EUR/USD Current price: 1.0920 Market participants keep buying the US Dollar ahead of key employment and growth figures. The German Unemployment Rate was confirmed at 5.9% in December. EUR/USD trades near the 1.0900 level and aims to break below it. The EUR/USD pair stayed on the back foot throughout the first half of Wednesday, although the slide was moderated. The pair bottomed at 1.0915  during European trading hours and maintains the sour tone heading into Wall Street's opening, as investors are cautiously awaiting first-tier figures. So far, the macroeconomic calendar offered the December German Unemployment Rate, which was confirmed at 5.9%, unchanged from the previous month. Additionally, the United States (US) published MBA Mortgage Applications for the week ended December 29, which plunged 10.7%. However, the decline is irrelevant, considering it occurred during the winter holidays. After the American opening, the focus will be on the US ISM Manufacturing PMI, foreseen in December at 47.1, improving from 46.7 in November but still within contraction levels. At the same time, the country will release November JOLTS Job Openings, relevant ahead of the Nonfarm Payrolls (NFP) report on Friday. Finally, in the US afternoon, the focus will shift to the Federal Open Market Committee (FOMC) Minutes, which can provide clues on upcoming rate cuts. EUR/USD short-term technical outlook The EUR/USD pair bounced modestly from the aforementioned intraday low, but trades in the red. Technical readings in the daily chart suggest the decline may continue as indicators extend their slides, currently heading lower within neutral levels. At the same time, the pair is battling around a still bullish 20 Simple Moving Average (SMA), while the longer ones remain directionless far below the current level. The near-term picture indicates that the risk skews to the downside. In the 4-hour chart, EUR/USD found near-term buyers around a directionless 200 SMA, but develops below the 20 and 100 SMAs, with the shorter one gaining downward momentum. Finally, technical indicators remain within negative levels, with the Relative Strength Index (RSI) indicator maintaining its bearish slope at around 27, without signs of exhaustion. Support levels: 1.0910 1.0880 1.0845   Resistance levels: 1.0950 1.0990 1.1025

EUR/USD stabilized above 1.0950 following Tuesday's sharp decline. Near-term technical outlook suggests that the pair remains bearish. US economic docket will feature key data releases on Wednesday. EUR/USD declined sharply on Tuesday and touched its lowest level in nearly two weeks at 1.0938 as the US Dollar (USD) staged a decisive correction following the poor performance seen in the last couple of weeks of 2023. Early Wednesday, the pair holds steady at around 1.0950. In the absence of high-tier data releases, the USD benefited from souring market mood and the steady recovery seen in the US Treasury bond yields on Tuesday. The US Dollar Index, which lost about 2% in December, gained nearly 1% on the first trading day of 2024. In the second half of the day, the US economic docket will feature the ISM Manufacturing PMI data for December and JOLTS Job Openings report for November. Investors expect the ISM Manufacturing PMI to edge higher to 47.1 from 46.7 in November. A reading above 50 could provide a boost to the USD with the immediate reaction. On the other hand, a noticeable decline in the number of job openings could hurt the USD.  Later in the American session, the Federal Reserve (Fed) will release the minutes of the December policy meeting. In the post-meeting press conference, Fed Chairman Jerome Powell said that policymakers were thinking and talking about when it will be appropriate to cut rates. In case the publication confirms that officials discussed the timing of a policy pivot, the USD could find it difficult to stay resilient against its rivals. According to the CME Group FedWatch Tool, markets are currently pricing in a 25% probability that the Fed will leave the policy rate unchanged in March. EUR/USD Technical Analysis The Relative Strength Index on the 4-hour chart rose slightly above 30 after falling below that level on Tuesday, suggesting that the bearish bias remains intact following a technical correction. Additionally, the 20-period Simple Moving Average (SMA) is about to make a bearish cross with the 50-period SMA on the same chart, highlighting a buildup of bearish pressure.  On the downside, 1.0950 (Fibonacci 23.6% retracement of the latest uptrend) aligns as immediate support. The 100-period SMA reinforces this level as well. If EUR/USD falls below 1.0950 and starts using that level as resistance, sellers could remain interested. In this scenario, 1.0920 (200-period SMA), 1.0900 (psychological level, static level, lower limit of the ascending regression trend channel) and 1.0850 (Fibonacci 38.2% retracement) could be seen as next supports. On the upside, resistances are located at 1.1000 (psychological level, static level), 1.1025 (20-period SMA, 50-period SMA, mid-point of the ascending channel) and 1.1100 (psychological level, static level).

Good Morning! Dollar Index is rising as expected and could test 102.50 while Euro could fall to 1.0950-1.09. EURJPY looks bearish towards 155/154 while USDJPY has risen back and could test 143 now, contrary to our expectations of seeing a fall towards 140-138. USDCNY is rising towards our mentioned targets of 7.15/16. Aussie is headed towards 0.6750/0.67 while Pound is near its immediate support of 1.26 which needs to produce a bounce else could be vulnerable to fall towards 1.24. USDRUB rose sharply yesterday but seems to be falling from 91 now. USDINR rose slightly past our expected resistance of 83.30 but later it eventually came down. The 83.35-83.20 range could hold for the day. EURINR has risen above 91 and could test 91.50 soon before pausing. The US Treasury and the German yields are witnessing a corrective rise in line with our expectation. Both the yields can rise further from here in the coming days. The 10Yr GoI can move up to test its resistance before turning down again to resume the downtrend. The 5Yr GoI on the other hand is stuck in a narrow range within its broader downtrend. Dow Jones has scope to test its immediate resistance before a corrective fall can happen. DAX was volatile yesterday but as long as it holds above 16500, our bullish view will remain intact. Nifty has to sustain above 21500 to move up towards its resistance. Shanghai has declined failing to rise past 2975 but 2925 could lend some support and keep our view intact for a rise towards its resistance. Crude prices have fallen back sharply after disappointing US S&P manufacturing PMI for Dec-23. Gold and Silver have scope to test their key immediate support before a bounce back can happen. Copper is approaching 3.85. Failure to hold above 3.85 can drag Copper further down. Natural Gas has fallen back but downside could be limited to 2.50-2.45. Visit KSHITIJ official site to download the full analysis

The Federal Reserve's meeting minutes from the dovish December decision are of high interest early in 2024. Officials may wish to emphasize hawkish messages after markets ran with the Fed's dovish message of upcoming rate cuts. Any US Dollar strength or stock retreat may prove short-lived in the current festive mood. It is still cold out there – that will likely be the Federal Reserve (Fed) message as 2024 kicks off and the festive lights are removed from the streets. Nevertheless, any chill coming from the world's most powerful central bank will likely be short-lived.  Here is a preview for the Federal Open Market Committee (FOMC) Meeting Minutes, due on Wednesday, at 19:00 GMT. Markets got carried away by dovish pivot Three rate cuts in 2024 – that was the message from the Federal Reserve's "dot plot" on December 13. Chair Jerome Powell and his colleagues left rates unchanged and signaled more decreases in borrowing costs than previously anticipated. By slashing rate forecasts rather than increasing them, the Fed marked a turnaround in policy and signaled a victory over inflation.  Markets loved it – but perhaps too much –, pricing four to five cuts in 2024, with the first one coming in March. Bond yields have cratered, stocks have surged, and the Greenback is in the red. Investors tend to shoot first and think later, and may have gone too far. Interest-rate cuts are coming in March, according to bond markets. Source: CME Group FedWatch Tool Fed officials would not like the fall in long-term borrowing costs to come so strong and so fast – it could encourage lending instead of saving, risking the achievements in depressing inflation. That is where the Meeting Minutes come in handy. Fed uses minutes to convey messages The protocols are set to document what was said in the two-day meeting where members put their forecasts. At that time, policymakers were influenced by the Consumer Price Index (CPI) data (published on the first day of their deliberations) and the Producer Price Index (PPI), which was released just before Powell took the stage. But not all members of the Fed's board are fully aligned. As the Meeting Minutes are revised until the very last moment, editors will likely emphasize messages officials want to convey – hold your horses. I expect the report to highlight hawkish members' desire for caution before cutting rates and a commitment to refraining from cuts until they are sure such moves are essential.  Such a hawkish highlight would boost the US Dollar and chill down stock investors' spines. It would also cool Gold. However, I do not expect that effect to last for too long. First, the trend is strong – there is considerable optimism about a soft-landing scenario in which inflation completely disappears without a recession.  Second, markets take the Fed's forecasts with a grain of salt. The bank was late to acknowledge that inflation is not transitory, and may be also late to accept that it has done enough or perhaps too much.  Third– and this relates to the first point – the Fed stresses it is data-dependent. Unless fresh figures have an inflationary bent, there is no reason to be scared of hawkish tones.  Final thoughts I expect the Federal Reserve to release relatively hawkish meeting minutes, triggering a "risk off" market move. However, I do not expect it to last for too long. 

Gold price rebounds, as the US Dollar eases early Wednesday.   The US Treasury bond yields pause its uptrend amid souring sentiment. Gold price remains on track to test $2,100 but acceptance above $2,085 holds the key. Gold price is attempting a bounce above $2,060 early Wednesday, replicating the move seen in Asia on Tuesday, The US Dollar (USD) is unable to hold its previous uptick even though markets appear risk averse. All eyes on the Federal Reserve Minutes and US jobs data Amidst ongoing geopolitical conflict in the Middle East and simmering tensions between China and Taiwan, risk sentiment remains in a weak spot in Asian trading on Wednesday, allowing the traditional safe-haven, Gold price, to stage a modest rebound from near $2,060 region. Investors also stay cautious, as they keenly await the Minutes of the US Federal Reserve's (Fed) December meeting and the JOLTS Job Openings data, which could throw fresh light on the prospects of interest rate cuts later this year. Tsunami warnings and multiple high-magnitude earthquakes in Japan also keep investors on edge, although the natural disaster has had limited market impact so far. Despite the souring sentiment, the US Dollar is pulling back from multi-day highs, tracking the sluggish performance in the US Treasury bond yields, as aggressive US interest rate cuts seem to have ebbed ahead of the release of Fed minutes and jobs data. Gold price started off 2024 on the right footing and tested the $2,080 barrier in the first half of Tuesday's trading before reversing sharply to settle below $2,060 amid a solid US Dollar uptick. Markets resorted to repositioning ahead of the critical US employment data and the Fed Minutes, fuelling a fresh uptrend in the US Dollar alongside the US Treasury bond yields. Gold price technical analysis: Daily chart The near-term technical outlook for Gold price remains more or less the same, as the rising trendline resistance, now at $2,100, remains a tough nut to crack for Gold price. Ahead of that level, Gold buyers continue to run into offers near the $2,085 zone, making it a stiff resistance. If Gold price manages to find a strong foothold above these resistance levels, the all-time high of $2,144 will be next on their radar. The 14-day Relative Strength Index (RSI) indicator looks north above the midline, suggesting that the upside potential remains intact.   Adding credence to the bullish outlook, the 100-day Simple Moving Average (SMA) is on the verge of cutting the 200-day SMA from below, portraying an impending Bull Cross. On the downside, the iinitial support is seen at Friday's low of $2,058, below which the $2,050 round figure could be probed. The last line of defense for Gold buyers is aligned at the 21-day Simple Moving Average (SMA) at $2,038.

Markets U.S. stocks slid on the first significant trading day of the new year, signalling a downbeat start to 2024 after a winning year that left the S&P 500 shy of a new record high. The recent rally in stocks stalled on Friday, following two months of gains that contributed to gangbuster performance in the key U.S. benchmarks. The S&P 500, in particular, notched its ninth consecutive weekly win, marking the longest streak since 2004, and is approaching its all-time closing high of 4,796.56. Tech stocks declined after Barclays analysts downgraded their rating on Apple's stock, expressing concerns about demand for new iPhones. This downgrade contributed to a 1.7% fall in Apple shares as tech stocks slid. Economic updates expected later in the week, mainly the December jobs report due on Friday, could further challenge the ongoing rally. Investors are closely watching the report for its potential to influence the Federal Reserve's reaction function. The prevailing bets on fast and furious interest rate cuts in 2024 have been a critical factor buoying stocks in recent weeks. Tech stocks, with their rich valuations, are susceptible to the slightest economic wobble or shift higher in yields, and it's not like everyone was participating in this narrow market high driven by A.I. hype.  Unfortunately for Tech bulls, both 10-year yields are higher, and global economic data paints an even less favourable picture. While one might expect Treasury yields to fall in response to negative growth surprises, the opposite has happened since last week's dismal 7-year US auction, suggesting that not only are rate-cut bets waning, but bond markets are starting to add back some term premium as Treasury supply concerns loom. Indeed, it is not the best setup for growth stocks to start the year. In this narrowly focused rally, investors should be less concerned about whether the U.S. enters a recession or if inflation and interest rates deviate slightly from expectations. The critical consideration is the potential bursting of the Technology market cap bubble and its capacity to trigger a broader slump in the global market. But of course, if a recession does hit, and by all accounts of the most recent round of global PMI data, productivity is not in a great spot; richly valued equities (like Mega Cap Tech) would experience a significant de-rating if long-term growth expectations continue to decline. While this risk is easily identifiable, as evident in the data, it is crucial to acknowledge that significant sell-offs are often triggered by risks that go unnoticed. Suppose one aims to craft an out-of-consensus macroeconomic storyline for the United States in 2024; how about a hard landing, with a massive shot of deflation imported from China, turning the everything rally into the everything crash?  U.S. rates are lower because of the Fed, not the data; therefore, the focus remains on monitoring upcoming data. In this regard, a crucial reading on the labour market is imminent, as December's payroll report is scheduled for release on Friday. The fear is that markets may foretell any weakness in the data, especially around U.S. employment metrics, as a harbinger of a hard landing. Oil markets Geopolitical risk, often a key factor influencing oil prices recently, initially supported price action overnight. However, geopolitical risk is akin to "headline risk," as the recent market activity demonstrates. Oil prices initially rose after Iranian state media reported that Tehran had deployed a warship to the Red Sea, but later fell when reality set in.  In a more symbolic move to annoy the U.S. and its Western allies rather than a strategic military escalation, Iran dispatched a 51-year-old frigate to monitor Red Sea shipping lanes. The situation reflects a pattern of Iranian propaganda that lacks sophistication, cunning, or polish. While geopolitical headlines can temporarily support oil prices, the broader market context, including dismal economic data in China and Europe to start the year and diminishing optimism about U.S. rate cuts, exerted downward pressure during the busy New York session. Coupled with a strengthening U.S. dollar, it contributed to the negative trajectory of oil prices into the Asia session as traders remained on headline watch.  Forex market The recent dovish adjustment in Fed rate cut expectations establishes a higher threshold for additional weakness in the U.S. dollar to start the year. To sustain expectations for the Fed to initiate rate cuts as early as March, market participants will likely require a weak U.S. Payroll print but, as importantly, the continued ebbing of U.S. inflation metrics. The critical question for dollar bears is how the gap between market-based rate cut expectations and the Fed's projections will be reconciled. ( 150bp vs 75 bp).