EUR/USD stabilized above 1.0800 after closing in positive territory on Tuesday. The pair could face next resistance at 1.0840. Fed will release the minutes of the January policy meeting later in the day. EUR/USD gained traction and climbed to its highest level since early February at 1.0840 on Tuesday. Although the pair edged lower afterward, it managed to stabilize above 1.0800. The near-term technical outlook points to a bullish tilt. As trading conditions normalized following a three-day weekend in the US, the US Dollar (USD) came under bearish pressure amid retreating US Treasury bond yields during the American trading hours on Tuesday. Early Wednesday, the cautious market mood, as reflected by falling US stock index futures, helps the USD hold its ground and limits EUR/USD's upside.  Later in the day, the Federal Reserve (Fed) will release the minutes of the January policy meeting.  According to CME FedWatch Tool, markets are currently pricing in a nearly 70% probability that the Fed will leave the policy rate unchanged in the next two policy meetings. Since the January policy meeting took place before the January labor market and inflation data releases, which caused investors to doubt a rate cut in May, the publication is unlikely to offer any fresh clues regarding the timing of the policy pivot. Meanwhile, investors will pay close attention to comments from Fed policymakers later in the day. In case officials downplay the latest hot inflation readings and leave the door open to a rate reduction in May, the USD could come under renewed selling pressure. On the other hand, EUR/USD could have a difficult time extending its rebound in case safe-haven flows dominate the financial markets later in the day. EUR/USD Technical Analysis The Relative Strength Index (RSI) indicator climbed above 60 and EUR/USD closed the last 6 4-hour candles above the 100-period Simple Moving Average (SMA), highlighting a bullish tilt in the short-term outlook. 1.0800 (Fibonacci 23.6% retracement of the latest downtrend, psychological level) aligns as immediate support. In case this level holds, buyers could remain interested. On the upside, 1.0840 (200-period SMA) could be seen as first resistance before 1.0860 (Fibonacci 38.2% retracement) and 1.0900 (psychological level, static level). Below 1.0800, 1.0780 (100-period SMA) could act as next support. A 4-hour close below that level could attract technical sellers and open the door for a leg lower toward 1.0760 (static level, 50-period SMA).

In focus today Today, we receive euro area consumer confidence figures for February. Consumer confidence is still at a low level which is likely the reason for the sluggish consumption ratio. Consumer confidence rebounded strongly during the first half of 2023 but has since stagnated. An increase in consumer confidence could be the trigger for higher private consumption in 2024 as real incomes improve. Tonight, minutes from the FOMC's January meeting will be released. Markets will keep a close eye on any clues regarding the timing of the first rate cut, which we now expect to come in May. In addition, the Fed's Bostic and Bowman will be on the wires ahead of the release. Overnight, Japanese PMI figures kick off the slew of PMI data that is due tomorrow. Economic and market news What happened overnight Japanese export volumes declined 4.6% in January indicating a slow start to the year following the technical recession in 2023H2. That said, January PMIs were more uplifting but have not been a good GDP indicator recently. What happened yesterday Yesterday we got Q4 GDP figures for Denmark, which showed an impressive rebound with a growth rate of 2.0% q/q. Furthermore, Q3 growth was revised up to 0.4% from -0.7%. The development was largely driven by pharmaceuticals, where manufacturing GVA increased almost 8% q/q in Q4, which also drove exports higher. Consumption also ticked up with quarterly growth of 1.7%, indicating somewhat less cautious consumers. All in all, this means the economy grew 1.8% for the year 2023, which is substantially more than the Eurozone. However, when excluding pharmaceuticals, the numbers show a decline of 0.1%. Euro Area negotiated wage growth declined to 4.46% in Q4 from 4.7% y/y in Q3. This was in line with other trackers from the ECB and suggests that wage growth peaked in Q3. The ECB has repeatedly told markets that they await more data on wage growth, so this should provide some comfort, though they will likely still be cautious as we have yet to get the full overview of wage growth in Q4, which we will get with the "compensation per employee" print, due for release on 8 March. The market reaction was muted, with pricing still suggesting the first rate cut in June. Finally, we got somewhat dovish comments from Bank of England governor Andrew Bailey who said that it was "not necessary" to wait for inflation to come back to target before cutting rates, adding also that the Bank was particularly focused on whether services inflation and wage growth were on a sustained path towards headline inflation. The market reaction was muted. Equities: Global equities were lower yesterday with DM underperforming EM. DM is driven by macro and inflation data while EM is driven by China and the next step of policy support for the property sector. Defensive value outperforming globally on the higher for longer narrative but also boosted by earnings reports and earnings expectations yesterday. Investors embracing the earnings from retailers while taking some chips of the table in tech space ahead of tonight's reporting from Nvidia. Yesterday in the US Dow -0.2%), S&P 500 -0.6%, Nasdaq -0.9% and Russell 2000 -1.4%. Asian markets are mixed as the tech sector is dragging down most indices. Chinese indices are mostly higher as property developers are rising on the back of the last batch of policy support. Futures in US and Europe are mixed this morning with the tech-heavy indices trailing the rest. FI: There was a modest decline in global bond yields yesterday, where 10Y US Treasury yields declined 3-4bp relative to the opening level on Tuesday morning. 10Y German govt yield also declined 4-5bp. There was also a bullish steepener between 2Y and 10Y for both the US and European government bond yield curves. FX: SEK gained for the second straight day versus the rest of the G10 closely followed by the EUR, NZD and AUD. CAD and USD lost some ground yesterday, with EUR/USD rising to a two-week high just below 1.0840.

The Eurozone's current account surplus climbed to a six-month high of 31.9bn in December. Analysts, on average, had expected a decline to 20.3 bn from 22.5 bn the previous month. The current level was seen in the eurozone during the relatively benign pre-Covid period and sometime before Natural Gas prices spiked in the second half of 2021. The normalisation of the surplus is good news for the single currency, as it means more net capital inflows into the region. But this growth has been fuelled by falling imports, which can be the result of lower commodity and energy prices (which is a very good thing), but also partly indicative of a slowdown in domestic demand. This threatens to translate into economic contraction in the coming months. The euro area experienced periods of severe import contraction in late 2008 and early 2010, and in both cases, the economy experienced a severe downturn. Back in 2008, all this was accompanied by the collapse of the Euro.

Markets Without significant macroeconomic developments, investors have shifted their focus to micro-level dynamics, particularly in the technology sector. Big tech companies have exerted downward pressure on the stock market overnight, lugging it away from its recent all-time highs.  Amid this backdrop, the tech-heavy Nasdaq Composite experienced the most significant decline, dropping nearly 1% in value. The broader market also saw losses, with the S&P 500 falling approximately 0.6% and the Dow Jones Industrial Average decreasing roughly 0.2%. These declines come after a rocky week on the macro front, in which all three major indices closed lower amid doubts about the odds of a "soft landing" after a hotter-than-inflation gut punch knocked investors slightly off their bullish bias.  Investors closely monitored earnings as markets resumed trading in full swing after the Presidents' Day Break. Still, Wall Street is laser-focused on those from Nvidia (NVDA) scheduled for Wednesday. The market views Nvidia's earnings as the artificial intelligence ( AI )bellwether. Given its significance as the third-largest company by market value and its focus on AI, it could be seen as a trend-setting short-term turning point. With only a few mega-cap stocks driving most of the recent gains in the market, any potential shortfall in Nvidia's earnings, especially amid high expectations, could trigger a broader pullback in stocks. With the Mag 7 influence over broader market trends, their earnings reports have taken on a high-risk event status, akin to top-tier macro events. So, in a sense, we should not be surprised by the -4 % drop in Nvidia's shares overnight as investors take some "chips" ( pardon the pun) off the table to mitigate risk in an adverse market reaction. But unlike macro events, where market reactions often follow a binary pattern, earnings reports present a more nuanced challenge. Even if an earnings report hits the mark precisely, predicting the market's reaction remains uncertain. The first question investors will ask is, are the earnings good enough? Given the high valuation and the current muddled US macro scrim, answering that question too quickly can lead to a psychological impulse to sell the news rather than buy the facts.  Essentially, the narrative remains consistent each quarter for mega-cap companies, barring a few turbulent reports in 2022. Generally, their financial numbers continue to meet or exceed expectations. These corporate giants have become ingrained in the fabric of life for consumers and business people across developed and developing nations, symbolizing a significant portion of daily existence. While there may be occasional dips in performance, very few quarters can be classified as objectively harmful. The perception of a "bad" quarter often depends on relative or subjective measures rather than absolute balance sheet shortcomings. Oil markets The oil market experienced a modest selloff at the beginning of the holiday-shortened week as traders sifted through conflicting demand signals from major global economies. During its Lunar New Year holidays, China witnessed a significant surge in domestic travel and spending, surpassing pre-pandemic levels for the first time since 2020. However, on Tuesday, China's central bank announced a rate cut to revitalize a struggling property sector that failed to ignite enthusiasm in oil markets. But the pushback on the bullish thesis is stagflation concerns in the US. Investors continued to digest mixed macroeconomic data for January. Both consumer and producer inflation unexpectedly accelerated, while retail sales sharply declined.

Gold price sits at multi-day highs near $2,030 ahead of the Fed Minutes. US Dollar stays weak with the US Treasury bond yields, despite a tepid risk tone.  Gold buyers flex muscles after recapturing 21-day SMA near $2,025. RSI flips bullish.   Gold price is looking to extend its winning streak into a fifth straight day on Wednesday, sitting close to the highest level in five days reached at $2,031 on Tuesday. A sustained US Dollar (USD) weakness combined with subdued US Treasury bond yields render positive for Gold price, as buyers await the US Federal Reserve (Fed) January meeting Minutes for the next push higher.   Gold price braces for Fed Minutes and Fedspeak The latest leg down in the US Dollar could be attributed to renewed fears of a United States (US) government shutdown. House Republicans have shifted from optimistically cautious to expecting a government shutdown unless a budget or spending stopgap is passed by March 1, according to a report carried by Axios. The government will go into a full shutdown by March 8. The prolonged fiscal issue in the US is keeping the US Treasury bond yields on the defensive, exerting additional downside pressure on the US Dollar, even as risk sentiment remains tepid. Asian markets opened lower on Wednesday, tracking a negative Wall Street close. However, Chinese stocks have rebounded firmly on hopes of more stimulus coming through from Beijing to prop up the property market and the overall economy. Gold price is taking advantage of the ongoing US Dollar weakness, looking forward to the release of the Fed's January meeting Minutes, which could provide fresh hints on the timing of the first-rate cut this year. in the absence of any high-impact US economic data releases on Tuesday. Also, of note remains the earnings result from the American tech-giant Nvidia on Wednesday, as it could have a significant impact on the market sentiment. Markets are currently pricing a 77% chance of a cut in June, according to the CME Group's Fed Watch Tool. Markets now expect 92 basis points (bps) of cuts from the Fed this year, closer to the Fed's projection of 75 bps of easing and sharply below the 150 bps of cuts priced in by traders at the start of the year, per Reuters. Also, of note will be earnings result from the American tech-giant Nvidia on Wednesday, which could have a significant impact on the market sentiment, in turn, influencing the value of the US Dollar and the Gold price. American chipmaker Nvidia stumbled on Tuesday, leading the decline in the US stocks, in anticipation of its earnings report. Besides, Atlantic Fed President Raphael Bostic and Fed Governor Michelle Bowman will make their respective scheduled appearances later on Wednesday, offering some food for thought for Gold traders. Gold price technical analysis: Daily chart Gold price finally yielded a daily closing above the 21-day Simple Moving Average (SMA), now at $2,023, on Tuesday. The 14-day Relative Strength Index (RSI) extended its recovery above the midline, suggesting that the tide may have turned in favor of Gold buyers. Therefore, the immediate resistance is now seen at the $2,033 level, where the 50-day SMA and the February 13  high coincide. A sustained break above that level will generate fresh buying opportunities in Gold price, targeting the February 7 high of $2,044 and the $2,050 psychological barrier. On the contrary, if Gold sellers fight back control, the 21-day SMA at $2,023 will need to hold the fort. A failure to defend the latter could fuel a fresh downswing toward the previous day low of $2,015, followed by the rising trendline support that aligns at $2,011. The upwsrd-pointing 100-day SMA at $2,002 will act as a tough nut to crack for Gold sellers.

AUD/USD Current Price: 0.6552 The Reserve Bank of Australia Meeting Minutes left the door open for additional rate hikes. Speculation mounts the Federal Reserve will maintain rates higher for longer. AUD/USD advanced for a fifth consecutive day, faces critical resistance at 0.6610. The AUD/USD pair peaked on Tuesday at 0.6578, the highest in three weeks early in the American session. The pair retreated afterwards towards the 0.6550 region, where it stands ahead of the Asian opening, posting gains for the fifth consecutive day. The focus was on central banks at the beginning of the day, as the People's Bank of China (PBoC) lowered the five-year Loan Prime Rate (LPR) by 25 basis points (bps) to 3.95%. The LPR is a crucial reference lending rate for mortgages and was trimmed by the most on record. Nevertheless, Chinese stocks edged lower as the rate cut fell short of boosting demand. Also, the Reserve Bank of Australia (RBA) released the Minutes of its February monetary policy meeting. The document showed the Board considered either the case to hike by 25 bps or to hold steady, deciding on the latter. Policymakers also agreed it was not to rule out another rise in rates, despite adding that the latest data increased the Board's confidence inflation will return to target in a reasonable time frame. Meanwhile the US Dollar suffered from increasing speculation the Federal Reserve (Fed) will further delay a rate cut. Market players now believe the central bank has more chances to take action in the June meeting rather than in the May one. By the end of the day, speculative interest took some profits out of the table, providing near-term support to the USD that anyway seems poised to extend its slump- AUD/USD short-term technical outlook From a technical point of view, the daily chart for the AUD/USD pair supports additional gains, particularly if the pair holds above 0.6542, the 23.6% Fibonacci retracement of the 0.6871/0.6442 slump. In the mentioned time frame, technical indicators maintain bullish slopes, although within neutral levels, falling short of confirming an upcoming rally. At the same time, the pair stands above converging 20 and 100 Simple Moving Averages (SMAs) but met sellers after briefly surpassing a flat 200 SMA. The 4-hour chart shows a mildly bearish 200 SMA capped the upside around the daily high, while AUD/USD trades above a bullish 20 SMA, which advanced above the 100 SMA. At the same time, technical indicators remain within positive levels, aiming to regain the upside after correcting overbought conditions. The bullish case should strengthen on a break above 0.6610, the 38.2% retracement of the aforementioned daily slump. Support levels: 0.6545 0.6500 0.6465   Resistance levels: 0.6580 0.6610 0.6650