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Forex News Timeline

Monday, January 24, 2022

Crude oil prices fell sharply on Monday in tandem with a broad risk asset pullback that has also seen US (and European) equities, risk-sensitive curre

WTI has fallen back into the mid-$83.00s from earlier highs around $86.00.Oil prices have been selling off recently as the US dollar picks up and other risk assets decline.Crude oil prices fell sharply on Monday in tandem with a broad risk asset pullback that has also seen US (and European) equities, risk-sensitive currencies and cryptocurrency markets move sharply lower. Front-month WTI futures currently trade in the mid-$83.00s per barrel, down about $1.50 on the day, having been as high as $86.00 earlier in the session. Support in the $83.00 area is for now holding up, but a break below here could open the door to a drop back towards $80.00 per barrel. Traders have been citing a combination of Fed tightening fears (as this week’s Fed meeting looms) and concerns about geopolitical escalation in Eastern Europe as weighing on the macro mood. Safe-haven assets such as USD, JPY, CHF and bonds have been outperforming and generally seeing solid demand and some are attributing the stronger US dollar as another factor weighing on crude oil prices on Monday. A stronger dollar makes USD-denominated crude oil more expensive for the holders of international currencies, thus weighing on its demand. Analysts note that, while the broadly downbeat market mood does seem to be weighing on crude oil prices, rising geopolitical tensions between Russia/Ukraine/NATO, as well as in the Middle Ease as the UAE fends off more Houthi militia attacks, are a source of upside risk for crude oil prices. It remains unclear how any NATO (economic) response to a Russian military incursion into Ukraine would impact the country’s more than 11M barrels per day in crude oil output.  

EUR/CHF is now back at the December low near 1.0325/1.0310 – removal of which can trigger a dive towards the 1.0225/1.0210 area, economists at Société

EUR/CHF is now back at the December low near 1.0325/1.0310 – removal of which can trigger a dive towards the 1.0225/1.0210 area, economists at Société Générale report. Break above 1.0450 needed to affirm a meaningful bounce “Daily MACD is still in negative territory which denotes upside momentum is lacking.” “The pair has to cross above 1.0450, the 61.8% retracement of recent down move to affirm a meaningful bounce.” “Failure to defend 1.0325/1.0310 can lead to next leg of decline towards projections of 1.0275 and 1.0225/1.0210.”  

The S&P 500 saw an aggressive fall of 5.7% last week and this leaves the market nearly down 9% from its 2021 record high. The weekly close below the 2

The S&P 500 saw an aggressive fall of 5.7% last week and this leaves the market nearly down 9% from its 2021 record high. The weekly close below the 200-day moving average (DMA) at 4429 warns of further weakness to 4345, with scope for the October 2021 lows at 4290/79, analysts at Credit Suisse report. VIX set to soar towards 35.00 “The S&P 500 closed the week below our corrective of its long-term 200-DMA, currently at 4429, reinforcing its existing top below 4582. With weekly RSI momentum also holding a major top, we look for further weakness yet.”  “Below the 78.6% retracement of the rally from last October at 4396 can see support next at a small price gap from last October at 4387/64, then potential trend/”neckline” support at 4345.”  “We see scope for a move below 4345 to test the key lows of last October at 4290/79, but we look for an attempt to find a floor above here. Below 4279 though would mark a further deterioration with support then seen next at the 38.2% retracement of the rally from October 2020 at 4213.”  “Resistance is seen at 4426/29 initially, then 4455 with the immediate risk seen staying lower whilst below 4495.” “VIX above 27.40 warns of a further rise to 35.00.”  

Spot silver (XAG/USD) prices have been choppy in recent trade, with prices recently collapsing back to the south of the $24.00 level and towards $23.8

Spot silver prices have pulled back sharply below the $24.00 level in recent trade, despite gold prices remaining resilient.The recent bout of selling pressure has seen XAG/USD hit its lowest levels since last Wednesday.Technicians are eyeing a test of support in the $23.70 and $23.40 areas.Spot silver (XAG/USD) prices have been choppy in recent trade, with prices recently collapsing back to the south of the $24.00 level and towards $23.80, with the precious metal now trading lower by about 2.0% on the day. Silver is seeing divergence with spot gold on Monday, with the latter seemingly catching a bid amid safe-haven demand as a result of geopolitical concerns whilst the former fails to do so. Silver could be suffering as a result of a broadly stronger US dollar, which as (like gold) has been gaining on safe-haven grounds. Either way, the recent bout of selling pressure has seen XAG/USD hit its lowest levels since last Wednesday. The bears will be eyeing support in the form of the 24, 25 November highs in the $23.70 area ahead of a potential retest of the late December highs in the $23.40 area. If silver does hit these levels, a big question will be whether the recent pullback has been sufficient to attract dip-buyers. Ahead of this week’s Fed meeting, which is unanimously expected to be a very hawkish affair, the appeal of interest-rate-sensitive assets (such as precious metals) may be somewhat limited. Geopolitics and over-arching risk appetite will of course also be important drivers of silver this week, and US data in the form of Q4 GDP and December Core PCE inflation will be worth watching.  

Gold is moving ahead into a time cycle change, which is likely to feature a season of change favouring a better outlook. Technically, gold is trapped

Gold is moving ahead into a time cycle change, which is likely to feature a season of change favouring a better outlook. Technically, gold is trapped within a current triangle pattern that requires prices to break and sustain over $1,876, Benjamin Wong, Strategist at DBS Bank, reports. Looking for more horsepower “On the Ichimoku weekly, gold is yet over the cloud’s resistance at $1,863 and the 50% Fibonacci retracement of the $2,075-$1,677 range grip at $1,876 to command a complete bullish outlook. Gold needs to garner more horsepower before it can stage the break of the triangle pattern, which means breaking through $1,876 and last June’s $1,916 peak.” “Gold has so far peaked at $1,848 (retracing 76.4% the mid-November through mid-December drop), and a minor retracement of the 38.2% Fibonacci order can bring it back to $1,812. Below that rests the 50-day moving average (DMA) and 200-DMA confluence at $1,805.”  

The NZD/USD pair edged lower through the early North American session and dropped to the 0.6680 area, or the lowest level since November 2020 in the l

A combination of negative factors dragged NZD/USD to an over one-year low on Monday.Hawkish Fed expectations provided a strong boost to the greenback and exerted pressure.The risk-off mood further contributed to driving flows away from the perceived riskier kiwi.The NZD/USD pair edged lower through the early North American session and dropped to the 0.6680 area, or the lowest level since November 2020 in the last hour. Following a brief consolidation during the first half of the trading on Monday, the NZD/USD pair met with a fresh supply and prolong its bearish trend witnessed over the past two weeks or so. The US dollar made a solid comeback amid growing acceptance that the Fed will tighten its monetary policy at a faster pace than anticipated. In fact, the markets have fully priced in the prospects for an eventual lift-off in March and expect a total of four rate hikes in 2022. Apart from this, the risk-off mood – as depicted by an extension of the recent fall in the equity markets – further benefitted the safe-haven greenback and drove flows away from the perceived riskier kiwi. Meanwhile, the combination of factors dragged the NZD/USD pair below the 2021 swing lows support, taking along some trading stops placed near the 0.6700 round-figure mark. Hence, the downfall could further be attributed to some technical selling, which might have already set the stage for a further near-term depreciating move. Market participants now look forward to the release of the flash US PMI prints (Manufacturing and Services) for a fresh impetus. This, along with the US bond yields, will influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment to grab some short-term opportunities around the NZD/USD pair. The key focus, however, will remain on the outcome of a crucial two-day FOMC monetary policy meeting, scheduled to be announced during the US session on Wednesday. Investors will look for clues about the likely timing of when the Fed will commence its policy tightening cycle. This, in turn, will drive the USD and determine the near-term trajectory for the NZD/USD pair. Technical levels to watch  

EUR/GBP hit its highest level in three weeks on Monday, reversing higher from an earlier dip towards the 0.8350 level to come within a whisker of hitt

EUR/GBP hit its highest level in three weeks on Monday, reversing higher from an earlier dip to nearly hit 0.8390.Traders have attributed upside as a function of the generalised risk-off tone to broader macro trade.Mixed Eurozone and downbeat UK PMIs didn’t have much of an impact.EUR/GBP hit its highest level in three weeks on Monday, reversing higher from an earlier dip towards the 0.8350 level to come within a whisker of hitting the 0.8390 mark. At current levels in the 0.8380s, the pair is trading with modest on-the-day gains of about 0.1%. Traders have attributed upside as a function of the generalised risk-off tone to broader macro trade. Markets worry that a Russian military incursion into Ukraine might be imminent as Western powers move to remove diplomats from Kyiv and reinforce the NATO presence in neighbouring countries. US and European equities trade lower as a result and in FX markets, risk-sensitive currencies (like GBP) are the worse performers. Mixed preliminary January PMI results out of both the UK and Eurozone doesn’t seem to have shifted the dial much for EUR/GBP. In the Eurozone, the manufacturing PMI was substantially better than forecast, while services was a little worse. In the UK, the PMIs were worse than forecast across the board, but IHS said that with inflationary pressures remaining elevated near record highs, the BoE remains odds on to hike interest rates again at next week’s meeting. Meanwhile, FX strategists continue to view the uncertainty about UK PM Boris Johnson’s future in the top spot as not having much of an impact on sterling. Analysts at MUFG said “we do not expect heightened political uncertainty to materially impact pound performance given there is unlikely to be any near-term change in government policies”. Analysts at ING said “politics has yet to hit GBP on the view that even if PM Johnson were to resign, Chancellor Sunak would be seen as a safe pair of hands as an alternative”. Ahead this week, there isn't much by way of notable tier one data aside from Spanish, French and German flash Q4 GDP numbers of Friday.  

United States Chicago Fed National Activity Index dipped from previous 0.37 to -0.15 in December

Economists at ABN Amro expect more weakness in EUR/USD. They forecast the pair at 1.05 and 1.00 by the end of 2022 and 2023, respectively. Significant

Economists at ABN Amro expect more weakness in EUR/USD. They forecast the pair at 1.05 and 1.00 by the end of 2022 and 2023, respectively. Significant policy divergence between the Fed and the ECB over the coming years “We now expect that the Fed will begin hiking interest rates in March 2022 and to hike four times in 2022.”  “We believe that the ECB is facing a different set of macroeconomic circumstances than faced by the US central bank. The ECB has also explicitly ruled out a rate hike in 2022 and has hinted that it could well be ‘on hold’ for much longer.”  “Our forecast for EUR/USD at year-end 2022 is 1.05 and 1.00 for year-end 2023.”  

The USD/CAD pair built on its intraday ascent and climbed to a nearly two-week high, around the 1.2625 region heading into the North American session.

USD/CAD gained strong positive traction for the second successive day on Monday.Fed rate hike bets, the prevalent risk-off mood boosted the safe-haven greenback.An intraday pullback in oil prices undermined the loonie and remained supportive.The USD/CAD pair built on its intraday ascent and climbed to a nearly two-week high, around the 1.2625 region heading into the North American session. The pair attracted some dip-buying near the 1.2555 area on Monday and built on the previous session's positive move from the very important 200-day SMA amid a broad-based US dollar strength. The markets have fully priced in the prospects for an eventual Fed lift-off in March and expect a total of four rate hikes in 202. This, along with the prevalent risk-off mood, provided a goodish lift to the safe-haven greenback and assisted the USD/CAD pair to gain traction for the second successive day. On the other hand, an intraday pullback in crude oil prices undermined the commodity-linked loonie. This was seen as another factor that pushed the USD/CAD pair higher, taking along some short-term trading stops placed near the 1.2600 round-figure mark. Hence, the uptick could further be attributed to some technical buying. That said, any meaningful upside still seems elusive ahead of this week's key central bank event risks – the BoC and the FOMC monetary policy decisions on Wednesday. The markets have been speculating that the Bank of Canada could increase rates as early as this week amid a jump in Canada’s annual inflation rate to a three-decade high in December. Apart from this, escalating geopolitical tensions between Russia and Ukraine as well as in the Middle East should limit the downside for crude oil prices. The fundamental backdrop makes it prudent to wait for a strong follow-through buying before confirming that the USD/CAD pair has bottomed out already. Market participants now look forward to the release of the flash US PMI prints (Manufacturing and Services) for a fresh impetus. This, along with the broader market risk sentiment, will drive the USD demand. Traders will further take cues from oil price dynamics to grab some short-term opportunities around the USD/CAD pair. Technical levels to watch  

Enrico Tanuwidjaja, Economist at UOB Group, reviews the latest bank Indonesia (BI) event. Key Takeaways “BI kept rates unchanged at its first meeting

Enrico Tanuwidjaja, Economist at UOB Group, reviews the latest bank Indonesia (BI) event. Key Takeaways “BI kept rates unchanged at its first meeting of the year at 3.5%.” “However, RRR hike is expected to start in March, signalling normalization has begun.” “We keep our view for BI to start hiking in H2 2022 to reach 4.5% by the end of this year.”

As geopolitical concerns mount about a potential Russian military incursion into Ukraine, spot gold (XAU/USD) prices are finding support via safe-have

Gold is holding near $1840 despite the stronger USD on a heightened safe-haven bid amid geopolitical concerns.What is expected to be a very hawkish Fed meeting will test gold’s resilience this week.As geopolitical concerns mount about a potential Russian military incursion into Ukraine, spot gold (XAU/USD) prices are finding support via safe-haven demand and, for now, shrugging off the negative headwinds from a firmer US dollar. XAU/USD has been gradually rising since the Monday Asia Pacific session open in the mid-$1830s to current levels around $1840. The subdued tone to trade in US government bond markets, where long-term yields are modestly lower (10 and 30-year -1bps), is also acting as somewhat supportive for the yield-sensitive precious metal. A Goldman Sachs note warning that the Fed might lift interest rates at all of the remaining meetings this year got a lot of attention amongst analysts this morning but doesn’t seem to have moved the needle much for markets. Admittedly, US 2-year yields are about 2bps higher, but as noted, the rest of the yield curve is flat to lower with geopolitics the main topic of discussion so far on the day. That suggests the main driver of Monday’s USD upside (DXY +0.3% to near 96.00, near two-week highs) is safe-haven more than Fed-related, which is why gold has been able to trade on a stronger footing. Whether gold’s resilience to ongoing dollar advances can last is another question. This week’s Fed meeting is likely to be a hawkish affair, though the bar for the meeting to exceed the market’s very hawkish expectations is seemingly quite higher. Gold bulls will be hoping that at the very least, the precious metal is able to hold within its recent $1830-$1845ish range. A further escalation in the tense geopolitical situation in Eastern Europe might be enough to send XAU/USD back above $1850 if also coupled with less hawkish than feared Fed vibes. The other major events to watch out for this week include US earnings, which could shift equity and also macro sentiment, and the Advance Q4 GDP growth estimate (on Thursday) and December Core PCE (on Friday).  

EUR/USD fades Friday’s decent advance and shifts the attention to the downside on Monday. The bias appears tilted to further decline in the very near

EUR/USD resumes the downtrend and challenges 1.1300.Sellers aim at another visit to the 2022 low at 1.1272.EUR/USD fades Friday’s decent advance and shifts the attention to the downside on Monday. The bias appears tilted to further decline in the very near term. That said, a breach of recent lows in the 1.1300 zone should pave the way for a potential visit to the 2022 low at 1.1272 (January 4). The longer term negative outlook for EUR/USD is seen unchanged while below the key 200-day SMA at 1.1712. EUR/USD daily chart  

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting comment on the latest interest rate decision by the Bank Negara Malaysia (BNM). Ke

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting comment on the latest interest rate decision by the Bank Negara Malaysia (BNM). Key Takeaways “Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) unchanged at 1.75% … (20 Jan). This came in line with our estimate and market expectations. The next two scheduled monetary policy meetings are on 2-3 Mar and 10-11 May.” “The overall tone of the latest statement remains optimistic on Malaysia’s growth outlook in 4Q21 and 2022. Key growth drivers include rising global demand, domestic private spending, improved labour market, and ongoing policy support. BNM sees underlying inflation or core inflation rising but to remain modest amid continued slack in the economy and labour market. The inflation outlook, however, is still subject to global commodity price movements and prolonged supply-related disruptions.” “There was no mention of the need to review the degree of monetary accommodation. BNM continued to judge that the existing monetary policy stance remained appropriate and accommodative. However, given BNM’s sanguine outlook on the economic recovery and to be ahead of the curve, we think BNM may consider normalising interest rates in the coming months. Our view is also backed by improving labour market conditions, progress in vaccinations, and better management of the pandemic. We are revising our OPR view to two 25bps rate hikes, with the first hike in 2Q22 followed by another in 3Q22 (vs. one 25bps rate hike in 3Q22 previously). This will bring the year-end OPR target to 2.25%.” 

DXY quickly leaves behind Friday’s downtick and resumes the way up to the proximity of the 96.00 mark on Monday. The intense upside in the dollar has

DXY advances to multi-day highs and flirts with 96.00.The YTD peak at 96.46 emerges as the next hurdle of note.DXY quickly leaves behind Friday’s downtick and resumes the way up to the proximity of the 96.00 mark on Monday. The intense upside in the dollar has recently surpassed the 4-month line, today near 95.30, and in doing so it has reinstated the short-term bullish bias. That said, a break above the temporary barrier at the 55-day SMA (95.89) should open the door to a move to the so far 2022 top at 96.46 (January 4). Looking at the broader picture, the longer-term positive stance in the dollar remains unchanged above the 200-day SMA at 93.24. DXY daily chart  

Quek Ser Leang at UOB Group’s Global Economics & Markets Research noted USD/IDR is predicted to keep the 14,280-14,380 range in the near term. Key Quo

Quek Ser Leang at UOB Group’s Global Economics & Markets Research noted USD/IDR is predicted to keep the 14,280-14,380 range in the near term. Key Quotes “USD/IDR traded between 14,275 and 14,375 for the whole of last week, higher than our expected consolidation range of 14,260/14,360. The relatively quiet price actions offer no fresh clues and we continue to expect USD/IDR to consolidate, likely within a range of 14,280/14,380.” “Looking ahead, USD/IDR has to break below the rising trend-line support (currently at 14,240) or above the declining trend-line resistance (currently at 14,405) before a sustained directional movement is likely.”

The GBP/USD pair added to its intraday losses and dropped to a two-and-half-week low, below the 1.3500 psychological mark during the mid-European sess

GBP/USD witnessed selling for the third successive day and dropped to over a two-week low.A sustained break below the 1.3535-1.3530 confluence was seen as a fresh trigger for bears.The stage now seems all set for a slide towards testing the 50% Fibo., around mid-1.3400s.The GBP/USD pair added to its intraday losses and dropped to a two-and-half-week low, below the 1.3500 psychological mark during the mid-European session. The UK political crisis, along with disappointing UK PMI prints undermined the British pound. Apart from this, a strong pickup in the US dollar demand turned out to be a key factor that dragged the GBP/USD pair lower for the third successive day. From a technical perspective, a sustained break below the 1.3535-1.3530 confluence was seen as a fresh trigger for bearish traders. The mentioned region comprised of the 100-day SMA and the 38.2% Fibonacci retracement level of 1.3161-1.3749 strong move up. Meanwhile, oscillators on the daily chart have just started drifting into the negative territory and support prospects for further losses. Hence, some follow-through slide towards the 50% Fibo. level, around the 1.3455 region, remains a distinct possibility. On the flip side, any attempted recovery might now meet with a fresh supply near the 1.3530-1.3535 confluence support breakpoint. This, in turn, should cap the upside for the GBP/USD pair near the 1.3580-1.3585 region, which should now act as a pivotal point. The latter is closely followed by the 1.3600 mark and the 23.6% Fibo. level, which if cleared decisively will negate the bearish bias. The GBP/USD pair might then accelerate the momentum towards the 1.3660 resistance en-route the 1.3700 round-figure mark. GBP/USD daily chart Levels to watch  

EUR/JPY comes under further pressure in the 128.50 region at the beginning of the week. Price action in the cross now seems to favour extra decline in

EUR/JPY extends the leg lower to the mid-128.00s.Further south comes the December lows near 127.50.EUR/JPY comes under further pressure in the 128.50 region at the beginning of the week. Price action in the cross now seems to favour extra decline in the short-term horizon, particularly after EUR/JPY extended the breakdown of the key 200-day SMA (130.51) in past sessions. Next on the downside should come the December 2021 low near 127.50. While below the 200-day SMA, today at 130.51, the outlook for the cross is expected to remain negative. EUR/JPY daily chart  

Mexico 1st half-month Inflation came in at 0.39%, below expectations (0.4%) in January

Mexico 1st half-month Core Inflation came in at 0.34%, above expectations (0.26%) in January

USD/MYR is still expected to navigate within the 4.1700-4.2000 range for the time being, suggested Quek Ser Leang at UOB Group’s Global Economics & Ma

USD/MYR is still expected to navigate within the 4.1700-4.2000 range for the time being, suggested Quek Ser Leang at UOB Group’s Global Economics & Markets Research. Key Quotes “USD/MYR traded between 4.1800 and 4.1940 last week, narrower than our expected consolidation range of 4.1680/4.2060. Momentum indicators are mostly neutral and USD/MYR could continue to consolidate this week, expected to be within a range of 4.1700/4.2000.” “Looking ahead, the risk of USD/MYR breaking below the bottom of the expected range (at 4.1700) first appears to be greater but any weakness is expected encounter solid support at 4.1620 and 4.1560.”

In its monthly report published on Monday, Germany's Bundesbank noted that the German economy likely shrunk in the last quarter of 2021, per Reuters.

In its monthly report published on Monday, Germany's Bundesbank noted that the German economy likely shrunk in the last quarter of 2021, per Reuters. Regarding the inflation outlook, Bundesbank said that price pressures could remain exceptionally high in early 2022 due to surging energy costs. "The adjustments in behaviour and the triggered containment measures in some cases had a significant impact on economic activity in the service sector, especially in December," the Bundesbank noted in its publication. "Germany's real gross domestic product is likely to have fallen slightly in the final quarter of 2021." Market reaction The EUR/USD pair remains under bearish pressure during the European trading hours and was last seen losing 0.25% on the day at 1.1310.

Quek Ser Leang at UOB Group’s Global Economics & Markets Research suggested USD/THB could extend the range bound theme between 32.85 and 33.29 for the

Quek Ser Leang at UOB Group’s Global Economics & Markets Research suggested USD/THB could extend the range bound theme between 32.85 and 33.29 for the time being. Key Quotes “Last Monday (17 Jan, spot at 33.25), we held the view that USD/THB ‘could dip below 33.25’.  We added, ‘the next support at 32.83 is unlikely to come into the picture’. While our view for a weaker USD/THB was not wrong, we did not expect the sharp drop that dipped below 32.83 (low of 32.81). The rebound from the low amid oversold conditions suggest that USD/THB is unlikely to weaken further.” “For this week, USD/THB is more likely to consolidate and trade sideways between 32.85 and 33.29.”

The AUD/USD pair continued losing ground through the first half of the European session and dropped to over a two-week low, further below mid0.7100s i

AUD/USD witnessed some selling for the second straight day and dropped to over a two-week low.Hawkish Fed expectations underpinned the USD and turned out to be a key factor exerting pressure.A generally weaker risk tone also contributed to drive flows away from the perceived riskier aussie.The AUD/USD pair continued losing ground through the first half of the European session and dropped to over a two-week low, further below mid0.7100s in the last hour. The pair extended last seek's rejection slide from the 100-day SMA resistance and witnessed some follow-through selling for the second successive day on Monday. The US dollar continued drawing some support from expectations that the Fed will tighten its monetary policy at a faster pace than anticipated. This, in turn, was seen as a key factor dragging the AUD/USD pair lower. The markets seem convinced about an eventual Fed lift-off in March and have been pricing in a total of four hikes in 2022. This has been fueling concerns that rising borrowing costs could dent the earnings outlook for companies. This, along with escalating geopolitical tensions, weighed on investors' sentiment and further collaborated to drive flows away from the perceived riskier aussie. Apart from this, the downfall could further be attributed to some technical selling below a short-term ascending trend-line support, around the 0.7200 mark, which was broken on Friday. The subsequent downfall might already set the stage for a further near-term depreciating move. Hence, a slide towards testing the next relevant support, around the 0.7100 mark, remains a distinct possibility. Market participants now look forward to the release of the flash US PMI prints, due later during the early North American session. This, along with the US bond yields and the broader market risk sentiment, will influence the USD and provide some impetus to the AUD/USD pair. The focus, however, will remain on the outcome of the FOMC meeting, scheduled to be announced on Wednesday. Technical levels to watch  

Unfavourable equity market developments have taken away some of the support for the pound from the ongoing hawkish repricing of Bank of England (BoE)

Unfavourable equity market developments have taken away some of the support for the pound from the ongoing hawkish repricing of Bank of England (BoE) rate hike expectations. Economists at MUFG Bank expect the GBP to remain depressed if equity markets continue suffering losses. Equity weakness hits pound even as BoE moves closer to another hike “The 30-day correlation between daily % changes in cable and the MSCI’s ACWI equity index has risen back up to +0.65 from a recent low of +0.12 on 10th December. It has been the strongest sustained period of positive correlation between cable and global equity market performance since 2013, and highlights that the pound is vulnerable to further near-term weakness if equity market weakness extends.” “The BoE is likely to raise rates again at their next meeting on 3rd February backed up as well by last week’s inflation and labour market reports from the UK. The recent earlier than expected rolling back of Plan B COVID-19 restrictions should further help to ease downside risks to growth at the start of this year.” “The week ahead could prove important for the future of Prime Minster Boris Johnson ahead of the release of the much anticipated internal investigation into ‘partygate’. We do not expect heightened political uncertainty to materially impact pound performance given there is unlikely to be any near-term change in government policies.”   

EUR/USD has failed to build on Friday's modest recovery gains and started to edge lower toward 1.1300 at the start of the week. Analysts at Credit Su

EUR/USD has failed to build on Friday's modest recovery gains and started to edge lower toward 1.1300 at the start of the week. Analysts at Credit Suisse believe that recent strength has been corrective only, with a break below 1.1272 needed to suggest the core downtrend has resumed. Resistance at 1.1370 caps to keep the immediate risk lower “With daily MACD momentum now turning lower again, this should add weight to our base case that the consolidation from last November and recent strength remains a corrective phase only ahead of the core downtrend eventually resuming.” “Key near-term support stays seen at the recent reaction lows and uptrend from November at 1.1292/72. Below here should confirm the completion of a bearish continuation pattern for a resumption of the core downtrend to 1.1234/23 initially, then a retest of 1.1186/68.”  “Big picture, we continue to look for an eventual fall to our 1.1019/02 main objective.” “Resistance at 1.1370 ideally caps to keep the immediate risk lower. Above can see further range trading and a recovery back to 1.1423/36.”

The GBP/USD pair remained depressed through the early part of the European session and was last seen trading near a two-week low, around the 1.3535 re

GBP/USD continued losing ground for the third successive day on Monday.UK political crisis, dismal UK PMIs continued weighing on the British pound.Modest USD strength further contributed to the downtick to a two-week low.The GBP/USD pair remained depressed through the early part of the European session and was last seen trading near a two-week low, around the 1.3535 region post-UK PMIs. The pair extended its recent pullback from the vicinity of mid-1.3700s, or a two-month high and witnessed some selling for the third successive day on Monday. This also marked the sixth day of a negative move in the previous seven and was sponsored by a combination of factors. Growing demands for Prime Minister Boris Johnson's resignation over a series of lockdown parties in Downing Street continued undermining the British pound. Apart from this, the emergence of some US dollar buying further contributed to the offered tone surrounding the GBP/USD pair. On the economic data front, the flash version of the UK PMIs fell short of market expectations and showed that expansion in both the manufacturing and the services sectors slowed notably in January. The data did little to impress bulls or lend any support to the GBP/USD pair. That said, increasing bets for additional rate hikes by the Bank of England held back traders from placing aggressive bearish bets around sterling. On the other hand, a fresh leg down in the US Treasury bond yields capped the USD gains and helped limit losses for the GBP/USD pair. Investors also seemed reluctant and preferred to wait on the sidelines ahead of the key central bank event risk – the outcome of a two-day FOMC policy meeting on Wednesday. This makes it prudent to wait for a strong follow-through selling before positioning for any further decline. Moving ahead, market participants now look forward to the release of the flash US PMI prints, due later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and produce some trading opportunities around the GBP/USD pair. Technical levels to watch  

NZD/USD is expected to see a clear break of 0.6703/6697 to mark a resumption of the downtrend for a move the lows from August and September 2020 at 0.

NZD/USD is expected to see a clear break of 0.6703/6697 to mark a resumption of the downtrend for a move the lows from August and September 2020 at 0.6511/6488, analysts at Credit Suisse report. NZD/USD to resume the core downtrend on a clear break of major support at 0.6703/0.6697 “With a major top already in place we continue to look for an eventual clear and sustained break below the lows of 2021 and 38.2% retracement of the entire 2020/2021 bull trend at 0.6703/6697 to mark the completion of a fresh bearish continuation pattern to confirm a resumption of the core downtrend. We would then see support next at the down trendline from March 2021 at 0.6662/60.”  “Whilst we would look for 0.6662/60 to hold at first, an eventual break should see weakness extend to 0.6588 ahead of our core objective at the lows from August and September 2020 at 0.6511/6488.”  “Resistance is seen at 0.6737/50 initially, then 0.6752/60, with 0.6806/19 ideally capping to keep the immediate risk lower. Above can see a recovery back to 0.6839/61, but with fresh sellers expected here again.”  

Manufacturing PMI in the UK declined to 56.9 in early January from 57.9 in December, IHS Markit reported on Monday. This print came in worse than the

UK Manufacturing and Services PMIs came in slightly weaker than expected in January.GBP/USD continues to edge lower with the initial reaction.Manufacturing PMI in the UK declined to 56.9 in early January from 57.9 in December, IHS Markit reported on Monday. This print came in worse than the market expectation of 57.9. Further details of the publication revealed that the business activity in the services sector expanded at a softer pace than it did in December with the Services PMI edging lower to 53.3 from 53.6.  Assessing the survey's findings, "a resilient rate of economic growth in the UK during January masks wide variations across different sectors," explained Chris Williamson, Chief Business Economist at IHS Markit. "Consumer-facing businesses have been hit hard by Omicron and manufacturers have reported a further worrying weakening of order book growth, but other business sectors have remained encouragingly robust."  Market reaction GBP/USD came under renewed bearish pressure on PMI figures and was last seen losing 0.17% on the day at 1.3529.

GBP/USD has started the new week under bearish pressure. The pair closes in on the key 1.3530 support, removal of which would allow further losses. Po

GBP/USD has started the new week under bearish pressure. The pair closes in on the key 1.3530 support, removal of which would allow further losses. Pound looks vulnerable  “On the downside, 1.3530 (Fibonacci 38.2% retracement of the one-month-old uptrend) aligns as the first support. In case this level turns into resistance, cable could target 1.3500 (psychological level) and 1.3460 (200-period SMA).”  “Strong resistance seems to have formed at 1.3600 (fibonacci 23.6% retracement, 100-period SMA). A daily close above that level could be taken as a bullish sign and open the door for a more decisive rebound toward 1.3640 (50-period SMA).”  

AUD/USD has broken its short-term uptrend from December to suggest the corrective recovery is over and broader downtrend is resuming. A break below th

AUD/USD has broken its short-term uptrend from December to suggest the corrective recovery is over and broader downtrend is resuming. A break below the January YTD low at 0.7129 would clear the way for a fall to 0.6992/91 – the late 2020 and 2021 lows, economists at Credit Suisse report. Short-term resistance moves to 0.7170 “Key now is the January YTD low at 0.7129, removal of which should reinforce our view to add momentum to the decline for a move back to 0.7089/82 and eventually a retest of medium-term support at .6992/91 – the late 2020 and 2021 lows.”  “Below 0.6992/91 should then open up an eventual move to the 50% retracement of the entire 2020/2021 uptrend at 0.6758, which remains our core medium-term objective.”  “Short-term resistance moves to 0.7170 with resistance at 0.7216/33 ideally now capping to keep the immediate risk lower. A break can clear the way for a move back to the high of last week and downtrend at 0.7277/84, but with fresh sellers expected here.”  

United Kingdom Markit Manufacturing PMI registered at 56.9, below expectations (57.9) in January

United Kingdom Markit Services PMI came in at 53.3 below forecasts (55) in January

EUR/USD trades on the defensive and leaves behind Friday’s decent gains on the back of the renewed buying interest around the US dollar. EUR/USD remai

EUR/USD fails to advance further north of 1.1350 on Monday.Germany Flash Manufacturing PMI surprises to the upside in January.Advanced January PMIs also due across the pond later in the NA session.EUR/USD trades on the defensive and leaves behind Friday’s decent gains on the back of the renewed buying interest around the US dollar. EUR/USD remains supported by 1.1300 so far EUR/USD maintains the consolidation well and sound at the beginning of the week, always underpinned by the 1.1300 neighbourhood amidst the better note in the greenback and despite another downtick in yields. Indeed, the pair continues to look to dollar dynamics for price direction in the very near term, when the start of the Fed’s tightening cycle and the escalating effervescence in the Russia-Ukraine front keep dictating the sentiment among market participants. In the domestic tap, Germany Flash Manufacturing PMI is expected to have improved to 60.5 for the current month, while the Services PMI is also seen bettering to 52.2. In the broader Euroland, the Manufacturing PMI came in at 59.0 and the Services gauge is predicted at 51.2. Later in the NA docket, Markit will also publish its manufacturing and services gauges along with the Chicago Fed National Activity Index. What to look for around EUR EUR/USD seems to have met a tough barrier in the area below 1.1500 in mid-January, sparking a corrective downside soon afterwards in tandem with the strong recovery in the greenback. Moving forward, there is not much optimism around the pair, particularly in light of the Fed’s imminent start of the tightening cycle vs. the accommodative-for-longer stance in the ECB, despite the high inflation in the euro area is not giving any things of cooling down for the time being. On another front, the unabated advance of the coronavirus pandemic remains as the exclusive factor to look at when it comes to economic growth prospects and investors’ morale in the region.Key events in the euro area this week: Flash PMIs in Germany, France and EMU (Monday) – Germany IFO Business Climate (Tuesday) – Germany GfK Consumer Confidence (Thursday) – Germany Advanced Q4 GDP, EMU Final Consumer Confidence.Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. ECB stance/potential reaction to the persistent elevated inflation in the region. ECB tapering speculation/rate path. Italy elects President of the Republic in late January. Presidential elections in France in April. EUR/USD levels to watch So far, spot is losing 0.16% at 1.1325 and faces the next up barrier at 1.1372 (10-day SMA) seconded 1.1482 (2022 high Jan.14) and finally 1.1505 (200-week SMA). On the other hand, a break below 1.1300 (weekly low Jan.21) would target 1.1272 (2022 low Jan.4) en route to 1.1221 (monthly low Dec.15 2021).

The economic activity in Germany's manufacturing sector grew at its strongest pace in five months with Markit Manufacturing PMI jumping to 60.5 from 5

German Manufacturing and Services PMIs came in above expectations in January.EUR/USD continues to fluctuate in a relatively tight daily range.  The economic activity in Germany's manufacturing sector grew at its strongest pace in five months with Markit Manufacturing PMI jumping to 60.5 from 57.4 in December. This print surpassed the market expectation of 57. Additionally, Markit Services PMI advanced to 52.2 from 48.7 in December, showing that Germany's service sector moved back into the expansion territory. Commenting on the data, "January’s flash PMI numbers came in comfortably above consensus to show a surprisingly resilient performance from the German economy at the start of the year," noted Phil Smith, Economics Associate Director at IHS Markit. "Still, rising costs remain a concern for businesses, with the survey data showing that input prices are continuing to rise sharply and on multiple fronts." Market reaction The shared currency failed to capitalize on the upbeat PMI readings and the EUR/USD pair was last seen posting small daily losses at 1.1326.

The business activity in the eurozone's manufacturing sector expanded at a more robust pace in early January than it did in December with IHS Markit's

Markit Manufacturing PMI for eurozone rose slightly in January.Service sector lost growth momentum at the start of the new year.EUR/USD continues to trade in the negative territory, holds above 1.1300.The business activity in the eurozone's manufacturing sector expanded at a more robust pace in early January than it did in December with IHS Markit's Manufacturing PMI rising to 59 from 58. This print surpassed the market expectation of 57.5. On a negative note, Services PMI fell to 51.2 from 53.1 in December, compared to analysts' estimate of 52.2. Finally, Composite PMI edged lower to 52.4 from 53.3. Commenting on the data, "while the Omicron wave has dented prospects in the service sector, the impact so far looks less severe than prior waves," noted Chris Williamson, Chief Business Economist at IHS Markit. "Prices for goods and services are rising at a joint-record rate as increasing wages and energy costs offset the easing in producers’ raw material prices, dashing hopes of any imminent cooling of inflationary pressures." Market reaction The EUR/USD pair stays under modest bearish pressure following these data and was last seen losing 0.12% on the day at 1.1327.

European Monetary Union Markit Manufacturing PMI came in at 59, above expectations (57.5) in January

European Monetary Union Markit Services PMI below expectations (52.2) in January: Actual (51.2)

European Monetary Union Markit PMI Composite came in at 52.4 below forecasts (52.6) in January

According to FX Strategists at UOB Group, the prospects for USD/CNH to break below 6.3300 seems to have increased as of late. Key Quotes 24-hour view:

According to FX Strategists at UOB Group, the prospects for USD/CNH to break below 6.3300 seems to have increased as of late. Key Quotes 24-hour view: “Last Friday, we highlighted that USD ‘could edge higher but any advance is unlikely to break 6.3610’. Instead of edging higher, USD dipped to a low of 6.3380. Downward momentum has improved somewhat and the risk is tilted to the downside. That said, any weakness is expected to encounter solid support at 6.3300. Resistance is at 6.3445 followed by 6.3520.” Next 1-3 weeks: “In our latest narrative from Monday (17 Jan, spot at 6.3610), we highlighted that odds for further USD weakness are not high. We added, only a breach of 6.3710 (‘strong resistance’ level) would indicate that the downside risk has dissipated. On Friday, USD dropped to a low of 6.3380 and downward momentum is beginning to perk up and the chance for USD to break the major support at 6.3300 has increased.  Looking ahead, the next support is at 6.3180. On the upside, the ‘strong resistance’ level has moved lower to 6.3650 from 6.3710.”

The USD/CHF pair surrendered a major part of its intraday gains and was last seen trading just a few pips above the daily low, around the 0.9120 regio

USD/CHF struggled to preserve its modest intraday gains amid the risk-off mood.Modest USD strength extended some support to the major and helped limit losses.Investors might also prefer to wait on the sidelines heading into the FOMC meeting.The USD/CHF pair surrendered a major part of its intraday gains and was last seen trading just a few pips above the daily low, around the 0.9120 region. Having defended the 0.9100 mark, the USD/CHF pair gained some positive traction on the first day of a new week amid the emergence of some US dollar buying. Firming expectations for an eventual Fed lift-off in March turned out to be a key factor that underpinned the greenback and extended some support to the major. That said, an intraday pullback in the US Treasury bond yields held back the USD bulls from placing aggressive bets. On the other hand, a generally weaker risk tone benefitted the safe-haven Swiss franc. This, in turn, kept a lid on any meaningful upside for the USD/CHF pair, rather prompted fresh selling at higher levels. The markets remain concerned about the earnings outlook for companies amid the prospects for a faster policy tightening by the Fed. This, along with escalating geopolitical tensions between Russia and Ukraine as well as in the Middle East, further weighed on investors' sentiment and led to a further decline in the equity markets. That said, the downside is likely to remain limited as investors might prefer to wait on the sidelines ahead of the key central bank event risk. The Fed is scheduled to announce the outcome of a two-day monetary policy meeting on Wednesday. This will influence the USD and provide a fresh directional impetus to the USD/CHF pair. In the meantime, traders on Monday will take cues from the US economic docket – featuring the release of the flash PMI prints (Manufacturing and Services). This, along with the US bond yields, will drive the USD demand. Apart from this, the broader market risk sentiment might further produce some short-term opportunities around the USD/CHF pair. Technical levels to watch  

The greenback, in terms of the US Dollar Index (DXY), manages to reverse Friday’s pullback and resumes the upside at the beginning of the new trading

The index kicks in the week on an optimistic mood.US yields extend the corrective downside on Monday.Flash Markit’s PMIs next of note in the US calendar.The greenback, in terms of the US Dollar Index (DXY), manages to reverse Friday’s pullback and resumes the upside at the beginning of the new trading week. US Dollar Index focuses on yields, data, geopolitics The index extends the consolidative theme in the upper end of the consolidative phase for yet another session on Monday, always tracking the price action in the US money markets, geopolitics and the broad risk appetite trends. The greenback remains vigilant, albeit so far apathetic when it comes to reaction in prices, on the developments from the US-Russia-Ukraine conflict, where the latest US-Russia talks yielded no progress on this front. In the meantime, US yields extend the move lower after hitting fresh tops earlier in the past week amidst some profit taking mood and the persistent adjustment from investors to the prospects of a sooner-than-anticipated Fed’s lift-off. In the US data space, the Chicago Fed National Activity Index is due in the first turn seconded by the more relevant advanced PMIs measured by Markit for the month of January. What to look for around USD Despite Friday’s pullback, the index managed to close the week in a positive note well north of the 95.00 barrier. In spite of consensus already priced in a probable move on rates by the Fed at the March meeting, the constructive outlook for the greenback is expected to remain unchanged into this week and ahead of the FOMC event on Wednesday. Looking at the broader scenario, higher US yields, persistent elevated inflation, supportive Fedspeak and the solid pace of the US economic recovery should continue to underpin the buck in the months to come.Key events in the US this week: Chicago Fed National Activity Index, Flash PMIs (Monday) – House Price Index, CB Consumer Confidence (Tuesday) – Trade Balance, New Home Sales, FOMC Meeting, Powell’s Press Conference (Wednesday) – Durable Goods Orders, Advanced Q4 GDP, Initial Claims, Pending Home Sales (Thursday) – PCE, Personal Income/Spending, Final Consumer Sentiment (Friday).Eminent issues on the back boiler: Fed’s rate path this year. US-China trade conflict under the Biden administration. Debt ceiling issue. Escalating geopolitical effervescence vs. Russia and China. US Dollar Index relevant levels Now, the index is losing 0.08% at 95.64 and a break above 95.83 (weekly high Jan.18) would open the door to 96.46 (2022 high Jan.4) and finally 96.93 (2021 high Nov.24). On the flip side, the next down barrier emerges at 94.75 (100-day SMA) followed by 94.62 (2022 low Jan.14) and then 93.27 (monthly low Oct.28 2021).

Germany Markit Services PMI registered at 52.2 above expectations (48) in January

Germany Markit Manufacturing PMI came in at 60.5, above forecasts (57) in January

Germany Markit PMI Composite came in at 54.3, above forecasts (49.2) in January

Euro stays on the back foot to start the week. Economists at OCBC Bank think the EUR/USD pair is likely to break below the 1.1300 level. Geopolitical

Euro stays on the back foot to start the week. Economists at OCBC Bank think the EUR/USD pair is likely to break below the 1.1300 level. Geopolitical tensions with Russia to have important implications for the euro “At this juncture, risk-reward likely favours a downside breach of 1.1300, rather than moving higher towards 1.1500.” “Outright conflict over Ukraine may be a strong directional impetus.”  

France Markit Manufacturing PMI in line with forecasts (55.5) in January

France Markit PMI Composite below forecasts (54.5) in January: Actual (52.7)

France Markit Services PMI below expectations (55.3) in January: Actual (53.1)

The NZD/USD pair languished near monthly low through the early European session, with bears still awaiting a sustained break below the 0.6700 round-fi

NZD/USD was seen consolidating its recent slide back closer to the 2021 swing low.Rebounding US bond yields helped revive the USD demand and acted as a headwind.The downside seems limited as investors seem reluctant ahead of the FOMC meeting.The NZD/USD pair languished near monthly low through the early European session, with bears still awaiting a sustained break below the 0.6700 round-figure mark. The pair, so far, has struggled to gain any meaningful traction and now seems to have entered a bearish consolidation phase near the 2021 low touched in December. The US dollar was back in demand on the first day of a new week amid rebounding US Treasury bond yields and the prospects for a faster policy tightening by the Fed. This, in turn, was seen as a key factor that acted as a headwind for the NZD/USD pair. Investors seem convinced that the Fed would begin raising interest rates in March to combat high inflation and have been pricing in a total of four hikes in 2022. This has been fueling concerns that rising borrowing costs could dent the earnings outlook for companies. This, along with escalating geopolitical tensions, weighed on investors' sentiment and further capped the upside for the perceived riskier kiwi. The downside, however, remains cushioned, at least for the time being, as investors seemed reluctant to place aggressive bets ahead of the key central bank event risk. The Fed is scheduled to announce the outcome of a two-day policy meeting during the US session on Wednesday. This will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for the NZD/USD pair. In the meantime, traders on Monday will take cues from the release of the flash US PMI prints, due later during the early North American session. Apart from this, the US bond yields and the broader market risk sentiment will drive the USD demand. This, in turn, should allow traders to grab some short-term opportunities around the NZD/USD pair. Technical levels to watch  

New Zealand will release Consumer Price Index (CPI) data on Wednesday. Strong figures could lift the kiwi, which is expected to climb back to the 0.68

New Zealand will release Consumer Price Index (CPI) data on Wednesday. Strong figures could lift the kiwi, which is expected to climb back to the 0.6800 level, according to economists at ING.  Another big jump in inflation “The market’s tightening expectations for the Reserve Bank of New Zealand are already quite aggressive (a 25bp hike in mid-February and at least five more in 2022), but we think that a strong CPI read may fuel speculation that the Bank will go for 50bp in February, which should be translated into a stronger NZD.” “We think NZD/USD can make its way back to the 0.6800 mark, although that clearly relies on a stabilisation in the overall risk environment.”  

Gold attracted some dip-buying on the first day of a new week and reversed a major part of the previous week's pullback from a two-month high. Economi

Gold attracted some dip-buying on the first day of a new week and reversed a major part of the previous week's pullback from a two-month high. Economists at TD Securities expect the yellow metal to consolidate around the $1,830 mark this week. Market continues to pencil in additional Fed rate hikes “Money managers reduced net length in their gold holdings. As the market continues to pencil in additional Fed rate hikes, with a full 4 hikes priced for 2022 and a near-certain March rate hike priced, precious metals appear vulnerable to a consolidation following this substantial shake-up in position.” “We expect gold to hold near current $1,830/oz level into next week, with positioning likely moving toward the longs.”  

Inflation will actually be high in the United States and the eurozone, probably until the summer of 2022, but this is not necessarily negative for equ

Inflation will actually be high in the United States and the eurozone, probably until the summer of 2022, but this is not necessarily negative for equities, on the contrary. Economists at Natixis believe that in the current configuration, inflation will drive share prices up and not down.  Inflation is not necessarily bad for equities “If nominal wages react less than proportionately to inflation, a rise in producer prices will push down real wages and drive up earnings. If nominal interest rates rise less than inflation, inflation will push down real interest rates.” “If inflation leads to higher earnings and lower real interest rates, it is conducive to a rise in stock market indices. So we should stop writing that inflation threatens equity markets.”  

Economists at ING expect CAD outperformance as the Bank of Canada (BoC) hikes on Wednesday. The USD/CAD pair could slip to the 1.2450/00 neighborhood.

Economists at ING expect CAD outperformance as the Bank of Canada (BoC) hikes on Wednesday. The USD/CAD pair could slip to the 1.2450/00 neighborhood. A 25 bps rate hike by the BoC “The current restrictions in Ontario – which are however due to be eased at the end of next week – make it a close call, but we think the BoC will hike interest rates by 25 basis points on Wednesday.” “The market is currently attaching a 70% implied probability of a hike, which leaves some room for the CAD to appreciate after the announcement, especially as that should reinforce the view that the BoC will lead the Fed tightening by 1-2 months and by 25-50 basis points.”  “We expect a drop in USD/CAD to the 1.2400/1.2450 area if our expectation for a hike prove correct.”  

Another tick higher in inflation, but the Reserve Bank of Australia (RBA) tightening is still far. Analysts at ING believe that the AUD/USD pair could

Another tick higher in inflation, but the Reserve Bank of Australia (RBA) tightening is still far. Analysts at ING believe that the AUD/USD pair could build some support at 0.72. Tick-up in inflation to provide some help “The 4Q inflation report published tonight in Australia should see a mild acceleration in the headline rate from the latest 3.0% read. This could keep hawkish expectations on the Reserve Bank of Australia alive and help build a floor under the Aussie dollar.” “The current pricing for RBA tightening seems unrealistic, which poses downside risks further down the road for AUD. Until some sort of reality check from the RBA forces some re-pricing of rate expectations, the very oversold AUD could find some support in periods of stable risk sentiment, although the exposure to China and its zero-covid policy should continue to put a curb on any sustained rally.” “This week, we could see AUD/USD consolidate in the 0.7200/0.7250 area.”  

The USD/CAD pair reversed an intraday dip and climbed to a nearly two-week high, around the 1.2585 region during the early European session. The pair

Rebounding US bond yields revive the USD demand and extended some support to USD/CAD.Bullish crude oil prices underpinned the loonie and capped any meaningful gains for the pair.Investors seemed reluctant to place aggressive bets ahead of the Fed and BoC on Wednesday.The USD/CAD pair reversed an intraday dip and climbed to a nearly two-week high, around the 1.2585 region during the early European session. The pair attracted some dip-buying near the 1.2555 area on Monday and is now be looking to build on the previous session's positive move amid modest US dollar strength. The prospects for a faster policy tightening by the Fed, along with escalating geopolitical tensions revive the USD demand and acted as a tailwind for the USD/CAD pair. Investors seem convinced that the Fed would begin raising interest rates in March to combat high inflation and have been pricing in a total of four hikes in 2022. Apart from this, concerns about a possible Russian attack on Ukrain further benefitted the greenback's relative safe-haven status and extended some support to the USD/CAD pair. Meanwhile, crude oil prices remained well supported by worries about supply disruption amid rising tensions in Eastern Europe and the Middle East. Apart from this, speculations that the Bank of Canada could increase rates as early as this week further underpinned the commodity-linked loonie. This, in turn, capped the upside for the USD/CAD pair. Investors might also prefer to wait on the sidelines ahead of the key central bank event risks – the BoC policy decision and the outcome of a two-day FOMC meeting on Wednesday. The fundamental backdrop makes it prudent to wait for a strong follow-through buying before confirming that the USD/CAD pair has formed a strong base near mid-1.2400s. In the meantime, traders on Monday will take cues from the release of the flash US PMI prints, due later during the early North American session. Apart from this, the US bond yields and the broader market risk sentiment will influence the USD. This, along with oil price dynamics, should produce some short-term opportunities around the USD/CAD pair. Technical levels to watch  

Economists at ING think some dollar softness after the FOMC can help EUR/USD climb back to the 1.1415/20 area this week. Russia-Ukraine tensions in fo

Economists at ING think some dollar softness after the FOMC can help EUR/USD climb back to the 1.1415/20 area this week. Russia-Ukraine tensions in focus “A slightly softer dollar environment around the Fed could see EUR/USD trade up to the 1.1415/20 area, though we do not expect gains to last.” “The euro seems to be pricing in little to no geopolitical risk, so the downside risks for the common currency are non-negligible if tensions with Russia flare up.”  

European Central Bank (ECB) Governing Council member Francois Villeroy de Galhau reiterated on Monday that the ECB stands ready to do what it takes to

European Central Bank (ECB) Governing Council member Francois Villeroy de Galhau reiterated on Monday that the ECB stands ready to do what it takes to get inflation back down below 2%, as reported by Reuters. "We need to progressively normalise the monetary policy," Villeroy further added. Market reaction These comments don't seem to be having a noticeable impact on the shared currency's performance against its major rivals. As of writing, the EUR/USD pair was trading at 1.1328, where it was down 0.12% on a daily basis. 

USD/JPY could extend the downtrend to the 113.00 neighbourhood if 113.40 is cleared in the near term, noted FX Strategists at UOB Group. Key Quotes 24

USD/JPY could extend the downtrend to the 113.00 neighbourhood if 113.40 is cleared in the near term, noted FX Strategists at UOB Group. Key Quotes 24-hour view: “Last Friday, we held the view that USD ‘is likely to break 113.70 but the next support at 113.40 is unlikely to come under threat’. Our view was not wrong as USD dropped to 113.68 before recovering. Downward pressure appears to have eased and USD is unlikely to weaken further. For today, USD is more likely to trade sideways between 113.60 and 114.20.” Next 1-3 weeks: “There is not much to add to our update from last Friday (21 Jan, spot at 113.90). As highlighted, shorter-term downward momentum has improved but USD has to break 113.40 before a decline to 113.00 is likely. The chance for USD to break 113.40 is not high but it would increase further as long as USD does not move above 114.45 (no change in ‘strong resistance level’ from last Friday).”

Gold stays in consolidation mode around $1,840 after rallying to its highest level in two months near $1,850 on Thursday. In the opinion of FXStreet’s

Gold stays in consolidation mode around $1,840 after rallying to its highest level in two months near $1,850 on Thursday. In the opinion of FXStreet’s Haresh Menghani, XAU/USD bulls are likely to stay on the sidelines. The $1,830-$1,828 zone to act as immediate support “Gold showed some resilience below the $1,830 resistance-turned-support and the subsequent strength favours bullish traders. That said, any further move up is likely to confront resistance near last week’s swing high, around the $1,848 region. The next relevant hurdle is pegged near a downward sloping trend-line extending from June 2021 swing high, currently around the $1,860 region. A convincing breakthrough would be seen as a fresh trigger for bullish traders and pave the way for an extension of the recent move up witnessed over the past one month or so.” “On the flip side, the $1,830-$1,828 zone might continue to act as immediate support, which if broken might prompt some technical selling and accelerate the fall towards the $1,812 horizontal zone. This is followed by the very important 200-day SMA, currently around the $1,805 region, ahead of the $1,800 round figure. Some follow-through selling below an upward sloping trend-line support, extending from the August 2021 swing low, currently around the $1,794 region, will negate any positive bias and turn gold vulnerable.”  

Silver remains on the back foot around $24.10, down 0.50% intraday heading into Monday’s European session. In doing so, the bright metal extends Thurs

Silver extends pullback from six-week-old resistance line, refreshes intraday low.Bearish MACD signals favor declines towards 61.8% Fibonacci retracement.Two-day-old resistance line guards immediate upside.Silver remains on the back foot around $24.10, down 0.50% intraday heading into Monday’s European session. In doing so, the bright metal extends Thursday’s U-turn from an upward sloping resistance line from December 13. The pullback moves gain support from the bearish MACD signals to direct silver bears towards the 61.8% Fibonacci retracement (Fibo.) level near $23.90. However, the commodity’s further declines will be challenged by the 50-SMA surrounding $23.55. Alternatively, fresh recovery needs to cross the immediate resistance line around $24.30 to recall silver buyers. Even so, a bit broader resistance line near $24.80 and multiple levels marked during mid-November near $25.00 will challenge the XAG/USD buyers afterward. Silver: Four-hour chart Trend: Further declines expected  

The USD/JPY pair maintained its bid tone heading into the European session, albeit has retreated a few pips from the daily high and was last seen trad

The risk-on impulse undermined the safe-haven JPY and assisted USD/JPY to regain traction.Rebounding US bond yields revived the USD demand and remained supportive of the uptick.Escalating geopolitical tensions held back bulls from placing aggressive bets and capped gains.The USD/JPY pair maintained its bid tone heading into the European session, albeit has retreated a few pips from the daily high and was last seen trading around the 113.75 region. A combination of supporting factors assisted the USD/JPY pair to attract some buying on the first day of a new week and snap three consecutive days of the losing streak. A generally positive tone around the equity markets undermined the safe-haven Japanese yen and acted as a tailwind for the major. Bulls further took cues from a goodish rebound in the US Treasury bond yields, which helped revive the US dollar demand. Apart from this, the greenback was further underpinned by the growing market acceptance that the Fed will tighten its monetary policy at a faster pace than anticipated. Investors seem convinced that the Fed would begin raising interest rates in March to combat high inflation and have been pricing in a total of four hikes in 2022. Hence, the focus will remain glued to the outcome of a two-day FOMC meeting starting Tuesday. Heading into the key event risk, escalating geopolitical tensions between Russia and Ukraine capped the upside for the USD/JPY pair. In fact, the US State Department ordered the families of all American staff at the US Embassy in Ukraine to leave the country amid concerns about a possible Russian attack. Moreover, reports suggested that President Joe Biden was considering sending US troops to NATO allies in Europe along with warships and aircraft. The mixed fundamental backdrop warrants some caution before placing aggressive bullish bets around the USD/JPY pair and confirming that the recent pullback from a multi-year high has run its course. Market participants now look forward to the flash US PMI prints (Manufacturing and Services) for a fresh impetus. This, along with the US bond yields and the broader market risk sentiment, should produce some trading opportunities around the USD/JPY pair. Technical levels to watch  

Asian equities fail to justify China’s aggressive easing as most markets print losses during early Monday. The reason could be linked to the pre-Fed c

Asian equities drift lower even as PBOC announced another rate cut.Firmer yields, upbeat US stock futures trouble investors amid softer start to the key week.Fears of Russian invasion of Ukraine, wider quasi emergency in Japan also weigh on the sentiment.Asian equities fail to justify China’s aggressive easing as most markets print losses during early Monday. The reason could be linked to the pre-Fed caution and challenges to the risk appetite emanating from Russia-Ukraine tussles. That said, the MSCI’s index of Asia-Pacific stocks ex-Japan drops 0.80% whereas Japan’s Nikkei 225 recovers early Asian losses, up 0.20% intraday heading into the European session. Policymakers in Japan brace for taking more prefectures under quasi-emergency status as covid infections jump to record high during weekends. Even so, a jump in Japan’s Jibun Bank Manufacturing PMI to a four-year high seems to underpin the latest optimism. Elsewhere, Australia’s Commonwealth Bank PMIs came in mixed and the virus infections also seem to ease of late. Even so, Australia’s ASX 200 drops 0.50% at the latest whereas New Zealand’s NZX 50 drops over 1.0% as the Pacific nation moves ‘red’ alert level for activity restrictions. On a different page, the People’s Bank of China (PBOC) announced 10 basis points (bps) of a rate cut, the second in nearly a week, to defend the world’s second-largest economy from covid and financial risks. However, markets in China and Hong Kong trade mixed with Hang Seng down 1.0%. Further, shares in Indonesia, South Korea and Indian print losses amid firmer US Treasury yields. That said, the US 10-year Treasury yields rose two bps to 1.767% by the press time while stock futures in the US and Europe begin the crucial week on a positive. Moving on, preliminary PMIs for January could entertain intraday traders but major attention will be given to Wednesday’s Federal Open Market Committee (FOMC). Read: Fed Preview: Three ways Powell could out-dove markets, dealing a blow to the dollar

Open interest in natural gas futures markets shrank for the third consecutive session on Friday, this time by around 2.3K contracts, according to adva

Open interest in natural gas futures markets shrank for the third consecutive session on Friday, this time by around 2.3K contracts, according to advanced prints from CME Group. Volume reversed two daily builds in a row and went down by around 145.5K contracts. Natural Gas could retest $3.60/MMBtu Friday’s decent gains in prices of natural gas was supported by short covering, as noted by declining open interest and volume. Against this, further gains appear not favoured in the very near term, with the door still open to a visit to the $3.60 region per MMBtu, or December lows.

Further downside could force AUD/USD to breach the 0.7140 level in the next weeks, suggested FX Strategists at UOB Group. Key Quotes 24-hour view: “We

Further downside could force AUD/USD to breach the 0.7140 level in the next weeks, suggested FX Strategists at UOB Group. Key Quotes 24-hour view: “We highlighted last Friday that the ‘the pullback in AUD has room to extend but any weakness is expected to encounter solid support at 0.7170’. Our view was not wrong as AUD dropped to a low of 0.7172. While oversold, the weakness in AUD has room to extend further even though a break of the major support at 0.7140 appears unlikely. Resistance is at 0.7200 followed by 0.7215.” Next 1-3 weeks: “Last Monday (17 Jan, spot at 0.7210), we highlighted that the outlook for AUD is mixed and it is likely to trade within a range of 0.7140/0.7285. After a week, downward momentum is showing tentative signs of building as AUD dropped to 0.7172 last Friday. From here, the risk of AUD breaking 0.7140 has increased. On the upside, a breach 0.7240 would indicate that the downside risk has dissipated. Looking ahead, the next support below 0.7140 is at 0.7105.”

Considering preliminary readings from CME Group for crude oil futures markets, traders trimmed their open interest positions by around 2.5K contracts

Considering preliminary readings from CME Group for crude oil futures markets, traders trimmed their open interest positions by around 2.5K contracts at the end of last week, partially reversing the previous build. Volume followed suit and rose by around 184.5K contracts after two daily builds in a row. WTI stays focused on tops near $88.00 The barrel of WTI closed Friday’s session with modest gains after dropping to multi-day lows. The price action was in tandem with diminishing open interest and volume, exposing the resumption of the downtrend in the very near term, while recent 2022 highs near the $88.00 mark per barrel remains the immediate magnet for oil bulls.

Here is what you need to know on Monday, January 24: Wall Street's main indexes suffered heavy losses on Friday and the benchmark 10-year US Treasury

Here is what you need to know on Monday, January 24: Wall Street's main indexes suffered heavy losses on Friday and the benchmark 10-year US Treasury bond yield fell sharply ahead of the weekend, making it difficult for the dollar to outperform its rivals. Ahead of IHS Markit's preliminary January Manufacturing and Services PMI surveys for Germany, the euro area, the UK and the US, the greenback is holding its ground with the US Dollar Index posting modest gains above 95.70. The Federal Reserve Bank of Chicago's National Activity Index and the Federal Reserve Bank of Dallas' Manufacturing Business SUrvey will also be featured in the US economic docket. At the start of the week, the market mood seems to be improving. During the Asian trading hours, the People's Bank of China announced that it lowered the rate on the 14-day reverse report by 10 basis points. Reflecting the risk-positive environment, the US stocks futures indexes are up between 0.65% and 0.85% in the early European morning. Last week, the S&P 500 fell 5.8% and registered its largest one-week drop since the beginning of the coronavirus pandemic.Week Ahead on Wall Street (SPY) (QQQ): Big earnings week ahead and it is badly needed.Following the sharp decline witnessed on Tuesday, EUR/USD moved up and down in a relatively tight range for the rest of the week and extends its sideways grind on Monday. The pair was last seen posting small daily losses below 1.1330. While speaking at the Davos World Economic Forum on Friday, European Central Bank President Christine Lagarde noted that they are not seeing signs of wages being bid up and noted that the euro area is not likely to face the same inflation as the US.GBP/USD broke below the 1.3600 support area on Friday and snapped a four-week winning streak. The pair stays on the back foot slightly below 1.3550 to start the new week. Several news outlets report that civil servant Sue Gray is expected to release the findings on the "Partygate" investigations later in the week.USD/JPY rose toward 114.00 during the Asian trading hours on Monday but seems to be having a tough time gathering momentum. In case the 10-year US T-bond yield gains traction, the pair could look to extend its rebound in the short term.Gold stays in consolidation mode around $1,840 after rallying to its highest level in two months near $1,850 on Thursday.Bitcoin plunged to its weakest level since July at $34,000 late Friday and failed to make a meaningful recovery over the weekend. BTC was last seen losing more than 3% on a daily basis at $35,000. Ethereum lost nearly 25% last week and continues to edge lower while trading below $2,500.

In opinion of FX Strategists at UOB Group, GBP/USD could still grind lower to the 1.3500 region in the near term. Key Quotes 24-hour view: “We expecte

In opinion of FX Strategists at UOB Group, GBP/USD could still grind lower to the 1.3500 region in the near term. Key Quotes 24-hour view: “We expected GBP to weaken last Friday but we were of the view that ‘any weakness is unlikely to break the major support at 1.3560’. The subsequent weakness exceeded our expectations as GBP fell to 1.3546 before settling on a soft note at 1.3551 (-0.31%). Downward momentum has improved and further weakness appears likely. That said, oversold conditions suggest that 1.3500 is likely out of reach for today (there is another support at 1.3520). On the upside, a breach of 1.3590 (minor resistance is at 1.3570) would indicate that the current weakness has stabilized.” Next 1-3 weeks: “Last Thursday (20 Jan, spot at 1.3615), we highlighted that while the underlying tone has softened, we continue to expect GBP to trade between 1.3560 and 1.3725. We added, ‘looking ahead, a clear break 1.3540 would indicate that GBP is ready to head lower in a sustained manner’. GBP dropped to 1.3546 on Friday and while 1.3540 is not breached, improved shorter-term downward momentum suggests that GBP is likely to trade with a downward bias towards 1.3500. The downward bias is intact as long as GBP does not move above the ‘strong resistance’ level, currently at 1.3610.”

CME Group’s flash data for gold futures markets noted open interest shrank by around 3.9K contracts on Friday after four consecutive daily builds. In

CME Group’s flash data for gold futures markets noted open interest shrank by around 3.9K contracts on Friday after four consecutive daily builds. In the same line, volume clinched the third drop in a row, now by around 25.5K contracts. Gold now targets $1,850/oz Friday’s downtick in prices of gold was on the back of shrinking open interest and volume, leaving the door open for a rebound in the short-term horizon with the immediate target at recent peaks in the $1,850 area per ounce troy (January 20).

AUD/USD takes offers to refresh daily low near 0.7165, down 0.15% intraday, as traders brace for Monday’s European session. The pair’s latest declines

AUD/USD refreshes two-week low, extends pullback from 100-DMA.Downbeat MACD signals, RSI line favor sellers eyeing 2021 bottom.Seven-week-old previous support acts as immediate hurdle, 0.7080 can offer nearby support.AUD/USD takes offers to refresh daily low near 0.7165, down 0.15% intraday, as traders brace for Monday’s European session. The pair’s latest declines could be linked to a downside break of the five-week-long support line, as well as bearish MACD signals and descending RSI line. It’s worth noting that the Aussie pair took a U-turn from the 100-DMA, around 0.7275 at the latest, on Thursday and closed below an upward sloping trend line from early December to favor sellers at Friday’s closing. That said, the quote’s latest declines eye the 0.7100 threshold and 0.7080 support levels ahead of directing AUD/USD sellers towards 2021 bottom surrounding 0.6990. On the contrary, recovery moves may initially aim for the support-turned-resistance line from December 03, near 0.7195. Also acting as a nearby resistance is the 0.7200 round figure. Should the quote rises past 0.7200, it becomes capable of challenging the 100-DMA level near 0.7275. However, the previous support line from August and a descending trend line from May, respectively around 0.7350 and 0.7400, will challenge the further AUD/USD pair’s upside past the 100-DMA. It’s worth noting that the 200-DMA level near 0.7415 acts as an extra filter to the north. AUD/USD: Daily chart Trend: Further weakness expected  

FX Strategists at UOB Group noted EUR/USD risks a potential move lower with support at 1.1285 in the next weeks. Key Quotes 24-hour view: “We highligh

FX Strategists at UOB Group noted EUR/USD risks a potential move lower with support at 1.1285 in the next weeks. Key Quotes 24-hour view: “We highlighted last Friday that EUR ‘could edge lower but a sustained drop below the major support at 1.1285 is unlikely’. Our expectations did not materialize as EUR dipped to 1.1299 before rebounding. Downward pressure has eased and EUR is likely to consolidate and trade between 1.1310 and 1.1360 for today.” Next 1-3 weeks: “Our latest narrative from last Thursday (20 Jan, spot at 1.1340) still stands. As highlighted, there is a slight downward bias in EUR but any weakness is likely limited to a test of 1.1285. The downward bias is intact as long as EUR does not move above 1.1385 (no change in ‘strong resistance’ level from last Friday). Looking ahead, if there is a clear break of 1.1285, the next support level to watch is at 1.1240.”

“The economies in the six-member Gulf Cooperation Council will grow at their fastest pace in several years,” per the latest Reuters poll. The survey r

“The economies in the six-member Gulf Cooperation Council will grow at their fastest pace in several years,” per the latest Reuters poll. The survey results also mentioned, “Nine of 10 economists who answered an additional question said a decline in oil prices and new coronavirus variants were the biggest threats to GCC economic growth this year.” Key quotes Saudi Arabia was predicted to top the list with growth of 5.7%, followed by Kuwait and UAE with 5.3% and 4.8% respectively. Economic growth in Qatar, Oman and Bahrain was expected to average between 3%-4% for 2022. If realised, that would be the best these countries have witnessed in several years. Eight of ten respondents said risks to their growth forecasts were skewed more to the downside. Oil prices remain firmer… The hawkish outlook for energy prices joins the recent geopolitical concerns surrounding Russia and Ukraine to also underpin WTI crude oil prices to gain over 1.0% by the press time of the pre-European session on Monday. Read: WTI Price Analysis: Extends bounce off 200-HMA towards $86.00 hurdle

Gold (XAU/USD) begins Fed week on a firmer not around $1,840, extending the previous two-week uptrend. The precious metal’s latest run-up could be lin

Gold reverses Thursday’s pullback from yearly resistance line.Bulls cheer firmer stock futures but yields test further upside ahead of the key FOMC.Russia-Ukraine tussles, Omicron headlines add to the risk catalysts, US Q4 Advances GDP, PCE Inflation eyed as well. Gold slides and rebounds in 2022Gold (XAU/USD) begins Fed week on a firmer not around $1,840, extending the previous two-week uptrend. The precious metal’s latest run-up could be linked to the market’s rush towards risk-safety ahead of the key weekly event, namely Wednesday’s Federal Open Market Committee (FOMC) meeting. The risk-off mood could also be linked to the mixed performance of the US Treasury bonds and mostly downbeat Wall Street. The yellow metal stepped back from the yearly resistance line on Thursday, also declined on Friday, as markets weighed hawkish Fed concerns while geopolitical tensions surrounding Russia and Ukraine escalated. The pullback moves failed to last long so far on Monday as stock futures It’s worth noting that the hawkish hopes from the Fed aren’t the only catalysts market players are bracing for this week as a slew of preliminary PMIs and GDP data also weigh on sentiment. Read: Gold, Chart of the Week: Bulls pining for $1,850+, could be just a Fed awayGold Price: Key levels to watchThe Technical Confluences Detector shows that the gold price is battling the key hurdle around $1,838 comprising a cluster of SMA 200 on 15-Minutes, Fibonacci 61.8% one-day and previous highs on 1H, as well as 4H. Given the metal’s ability to stay above multiple support zone surrounding $1,830, gold buyers are likely to keep the reins. Among the key, supports are the $1,832 level that encompasses Fibonacci 38.2% one-week, 23.6% Fibonacci on one-day and Bollinger Band Lower on 15-Minutes. Also acting as the key immediate support is the previous low on one-day surrounding $1,828, a break of which will set the tone for the metal’s further downside towards the $1,800 threshold. Alternatively, the upper band of Bollinger on one-day joins the previous daily high to carve out $1,844 as an immediate upside hurdle. However, major attention will be given to the $1,856 level including Pivot Point R1 on monthly and R3 on one-day. It should be noted that a one-year-old resistance line near $1,848 acts as an extra hurdle to the north.Here is how it looks on the toolAbout Technical Confluences Detector The TCD (Technical Confluences Detector) is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc.  If you are a short-term trader, you will find entry points for counter-trend strategies and hunt a few points at a time. If you are a medium-to-long-term trader, this tool will allow you to know in advance the price levels where a medium-to-long-term trend may stop and rest, where to unwind positions, or where to increase your position size.

Singapore Consumer Price Index (YoY) came in at 4, above forecasts (3.75) in December

EUR/USD extends the previous week’s downbeat performance towards a two-month-old support line, down 0.10% around 1.1330 ahead of Monday’s European ses

EUR/USD reverses Friday’s corrective pullback from two-week low.Yields consolidate the first negative weekly loss in five with eyes on Fed’s verdict, stock futures print mild gains.Russia-Ukraine fears, Omicron updates add to the watcher’s list, weigh on prices.Preliminary readings of January PMI, inflation data can act as buffers ahead of Wednesday’s FOMC.EUR/USD extends the previous week’s downbeat performance towards a two-month-old support line, down 0.10% around 1.1330 ahead of Monday’s European session. The major currency pair’s latest losses could be linked to the market’s risk-off mood ahead of the key weekly event, namely Wednesday’s Federal Open Market Committee (FOMC) meeting. Also weighing on the quote are the geopolitical concerns surrounding Russia and Ukraine, as well as fears of the South African covid variant namely Omicron. It’s worth noting that the expectations of the Fed’s March rate hike signals recently took clues from the latest comments from US President Joe Biden and International Monetary Fund Managing Director Kristalina Georgieva. Both these key authorities highlighted inflation fears and praised Fed’s push for tighter monetary policies. On the contrary, ECB Meeting Accounts failed to impress Euro bulls while ECB President Christine Lagarde said on Friday that geopolitics and weather factors are driving energy prices higher, but that the ECB is not seeing wages being bid up. Lagarde added that demand in Europe is not excessive and, as a result, we are unlikely to face the same inflation as the US.  Elsewhere, the US State Department and UK Deputy Prime Minister Dominic Raab both flashed warnings over Russia’s preparations for invading Ukraine, which in turn magnified geopolitical fears and drowned EUR/USD prices. Amid these plays, the US 10-year Treasury yields rose 3.6 basis points (bps) to 1.783%, snapping a three-day decline, as traders anticipate hawkish Fed verdict, amid firmer inflation, during this week’s key meeting. It should be observed that hopes of the US stimulus and receding virus numbers join the People’s Bank of China’s (PBOC) another rate to underpin mild optimism during the Asian session. Looking forward, January’s initial activity data will be closely watched for intraday direction. Given the already watered-down hopes from German and Eurozone PMIs, the EUR/USD prices are likely to remain pressured ahead of the US activity numbers. Should Markit figures for the US PMIs match upbeat expectations, inflation fears will have an additional role to weigh on the EUR/USD prices before the Fed’s verdict. Technical analysis In addition to the EUR/USD pair’s failures to cross the 20-DMA level of 1.1350, bearish MACD signals also suggest the bear’s firm determination to break an upward sloping trend line from late November, which has been defending buyers of late around 1.1300.  

GBP/USD struggles to keep corrective pullback from the 100-DMA, seesaws around 1.3550 heading into Monday’s London open. In doing so, the cable pair f

GBP/USD fades early Asian session bounce off two-week low.UK PM Johnson braces for tough week as Tories voice dislike over ‘Partygate’.British covid cases ease but death toll rise, Welsh ports see 30% reduction in traffic due to Brexit.UK/US preliminary PMIs for January will direct intraday moves, Fed is the key.GBP/USD struggles to keep corrective pullback from the 100-DMA, seesaws around 1.3550 heading into Monday’s London open. In doing so, the cable pair fails to justify the US dollar strength ahead of the key preliminary PMI numbers for January for the UK and the US. Other than the pre-PMI cautious, the pair’s indecision could also be linked to the market’s fears of hawkish Fed during Wednesday’s Federal Open Market Committee (FOMC) meeting. Additionally, UK PM Boris Johnson is in a political grind amid investigations over holding a booze party during the peak covid lockdowns in Britain. “Johnson would face a confidence vote on his leadership if 54 Tory MPs, or 15% of the total in the House of Commons, submit letters to a key committee calling for him to resign,” said Bloomberg in this regard. Elsewhere, The Guardian conveyed British citizens’ hardships in the Eurozone as “Thousands of people say their rights have been compromised despite government promises.” It’s worth noting that Independent said, “Two major ports in Wales saw trade plummet by 30 percent in 2021 as a result of post-Brexit changes in the way freight is moved, a ferry operator has said.” Talking about the virus, the UK’s covid cases have been halved in the last two weeks with the latest updates citing Saturday’s daily infections as 76,807, down by 54% from 176,191 cases detected two weeks ago. On a different page, the US State Department and UK Deputy Prime Minister Dominic Raab both flashed warnings over Russia’s preparations for invading Ukraine, which in turn magnified geopolitical fears and challenge the GBP/USD buyers. Furthermore, Friday’s downbeat UK Retail Sales, which contrasts with the hopes of the hawkish Fed, also exert downside pressure on the cable pair. Against this backdrop, US 10-year Treasury yields rose 3.6 basis points (bps) to 1.783%, snapping a three-day decline, as traders anticipate hawkish Fed verdict, amid firmer inflation, during this week’s key meeting. Moving on, GBP/USD traders are likely to keep the latest rebound amid upbeat expectations from the UK’s monthly PMI data. However, a surprise negative will highlight the Fed’s rate hike woes and exert downside pressure to break the 100-DMA key support. Technical analysis GBP/USD recovery gains support from the 100-DMA level surrounding 1.3540. However, the pair bulls remain unconvinced until crossing the weekly resistance line, near 1.3620. It’s worth noting that the 21-DMA level surrounding 1.3575 guards the quote’s immediate upside.  

China has delivered another rate cut with the People's Bank of China cutting the rate on 14-day reverse repo by 10 bps. China’s recent cut of two key

China has delivered another rate cut with the People's Bank of China cutting the rate on 14-day reverse repo by 10 bps.  China’s recent cut of two key policy interest rates opened the door to more monetary easing actions ahead. This is despite the sentiment that the Federal Reserve will probably hike rates from March.  China cut the one-year medium-term lending facility rate and the seven-day reverse repurchase rate for the first time in almost two years earlier this month. The one-year tenor was already dropped by five basis points last month, so all eyes are on whether the five-year rate will decline to allow for cheaper mortgages. Market implications Goldman Sachs Group Inc. economists led by Maggie Wei said, “we see a decent possibility for the five-year loan prime rate to be cut by 5 basis points” when it’s announced Thursday, the economists said in a note Monday. The five-year rate is the reference for mortgages and a cut “would send a signal on broad property policy easing.”   

USD/CHF consolidates recent losses around a one-week low, picking up bids to refresh daily high near 0.9138 amid early Monday morning in Europe. Even

USD/CHF takes the bids to refresh intraday high, bounces off one-week low.Oscillators and bear cross favor sellers, fortnight-old descending trend line, key DMAs restrict short-term recovery.78.6% Fibonacci retracement level limits immediate downside.USD/CHF consolidates recent losses around a one-week low, picking up bids to refresh daily high near 0.9138 amid early Monday morning in Europe. Even so, bear cross of the 50-DMA to the 100-DMA joins downbeat MACD and Momentum to keep sellers hopeful. That said, a descending resistance line from January 10, around 0.9165-70, restricts the immediate rebound of the pair ahead of the latest swing high near 0.9180. Even if the USD/CHF buyers manage to cross the 0.9180 resistance, the stated key DMAs will challenge the pair’s further advances near 0.9210-15. It’s worth noting that the 61.8% and 50% Fibonacci retracements (Fibo.) of August-November 2021 upside, respectively near 0.9155 and 0.9200, act as additional filters to the north. On the contrary, the 78.6% Fibo. level near 0.9090 acts as strong support to watch during the quote’s fresh declines. Should the USD/CHF prices remain weaker past 0.9090, the pair becomes vulnerable to drop towards August 2021 swing low near 0.9020. USD/CHF: Daily chart Trend:  Bearish  

The bulls could well be moving in for the kill soon considering the correction's depth and deceleration at the 38.2% Fibonacci retracement level which

USD/INR bulls are on the move, but a wall of resistance lies ahead. The bears are looking deeper into the picture that involves a bearish prospect in US 10-year yields. The bulls could well be moving in for the kill soon considering the correction's depth and deceleration at the 38.2% Fibonacci retracement level which is acting as support, currently. USD/INR daily chart The bulls will look to a 75.20 target where the old structure falls in near prior resistance looking left. A break there would be significantly bullish for the weeks ahead.  USD/INR weekly chart The weekly chart, on the other hand, shows that the price is merely correcting a dominant weekly bearish impulse. A correction into the 50% mean reversion area near the said 75.20 target, could equate to resistance and result in a downside test of the trendline resistance and a potential follow-through for the weeks ahead. 72.80 would be eyed in this scenario.  Looking to the US dollar, there are prospects of a shift to the downside if the market has overpriced the Fed and if yields fall. The weekly chart in Us ten year yields, in this regards is compelling: This W-formation is a reversion pattern that has a high completion rate on a fractal basis, ie,e, across all time frames. The price tends to retrace back to the neckline, or, in the case of an overextended-W. In this scenario, the 38.2% Fibonacci aligns with the prior highs around the 1.70s%. that would be highly bearish for the US dollar: DXY weekly chart If this is a retest in a low volume rally before the markdown, then the dollar could be headed much lower in the weeks to come. The weekly chart is compelling in this regard: Old highs near 94.50 and then a retest of 92 on the longer-term outlook would significantly dent USD/INR. 

US Dollar Index (DXY) seesaws around 95.70 as traders brace for crucial week comprising Fed meeting amid early hours of Monday’s Asian session. In doi

DXY tracks firmer yields to begin the key week but refrains from further advances.Market players stay divided over FOMC, March rate hike clues expected.Easing fears of Omicron battles escalating concerns over Russia-Ukraine tussles.US Markit PMIs can offer immediate direction, US Q4 GDP, PCE Inflation important too.US Dollar Index (DXY) seesaws around 95.70 as traders brace for crucial week comprising Fed meeting amid early hours of Monday’s Asian session. In doing so, the greenback gauge tracks firmer yields, although a bit slowly amid mixed concerns over the covid variant Omicron. In addition to the pre-Fed hawkish mood that propels the US Treasury yields of late, geopolitical fears surrounding Russia’s invasion of Ukraine and inflation fears also favor the US Treasury bond coupons. That said, US 10-year Treasury yields rose 2.7 basis points (bps) to 1.774%, snapping a three-day decline, as traders anticipate hawkish Fed verdict, amid firmer inflation, during this week’s key meeting. Expectations of the March rate hike signals from the Federal Open Market Committee (FOMC) take clues from the latest comments from US President Joe Biden and International Monetary Fund Managing Director Kristalina Georgieva. Both these key authorities highlighted inflation fears and praised Fed’s push for tighter monetary policies. Elsewhere, the US State Department and UK Deputy Prime Minister Dominic Raab both flashed warnings over Russia’s preparations for invading Ukraine, which in turn magnified geopolitical fears. On the positive side, the recently easing virus numbers from the UK, the US and China hint at easing Omicron fears even as Japan and India do struggle with the virus of late. Additionally, People’s Bank of China’s (PBOC) efforts to keep the world’s second-largest economy fluid joins hopes of the US stimulus to favor the US stock futures despite firmer US T-bond yields, which in turn tests DXY bulls. Ahead of Wednesday’s FOMC, Bank of America (BoA) expects the first rate hike to take place in March, with 25 by hikes in each of the next eight quarters. The BoA also said, “We now expect QT to be announced at the June FOMC meeting, with risks skewed earlier to the May FOMC meeting.” Read: Fed Preview: Three ways Powell could out-dove markets, dealing a blow to the dollar For now, monthly readings of Markit PMIs from the US will decorate today’s calendar. Given the upbeat expectations versus recently mixed US data, a slight miss by the scheduled PMIs may negatively affect the DXY. However, nothing becomes more important than Wednesday’s Fed meeting. Following that, the US Advances Q4 GDP and PCE Inflation data will also be watched for further clarity on the US central bank’s next move. Technical analysis US Dollar Index bulls need a clear upside break of a six-week-old resistance line and 50-DMA, around $96.00 by the press time, to retake controls. Until then, the odds of another pullback to 95.50 can’t be ruled out.  

EUR/USD is under pressure in the opening session for the week and easing off from 1.1345 highs to 1.1332 as risk-off continues on the back of Friday's

EUR/USD is pressured in a risk-off start to the week. Russia, the Fed and US data are the standout themes.EUR/USD is under pressure in the opening session for the week and easing off from 1.1345 highs to 1.1332 as risk-off continues on the back of Friday's bearish close on Wall Street. Asian markets are lower on Monday with the Federal Reserve expected to confirm it will soon start draining the massive liquidity that has fulled stock markets for years.  Additionally, a Russian attack on Ukraine is creating angst in financial markets as tensions mount up as per the weekend headlines:US orders families of all American embassy staff in Kyiv to leave UkraineRussia/Ukraine tensions rising: British gov says it has uncovered a plot by Moscow to install a pro-Russian leader in KievThe New York Times reported President Joe Biden was considering sending thousands of U.S. troops to NATO allies in Europe along with warships and aircraft. The news is hurting MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) that eased 0.1% and sent Japan's Nikkei 1.0% lower.  FOMC in focus Meanwhile, the markets have been trading cautiously ahead of this week’s FOMC statement. Analysts at ANZ bank explained that they are doubtful that the Fed will end QE next week, as some in the market speculate. ''We are also doubtful that the Fed would begin to tighten policy with a 50bps rate rise. Markets may stabilise if the Fed is not as hawkish as some worst case fears suggest. We do expect that Chair Powell will elaborate on quantitative tightening (QT) although it may be the case that no firm decision has yet been made.'' ''From a sequencing perspective, it may be too draconian to signal a near term start to QT before QE has finished and rates have started to rise.'' Meanwhile, the prospect of higher borrowing costs and more attractive bond yields are weighing on stock markets and in turn, risk apatite which translates to a bearish outlook for currencies such as the euro.  Looking outside of the Fed, the first reading of U.S. gross domestic product for the December quarter is due this week also. Expectations are for growth running at an annualised 5.4% before Omicron put its foot on the brakes. Additionally, oil prices are going to be a focus for the euro considering the inflationary pressures that can harm the economy alongside sky-high gas prices imported from Russia. Oil has been rising again having climbed for five weeks in a row to a seven-year peak. The European Central Bank will continue to be second-guessed in this regard.  ''To date, the ECB has been keen to push against speculation that it could drop its dovish policy guidance. This week, ECB President Lagarde commented that the Bank has “every reason” not to respond as forcefully as the Fed, with CPI inflation clearly weaker in the Eurozone and the recovery not as advanced,'' analysts at Rabobank explained.  ''The market is pricing in a small rate rise in the second half of the year, with more tightening expected next year. Given that the market is short EURs, a renewed focus on the outlook for a change in direction for ECB policy could trigger a move higher in EUR/USD.''  

Bloomberg came out with the latest analysis from Goldman Sachs to propel hawkish hopes ahead of Wednesday’s Federal Open Market Committee (FOMC) meeti

Bloomberg came out with the latest analysis from Goldman Sachs to propel hawkish hopes ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting. Key quotes (via Bloomberg) The Goldman Sachs economists led by Jan Hatzius said in a weekend report to clients that they currently expect rates to be increased in March, June, September and December and for the central bank to announce the start of a balance sheet reduction in July. But they said inflation pressures mean that the ‘risks are tilted somewhat to the upside of our baseline.’ ‘We see a risk that the FOMC will want to take some tightening action at every meeting until that picture changes,’ the Goldman Sachs economists said. This raises the possibility of a hike or an earlier balance sheet announcement in May, and of more than four hikes this year. The Goldman Sachs economists said if the Fed did decide to be more aggressive, it would likely hike by 25 basis points at consecutive meetings rather than by 50 basis points.  Read: Fed Preview: Three ways Powell could out-dove markets, dealing a blow to the dollar

USD/TRY begins the trading week on a positive note around $13.48, up 0.10% intraday, during Monday’s Asian session. Even so, the Turkish lira (TRY) pa

USD/TRY prints mild gains to pare two-week losses.100/200-SMA confluence offers strong resistance inside immediate triangle.Steady RSI hints at further grinding below the key SMAs.USD/TRY begins the trading week on a positive note around $13.48, up 0.10% intraday, during Monday’s Asian session. Even so, the Turkish lira (TRY) pair remains inside a two-week-long symmetrical triangle amid steady RSI. It should be noted, however, that sustained trading below the 100 and 200 SMA confluence, near $13.55, keeps USD/TRY sellers hopeful. Should the quote rise past $13.55, the odds of its run-up to cross the stated triangle’s resistance line, near $13.60 by the press time, can’t be ruled out. Following that, the monthly high around $13.95 and the $14.00 threshold will lure the pair buyers. On the contrary, pullback moves remain elusive beyond the triangle’s support line, around $13.30 at the latest. Even if the USD/TRY bears manage to conquer the $13.30 support, the $13.00 threshold will challenge the downside before highlighting the 61.8% Fibonacci retracement of December 24 to January 03 upside, near $12.40. USD/TRY: Four-hour chart Trend: Further weakness expected

USD/JPY picks up bids to refresh intraday high near 113.85, up 0.20% intraday, during the initial hours of Tokyo trading on Monday. In doing so, the y

USD/JPY consolidates the heaviest daily loss around one-week low, recently refreshing intraday high.Markets brace for Fed, yields, equities begin the key week on a positive side.Japanese government eyes more areas to add to quasi-emergency status amid surging cases.US Preliminary Markit PMIs for January eyed for intraday moves, Wednesday’s FOMC is the week’s crucial event.USD/JPY picks up bids to refresh intraday high near 113.85, up 0.20% intraday, during the initial hours of Tokyo trading on Monday. In doing so, the yen pair rises for the first time in four days while tracking firmer US Treasury yields as traders brace for Wednesday’s Federal Open Market Committee (FOMC) meeting. At home, preliminary readings of Japan’s Jibun Bank Manufacturing PMI from January rose past 54.3 to 54.6, hitting a four-year high. It’s worth noting. However, the latest prints of Jibun Bank Services PMI slumped to 46.6 versus 52.1 in December. Additionally, “The government of Prime Minister Fumio Kishida is expected to place more prefectures under a COVID-19 quasi-state of emergency as the number of cases continues surging, government sources said Sunday,” per Japanese media Kyodo News. That said, US 10-year Treasury yields rose 3.6 basis points (bps) to 1.783%, snapping a three-day decline, as traders anticipate hawkish Fed verdict, amid firmer inflation, during this week’s key meeting. During the last week, US data was mostly mixed but the latest Fedspeak has been hawkish, suggesting that the US central bank is on the way to chart March’s rate hike on Wednesday. Adding to the bullish bias were the chatters concerning Omicron-linked supply chain damage and inflation woes. It’s worth noting that comments from US President Joe Biden and International Monetary Fund Managing Director Kristalina Georgieva were both in support of the Fed’s hawkish bias, which in turn reinforced Fed rate hike concerns. It’s worth observing that escalating fears of a Russian invasion of Ukraine also favor the US Treasury yields and the USD/JPY prices. Furthermore, mildly bid S&P 500 Futures adds strength to the pair’s rebound even as Nikkei 225 drops 0.80% intraday by the press time. Moving on, the preliminary readings of January US Markit PMIs will be crucial for intraday trade direction. However, major attention will be given to Wednesday’s FOMC and Thursday’s US Q4 GDP for a clearer view. Technical analysis A clear downside break of an ascending support line from early October, near 114.00 by the press time, directs USD/JPY towards the 100-DMA support of 113.27.  

In recent trade today, the People’s Bank of China (PBOC) set the yuan (CNY) at 6.3411 vs. the estimate of 6.3409 and the last close of 6.3396. About t

In recent trade today, the People’s Bank of China (PBOC) set the yuan (CNY) at 6.3411 vs. the estimate of 6.3409 and the last close of 6.3396. About the fix China maintains strict control of the yuan’s rate on the mainland. The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled. Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day closing level and quotations taken from the inter-bank dealer.

USD/CAD consolidates recent gains around 1.2570, down 0.10% intraday, during Monday’s Asian session. In doing so, the Loonie pair takes a U-turn from

USD/CAD snaps two-day rebound from eight-week-old descending resistance line.61.8% Fibonacci retracement level can offer immediate support, weekly horizontal area adds to the downside filters.100-DMA, 50% Fibo. probes bulls before giving them controls.USD/CAD consolidates recent gains around 1.2570, down 0.10% intraday, during Monday’s Asian session. In doing so, the Loonie pair takes a U-turn from a downward sloping resistance line from late November. However, easing bearish bias of the MACD and the pair’s sustained trading beyond the 61.8% Fibonacci retracement (Fibo.) level of October-December 2021 upside, near 1.2550, keeps USD/CAD buyers hopeful. Also favoring the pair buyers is the successful trading beyond the 200-DMA. That said, the quote’s latest pullback remains less important until staying beyond the aforementioned key Fibonacci retracement level and the 200-DMA, respectively around 1.2550 and 1.2500. Even if the quote drops below 1.2500, a clear downside break of short-term horizontal support near 1.2450 will be necessary to recall bears. On the flip side, the stated resistance line and the 100-DMA, around 1.2590 and 1.2625 in that order, will restrict the short-term upside of the USD/CAD prices. It’s worth noting that the 50% Fibo. level near 1.2630 also challenges the pair buyers before directing them to the 1.2700 threshold. USD/CAD: Daily chart Trend: Further upside expected  

Sky News has reported that ''the US has ordered the families of all American embassy staff in Kyiv to leave Ukraine amid heightened fears of a Russian

Sky News has reported that ''the US has ordered the families of all American embassy staff in Kyiv to leave Ukraine amid heightened fears of a Russian invasion.'' This follows earlier news at the start of the day that 'the UK has accused Russia’s President Vladimir Putin of plotting to install a pro-Moscow figure to lead Ukraine's government,'' as per the BBC:Russia/Ukraine tensions rising: British gov says it has uncovered a plot by Moscow to install a pro-Russian leader in KievMeanwhile, the US State Department has told the dependants of staffers at the US embassy in Ukraine's capital that they must leave the country and said that non-essential employees could also leave at government expense, Sky reports.  Additionally, the US President, Joe Biden, is weighing the implications in deploying warships and aircraft to NATO allies well as deploying several thousand US troops in the Baltics and Eastern Europe. Market implications The safe havens would be expected to benefit, such as gold and the US dollar, yen and to a lesser degree, CHF (considering the euro's vulnerability to escalating tensions and surging gas prices over tight Russian supplies; any weakness in the euro as a consequence would be a concern to the Swiss National Bank). As it stands, the US dollar is outperforming.

AUD/USD pares intraday gains around 0.7180, up 0.08% on a day, following an upbeat start to the key week during the early Asian session. The Aussie pa

AUD/USD consolidates the previous weekly losses, retreats from intraday high of late.Easing Omicron fears join market’s preparation for hawkish Fed to underpin recent risk-on mood, yields, gold both print mild gains.Hawkish bets on RBA gain traction after the last week’s firmer Aussie data.Aussie PMIs came in softer, US Markit activity numbers for January in focus.AUD/USD pares intraday gains around 0.7180, up 0.08% on a day, following an upbeat start to the key week during the early Asian session. The Aussie pair initially ignored mixed Australia PMIs from Commonwealth Bank (CBA) as virus updates were positive. The recovery moves gained on firmer prices of gold afterward. However, pre-Fed fears and geopolitical tension surrounding Russia-Ukraine tensions recently weighed down the Aussie prices. That said, preliminary readings of January CBA Manufacturing PMI eased to 55.3, below 55.9 forecast and 57.4 revised down prior readings whereas Services PMI slumped into contraction territory with 45 figure compared to 51.8 expected and 55.1 prior. Elsewhere, Australia’s daily covid infections ease for the fifth consecutive day, to recently around 28,100. However, the death toll keeps climbing and challenge the optimists. It’s worth noting that the US State Department and UK Deputy Prime Minister Dominic Raab both flashed warnings over Russia’s preparations for invading Ukraine, which in turn magnified geopolitical fears. Amid these plays, the US 10-year Treasury yields rose 2.4 basis points (bps) to 1.77%, after posting the first weekly decline in five, whereas the S&P 500 Futures rise 0.50% while licking the previous week’s wounds amid the mostly quiet session. “Last week we argued the RBA would end quantitative easing in February, despite the uncertainty caused by Omicron. With the December employment report confirming the economy finished 2021 with exceptional momentum, we are even more confident about that call. Given how the labor market finished 2021, an explicit decision to move to QT is likely on the table for the February meeting,” said ANZ. That said, AUD/USD traders will pay attention to Tuesday’s Australia Consumer Price Index (CPI) for Q4, expected 1.0% versus 0.8% QoQ prior, for fresh impulse. However, Fed’s verdict on the March rate hike will be more important to follow. Read: Fed Preview: Three ways Powell could out-dove markets, dealing a blow to the dollar Technical analysis Having registered multiple failures to cross the 100-DMA, AUD/USD dropped below an ascending support line from early December 2021, forming part of a two-month-old rising wedge bearish pattern. Given the downbeat MACD and RSI conditions, bears do have upper hands and are likely to dominate on the clear break of 0.7170. That said, the 0.7100 threshold will be imminent support for the AUD/USD sellers to watch following the 0.7170 breakdowns. Alternatively, a clear upside break of the 100-DMA level surrounding 0.7280 isn’t a green card for the AUD/USD bulls as the previous support line from August and a descending trend line from May, respectively around 0.7350 and 0.7400, will challenge the further upside.  

Japan Jibun Bank Manufacturing PMI climbed from previous 54.3 to 54.6 in January

GBP/USD's W-formation could see the price continue to correct for the week ahead which puts an emphasis towards 1.3450: GBP/USD weekly chart The W-for

GBP/USD is testing critical support on the hourly chart. The weekly W-formation is compelling as risk-off takes hold in the open.GBP/USD's W-formation could see the price continue to correct for the week ahead which puts an emphasis towards 1.3450: GBP/USD weekly chart The W-formation is a reversion pattern where the neckline of the W is expected to be retested. Bears can move to a lower time frame in order to gauge for an optimal entry point from where the neckline can be bagged for profit: GBP/USD H1 chart The price needs to break the support and on a retest of this area, the bears will be looking for it to hold and confirm the downside bias towards the target area. A continuation higher in the DXY looks to be setting up for the day ahead with the risk-off market profile related to the Russian headlines. Russia/Ukraine tensions rising: British gov says it has uncovered a plot by Moscow to install a pro-Russian leader in Kiev DXY H1 chart The pound is often regarded as a riskier currency to hold at times of stress due to the nations twin deficits, so this too could tip the balance the bear's favour for the opening sessions this week. 

WTI takes the bids to refresh intraday high near $85.50, up 1.0% daily, during early Asian morning on Monday. In doing so, the black gold extends the

WTI begins the Fed week on a positive note, extends Friday’s rebound from weekly low.Three-day-old resistance line holds the key to further upside.Bullish MACD signals, firmer RSI line keep buyers hopeful.Seven-day-long support line adds to the downside filters.WTI takes the bids to refresh intraday high near $85.50, up 1.0% daily, during early Asian morning on Monday. In doing so, the black gold extends the previous day’s recovery moves from the 200-HMA amid firmer RSI and MACD signals. However, oil bulls need validation from a downward sloping resistance line from Thursday, near $86.00. Also acting as an upside filter is the recently flashed multi-month top near $86.93. During the quote’s run-up beyond $86.93, the $87.00 threshold and the $90.00 psychological magnet may act as buffers before direct WTI crude oil buyers towards September 2014 high near $95.00. Alternatively, pullback moves may retest the 200-HMA level of $83.40 whereas any further downside will be challenged by a short-term ascending trend line near $82.90. If at all the WTI crude oil prices drop below $82.90, the 61.8% Fibonacci retracement of January 10-20 upside, around $81.00, will be crucial for traders to watch before welcoming sellers. WTI: Hourly chart Trend: Further upside expected  

Gold (XAU/USD) begins the Fed week on a slightly positive note around $1,834, following a two-week uptrend, during the initial Asian session on Monday

Gold flirts with the key Fibonacci retracement support after bulls stepped back from yearly resistance.Pre-Fed caution, Omicron woes join geopolitics to challenge gold buyers, downbeat yields defend bulls.January PMIs, US Q4 GDP may entertain traders but FOMC will be crucial as traders await clues of March rate hike.Gold Weekly Forecast: XAU/USD could turn south on a hawkish Fed surpriseGold (XAU/USD) begins the Fed week on a slightly positive note around $1,834, following a two-week uptrend, during the initial Asian session on Monday. Gold prices rose during the last two weeks before reversing from the yearly resistance line on Thursday. That said, the market’s cautious sentiment ahead of this week’s crucial Federal Open Market Committee (FOMC) joined downbeat US Treasury yields and the US Dollar Index (DXY) performance to underpin the yellow metal’s safe-haven demand in the recent days. In addition to the Fed-linked fears, geopolitical concerns relating to the Ukraine-Russia war and Omicron chatters, not to forget inflation woes, also directed market players towards the traditional risk-safety. Even as the last week’s US data was mostly mixed, the latest Fedspeak has been hawkish, suggesting that the US central bank is on the way to chart March’s rate hike on Wednesday. Adding to the bullish bias were the chatters concerning Omicron-linked supply chain damage and inflation woes. It’s worth noting that comments from US President Joe Biden and International Monetary Fund Managing Director Kristalina Georgieva were both in support of the Fed’s hawkish bias, which in turn reinforced Fed rate hike concerns. “Markets have been trading cautiously ahead of this week’s FOMC statement, which is expected to be hawkish and potentially outline the case for interest rate rises starting in March. We are doubtful that the Fed will end QE next week, as some in the market speculate. We are also doubtful that the Fed would begin to tighten policy with a 50 bps rate rise. Markets may stabilize if the Fed is not as hawkish as some worst-case fears suggest,” said ANZ. Elsewhere, the South African covid variant, namely Omicron, pushes more areas of Japan towards quasi emergency whereas New Zealand is also up for more activity controls, if not the complete lockdowns, due to the stated virus strain. Further, reports of Russia’s preparations to invade Ukraine also take rounds of late, which in turn keep gold in demand. Against this backdrop, the US 10-year Treasury yields rose 1.8 basis points (bps) to 1.767%, after posting the first weekly decline in five, whereas the S&P 500 Futures rise 0.30% while licking the previous week’s wounds amid the mostly quiet session. Moving on, preliminary readings of January PMIs will offer intraday directions to the gold traders. However, major attention will be given to Wednesday’s Fed meeting and Treasury yields. Technical analysis Having reversed from a year-long resistance line, gold prices eye further losses towards 50 and 100-SMA levels, respectively around $1,825 and $1,816, currently poking 61.8% Fibonacci retracement (Fibo.) of November-December downside. However, the metal’s further downside will be challenged by an ascending support line from mid-December 2021 near $1,812, a break of which will confirm rising wedge bearish chart formation. Should bears keep reins past $1,812, theory suggests a gradual south-run towards September 2021 low surrounding $1,721. Though, the monthly bottom and December 2021 lows near $1,780 and $1,755 in that order will offer intermediate halts. Alternatively, recovery moves will initially aim to defy the rising wedge formation by a clear upside break of the pattern’s resistance line, close to $1,842. Following that, the previously mentioned yearly resistance line near $1,848 will regain the market’s attention as a break of which will be an open invitation for the bulls to aim for $1,900 and above during the days to come. To sum up, gold buyers stepped back from the key resistance line but that doesn’t give a warm welcome to the sellers until the quote drops below $1,812. Gold: Four-hour chart Trend: Pullback expected  

Early Monday morning in Asia, the US State Department released a slew of statements/orders confirming fears of Russian invasion of Ukraine. Key quotes

Early Monday morning in Asia, the US State Department released a slew of statements/orders confirming fears of Russian invasion of Ukraine. Key quotes The voluntary departure of US Direct Hire Personnel has been approved, and qualified family members have been instructed to leave the embassy in Kyiv. Due to growing fears of Russian military intervention and Covid-19, we advise against traveling to Ukraine. FX implications Although the news should ideally drown antipodeans and commodities, prices of AUD/USD, NZD/USD and gold have largely been unaffected by the news. However, WTI crude oil seems to benefit from the fears of supply outage, up 0.60% intraday near $85.15 by the press time. Read: Russia/Ukraine tensions rising: British gov says it has uncovered a plot by Moscow to install a pro-Russian leader in Kiev

“The government of Prime Minister Fumio Kishida is expected to place more prefectures under a COVID-19 quasi-state of emergency as the number of cases

“The government of Prime Minister Fumio Kishida is expected to place more prefectures under a COVID-19 quasi-state of emergency as the number of cases continues surging, government sources said Sunday,” Japanese media Kyodo News. The news reports the latest covid infections as more than 50,000 on Sunday after the country reported the highest daily cases of around 54,000 on Saturday. It’s worth noting that Japan’s Yomiuri News signaled that Japan will put around 16 more areas under quasi-emergency. Key quotes Tokyo and 12 other prefectures were added to regions subject to the quasi-emergency measures on Friday after three prefectures -- Hiroshima, Yamaguchi and Okinawa -- were placed under the measures from Jan. 9 following a spike in infections that local officials linked to nearby U.S. military bases. The COVID-19 restrictions are slated to be in place until Feb. 13 in Tokyo and the 12 prefectures, including Saitama, Chiba, Kanagawa, Aichi, Nagasaki and Kumamoto. The number of cases increased 100 times in three weeks since the start of this year, rising to 54,576 cases on Saturday from 534 logged on Jan. 1. FX implications Even with the pre-Fed sentiment weighing on the risk appetite, in addition to the Omicron fears from Japan, USD/JPY prints mild gains around 113.75 while consolidating the previous week’s losses by the press time of pre-Tokyo trading on Monday.

EUR/USD remains pressured below 20-DMA, around 1.1340 amid Monday’s initial Asian session, following the biggest weekly fall in five. In addition to t

EUR/USD struggles to extend corrective pullback from the key support.Bearish MACD signals suggest further downside, 50-DMA acts as immediate support.Bulls need a clear break of 61.8% Fibonacci retracement for confirmation.EUR/USD remains pressured below 20-DMA, around 1.1340 amid Monday’s initial Asian session, following the biggest weekly fall in five. In addition to the major currency pair’s failures to cross the short-term key moving average, bearish MACD signals also suggest the bear’s firm determination to break an upward sloping trend line from late November, which has been defending buyers of late. Ahead of the stated key support line, near 1.1300 by the press time, the 50-DMA level of 1.1315 will test the EUR/USD sellers. Also acting as a downside filter is the 23.6% Fibonacci retracement (Fibo.) level of October-November 2021 downside, near 1.1300, a break of which will direct the quote towards 2021 bottom of 1.1186 with 1.1230 likely acting as a buffer. Meanwhile, a clear upside break of the 20-DMA level surrounding 1.1350 won’t be a green signal for the EUR/USD bulls as 50% Fibo. and the monthly high, respectively around 1.1435 and 1.1480, will challenge the pair’s recovery. Even if the pair rises past 1.1480, the 61.8% Fibonacci retracement level of 1.1500 will be a crucial resistance for the pair traders to watch. To sum up, the EUR/USD prices are at a critical support juncture as traders await the Fed verdict. EUR/USD: Daily chart Trend: Further declines expected  

NZD/USD portrays the market’s sour mood around 0.6710 during early Monday morning in Asia, following the heaviest weekly fall in two months. In doing

NZD/USD remains pressured around yearly bottom following two consecutive daily declines.Market sentiment worsened on pre-Fed, inflation and Ukraine concerns.NZ PM Ardern refrained from Omicron-led lockdowns but verdict on traffic lights awaited.FOMC’s rate hike hints, New Zealand CPI are the week’s key events.NZD/USD portrays the market’s sour mood around 0.6710 during early Monday morning in Asia, following the heaviest weekly fall in two months. In doing so, the kiwi pair flirts with the year 2021 bottom, flashed in December, as traders await crucial events scheduled for release during the week. Other than the market fears concerning this week’s Federal Open Market Committee (FOMC) and New Zealand’s Q4 Consumer Price Index (CPI), up for publication on Wednesday and Thursday, geopolitical concerns relating to Ukraine-Russia tussles also weigh on NZD/USD prices. Although the last week’s US data was mostly mixed, the latest Fedspeak has been hawkish, suggesting that the US central bank is on the way to chart March’s rate hike on Wednesday. Adding to the bullish bias were the chatters concerning Omicron-linked supply chain damage and inflation woes. It’s worth noting that comments from US President Joe Biden and International Monetary Fund Managing Director Kristalina Georgieva were both in support of the Fed’s hawkish bias, which in turn reinforced Fed rate hike concerns. At home, New Zealand Prime Minister (PM) Jacinda Ardern will decide on the nation’s traffic light system and has already rejected lockdown fears. However, surging cases in Auckland do pose a serious threat to the working styles as New Zealand will witness Omicron spread. Elsewhere, geopolitical tussles between Russia and Ukraine escalate as Moscov braces for Keiv’s invasion. Recently, UK’s Deputy Prime Minister Dominic Raab told the BBC's Sunday Morning program that there was "a very serious risk" of invasion but there would be "severe economic consequences", including sanctions if Russia took that step. Amid these plays, the US Treasury yields and equities were down but commodities had a mixed performance, with crude gaining from supply outage fears and gold from softer yields. The same risk-off mood pressured Antipodeans towards the last year’s low. Moving on, New Zealand has very few important data to release ahead of Thursday’s NZ Q4 CPI, expected 5.6% versus 4.9% prior. However, monthly PMIs from the rest of the world and Fed meetings will be crucial to watch before then. Among them, the Fed’s verdict on rate hike and balance sheet normalization, which is highly expected, becomes critical. Read: Fed Preview: Three ways Powell could out-dove markets, dealing a blow to the dollar Technical analysis Unless breaking the weekly resistance line near 0.6755, NZD/USD prices are likely to conquer the year 2021 bottom surrounding 0.6700, which in turn open doors for the pair’s further declines towards the 61.8% Fibonacci Expansion (FE) of the pair’s moves between November 15 and December 24, near 0.6650.  

Australia Commonwealth Bank Composite PMI: 45.3 (January) vs previous 54.9

Australia Commonwealth Bank Manufacturing PMI below forecasts (55.9) in January: Actual (55.3)

Australia Commonwealth Bank Services PMI below expectations (51.8) in January: Actual (45)

As per the prior analysis, AUD/USD Price Analysis: Bears taking charge and testing critical support, the price, despite a brief liquidity hunt, has co

AUD/USD bears testing critical support for the open. Bears will look for a break below the 0.7160s.As per the prior analysis, AUD/USD Price Analysis: Bears taking charge and testing critical support, the price, despite a brief liquidity hunt, has continued to test critical support. The following illustrates the prospects for the opening sessions and week ahead from a technical perspective. AUD/USD daily charts The bears would argue that last week's Unemployment Rate fuelled spike was just the ticket for instigating the breakout of this critical level of support into month-end. The risk-off setting could see some follow-through over the opening sessions with markets in Asia yet to digest the rout in Friday's stock markets as well.  On the flipside, if there is a catalyst for a reversal in risk appetite or a hawkish bias towards the Reserve bank of Australia sentiment, then the Aussie would be expected to base around these levels. However, last week's bearish close leans more towards a test of the 0.7160s than the 0.7180s for the open: The above line chart represents the weekly W and M formation's necklines. These are considered to be key support and resistance levels. A break of either would indicate the bias for the days ahead.  
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