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Spreads
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Spreads
Spreads
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EUR/USD Retreats Below 1.1000 Amidst Surging US Inflation and Fed’s Caution
In Thursday’s trading, the EUR/USD pair faced resistance in breaching the critical 1.1000 level, triggering a notable corrective move following a higher-than-expected rise in US inflation figures for December 2023. The robust US Consumer Price Index (CPI) bolstered the greenback, leading investors to adjust their expectations regarding the Federal Reserve’s potential interest rate cuts in the second quarter. The pair’s downward trend was also influenced by varied performances in US yields across different maturities, prompting investors to reevaluate their bets on potential rate adjustments. Federal Reserve’s L. Mester from Cleveland emphasized that the central bank is not yet considering rate cuts, underlining the necessity for additional evidence of economic progress. Mester highlighted the importance of the Fed fine-tuning its policy for a soft landing, contingent upon sustained declines in inflation. Despite the absence of notable domestic data releases, the US docket revealed a 3.4% year-on-year increase in headline CPI for December and a 3.9% rise in Core CPI. Additionally, weekly Initial Claims climbed by 202,000 in the week ending January 6.
On Thursday, the EUR/USD moved slightly lower, unable to reach the lower band then went back higher and reached the upper band of the Bollinger Bands. Currently, the price moving just around the upper band, suggesting another potential upward movement. Notably, the Relative Strength Index (RSI) maintains its position at 59, signaling a neutral but bullish outlook for this currency pair.
Resistance: 1.1000, 1.1068
Support: 1.0950, 1.0892
XAU/USD Faces Pressure as Stronger-than-Expected US Inflation Boosts Dollar
Stronger-than-anticipated US inflation figures led to a surge in the US Dollar, exerting mild pressure on Gold (XAU/USD) ahead of Wall Street’s opening. Despite hopes for positive figures, the Consumer Price Index rose to 3.4% YoY in December, surpassing both the previous 3.1% and the expected 3.2%. This unexpected inflation surge bolstered the US Dollar in a risk-averse environment, as investors anticipated the Federal Reserve maintaining higher rates for a longer period. The increased likelihood of prolonged rate hikes weighed on the prospects of a rate cut in March, causing stocks to dip and government bond yields to rise, impacting the gold market.
On Thursday, XAU/USD moved lower and was able to reach the lower band of the Bollinger Bands. Currently, the price moving higher above the middle band and trying to reach the upper band. The Relative Strength Index (RSI) stands at 50, signaling a neutral outlook for this pair.
Resistance: $2,050, $2,070
Support: $2,023, $2,002
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