EURUSD
- The EUR/USD pair is attracting buyers near the 1.0800 level during the early Asian trading hours on Monday.
- Last week, there was a lack of major US data releases. However, this week is expected to provide insight into the interest rate outlook from both the Federal Reserve (Fed) officials and European Central Bank (ECB) policymakers.
- ECB Governing Council member Fabio Panetta mentioned on Saturday that the moment is fast approaching for the central bank to cut interest rates. He suggested that timely and gradual steps might help mitigate volatility in financial markets and the economy.
- Another ECB policymaker, Mario Centeno, expressed a preference for a gradual and steady decline in interest rates rather than a more rapid drop.
- Fed officials Bowman, Barkin, and Kashkari are scheduled to speak on Monday. Their remarks could provide additional insights into the Fed's perspective on interest rates.
- Goolsbee and Barr are scheduled to speak on Wednesday, Waller and Bostic on Thursday, and Barr and Daly on Friday. These speeches are likely to be closely monitored for any clues regarding the Fed's stance on interest rates.
| SMA (20) | Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Falling |
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Closing statement: the EUR/USD pair is currently seeing buying interest around 1.0800. The upcoming week is crucial for the pair as insights from both ECB and Fed officials are expected. ECB members, Panetta and Centeno, have hinted at the possibility of rate cuts, and the upcoming speeches by Fed officials will likely influence the market's perception of interest rate movements. Traders will closely watch for any clues or guidance regarding the future trajectory of interest rates.
GBPUSD
- The GBP/USD pair is seeing some buying interest during the Asian session on Monday. However, it lacks follow-through and remains below the mid-1.2600s.
- The US Dollar (USD) is struggling to gain meaningful traction, and this is attributed to uncertainty over the Federal Reserve's (Fed) rate-cut path.
- Market participants are scaling back their expectations for early and steep rate cuts by the Fed in 2024. This adjustment is due to the perception of a resilient US economy and hawkish comments from FOMC officials.
- Dallas Fed Bank President Lorie Logan, in remarks on Friday, mentioned that there is no urgency to cut rates. She expressed the need for further evidence on inflation to confirm that progress is durable.
- There is a growing acceptance in the market that the Bank of England (BoE) could lower borrowing costs in the next few months. This sentiment is acting as a deterrent for traders to place aggressive bullish bets on the British Pound (GBP).
| SMA (20) | Slightly Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: the GBP/USD pair is experiencing some buying interest, but it has not translated into sustained upward momentum. The struggle of the US Dollar to gain traction is linked to uncertainties regarding the Fed's rate-cut path. The adjustment in market expectations for Fed rate cuts and the possibility of a BoE rate cut soon are influencing the dynamics of the GBP/USD pair. Traders are cautious, and the pair is operating within a multi-day-old trading range. The market sentiment remains sensitive to central bank policies, particularly from the Fed and the BoE.
GOLD
- Gold price is in a consolidative range-bound pattern as it heads into the European session on Monday. It is positioned just above the monthly low reached last week.
- Traders are exercising caution and refraining from making fresh directional bets on both the US Dollar and Gold ahead of Tuesday’s US Consumer Price Index (CPI) data release.
- There is a perception in the market that a calm atmosphere prevails before Tuesday’s data storm, with markets now pricing only a 16% chance of a March Fed rate cut. However, the odds of a rate cut by the Fed for the May meeting are estimated at about 60%.
- Renewed concerns over China’s economic slowdown are contributing to the revival of safe-haven demand for the US Dollar. This dynamic is affecting the broader market sentiment, including the price of Gold.
- Looking forward, gold price is expected to maintain its bearish momentum. This anticipation is influenced by pre-US CPI data-led cautious trading and the easing of geopolitical tensions in the Middle East.
Closing statement: Gold is currently experiencing a consolidative phase, with traders adopting a wait-and-see approach ahead of the US CPI data release. The reduced likelihood of a March Fed rate cut, coupled with concerns over China's economic slowdown, has led to a revival of safe-haven demand for the US Dollar, which is influencing the gold price. The bearish momentum in Gold is expected to persist in the near term, given the cautious market sentiment and geopolitical developments.
CRUDE OIL
- West Texas Intermediate (WTI) oil price has experienced a stop in its five-day winning streak from the previous week. It is currently trading slightly lower at around $76.40 per barrel during the European session on Monday.
- The decline in Crude oil prices is attributed to Israel concluding a series of strikes in Gaza's southern city of Rafah. This development has alleviated concerns about potential disruptions in oil supply in the Red Sea region.
- Last week, oil prices surged due to heightened concerns about a potential escalation of geopolitical tensions in the Middle East. This was triggered by Netanyahu's rejection of a proposal to halt the conflict.
- During the Arab Fiscal Forum in Dubai, Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), highlighted that Middle East economies were underperforming compared to growth projections. Such statements can influence market perceptions regarding oil demand.
- The OPEC Monthly Oil Market Report (MOMR) scheduled for publication on Tuesday is anticipated to provide insights into significant issues impacting the global oil market. This report is likely to offer valuable information on developments in the Crude oil market.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: the recent decline in Crude oil prices is linked to geopolitical developments in the Middle East, specifically the conclusion of strikes in Gaza's southern city of Rafah. Last week's surge in prices, triggered by concerns over escalating tensions, has encountered a reversal. Additionally, insights from the upcoming OPEC Monthly Oil Market Report (MOMR) are awaited for a comprehensive understanding of factors influencing the global oil market.
DAX
- Finalized German inflation figures drew investor interest on Friday. The annual inflation rate softened from 3.7% to 2.9% in January, in line with preliminary numbers. Softer inflation numbers from Germany could potentially support bets on an April ECB rate cut.
- German government bond yields exerted pressure on the DAX as the market considered recent ECB speeches. Warnings about cutting rates too early contributed to an increase in yields, which could impact buyer demand for DAX-listed stocks.
- On Monday, the ECB is under the spotlight, and warnings about cutting interest rates too early could influence government bond yields.
- ECB Chief Economist Philip Lane, along with Executive Board members Piero Cipollone and Claudia Bach, are scheduled to deliver speeches. Their insights on inflation, the economic outlook, and the timeline for interest rate cuts could influence market sentiment and impact the DAX.
- Investors are advised to consider earnings releases from both Germany and broader Europe. However, there are no euro area or US economic data releases scheduled for Monday, leaving the focus on corporate performance and central bank communications.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: In summary, the DAX is currently influenced by German inflation figures and government bond yields, with attention turning to upcoming ECB speeches. The market is keenly awaiting insights into the economic outlook, inflation, and the potential timeline for interest rate cuts. Additionally, corporate earnings releases will contribute to shaping investor sentiment regarding DAX-listed stocks.