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EURUSD started the week with minor gains, trading at the crossroads of the 20- and 50-day exponential moving averages (EMAs) at 1.0660, which have been navigating the price southwards over the past month.

Previously, the pair refused to close below January’s low and the 200-day EMA, reducing the risk of a worsening outlook in the medium-term picture. Technically, there might be more push for improvement in the coming sessions as the RSI is strengthening its uptrend in the bearish area, while the MACD is set to climb above its red signal line, reflecting persisting buying interest.

Yet only a sustainable move above the 1.0700 mark could boost buying confidence, sending the price towards the 1.0800-1.0850 resistance region. If the bulls continue higher from here, the 50% Fibonacci retracement of the 1.2348-0.9535 downleg could add some downside pressure around 1.0940, delaying an extension towards the 1.1115-1.1185 area.

Alternatively, a close below 1.0600 could bring the 200-day EMA back on the radar at 1.0530. In case that floor cracks this time, the price could plummet towards the support trendline from September at 1.0400, while a more aggressive decline could re-challenge the constraining line from May 2021 seen at 1.0325.

In a nutshell, EURUSD is showing some encouraging signs of stability after its downtrend paused at 1.0530. Despite that, traders may stay on the sidelines until the price breaks decisively above the 1.0700 number.

The Aussie Dollar started a fresh increase above the 0.6720 resistance against the US Dollar. The AUD/USD pair gained pace above 0.6740 to move into a positive zone.

The pair even climbed above the 0.6750, but the bears seem to be active near the 0.6765 zone. The pair is now consolidating below the 0.6765 zone and the 50 hourly simple moving average. The next major resistance is near the 0.6780 level.

If there is an upside break above the 0.6780 zone, the pair could rise steadily towards the 0.6840 level in the near term. The next major resistance sits near 0.6880 on FXOpen.

An immediate support is near the 0.6750 level. The next key support is near the 0.6720 level. A downside break below the 0.6720 support could lead the pair towards the 0.6660 support.

Swiss Franc saw a surge after the release of the latest CPI data for February, which showed that inflation had accelerated beyond market expectations. The CPI remained above SNB's target range of 0-2%, coming in at 3.4% yoy. This should reinforce the case for the SNB to maintain its tightening pace and raise interest rates by 50bps to 1.50% on March 23. While some analysts expect a slowdown to 25bps in June, SNB may continue to tighten at the current speed if inflation remains high.

USD/CHF's break of 0.9340 support now suggests that corrective rebound from 0.9058 has completed at 0.9439 already, ahead of 38.2% retracement of 1.0146 to 0.9058 at 0.9474. Deeper decline would be seen to 0.9289 resistance turned support first. Decisive break there will bring retest of 0.9058 low.

EUR/CHF's strong break of 4 hour 55 EMA now suggests that rebound from 0.9844 has completed. The corrective pattern from 1.0095 is now extending with another falling leg back towards 0.9844 support.

Gold prices added more than 3% after the bounce off the 1,805 support level, moving within the Ichimoku cloud. The RSI is flattening above the neutral threshold of 50, while the MACD is jumping above its trigger line in the negative region. Also, the 200-day simple moving average (SMA) is moving sideways, suggesting a neutral bias in the medium-term.

If the market continues to move north, then the price may flirt with the 23.6% Fibonacci retracement level of the upward wave from 1,616 to 1,960 at 1,880, which overlaps with the 50-day SMA. More gains could lead the price until the 1,890 resistance and the previous peak of 1,960, registered on February 2.

However, if the bears take control, the yellow metal could drive towards the 38.2% Fibonacci at 1,830 before meeting 1,805 again. Below these lines, the 50.0% Fibonacci of 1,788 and the 200-day SMA at 1,775 may pause the decline towards the 61.8% Fibonacci of 1,747.

All in all, gold is trying to recoup some losses, but the price needs to overcome the 50-day SMA to post more positive movements.

XAUUSD: Actionary Waves Of The Double ZigZag Can Tend To Equality In the long term, XAUUSD can form a double zigzag pattern, which consists of three main sub-waves inside the cycle wave z.

Apparently, the first two sub-waves have already been formed, and the third sub- wave is under development.

Perhaps the wave takes the form of an intermediate zigzag (A)-(B)-(C).

The end of the potential zigzag is expected to reach the 2151.79 area. At that level, primary wave will be equal to actionary wave.

In the second variant, the primary actionary wave could be fully completed, it is a double zigzag (W)-(X)-(Y), but the entire cycle wave z can take a more complex form of a triple zigzag.

Thus, in the near future, the price may move down, forming a primary intervening wave, which is similar to an intermediate zigzag (A)-(B)-(C).

Probably, we will observe the end of the wave near 1697.96. At that level, it will be at 76.4% of wave.

Equities surged as US Treasury yields eased amid improved risk sentiment. Despite its choppy path lately, the Dax 40 remains up from the daily chart’s perspective. The top range (15200) of the late January consolidation has managed to contain multiple pullbacks, which suggests a strong bullish interest. A break above 15600 has thrown out the remaining bears and may open the door for an extended rally above the ceiling at 15650. 15450 is the closest support as the RSI shot into overbought territory.

Silver makes its way back as the US dollar retreats across the board. Breaking the daily support of 20.60 from last November could keep the downward pressure on the precious metal. Though the RSI’s oversold condition on the daily chart may warrant a brief bounce as some sellers take their chips off the table. 20.80 is a fresh support and the support-turned-resistance at 21.40 is the first hurdle. Then 21.90 near the 30-day SMA could be a tough level to crack as downbeat sentiment may lead sellers to double down.

The pound bounces higher thanks to upbeat services PMI in February. On the daily chart, the pair is still striving to hold above January’s low of 1.1840 which is a critical floor to keep the price afloat in the medium-term. A bearish breakout could trigger a sell-off towards 1.1600. The triple bottom at 1.1920 shows that the bulls are still eager to defend this major demand area and a pop above 1.2040 is an encouraging sign. A rally above the double top at 1.2140 would pave the way for a broader recovery.

Swiss CPI rose 0.7% mom in February, above expectation of 0.4% mom. Core CPI (excluding fresh and seasonal products, energy and fuel), rose 0.8% mom. Prices of domestic products rose 0.6% mom. Imported products rose 1.1% mom.

Compared with the same month a year ago, CPI accelerated to 3.4% yoy, up from January's 3.3% yoy, well above expectation of slowing to 2.9% yoy. Core CPI accelerated to 2.4% yoy, up from 2.2% yoy. Domestic prices accelerated to 2.9% yoy, up from 2.6% yoy. Imported prices slowed to 4.9% yoy, down from 5.2% yoy.

Full release here.

Market pricing about the Fed’s future course of action has dramatically changed lately, following a streak of upbeat US economic data and hotter-than-expected inflation numbers for January. Several Fed officials have become more vocal about the need for more aggressive action hereafter, but a big question is whether Fed Chair Powell has ditched his disinflationary view following the data. With that in mind, investors will closely watch his testimony before Congress on Tuesday and Wednesday.

Streak of January data boosts Fed hike bets

At the press conference following the last FOMC gathering, Fed Chair Powell appeared less hawkish than expected, saying that the disinflationary process has started and although he noted that it will not be appropriate to cut rates this year, he added that if inflation comes down faster, that will be incorporated into their policy.

Back then, his remarks added credence to investors’ view that the terminal rate could not reach the Fed’s median projection of 5.1%, and that a couple of rate cuts could be warranted by the end of the year. Nonetheless, a run of upside surprises in economic and inflation data made investors radically change their mind. They raised the level of where they expect interest rates to reach at 5.4%, while scaling back their bets for rate cuts.

The stellar gains in nonfarm payrolls for January marked the beginning of the shift, with the acceleration in the monthly CPI rate for the month cementing this change of heart. Although those releases were the game changers, early February numbers also corroborated the new narrative. The preliminary S&P Global PMIs surprised to the upside, and although the ISM manufacturing PMI stayed in contractionary territory, its prices subindex jumped above 50, heightening fears that inflation may remain elevated for longer.

Will Powell abandon his disinflationary view?

With all that in mind, investors may be sitting on the edge of their seats in anticipation of what Fed Chair Powell has to say in his semi-annual testimony before Congress. Will he reiterate his disinflationary remarks, or will he appear in a hawkish suit and fuel expectations that interest rate projections will be revised higher at the upcoming meeting?

Several of his colleagues seem to have adopted the latter stance. Minneapolis Fed President Neel Kashkari, who has long been an advocate of a terminal rate above 5.4%, said that he is “open minded” on either a 25 or 50bps hike at the upcoming meeting, while Cleveland Fed President Mester and Atlanta Fed President Bostic argued that rates should exceed 5% and stay there for a prolonged period, with Bostic specifically saying that they should keep them at the peak well into 2024.

How can the dollar respond?

Therefore, a hawkish message by Fed Chair Powell could further endorse investors’ view and thereby push Treasury yields and the dollar higher. At the same time, stock indices could extend their slide as higher interest rates mean higher borrowing costs and lower present values for firms. However, calling for a long-lasting recovery in the US dollar seems premature and impulsive. Ahead of the upcoming FOMC meeting, investors will have to take in the employment report for February, coming out on Friday, and the CPI numbers for the month, due to be released on March 14, both of which have the capacity to give market pricing a 180-degree spin again.

Considering that investors have drastically increased their ECB hike bets as well, euro/dollar may not be the best pair for exploiting any further dollar gains. With the slowdown in Canada’s inflation for January and the nation’s disappointing GDP data for Q4 congealing expectations that the BoC may refrain from hiking at Wednesday’s meeting, the loonie may be a better choice.

Will dollar/loonie break above 1.3700 soon?

Dollar/loonie seems to be in a recovery mode since February 14, while in the bigger picture, it is trading well above the key support zone of 1.3230 and well above the uptrend line drawn from the low of June 2021. So, should the bulls recharge soon, they could challenge the 1.3700 territory, which acted as a ceiling between December 7 and January 3. If there are no sellers to be found there, they may climb towards the 13810 zone, where another breach could set the stage for extensions towards the peak of October 13 at 1.3980.

Now, if Powell reiterates his disinflationary view, which seems an unlikely scenario following the latest bunch of US data, traders may abandon the US dollar and allow dollar/loonie to fall below 1.3470, a move that might trigger declines towards the key support territory of 1.3230. That said, the pair would still be trading above the aforementioned uptrend line and thus, the slide will be far from signaling a full-scale bearish reversal.