Daily Markets

• The U.S. dollar inched lower on Friday, after data showed inflation rose modestly in December but was trending lower, which should keep the Federal Reserve on track to cut interest rates by the middle of the year. Volume faded in the afternoon ahead of the weekend and as investors braced next week for a slew of important U.S. economic data such as non-farm payrolls for January and key events led by the Federal Open Market Committee meeting and the Treasury's refunding announcement. The latter will outline the U.S. government's borrowing requirements for the upcoming quarter. Data showed the personal consumption expenditures (PCE) price index increased 0.2% last month after an unrevised 0.1% drop in November. In the 12 months through December, the PCE price index increased 2.6%, matching November's unrevised gain. Those numbers were in line with consensus expectations. The annual inflation rate was under 3% for the third straight month. The Fed tracks the PCE price measure for its 2% inflation target. Currency analysts at MUFG said in a note that U.S. economic data presented a mixed picture for monetary policy, ahead of the Fed's next policy statement on Jan. 31. Post-inflation data, U.S. rate futures market priced in a roughly 47% chance of easing at the March meeting, down from late Thursday's 51% probability, and the 80% chance factored in two weeks ago, according to LSEG's rate probability app. The market is fully pricing in the first rate cut to occur at the May meeting, with a roughly 90% probability, down slightly from late Thursday, which was at 94%. About five rate cuts of 25 basis points each have been priced in this year. Jonathan Petersen, senior markets economist at Capital Economics wrote in a research note that despite recent solid economic data, growing disinflationary pressures have kept a lid on Treasury yields and the dollar. Much like the Fed, he noted that other central banks such as the European Central Bank, have pushed back against market expectations of rates cuts in the next couple of months. The euro was up 0.1% at $1.0856, rebounding from a six-week low hit earlier in the session after a survey showed weaker-than-expected German consumer sentiment. ECB policymaker Martins Kazaks also said on Friday the central bank was on the right path to lower inflation but patience was required before policy can be reversed.

Gold – XAU

Gold on Friday made its intraday high of US$2026.61/oz and low of $2015.86/oz. Gold is down by 0.104% at US$2018.51/oz.

Technicals in Focus:

On the daily charts, gold trades higher than 20DMA (1953). If it drops below this level, it could lead to 1,927. The MACD is currently below the zero line but the histograms are showing an increasing trend, indicating that there may be upward movement in the coming sessions. The RSI is currently at 45.31, which is in the neutral region, suggesting there may be more selling pressure before it rebounds. The Stochastic Oscillator is also in the oversold territory but has given a positive crossover, indicating a bullish stance for intraday trades.

Trading Strategy: Sell on Strength

Sell in between 2029-2100 keeping stop loss closing above 2107, targeting 2020-2005-1990. Buy in between 2020-1990 with risk below 1990 targeting 2039-2050-2058 and 2064-2080-2094.

Silver - XAG

Silver on Friday made its intraday high of US$22.96/oz and low of US$22.68/oz settled down by 0.354% at US$22.79/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 200DMA (22.91), breakage above will lead to 23.51. MACD is below the zero line and histograms are decreasing trend, bringing a bearish stance in the upcoming sessions. RSI is approaching the oversold region, indicating a sell signal for now. The Stochastic Oscillator is in the oversold region and gives a positive crossover to show an upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 22.40-19.30, targeting 23.50-24.60 and 25.00-25.90 with stop loss should be placed on the breakage below 19.00. Sell in between 23.00-27.50 with a stop loss above 27.50 targeting 22.40-21.90 and 21.50-20.90-20.50.

Oil - WTI

Crude Oil on Friday made an intra‐day high of US$78.17/bbl, an intraday low of US$75.99/bbl, and settled up by 1.390% to close at US78.09/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 100DMA i.e. 75.37, a support level, and breakage above will call for 77.48. MACD is above the zero line and histograms are in increasing mode will bring a bullish stance in the upcoming sessions. The Stochastic Oscillator is in the overbought region, giving a negative crossover to confirm a bearish stance; while the RSI is in the neutral region, more upside can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Sell

Sell in between 78.50-81.30 with stop loss at 81.50; targeting 78.00-77.30-76.50 and 75.75-74.90-74.00. Buy above 77.30-74.00 with risk daily closing below 74.00; targeting 78.50-79.35-80.00 and 80.60-81.50.

EUR/USD

EUR/USD on Friday made an intraday low of US$1.0812/EUR, a high of US$1.0884/EUR, and settled the day up by 0.073% to close at US$1.0853/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.0800), which becomes immediate support, a break below will target 1.0717. MACD is above the zero line and histograms are increasing mode, bringing a bullish view. Stochastic is in oversold territory, giving negative crossovers to the bullish outlook for intraday. 14D RSI is currently in a neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.0950-1.1100, targeting 1.0890-1.0820 and 1.0775-1.0770-1.0640 with stop-loss at daily closing above 1.1100. Buy above 1.0890-1.0650 with risk below 1.0490 targeting 1.1020-1.1105-1.1145-1.1200 and 1.1245-1.1275.

GBP/USD

GBP/USD on Friday made an intra‐day low of US$1.2674/GBP, a high of US$1.2757/GBP, and settled the day up by 0.0338% to close at US$1.2702/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 50DMA (1.2297) is becoming a resistance level. 14-D RSI is currently in a neutral region and direction is difficult to predict on an RSI basis. The Stochastic Oscillator is in oversold territory and gives a positive crossover to confirm a bullish stance. MACD is above the zero line but histograms are increasing leading to movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.2650-1.2050 with a target of 1.2730-1.2790-1.2850 and 1.2890-1.2950 1.2990-1.3040 with a stop loss closing below 1.2050. Sell in between 1.2720-1.2950 with targets at 1.2690-1.2630-1.2540 and 1.2490-1.2440-1.2390 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Friday made an intra‐day low of JPY147.40/USD, an intraday high of JPY148.20/USD, and settled the day up by 0.355% at JPY148.15/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (137.57), major support on the daily chart. 14-D RSI is currently in the overbought region and chances of downward are expected based on RSI. MACD is above the zero line but histograms are in decreasing mode which might lead to downward movement. The Stochastic Oscillator is in overbought territory and signaling to sell as it has given a negative crossover to confirm a bearish stance.

Trading Strategy: Neutral to Sell

Sell below 148.50-151.50 with risk above 151.90 targeting 146.95-146.50145.80 and 145.00-144.0-143.00. Long positions above 147.10-140.90 with targets of 148.00-148.55-149.20 and 149.90-150.50 with stops below 140.00.