Indian rupee, Sensex and Nifty gained sharply on Wednesday after the RBI slowed the pace of interest-rate increases for the second straight time. The Reserve Bank of India hiked the key interest rate by 25 basis points and projected better growth.

"The outlook remains clouded by geopolitical tensions, and oil prices. The world is looking to India to energise global partnership in several critical areas," RBI Governor Shaktikanta Das said. The Indian economy remains resilient in the face of considerable uncertainties on global commodity prices, he added.

EQUITIES

European stock opened higher while US futures traded with positive momentum throughout the Asian session following Federal Reserve Chairperson Jerome Powell's remarks that inflation will drop significantly this year. Moving ahead, today's speeches by Federal Reserve policymakers Bostic, Williams and Minneapolis Fed President Kashkari may offer some further insight into the Fed's thinking.

OIL

Crude oil futures extend the rebound on Wednesday as investors looked to the FED Powell's less hawkish than feared comments, with the focus now turning to weekly EIA inventory data. Meanwhile, the American Petroleum Institute inventory data showed the US crude inventories declined by 2.18 million barrels last week, defying forecasts for a 2.15-million-barrel increase.

CURRENCIES

In the currency market, the U.S. Dollar Currency Index, which tracks the greenback against six major currencies slightly retreats from the fresh monthly highs. The British pound regained momentum against the US dollar and Euro. As of this writing, GBPUSD recovered back to above 1.2100. During the previous session, the currency pair broke below the psychological support of 1.2000 and hit a fresh monthly low of 1.1960.

GOLD

The precious metal rebounded back to above $1880 on Wednesday Morning after the comments from FED chair Powell were seen as relatively less hawkish than anticipated by investors. While he also said that more interest-rate hikes will be necessary. However, the overall momentum remains mixed for the long term as the improvement in the risk appetite of the investors is shifting the focus from safe-haven assets.

Economic Outlook

On the data front, Industrial production in Germany went down sharply by 3.1% month-over-month in December of 2022, following an upwardly revised 0.4% rise in November and worse than market forecasts of a 0.7% decline. This marked the steepest decline in industrial output since March 2022.

Coronavirus update:

Worldwide, more than 676 million people have been confirmed infected and more than 6.77 million have died. The United States has confirmed over 104 million cases and has had more than 1.13 million deaths from COVID-19, the highest total in the world.

Technical Outlook and Review

EURUSD: The currency pair needs to stay above 1.0800; otherwise. 1.0700 and 1.0660 may be visible soon. On the upper side, 1.0810 is the key resistance zones to watch, if the pair breaks and closes above this area then the next resistance area to watch is around 1.0840/60.

The important levels to watch for today: Support- 1.0710 and 1.0670 Resistance- 1.0770 and 1.0800.

GOLD: For today, $1895 remains the key resistance to watch. On the downside, rejection and pullback from the $1895 resistance allow for a dip towards $1874, with $1865 and $1860 forming additional downside targets.

The important levels to watch for today: Support- 1875 and 1864 Resistance- 1888 and 1895.

Quote of the day - “Always trust your intuition, which resembles a hidden supercomputer in the mind. It can help you do the right thing at the right time if you give it a chance.” - Michael Steinhardt.