Fed messaging leaves something for everyone

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The door is now open for the next major upside extension towards the 2018 high at 1.4377. Setbacks should be well supported above 1.2000 on a monthly close basis.

• R2 1.2576 – 7 January/2025 high – Strong
• R1 1.2524 – 24 January high – Medium
• S1 1.2348 –  24 January low – Medium
• S2 1.2293 – 23 January low – Strong

GBPUSD – fundamental overview

Most of the latest movement in the Pound comes from reaction to the Fed policy decision. There were no major surprises, though it seems the market focused more on Powell's comment that rates remain meaningfully above the neutral rate, suggesting more cuts could be ahead. This opened some upside in the Pound. Key standouts on Thursday’s calendar come from German import prices, German GDP, BOE consumer credit, UK mortgage approvals, Eurozone GDP, Eurozone unemployment, Eurozone sentiment, the ECB policy decision, US GDP, initial jobless claims, and pending home sales.

USDJPY – technical overview

The market is looking to resume the longer-term uptrend after an intense correction in 2024. A higher low is ideally sought out above 140.00 in favor of a bullish continuation. The October monthly close back above 150.00 strengthens the case for longer-term uptrend resumption.

• R2 158.88 – 10 January/2025 high – Strong
• R1 156.76 – 23 January high – Medium
• S1 153.71– 27 January/2025 low – Medium
• S2 153.16 – 17 December low – Medium

USDJPY – fundamental overview

The Yen has been rallying on the back of some dovish Fed Chair comments post FOMC decision. The dovish comments come in contrast with a market that still things there are more BOJ rate hike ahead, which is driving this latest round of Yen demand. Key standouts on Thursday’s calendar come from German import prices, German GDP, BOE consumer credit, UK mortgage approvals, Eurozone GDP, Eurozone unemployment, Eurozone sentiment, the ECB policy decision, US GDP, initial jobless claims, and pending home sales.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6000 would give reason for rethink. A monthly close back above 0.7000 will take the big picture pressure off the downside and strengthen case for a bottom.

• R1 0.6390 – 11 December high – Strong
• R2 0.6331 – 24 January/2025 high – Medium
• S1 0.6200 – Figure – Medium
• S2 0.6164 – 17 January low – Strong

AUDUSD – fundamental overview

The Australian Dollar hasn't gotten any help from some dovish Fed Chair comments, instead focusing on the fact that the Fed Chair said the Fed was in no rush to cut rates. This in conjunction with this week's softer Aussie inflation data and ongoing worry about US tariffs has kept the Australian Dollar under pressure. The NAB even went ahead and tweaked their call for the RBA to cut rates in February versus March. Key standouts on Thursday’s calendar come from German import prices, German GDP, BOE consumer credit, UK mortgage approvals, Eurozone GDP, Eurozone unemployment, Eurozone sentiment, the ECB policy decision, US GDP, initial jobless claims, and pending home sales.

USDCAD – technical overview

A sustained hold above 1.3000 over the past several months signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4500-1.5000 area, exposing a retest of the 2020 high just ahead of 1.4700. Setbacks should be very well supported ahead of 1.3500.

• R2 1.4516 – 21 January/2025 high – Strong
• R1 1.4500 – Psychological – Medium
• S1 1.4261– 20 January low – Strong
• S2 1.4200 – Figure – Medium

USDCAD – fundamental overview

The Canadian Dollar is softer in the aftermath of the Bank of Canada and Fed policy decisions. The Bank of Canada went ahead and cut rates with an overall downbeat outlook, while the Fed left rates on hold with the Fed Chair saying the central bank was in no rush to cut rates. The Canada economy is under added stress from US tariffs and this is inviting more downside pressure on the Canadian Dollar. The Bank of Canada has also cut its growth forecasts and ended QT, while the Canadian Dollar deals with another blow in the form of lower oil. Key standouts on Thursday’s calendar come from German import prices, German GDP, BOE consumer credit, UK mortgage approvals, Eurozone GDP, Eurozone unemployment, Eurozone sentiment, the ECB policy decision, US GDP, initial jobless claims, and pending home sales.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5500 will intensify bearish price action.

• R2 0.5759 – 18 December high – Strong
• R1 0.5724 – 24 January/2025 high – Medium
• S1 0.5634 – 29 January low – Medium
• S2 0.5617 – 21 January low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar hasn't gotten any help from some dovish Fed Chair comments, instead focusing on the fact that the Fed Chair said the Fed was in no rush to cut rates. This in conjunction with ongoing worry about US tariffs and an expectation for another 50 basis point rate cut from the RBNZ in February has kept the New Zealand Dollar under pressure. We've also seen some added downside from the latest slumping New Zealand business outlook survey. Key standouts on Thursday’s calendar come from German import prices, German GDP, BOE consumer credit, UK mortgage approvals, Eurozone GDP, Eurozone unemployment, Eurozone sentiment, the ECB policy decision, US GDP, initial jobless claims, and pending home sales.

US SPX 500 – technical overview

The longer term uptrend remains intact and dips continue to be exceptionally well supported. Critical support comes in at 5679, with only a break back below this level to compromise the structure and open the door for a more significant corrective decline. Until then, the focus remains on a continued push to fresh record highs.

• R2 6200 – Round Number – Strong
• R1 6133 – 24 January/Record high – Medium
• S1 5771 – 13 January/2025 low – Medium
• S2 5697 – 4 November low – Strong

US SPX 500 – fundamental overview

Investors are feeling better about a soft landing in the US economy. Moreover, there has been a fresh wave of market optimism in anticipation of a market bullish Trump presidency. It will however be important to keep an eye on inflation, bigger picture economic data and the latest shift in the Fed dot plot. Any of these variables are capable of easily ruffling some feathers and we've already seen a little of this in the aftermath of the latest Fed decision.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 3000 area. Setbacks should now be well supported above 2500 on a monthly close basis.

• R2 2791 – 31 October/Record high – Strong
• R1 2786 – 24 January/2025 high – Medium
• S1 2537 – 14 November low – Medium
• S2 2500 – Round Number – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in recent months with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported over the coming months.