US government shutdown worry back in headlines

Next 24 hours: Yen gets boost from inflation data

Today’s report: US government shutdown worry back in headlines

The market is perhaps getting a little worried about being overcooked following the latest record prints in US equities. The fact that the US government shutdown deadline is approaching with no budget deal to speak of is also ruffling some feathers.

Download complete report as PDF

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

EURUSD – technical overview

The Euro has been in a multi-month consolidation since bottoming out in 2022. Setbacks have since been exceptionally well supported on dips below 1.0500, with a higher platform sought out ahead of the next major upside extension. Look for a push through the 2023 high at 1.1276 to strengthen the constructive outlook and extend the recovery run towards 1.2000. Only back below 1.0400 negates.

  • R2 1.0898 – 2 February high – Medium
  • R1 1.0889 - 22 February high – Medium
  • S1 1.0761 - 20 February low – Medium
  • S2 1.0695 – 14 February/2024 low – Strong

EURUSD – fundamental overview

The Euro has been defying the odds, with speculative longs down for a fifth week to the smallest since November 2022. The ECB is seen cutting before the Fed, and yet the Euro has pushed higher, seemingly on the back of a wave of less dovish comments from a batch of ECB officials. Key standouts on Tuesday’s calendar come from German consumer confidence, Eurozone money supply, US durable goods, a BOE Ramsden speech, Case Shiller, house prices, a Fed Barr speech, consumer confidence, and Richmond Fed manufacturing.

EURUSD - Technical charts in detail

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 November 2022 monthly close back above 1.2000 strengthens this prospect. Any setbacks should now be well supported ahead of 1.2000. Next key resistance comes in at 1.2849.

  • R2 1.2800 – Figure – Medium
  • R1 1.2710 – 20 February high – Medium
  • S1 1.2518 – 5 February/2024 low – Medium
  • S2 1.2500 – 13 December low – Strong

GBPUSD – fundamental overview

The Pound got a nice little boost on Monday after CBI data came in better than expected. February total sales spiked to +5 from -33 previous, while the retail print came in at -7 from -50 previous. Key standouts on Tuesday’s calendar come from German consumer confidence, Eurozone money supply, US durable goods, a BOE Ramsden speech, Case Shiller, house prices, a Fed Barr speech, consumer confidence, and Richmond Fed manufacturing.

USDJPY – technical overview

The market remains confined to a strong uptrend, with sights set on a retest and break of the multi-year high from 2022 at 151.95. A push through this level will open the next major upside extension towards 155.00. Key support comes in at 145.90, with only a weekly close below to delay the constructive outlook.

  • R2 151.00 – Figure – Medium
  • R1 150.89 – 13 February/2024 high – Medium
  • S1 148.92 – 12 February low – Medium
  • S2 147.62– 7 February low – Strong

USDJPY – fundamental overview

Japan CPI data came in hotter than forecast across all three metrics, also representing a 22nd consecutive month of core inflation coming in above the BOJ's 2% target. This should get the central bank thinking more about being on track to exit negative interest rate policy, which could be factoring into some of the Yen demand today. Key standouts on Tuesday’s calendar come from German consumer confidence, Eurozone money supply, US durable goods, a BOE Ramsden speech, Case Shiller, house prices, a Fed Barr speech, consumer confidence, and Richmond Fed manufacturing.

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 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

  • R1 0.6625– 30 January high – Strong
  • R2 0.6595 – 22 February high – Medium
  • S1 0.6442– 13 February/2024 low – Strong
  • S2 0.6400 – Figure – Medium

AUDUSD – fundamental overview

The Australian Dollar is trying to recover after dipping on Monday from the broad based downturn in sentiment led by a reversal in US equities. A lot of the trading over the next 24 hours will be around positioning into Wednesday's Aussie inflation data. Key standouts on Tuesday’s calendar come from German consumer confidence, Eurozone money supply, US durable goods, a BOE Ramsden speech, Case Shiller, house prices, a Fed Barr speech, consumer confidence, and Richmond Fed manufacturing.

USDCAD – technical overview

Above 1.3000 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 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

  • R2 1.3600 – Figure – Medium
  • R1 1.3587 – 13 February/2024 high – Medium
  • S1 1.3441 – 22 February  low – Medium
  • S2 1.3358 – 31 January low – Strong

USDCAD – fundamental overview

The Canadian Dollar underperformed on Monday on the back of discouraging wholesale sales and building sector sales reports. Key standouts on Tuesday’s calendar come from German consumer confidence, Eurozone money supply, US durable goods, a BOE Ramsden speech, Case Shiller, house prices, a Fed Barr speech, consumer confidence, and Richmond Fed manufacturing.

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 0.5800 will intensify bearish price action.

  • R2 0.6223 – 4 December high– Strong
  • R1 0.6218 – 22 February high – Medium
  • S1 0.6129 – 20 February low– Medium
  • S2 0.6000 – 5 February/2024 low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has cooled off as sentiment turns south and US equities reverse course. But most of the price action over the coming hours will be about positioning into Wednesday's RBNZ decision. Key standouts on Tuesday’s calendar come from German consumer confidence, Eurozone money supply, US durable goods, a BOE Ramsden speech, Case Shiller, house prices, a Fed Barr speech, consumer confidence, and Richmond Fed manufacturing.

US SPX 500 – technical overview

Longer-term technical studies continue to look quite extended after pushing to fresh record highs, begging for a deeper correction ahead. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close above 5000 will be required to delay the outlook. Next key support comes in at 4842.

  • R2 5112 – 23 February/Record – Strong
  • R1 5100 – Round Number– Medium
  • S1 4920– 13 February low – Strong
  • S2 4842 – 31 January low – Medium

US SPX 500 – fundamental overview

Though we have seen an adjustment of investor expectations towards the amount of rate cuts in 2024, the market still believes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid and pushing record highs. Still, it's important to highlight the fact that the Fed has yet to declare a victory over inflation and could disappoint investors with less accommodative policy than desired going forward. If this happens, stocks could be in for a nasty bearish reversal.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1900 on a monthly close basis ahead of the next major upside extension towards 2500.

  • R2 2175 – 4 December/Record high– Strong
  • R1 2100 – Round Number – Medium
  • S1 1984 – 14 February/2024 low– Medium
  • S2 1973 – 13 December low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less stable and upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an end.

Peformance chart: 30-Day Performance vs. US dollar (%)

Suggested reading

Daily Reports Global FX Insights   joelkruger  

Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Group has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX Group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Group does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Group or any other FX and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.