Investors less enthusiastic about stronger US data

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 1.2500 on a monthly close basis.

• R2 1.2614 – 20 December high – Strong
• R1 1.2576 – 6 January high –Medium
• S1 1.2352 –  2 January low – Medium
• S2 1.2300 – 22 April/2024 low – Strong

GBPUSD – fundamental overview

Discouraging UK construction PMI numbers put a damper on things, with the Pound giving back a healthy chunk of the latest recovery. This was also compounded by another healthy round of economic data out of the US on Tuesday. Looking ahead, we get German factory orders, German retail sales, Eurozone confidence and sentiment reads, Eurozone producer prices, US ADP employment, US initial jobless claims, and the Fed Minutes late in the day.

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 159.45 – 12 July high – Strong
• R1 158.43 – 7 January high – Medium
• S1 156.02– 31 December low – Strong
• S2 154.43 – 19 December low – Medium

USDJPY – fundamental overview

The prospect of more imminent rate hikes from the BOJ has faded, all while US economic data has been strong and Fed policy has shifted more hawkish. This has opened heavy downside pressure on the Yen, with the currency sinking to its lowest levels since July 2024. At this stage, we should expect more verbal intervention efforts like we saw on Tuesday with FinMin Kato, in an effort to slow the pace of Yen declines. Looking ahead, we get German factory orders, German retail sales, Eurozone confidence and sentiment reads, Eurozone producer prices, US ADP employment, US initial jobless claims, and the Fed Minutes late in the day.

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. A monthly close back above 0.7000 will take the big picture pressure off the downside and strengthen case for a bottom.

• R1 0.6400 – Figure – Medium
• R2 0.6340 – 18 December high – Medium
• S1 0.6179 – 31 December 2024 low – Medium
• S2 0.6170 – 2022 Low – Strong

AUDUSD – fundamental overview

Australia's closely watched trimmed mean core CPI measure has eased, opening the door to thoughts about a dovish shift in RBA policy and the consideration of a rate cut. This has weighed on the commodity currency on this Wednesday. Looking ahead, we get German factory orders, German retail sales, Eurozone confidence and sentiment reads, Eurozone producer prices, US ADP employment, US initial jobless claims, and the Fed Minutes late in the day.

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 1.4500 – Psychological – Strong
• R1 1.4468 – 19 December/2024 high – Medium
• S1 1.4280– 6 January low – Medium
• S2 1.4232 – 17 December low – Strong

USDCAD – fundamental overview

The Canadian Dollar came back under pressure on Tuesday, getting hit from solid US economic data and a resumption of tough trade talk from President-elect Trump. Looking ahead, we get German factory orders, German retail sales, Eurozone confidence and sentiment reads, Eurozone producer prices, US ADP employment, US initial jobless claims, and the Fed Minutes late in the day.

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 0.5693 – 7 January high – Medium
• S1 0.5587 – 2 January/2025 low – Medium
• S2 0.5512 – 2022 Low – Strong

NZDUSD – fundamental overview

Though we did see a rise in milk powder prices, the other prices for dairy commodities softened, which has translated to a net downside pressure on the New Zealand Dollar. Looking ahead, we get German factory orders, German retail sales, Eurozone confidence and sentiment reads, Eurozone producer prices, US ADP employment, US initial jobless claims, and the Fed Minutes late in the day.

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 6112 – 16 December/Record high – Medium
• S1 5817 – 20 December 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 2727 – 12 December 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.