Getting back to familiar market drivers

Next 24 hours: All eyes on US CPI

Today’s report: Getting back to familiar market drivers

We believe the story right now is much more about the market getting reacquainted with President Trump’s tactics than any material risk and fallout associated with extreme tariff measures. Key standouts on today's calendar come from US CPI and more Fed Chair testimony.

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 towards parity, with a higher platform sought out ahead of the next major upside extension. Look for a major bounce in the days ahead and the start to a push back towards the 2023 high at 1.1276. Only a monthly close below 1.0000 negates.

  • R2 1.0443 –5 February high – Medium
  • R1 1.0400 - Figure – Medium
  • S1 1.0272 - 4 February low – Medium
  • S2 1.0178 – 13 January/2025 low – Strong

EURUSD – fundamental overview

The Euro was higher on comment from EC President Von der Leyen who said unjustified tariffs against the EU would not go unanswered and would trigger proportionate countermeasures.  This sentiment was also echoed by German Chancellor Scholz. Key standouts on Wednesday’s calendar come from ECB speak, US CPI, the German current account, BOE speak, another day of Fed Chair Powell testimony, and the Bank of Canada Summary of Deliberations.

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 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 high – Strong
  • R1 1.2550 – 5 February high – Medium
  • S1 1.2249 –  3 February low – Medium
  • S2 1.2161 – 17 January low – Medium

GBPUSD – fundamental overview

The Pound has been better bid despite a dip in BRC retail sales and dovish comments from BOE Mann who voted for a 50 basis point rate cut. Key standouts on Wednesday’s calendar come from ECB speak, US CPI, the German current account, BOE speak, another day of Fed Chair Powell testimony, and the Bank of Canada Summary of Deliberations.

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 156.76 – 23 January high – Strong
  • R1 155.89 – 3 February high – Medium
  • S1 150.93– 7 February low – Medium
  • S2 150.00 – Psychological – Medium

USDJPY – fundamental overview

Testimony from Fed Governor Powell that the central bank favored delaying additional rate cuts has weighed on the Yen as yield differentials react accordingly. There have also been reports of Yen selling from leveraged funds betting the US will reject Japan's petition for an exemption from US steel tariffs. Key standouts on Wednesday’s calendar come from ECB speak, US CPI, the German current account, BOE speak, another day of Fed Chair Powell testimony, and the Bank of Canada Summary of Deliberations.

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 0.6331 – 24 January/2025 high – Medium
  • R2 0.6310 – 12 February high – Medium
  • S1 0.6170 – 4 February low – Medium
  • S2 0.6087 – 3 February/2025 low – Strong

AUDUSD – fundamental overview

The Australian Dollar has been holding steady as it awaits more clarity relating to possible Trump tariff exemptions and as it looks ahead to next week's RBA decision in which the central bank is expected to cut rates 25 basis points. Key standouts on Wednesday’s calendar come from ECB speak, US CPI, the German current account, BOE speak, another day of Fed Chair Powell testimony, and the Bank of Canada Summary of Deliberations.

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 at the 1.5000 psychological barrier. Setbacks should be very well supported ahead of 1.4200.

  • R2 1.4595 – 30 January high – Medium
  • R1 1.4503 – 4 February high – Medium
  • S1 1.4300 – Figure – Medium
  • S2 1.4270 – 5 February/2025 low – Strong

USDCAD – fundamental overview

The Canadian Dollar got a nice distraction away from all things tariffs and was able to generate some bids on the back of higher oil prices and an uptick in Canada building permits for December. Key standouts on Wednesday’s calendar come from ECB speak, US CPI, the German current account, BOE speak, another day of Fed Chair Powell testimony, and the Bank of Canada Summary of Deliberations.

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 0.5469 will intensify bearish price action.

  • R2 0.5724 – 24 January/2025 high – Strong
  • R1 0.5703 – 5 February high – Medium
  • S1 0.5582 – 4 February low – Medium
  • S2 0.5541 – 13 January low – Medium

NZDUSD – fundamental overview

The New Zealand Dollar is trying to find its feet as it contends with stress from last week's of not so great New Zealand data, worry around Trump tariffs, and what should be another 50 basis point RBNZ rate cut. Key standouts on Wednesday’s calendar come from ECB speak, US CPI, the German current account, BOE speak, another day of Fed Chair Powell testimony, and the Bank of Canada Summary of Deliberations.

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 Trump trade policies, 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 as 2025 gets going.

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 3000 – Psychological – Strong
  • R1 2943 – 11 February/Record high – Medium
  • S1 2730 – 27 January low – Medium
  • S2 2689 – 20 January low – Medium

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.

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.