Markets in disarray on tariff tantrum

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 1.2524 – 27 January high – Strong
• R1 1.2377 – 22 January high – Medium
• S1 1.2249 –  3 February low – Medium
• S2 1.2161 – 17 January low – Medium

GBPUSD – fundamental overview

The Pound hasn't been able to avoid fallout from the weekend news of the Trump tariffs on Canada, Mexico, and China. The currency has also been thinking about this week's BOE decision in which the central bank is expected to cut rates. Key standouts on Monday’s calendar come from German, Eurozone, and UK manufacturing PMIs, Eurozone inflation, Canada manufacturing PMIs, US ISM manufacturing, US construction spending, Fed speak, and ECB speak.

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

Though the Yen is weaker on the day amidst a massive wave of Dollar demand, the currency has held up better than most on the flight to safety correlation and on the back of a BOJ monetary policy outlook that has been leaning more hawkish. Key standouts on Monday’s calendar come from German, Eurozone, and UK manufacturing PMIs, Eurozone inflation, Canada manufacturing PMIs, US ISM manufacturing, US construction spending, Fed speak, and ECB speak.

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 0.6263 – 31 January high – Medium
• R2 0.6200 – Figure – Medium
• S1 0.6087 – 3 February/2025 low – Medium
• S2 0.6000 – Psychological – Strong

AUDUSD – fundamental overview

The Australian Dollar has sunk to a 4 year low on the back of the weekend news around Trump tariffs on Canada, Mexico, and China. A mixed bag of economic data including better than expected Aussie retail sales was mostly shrugged off and overshadowed on the Trump news. All of this distress from worry around trade wars could invite more downside pressure as the RBA is forced to take rate cuts more seriously. Key standouts on Monday’s calendar come from German, Eurozone, and UK manufacturing PMIs, Eurozone inflation, Canada manufacturing PMIs, US ISM manufacturing, US construction spending, Fed speak, and ECB speak.

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 1.5000 – Psychological– Strong
• R1 1.4793 – 3 February/2025 high – Medium
• S1 1.4595 – 30 January high – Medium
• S2 1.4369 – 31 January low – Strong

USDCAD – fundamental overview

No surprise to see the Canadian Dollar smashed to its lowest level against the Buck since 2003. The news of the Trump tariffs on Canada, Mexico, and China have intensified fears of a global trade war and have weighed on the Loonie accordingly. Prime Minister Trudeau has already hit back with a 25% counter tariff. Key standouts on Monday’s calendar come from German, Eurozone, and UK manufacturing PMIs, Eurozone inflation, Canada manufacturing PMIs, US ISM manufacturing, US construction spending, Fed speak, and ECB speak.

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 0.5684 – 31 January high – Medium
• R1 0.5652 – 15 January high – Medium
• S1 0.5516 – 3 February/2025 low – Medium
• S2 0.5469 – 2020 low – Very Strong

NZDUSD – fundamental overview

The New Zealand Dollar is making fresh 2025 and multi-month lows on the back of the news of the Trump tariffs on Canada, Mexico, and China. The currency will also need to worry about this week's Kiwi employment data and an upcoming RBNZ decision in which 50 basis points of rate cuts are expected. Key standouts on Monday’s calendar come from German, Eurozone, and UK manufacturing PMIs, Eurozone inflation, Canada manufacturing PMIs, US ISM manufacturing, US construction spending, Fed speak, and ECB speak.

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 2850 – Mid-Figure – Medium
• R1 2818 – 31 January/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.