President Trump’s unsettling reminder

Next 24 hours: Will cooler heads prevail?

Today’s report: President Trump's unsettling reminder

President Trump is back to tightening the screws on trade as he reminds the market that tariffs on Canada and Mexico will be proceeding as planned next week. Financial markets have reacted accordingly, with stocks selling off, after already contending with the stressful combination of softer US economic data and hotter US inflation.

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 1.0534 – 27 January/2025 high – Strong
  • R1 1.0529 - 24 February high  – Medium
  • S1 1.0373 - 13 February low – Medium
  • S2 1.0283 – 10 February low – Medium

EURUSD – fundamental overview

The Euro has been consolidating a round of gains in the aftermath of the German election and is now waiting for more clarity as far as what exactly the coalition government will look like. Merz is said to be in talks with the SDP about the creation of a 200 billion Euro emergency defense fund. Key standouts on Tuesday’s calendar come from German GDP, UK CBI trades, Canada manufacturing sales, US Case Shiller, house prices, consumer confidence, Richmond Fed manufacturing, BOE speak, ECB speak, and Fed speak.

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 1.2729 – 17 December high – Strong
  • R1 1.2691 – 24 February/2025 high – Medium
  • S1 1.2563 –  19 February low – Medium
  • S2 1.2545 – 14 February low – Strong

GBPUSD – fundamental overview

The Pound has retreated from two-month highs against the US Dollar, with a good portion of the pullback attributed to comments from BOE Dhingra who has said gradual 25 basis point rate cuts will keep policy restrictive. Key standouts on Tuesday’s calendar come from German GDP, UK CBI trades, Canada manufacturing sales, US Case Shiller, house prices, consumer confidence, Richmond Fed manufacturing, BOE speak, ECB speak, and Fed 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 154.80 – 12 February high – Strong
  • R1 152.32 – 19 February high – Medium
  • S1 148.84 – 24 February/2025 low – Medium
  • S2 148.64 – 3 December low – Strong

USDJPY – fundamental overview

Japan has returned from the holiday break and most of the focus is on positioning ahead of this Friday's inflation data. The Yen has been better bid of late on the more hawkish leaning BOJ policy stance, and a hotter inflation print this week will further reinforce this outlook. Key standouts on Tuesday’s calendar come from German GDP, UK CBI trades, Canada manufacturing sales, US Case Shiller, house prices, consumer confidence, Richmond Fed manufacturing, BOE speak, ECB speak, and Fed 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 0.6430 – 12 December high – Medium
  • R2 0.6409 – 21 February/2025 high – Medium
  • S1 0.6310 – 14 February low – Medium
  • S2 0.6233 – 12 February low – Strong

AUDUSD – fundamental overview

The Australian Dollar has done a good job holding up in the face of escalating trade tension and risk off flow. This has been offset by an injection of liquidity into the Chinese markets and China's release of its 2025 policy framework, emphasizing rural reform and revitalization of the property market. Key standouts on Tuesday’s calendar come from German GDP, UK CBI trades, Canada manufacturing sales, US Case Shiller, house prices, consumer confidence, Richmond Fed manufacturing, BOE speak, ECB speak, and Fed 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 1.4000.

  • R2 1.4595 – 30 January high – Medium
  • R1 1.4380 – 10 February high – Strong
  • S1 1.4151 – 14 February/2025 low – Medium
  • S2 1.4100 – Figure – Medium

USDCAD – fundamental overview

The Canadian Dollar has come back under pressure as President Trump says tariffs on Canada and Mexico are on schedule to proceed as planned next week. Risk off flow has been another factor as well.  Meanwhile, traders are looking ahead to Friday's Canada GDP data. Key standouts on Tuesday’s calendar come from German GDP, UK CBI trades, Canada manufacturing sales, US Case Shiller, house prices, consumer confidence, Richmond Fed manufacturing, BOE speak, ECB speak, and Fed 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 0.5818 – 12 December high – Medium
  • R1 0.5773 – 21 February/2025 high – Medium
  • S1 0.5600 – 12 February low – Strong
  • S2 0.5541 – 13 January low – Medium

NZDUSD – fundamental overview

The New Zealand Treasury's latest economic update has signaled continued moderation in inflationary pressures despite the RBNZ’s recent 50bp rate cut. Future rate reductions are expected in smaller 25bp increments. Key standouts on Tuesday’s calendar come from German GDP, UK CBI trades, Canada manufacturing sales, US Case Shiller, house prices, consumer confidence, Richmond Fed manufacturing, BOE speak, ECB speak, and Fed 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 5770, 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 6152 – 19 February/Record high – Medium
  • S1 5912 – 3 February low – Medium
  • S2 5770 – 13 January/2025 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 2957 – 24 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.