Signs US tariffs could be less severe

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 1.2716 – 26 February/2025 high – Medium
• S1 1.2559 –  28 February low – Medium
• S2 1.2545 – 14 February low – Strong

GBPUSD – fundamental overview

Most of the latest weakness in the Pound is more about the month end flow into the US Dollar than anything else. Key standouts on today’s calendar come from German, Eurozone, and UK manufacturing PMIs, BOE consumer credit and mortgage approvals, Eurozone inflation, Canada manufacturing PMIs, US ISM manufacturing, and US construction spending.

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

Friday's softer Tokyo CPI data has opened more downside pressure on the Yen. And as per last Thursday's insights, CFTC Yen positioning had been tracking at extreme levels, while the one month vol risk premium was also trading at elevated levels. This warned of the possibility for Yen selling on the horizon. Key standouts on today’s calendar come from German, Eurozone, and UK manufacturing PMIs, BOE consumer credit and mortgage approvals, Eurozone inflation, Canada manufacturing PMIs, US ISM manufacturing, and US construction spending.

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 0.6409 – 21 February/2025 high – Strong
• R2 0.6331 – 24 January high – Medium
• S1 0.6193 – 28 February low – Medium
• S2 0.6164 – 17 January low – Medium

AUDUSD – fundamental overview

The latest round of economic data out of Australia was mixed, with Q4 company operating profit and inventories exceeding expectation, while inflation data and job ads came in below forecast. The offsetting results left most of the focus on worry around Trump tariffs and potential fallout. Key standouts on today’s calendar come from German, Eurozone, and UK manufacturing PMIs, BOE consumer credit and mortgage approvals, Eurozone inflation, Canada manufacturing PMIs, US ISM manufacturing, and US construction spending.

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 – Strong
• R1 1.4500 – Figure – Medium
• S1 1.4270 – 5 February low – Medium
• S2 1.4151 – 14 February/2025 low – Strong

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 tomorrow. However, setbacks have been mitigated by the fact that President Trump's commerce secretary was out saying that all of this was a fluid situation, suggesting that things may not end up being nearly as severe as 25%. Key standouts on today’s calendar come from German, Eurozone, and UK manufacturing PMIs, BOE consumer credit and mortgage approvals, Eurozone inflation, Canada manufacturing PMIs, US ISM manufacturing, and US construction spending.

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 0.5585 – 28 February low – Medium
• S2 0.5541 – 13 January low – Medium

NZDUSD – fundamental overview

Most of the weakness we've been seeing is in sympathy to the Australian Dollar as trade tension headlines sit front and center. Key standouts on today’s calendar come from German, Eurozone, and UK manufacturing PMIs, BOE consumer credit and mortgage approvals, Eurozone inflation, Canada manufacturing PMIs, US ISM manufacturing, and US construction spending.

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 6152 – 19 February/Record high – Strong
• R1 6014 – 26 February high – Medium
• S1 5805 – 10 January low – Medium
• S2 5770 – 13 January/2025 low – Strong

US SPX 500 – fundamental overview

Going forward, it will be important to keep an eye on Trump trade policies, inflation, bigger picture economic data and the Fed policy outlook. 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.