Tariff talk continues to support the Buck

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/2025 high – Strong
• R1 1.2524 – 24 January high – Medium
• S1 1.2348 –  24 January low – Medium
• S2 1.2293 – 23 January low – Strong

GBPUSD – fundamental overview

The Pound has been trading relatively steady in what has been some muted price action for the UK currency. We've just seen an uptick in mortgage approvals despite the surge in house prices. Meanwhile, the BOE is widely expected to cut rates by 25 basis points when it meets next week. Key standouts on Friday’s calendar come from German retail sales, UK nationwide house prices, German unemployment, German inflation, Canada GDP, US core PCE, Chicago PMIs, Eurozone consumer inflation expectations, 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 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

Most of the focus in Japan has been around the shift in BOJ policy with the central bank now on a track of raising rates after a prolonged period of negative real interest rates. At the same time, the latest headlines around Trump on tariffs are inviting some Dollar demand into Friday. Key standouts on Friday’s calendar come from German retail sales, UK nationwide house prices, German unemployment, German inflation, Canada GDP, US core PCE, Chicago PMIs, Eurozone consumer inflation expectations, 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 0.6390 – 11 December high – Strong
• R2 0.6331 – 24 January/2025 high – Medium
• S1 0.6199 – 30 January low – Medium
• S2 0.6164 – 17 January low – Strong

AUDUSD – fundamental overview

Aussie producer prices ticked up a bit which may be helping to offset some of the latest weakness around renewed concerns over President Trump tariff policy and the possibility for official action against Canada and Mexico over the weekend. Key standouts on Friday’s calendar come from German retail sales, UK nationwide house prices, German unemployment, German inflation, Canada GDP, US core PCE, Chicago PMIs, Eurozone consumer inflation expectations, 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 up at the 2020 high just ahead of 1.4700. Setbacks should be very well supported ahead of 1.3500.

• R2 1.4595 – 30 January/2025 high – Strong
• R1 1.4500 – Round Number – Medium
• S1 1.4391– 29 January low – Medium
• S2 1.4315 – 24 January low – Medium

USDCAD – fundamental overview

The Canadian Dollar just took another big hit, trading to a fresh multi-month low and sitting at its lowest level against the Buck since March 2020. The latest weakness comes from President Trump's announcement of 25% tariffs on Canada imports ahead of the closing bell on Thursday. The market had been caught off guard after getting contradictory comments earlier from Commerce Secretary Howard Lutnick. Key standouts on Friday’s calendar come from German retail sales, UK nationwide house prices, German unemployment, German inflation, Canada GDP, US core PCE, Chicago PMIs, Eurozone consumer inflation expectations, 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 0.5500 will intensify bearish price action.

• R2 0.5759 – 18 December high – Strong
• R1 0.5724 – 24 January/2025 high – Medium
• S1 0.5634 – 29 January low – Medium
• S2 0.5617 – 21 January low – Strong

NZDUSD – fundamental overview

Ongoing worry about US tariffs and an expectation for another 50 basis point rate cut from the RBNZ in February has kept the New Zealand Dollar under pressure. We've also seen some added downside from this week's slumping New Zealand business outlook survey. Key standouts on Friday’s calendar come from German retail sales, UK nationwide house prices, German unemployment, German inflation, Canada GDP, US core PCE, Chicago PMIs, Eurozone consumer inflation expectations, 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 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 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 2850 – Mid-Figure – Medium
• R1 2800 – 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.