Trade wars or trade strategy?

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 1.3048 – 6 November high – Strong
• R1 1.2990 – 12 March/2025 high – Medium
• S1 1.2800 –  Figure – Medium
• S2 1.2768 – 5 March low – Strong

GBPUSD – fundamental overview

The Pound continues to hold up well, getting another boost from US Commerce Secretary Lutnick who praised the UK's lack of response on US tariffs. Key standouts on Friday’s calendar come from German wholesale prices and inflation, UK GDP, industrial production, manufacturing production, and construction output, Canada manufacturing sales and wholesale sales, the German current account, and US Michigan sentiment.

USDJPY – technical overview

There are signs of a meaningful top in place after the market put in a multi-year high in 2024. At this point, the door is now open for a deeper setback towards the 140 area.

• R2 151.31 – 3 March high – Strong
• R1 150.00 –Psychological – Medium
• S1 146.54 – 11 March/2025 low – Medium
• S2 145.91 – 4 October low – Strong

USDJPY – fundamental overview

The Yen has come under some pressure into the end of the week as it worries about a US 25% automobile tariff which looks set to take effect in April. Still, overall, the Yen has been mostly supported on hawkish BOJ comments and improving real wages. Key standouts on Friday’s calendar come from German wholesale prices and inflation, UK GDP, industrial production, manufacturing production, and construction output, Canada manufacturing sales and wholesale sales, the German current account, and US Michigan sentiment.

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 0.6365 – 6 March high – Medium
• S1 0.6187 – 4 March low – Medium
• S2 0.6164 – 17 January low – Medium

AUDUSD – fundamental overview

All of this recent worry around the outlook for the US economy amidst escalating trade tension and an unpredictable set of US administration policies has opened some broad based US Dollar outflows. However, this latest run of intense risk off flow in global markets has been having a negative impact on the risk correlated Australian Dollar. Key standouts on Friday’s calendar come from German wholesale prices and inflation, UK GDP, industrial production, manufacturing production, and construction output, Canada manufacturing sales and wholesale sales, the German current account, and US Michigan sentiment.

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 1.4544 – 4 March high – Medium
• S1 1.4239 – 6 March low – Medium
• S2 1.4151 – 14 February/2025 low – Strong

USDCAD – fundamental overview

The Canadian Dollar remains under pressure on the trade war theme. It's becoming clear that exactly how governments decide to negotiate on tariffs could make a big difference on how things ultimately play out. We've seen the Peso holding up much better relative to the Canadian Dollar because Mexico seems to be taking a more pragmatic approach to negotiations, while Canada is playing the tit-for-tat game. Key standouts on Friday’s calendar come from German wholesale prices and inflation, UK GDP, industrial production, manufacturing production, and construction output, Canada manufacturing sales and wholesale sales, the German current account, and US Michigan sentiment.

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

All of this recent worry around the outlook for the US economy amidst escalating trade tension and an unpredictable set of US administration policies has opened some broad based US Dollar outflows. However, this latest run of intense risk off flow in global markets has been having a negative impact on the risk correlated New Zealand Dollar. Key standouts on Friday’s calendar come from German wholesale prices and inflation, UK GDP, industrial production, manufacturing production, and construction output, Canada manufacturing sales and wholesale sales, the German current account, and US Michigan sentiment.

US SPX 500 – technical overview

The longer term uptrend remains intact and dips continue to be exceptionally well supported. Critical support comes in at 5386, with only a weekly close back below this level to compromise the structure. Until then, the focus remains on the formation of the next major higher low.

• R2 5877 – 4 March high – Medium
• R1 5771 – 13 January low – Medium
• S1 5509 – 13 March/2025 low – Medium
• S2 5386 – 6 September 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 above 3000. Setbacks should now be well supported above 2500 on a monthly close basis.

• R2 3000 – Psychological – Strong
• R1 2994 – 14 March/Record high – Medium
• S1 2833 – 28 February low – Medium
• S2 2730 – 27 January low – Strong

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.