US Dollar demand persists….for now

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

On Tuesday, the Bank of England announced a repo facility for non-bank financials, and the BOE will now attempt to stave off a repeat of the 2022 bond meltdown. Emergency cash will be available to insurers and pension funds. Key standouts on Wednesday’s calendar come from German consumer confidence, the US advanced goods trade balance, wholesale inventories, a BOE Bailey speech, the Bank of Canada policy decision, and the FOMC decision.

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

The Yen has been stuck in a range with most Asian markets closed on this Wednesday. However, we have seen some Yen demand on the back of the latest BOJ Minutes which show some BOJ members still feeling more rate hikes ahead. Key standouts on Wednesday’s calendar come from German consumer confidence, the US advanced goods trade balance, wholesale inventories, a BOE Bailey speech, the Bank of Canada policy decision, and the FOMC decision.

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 0.6200 – Figure – Medium
• S2 0.6164 – 17 January low – Strong

AUDUSD – fundamental overview

The Australian Dollar was already struggling with the news of President Trump wanting the universal tariff to be greater than 2.5%. The currency has come under added pressure on Wednesday after the release of a round of softer than expected inflation data. Key standouts on Wednesday’s calendar come from German consumer confidence, the US advanced goods trade balance, wholesale inventories, a BOE Bailey speech, the Bank of Canada policy decision, and the FOMC decision.

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 into the 1.4500-1.5000 area, exposing a retest of the 2020 high just ahead of 1.4700. Setbacks should be very well supported ahead of 1.3500.

• R2 1.4516 – 21 January/2025 high – Strong
• R1 1.4500 – Psychological – Medium
• S1 1.4261– 20 January low – Strong
• S2 1.4200 – Figure – Medium

USDCAD – fundamental overview

The Canadian Dollar continues to trade soft on Trump tariff news and lower oil. There is now a serious liquidity overhang as the Canadian government plans a Covid-style liquidity buffer in response to tariff threats. Key standouts on Wednesday’s calendar come from German consumer confidence, the US advanced goods trade balance, wholesale inventories, a BOE Bailey speech, the Bank of Canada policy decision, and the FOMC decision.

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 0.5647 – 23 January low – Medium
• S2 0.5617 – 21 January low – Strong

NZDUSD – fundamental overview

The news of President Trump wanting the universal tariff to be more than 2.5% does not bode well for the global trade outlook, which has been having a negative influence on the correlated New Zealand Dollar. Of course, the Kiwi rate is already struggling with the expectation for another 50 basis point rate cut from the RBNZ in February. Key standouts on Wednesday’s calendar come from German consumer confidence, the US advanced goods trade balance, wholesale inventories, a BOE Bailey speech, the Bank of Canada policy decision, and the FOMC decision.

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 2791 – 31 October/Record high – Strong
• R1 2786 – 24 January/2025 high – Medium
• S1 2537 – 14 November low – Medium
• S2 2500 – Round Number – 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.