USD/CAD Price Analysis – Feb 04, 2025
Daily Price Outlook
During the European trading session, the USD/CAD currency pair has failed to stop its downward trend and is still under pressure, trading around 1.4387.
The main reason for this losing streak is the strength of the Canadian Dollar (CAD). The Loonie has gained almost 2.6% from its high of 1.4800 on Monday, partly because US President Donald Trump decided to delay his plan to impose 25% tariffs on Canada and Mexico. This move helped boost the CAD, making the USD weaker in comparison.
Moreover, investors are now expecting the Bank of Canada (BoC) to cut interest rates by 25 basis points (bps) to 2.75% in its upcoming meeting in March. The possibility of this rate cut is another factor that has weighed on the Canadian Dollar, although it’s still holding strong.
On the other hand, the US Dollar (USD) has been struggling due to Trump’s decision to delay tariffs, which has reduced the Greenback's appeal as a safe-haven currency.
As a result, the US Dollar Index (DXY), which tracks the strength of the USD against six major currencies, is struggling to hold above 108.40, which was its low point from Monday.
US Dollar Weakens as Trump Delays Tariff Plans, Boosting Canadian Dollar
On the US front, the broad-based US Dollar (USD) has weakened after President Trump decided to delay his tariff plans on Canada and Mexico for 30 days.
This decision followed an agreement with his North American counterparts to tighten border restrictions aimed at preventing illegal immigration and the flow of fentanyl into the US. As a result, the Canadian Dollar (CAD) has become more attractive, strengthening sharply.
This move also suggests that Trump is using tariffs as a negotiating tool to secure better trade deals, giving the CAD a short-term boost. However, the Canadian Dollar's long-term outlook remains uncertain, as concerns grow that inflation in Canada may fall below the Bank of Canada's (BoC) 2% target.
Meanwhile, the US Dollar's safe-haven appeal has declined, pushing the US Dollar Index (DXY) lower. The DXY, which tracks the value of the USD against six major currencies, is struggling to recover from Monday’s low of 108.40.
Investors are now looking ahead to the US JOLTS Job Openings data for December, set to be released at 15:00 GMT. Economists predict that around 8 million new jobs were posted, slightly fewer than the 8.10 million in November.
This data could provide further insight into the US labor market and the USD's movement against the Canadian Dollar.
USD/CAD – Technical Analysis
The USD/CAD pair is trading at $1.44852, up 0.38%, reflecting a continuation of bullish momentum. The pair is comfortably holding above the key pivot point at $1.44525, signaling sustained buying interest.
Immediate resistance is positioned at $1.45254, with a break above this level potentially accelerating gains toward $1.45906 and $1.46681, the latter marking a significant barrier for bullish extension.
On the downside, immediate support is identified at $1.43820, followed by $1.43175 and $1.42623. A drop below these levels could trigger corrective pullbacks; however, the broader bias remains bullish as long as the pair sustains above the pivot.
The 50-day Exponential Moving Average (EMA) at $1.44369 underpins the bullish outlook, acting as dynamic support.
Additionally, the Relative Strength Index (RSI) remains in neutral-to-bullish territory, suggesting further room for upside before reaching overbought conditions.
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AUD/USD Price Analysis – Feb 04, 2025
Daily Price Outlook
During the European trading session, the AUD/USD currency pair failed to continue its upward trend and turned bearish around the 0.6213 level, hitting an intra-day low of 0.6170.
However, the decline was mainly due to rising US-China trade war tensions after China retaliated against new US tariffs. China announced a 15% tariff on US coal and liquefied natural gas (LNG) imports, along with a 10% tariff on crude oil, farm equipment, and some automobiles.
Moreover, China is imposing export controls on key minerals like tungsten and molybdenum to safeguard national security. As Australia relies heavily on trade with China, these tensions increased market uncertainty, putting pressure on the Australian dollar.
Furthermore, concerns over the Reserve Bank of Australia (RBA) possibly cutting interest rates in February added to the AUD/USD pair’s weakness. The RBA has kept its Official Cash Rate (OCR) at 4.35% since November 2023, waiting for inflation to return to its 2%-3% target before easing policy.
Market expectations remain cautious, but Westpac still predicts a total of 100 basis points in rate cuts during 2025. If the RBA signals an earlier rate cut, the AUD could face further downside pressure.
AUD/USD Under Pressure from US-China Trade Tensions and RBA Rate Cut Expectations
On the AUD front, the losses in the AUD/USD pair came after market volatility increased due to concerns over the ongoing trade tensions between the US and China, Australia’s major trading partner.
President Trump hinted at speaking with China soon, but warned that if a deal wasn’t reached, tariffs could become much higher. This uncertainty around trade is adding pressure to the Australian dollar, as investors watch how these tensions will unfold.
In addition, Trump recently announced a delay in steep tariffs on Mexico and Canada after the countries agreed to deploy 10,000 soldiers to help combat drug trafficking at the US border. This decision comes right after Trump imposed heavy tariffs on goods from Mexico, Canada, and China, causing further concerns over global trade.
Meanwhile, Chinese manufacturers are shifting production to other countries to avoid these tariffs, which could affect Australia’s trade relationship with China and weaken the AUD even more.
Moreover, the Australian dollar is also under pressure from expectations that the Reserve Bank of Australia (RBA) might cut interest rates in February. The RBA has kept rates steady at 4.35% since November 2023, waiting for inflation to fall within the target range.
With economic signs such as a decline in retail sales and a lower-than-expected PMI in China, the likelihood of a rate cut has grown. Analysts now expect a 25 basis point cut in February, which could add further weakness to the Australian dollar.
US Dollar Strengthens Amid Trade Tensions, Inflation Data, and Fed Caution
On the US front, the broad-based US dollar has been stabilizing around 108.70 after losing some gains from the previous session. A key development was the announcement that President Trump signed an executive order to create a government-owned investment fund.
This fund could potentially help the US profit from TikTok if an American buyer is found. Trump has pushed for the US to acquire a 50% stake in the company, and TikTok has until early April to secure a deal.
In addition, Federal Reserve Bank of Chicago President Austan Goolsbee suggested that the Fed would need to be cautious with any rate cuts due to uncertainties, including inflation risks.
Meanwhile, data from the Institute for Supply Management (ISM) showed that the US Manufacturing PMI rose to 50.9 in January, indicating better-than-expected economic activity.
The US Personal Consumption Expenditures (PCE) Price Index also showed inflation pressures, with an annual rise of 2.6%, keeping the Fed cautious about adjusting monetary policy.
On the trade front, President Trump has threatened 100% tariffs on BRICS nations if they try to introduce a currency alternative to challenge the US dollar.
These developments, along with the Fed's cautious stance, have contributed to the strengthening of the US dollar, impacting the AUD/USD pair.
The Australian dollar is facing pressure as global trade tensions and US monetary policy uncertainties continue to shape market sentiment.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.61872, down 0.62%, reflecting persistent bearish sentiment as the pair struggles below the key pivot point at $0.62087.
The price action remains under pressure, with the pair facing immediate resistance at $0.62568. A breakout above this level could trigger a corrective rally toward $0.62922, with further gains potentially capped at $0.63235.
On the downside, immediate support is observed at $0.61674. A decisive break below this level may accelerate selling pressure, exposing the next support levels at $0.61324 and $0.60890.
The 50-day Exponential Moving Average (EMA) at $0.62432 reinforces the bearish outlook, acting as a dynamic resistance level. The sustained price action below this moving average indicates that sellers maintain control.
Technical indicators further confirm the downward bias. The Relative Strength Index (RSI) hovers in bearish territory, suggesting the pair is not yet oversold, leaving room for additional downside.
The Moving Average Convergence Divergence (MACD) indicator also signals bearish momentum with a widening gap between the MACD line and the signal line.
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GOLD Price Analysis – Feb 04, 2025
Daily Price Outlook
Gold’s price (XAU/USD) sustained its bullish trend and remained trading well around new all-time highs near the $2,820 level. However, the upticks were mainly supported by ongoing geopolitical tensions, as China retaliated against recent US tariffs.
Over the weekend, Beijing announced a 15% tariff on US energy imports like coal and liquefied natural gas (LNG) and a 10% tariff on American oil and agricultural equipment.
Moreover, China launched an antitrust investigation into Google, adding more uncertainty to global markets. This has led to a choppy trading session, with investors unsure about the long-term impact of these trade actions.
On the economic side, there are no major events before Friday’s Nonfarm Payrolls report, which could influence the Federal Reserve’s next move.
However, traders will keep an eye on JOLTS Job Openings data later in the day, which gives insights into the US job market. Also, two key Fed officials, Raphael Bostic and Mary Daly, will speak, possibly hinting at future interest rate decisions.
US Dollar Weakness and Trade Tensions Support Safe-Haven Demand Amid Economic Uncertainty
On the US front, the broad-based US dollar was unable to stop its losing momentum and remained under pressure as traders assessed economic data and Federal Reserve signals. The CME FedWatch tool showed an 86.5% chance that the Fed will keep interest rates unchanged in March, with only a 13.5% chance of a rate cut.
Fed officials, including Austan Goolsbee, emphasized the need for caution, warning that inflation could rise again. Meanwhile, US Manufacturing PMI data showed better-than-expected growth, rising to 50.9 in January, signaling expansion in the sector.
On the trade front, China retaliated against US tariffs by targeting select American companies and placing levies on US energy and agricultural products.
However, analysts believe China’s response was measured, avoiding major escalation while still sending a warning to former US President Donald Trump.
The tariffs will take effect on February 10, leaving room for potential negotiations. Meanwhile, Trump threatened 100% tariffs on BRICS nations if they introduce an alternative currency to challenge the US dollar.
Therefore, the US dollar’s weakness and ongoing trade tensions could support gold prices, as investors seek safe-haven assets. However, stronger US economic data and cautious Fed signals may limit gains, keeping gold in a consolidation phase until fresh catalysts emerge.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,814.11, marginally down by 0.01%, reflecting a cautious market stance ahead of key U.S. economic data releases. The price action remains above the pivotal level at $2,808.60, which continues to act as a key inflection point for traders.
Sustained moves above this pivot point suggest bullish momentum, with immediate resistance located at $2,830.19. A breakout above this level could trigger further buying interest, potentially targeting $2,848.35 and, in an extended rally, $2,871.03.
On the downside, gold finds immediate support at $2,782.04. A breach below this level could open the door for a deeper pullback toward $2,752.15 and possibly $2,730.45 if bearish pressure intensifies.
The 50-day Exponential Moving Average (EMA) at $2,772.52 offers dynamic support, reinforcing the bullish bias as long as prices hold above this key technical marker.
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- GOLD Price Analysis – Feb 03, 2025
GOLD Price Analysis – Feb 03, 2025
Daily Price Outlook
During the first half of the European session on Monday, the Gold price (XAU/USD) managed to recover some of its losses but remained bearish around the $2,799 level.
However, the precious metal found some support from concerns about the potential economic fallout from US President Donald Trump's trade tariffs. These tariffs, along with fears of a trade war, have made investors more cautious and less willing to take risks.
As a result, Gold, which is considered a safe-haven asset, has been benefiting from the uncertainty. Moreover, there are speculations that Trump's protectionist policies could lead to higher inflation, further strengthening Gold’s appeal as a hedge against rising prices.
Meanwhile, the US dollar has bounced back close to a two-year high, driven by Trump's decision to impose tariffs on Canada, Mexico, and China. On top of this, there are growing expectations that the Federal Reserve may hold off on cutting interest rates this year due to rising prices and strong consumer spending.
This has limited Gold’s gains. Gold remains supported by global trade tensions, the stronger US Dollar and potential Fed actions are keeping it from fully recovering.
Impact of US Tariffs and Economic Data on Gold Prices and the US Dollar
On the US front, the broad-based US Dollar (USD) spiked after President Donald Trump imposed tariffs on imports from Canada, Mexico, and China, which had a negative impact on Gold prices. The US Commerce Department's report showed that inflation ended 2024 on a strong note, with consumer spending rising in December.
This led to expectations that the Federal Reserve might hold off on more aggressive rate cuts. The Personal Consumption Expenditures (PCE) Price Index rose to 2.6% year-on-year in December, while the core PCE gauge also climbed to 2.8%, matching expectations.
Investors are concerned that Trump's tariffs could worsen inflation in the US, which could make the Federal Reserve more likely to take a hawkish stance, weakening Gold further. US Treasury Secretary Scott Bessent mentioned that the tariffs would strengthen the US Dollar and continue to push inflation higher.
However, Trump's calls for lower interest rates and the possibility of more policy easing by the Fed could keep US Treasury bond yields low, which might prevent Gold from falling too much. Traders are now focusing on upcoming US economic data, like the ISM Manufacturing PMI, to gauge the near-term direction for Gold.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,783.87, down 0.50% as bearish pressure weighs on the metal amid a stronger U.S. dollar and shifting market sentiment.
The price action remains confined within a consolidation range, with the pivot point at $2,773.05 acting as a critical juncture for short-term direction.
The 50-EMA at $2,765.63 provides dynamic support, slightly below the current price, reinforcing the importance of the $2,772 level.
A sustained move above $2,772 may trigger bullish momentum, targeting immediate resistance at $2,809.05. If buying pressure strengthens, the next upside barriers are $2,830.19 and $2,848.35.
Conversely, failure to hold above the pivot could expose gold to immediate support at $2,744.98. A deeper decline may find stability around $2,730.45, with $2,703.37 marking a crucial downside target if bearish momentum accelerates.
The technical setup suggests a cautious bullish bias above $2,772, with a recommended entry at this level, targeting $2,808 for profit-taking.
A stop loss at $2,754 helps manage downside risk. However, if gold breaches the 50-EMA convincingly, the bias could shift bearish, increasing the likelihood of testing lower supports.
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EUR/USD Price Analysis – Feb 03, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair experienced downward trend, driven by the strength of the US Dollar.
The demand for the US Dollar as a safe-haven asset surged significantly following US President Donald Trump's escalating trade war rhetoric.
The US Dollar Index (DXY), which measures the Greenback's value against six major currencies, surged above the 109.50 mark. As a result, EUR/USD dropped over 1%, reaching near 1.0230 at the start of the week.
Moreover, the losses in the EUR/USD pair were further bolstered by the President Trump reiterated his threats to impose tariffs on the European Union (EU).
Over the weekend, Trump had already slapped 25% tariffs on Canada and Mexico, along with 10% tariffs on China.
He also warned of potential tariff hikes on the EU, although he did not provide further details. This uncertainty surrounding trade policies put additional pressure on the EUR/USD pair.
Trump's Tariff Threats and Economic Slowdown Pressure on EUR/USD
President Trump has once again threatened to impose tariffs on the European Union (EU), intensifying trade tensions. Over the weekend, he announced 25% tariffs on Canada and Mexico and 10% on China.
Trump further warned that similar measures could be applied to the EU, claiming that the region has “taken advantage” of the US by not buying enough American goods. He emphasized that the EU benefits more from trade with the US than vice versa, adding to concerns over the EUR/USD pair.
However, the possibility of tariffs on the Eurozone comes at a challenging time for the region. The Eurozone economy is already showing signs of slowdown, with preliminary GDP data for Q4 2024 showing no growth, following a 0.4% expansion in Q3.
Germany, the Eurozone’s largest economy, contracted by 0.2% year-over-year in Q4, highlighting the weakness. The threat of tariffs could make matters worse, putting more pressure on the euro and pushing the EUR/USD lower.
In response to these economic challenges, the European Central Bank (ECB) has been lowering interest rates. Last Thursday, it cut the Deposit Facility rate to 2.75% and signaled a clear path for further cuts.
Traders expect the ECB to make three more rate cuts by the summer. Meanwhile, inflation data from January showed mixed results, adding uncertainty to the Eurozone’s economic outlook, further weighing on the EUR/USD pair.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.02379, up 1.14%, reflecting renewed bullish momentum after breaking past key technical levels. The currency pair is currently hovering just above its pivot point at $1.02375, a critical level that could dictate the near-term trend.
Despite this upside movement, EUR/USD remains below its 50-day Exponential Moving Average (EMA) at $1.04228, suggesting that the broader trend is still under pressure unless a decisive breakout occurs.
If bullish sentiment persists, the next immediate resistance lies at $1.02917, a key hurdle that, if breached, could open the door towards $1.03516 and potentially $1.04340.
On the flip side, failure to sustain above the pivot point may trigger a pullback toward immediate support at $1.01770. Further downside risks include targets at $1.01249 and $1.00826, where buying interest could re-emerge.
The technical setup favors a cautiously bullish outlook above $1.02179, with an entry suggested at this level. A take-profit target is set at $1.02917, capturing potential gains from continued upward momentum, while a stop-loss at $1.01685 helps limit downside risks.
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GBP/USD Price Analysis – Feb 03, 2025
Daily Price Outlook
During the first half of the European session on Monday, the GBP/USD currency pair continued its downward trend, dropping to around the 1.2293 level. This decline can be attributed to market concerns triggered by the imposition of tariffs on Canada, Mexico, and China by US President Donald Trump, which spooked global financial markets and prompted investors to seek safer assets.
Moreover, the British Pound showed a mixed performance against its major peers as investors shifted their focus toward the upcoming Bank of England (BoE) monetary policy decision, set to be announced on Thursday.
GBP/USD Focuses on Bank of England's Expected Rate Cut Amid Slowing Inflation and Weak Labor Demand
The Bank of England (BoE) is expected to cut interest rates by 0.25% to 4.50%. Most of the BoE's policymakers (seven out of nine) are likely to agree with this cut. However, two members, including Catherine Mann, who tends to be more cautious, may vote to keep rates the same. This decision comes as the UK shows signs of slowing inflation and weak labor demand, making the BoE consider easing its policy.
The expectation for a rate cut is based on slowing inflation and weak job demand in the UK. The UK's core Consumer Price Index (CPI), which leaves out things like food and energy, dropped to 3.2% in December. Additionally, the labor market saw a small increase of 35,000 new jobs in the three months up to November.
Therefore, the anticipated rate cut by the BoE, driven by slowing inflation and weak job demand, could weaken the GBP, leading to potential downward pressure on the GBP/USD pair in the short term.
US Dollar Strengthens Amid Tariff Concerns and Focus on Labor Market Data
On the US front, the broad-based US Dollar surged as global market sentiment worsened, particularly following US President Donald Trump's decision to impose tariffs on Canada, Mexico, and China.
This move spooked investors, leading them to flock to the safety of the US Dollar. The US Dollar Index (DXY), which measures the Greenback’s strength against six major currencies, climbed above 109.50, its highest level in over two weeks.
Trump’s tariffs included 25% on Canada and Mexico, and 10% on China, citing concerns over illegal immigration and fentanyl. While he also threatened tariffs on Europe, he softened his stance toward the UK, noting a potential deal with Prime Minister Keir Starmer.
Investors are closely watching this week's labor market data to get a sense of how long the Federal Reserve might keep interest rates steady. After last Wednesday’s meeting, Fed Chair Jerome Powell mentioned they’d only change rates if inflation improves or the job market weakens.
On Monday, traders are paying attention to the ISM Manufacturing PMI and the revised S&P Global Manufacturing PMI. The ISM PMI is expected to rise slightly to 49.5, but it’s still below the 50.0 mark, which signals the economy could be slowing down.
Therefore, the US Dollar's strength, driven by global market uncertainty and Trump's tariff decisions, could put pressure on the GBP/USD pair, potentially causing the pound to weaken against the dollar.
GBP/USD – Technical Analysis
The GBP/USD pair is trading at $1.22693, down 0.97%, reflecting sustained bearish momentum as the pair struggles below key technical levels.
The price is currently hovering beneath the pivot point at $1.23076, signaling a potential continuation of the downtrend.
Notably, the 50-day Exponential Moving Average (EMA) at $1.24076 adds further pressure from above, reinforcing the bearish outlook unless a strong reversal occurs.
If sellers maintain control, immediate support is seen at $1.22284. A break below this level could accelerate declines toward $1.21595, with $1.21054 as the next critical support zone.
Conversely, if the pair manages to recover above the pivot point, initial resistance is expected at $1.23877. Surpassing this could open the door for further gains toward $1.24541 and $1.25225, though such moves may face strong selling interest given the broader bearish bias.
The technical structure favors a bearish outlook below $1.23069, with a recommended sell entry at this level. The take-profit target is set at $1.22281 to capture potential downside momentum, while a stop-loss at $1.23565 helps manage risk in case of unexpected reversals. A sustained move above the 50-EMA would be required to shift the bias towards a more bullish scenario.
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GOLD Price Analysis – Jan 31, 2025
Daily Price Outlook
Gold (XAU/USD) failed to extend its upward trend and edged lower around the $2,791 level on Friday, retreating from its recent record high. The decline comes as investors remain cautious due to the Federal Reserve’s firm stance on interest rates, a stronger US dollar, and ongoing geopolitical tensions.
Gold Faces Pressure from Federal Reserve’s Hawkish Stance
However, the major factor weighing on gold prices is the Federal Reserve’s decision to pause interest rate cuts for the first time since its easing cycle began in September.
The central bank’s cautious approach has led to a slight rise in US Treasury bond yields, strengthening the US dollar and limiting gold’s upside potential.
As a result, traders are hesitant to make aggressive bullish bets until they receive more clarity from upcoming economic data.
Moreover, the Fed has signaled that it will not rush to lower borrowing costs unless inflation and employment data justify such action. This has kept the US dollar strong, reducing the appeal of gold as a non-yielding asset.
US Tariff Threats and Geopolitical Risks Boost Safe-Haven Demand
Despite the pullback in gold prices, demand for the precious metal remains supported by ongoing global uncertainties. US President Donald Trump’s renewed threats to impose 25% tariffs on Mexico and Canada, along with potential 100% tariffs on BRICS nations if they challenge the US dollar’s dominance, have raised investor concerns.
Moreover, heightened geopolitical tensions have added to market instability. Japan’s Joint Staff Office reported that Russian bombers, accompanied by fighter jets, flew an eight-hour mission over the Sea of Okhotsk and the Sea of Japan, escalating regional concerns.
Economic Data in Focus: US PCE Price Index Awaited
On the economic front, weaker-than-expected US GDP growth of 2.3% in the fourth quarter of 2024—down from the previous 3.1%—has raised recession fears. This could fuel fresh interest in gold as a hedge against economic downturns.
However, market participants remain cautious ahead of the US Personal Consumption Expenditure (PCE) Price Index release, scheduled for later on Friday.
As the Federal Reserve’s preferred measure of inflation, the PCE data will play a crucial role in shaping market sentiment and influencing gold’s next move.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) continues its upward trajectory, holding near $2,795.88, with bullish momentum intact. The metal is trading above the pivot level of $2,788.36, signaling further upside potential.
Immediate resistance is seen at $2,814.11, followed by key levels at $2,826.85 and $2,840.38. A decisive break above these thresholds could propel gold toward fresh highs as investor sentiment remains strong amid ongoing economic uncertainties.
On the downside, $2,772.24 remains critical support, with further downside risk extending to $2,748.57 and $2,730.88 if bearish momentum intensifies. The 50-day EMA at $2,757.74 continues to provide dynamic support, reinforcing the broader bullish structure.
Technical indicators suggest a strong buying bias above $2,788. The recent pullback found support at key technical levels, allowing buyers to re-enter the market. The upward trend remains valid as long as prices hold above $2,788. However, a sustained move below this level could shift sentiment, prompting a corrective pullback.
For now, traders are closely watching resistance at $2,814.11. If breached, the next upside targets are $2,826.85 and $2,840.38. Conversely, failure to hold above $2,788 may invite selling pressure, with a potential retest of lower support levels.
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EUR/USD Price Analysis – Jan 31, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair struggled to stop its downward trend, staying under pressure around the 1.0377 level and even hitting an intraday low of 1.0366.
However, the main reason behind this decline is the weakening of the Euro. A slowdown in inflationary pressures across six German states contributed to the fall. This has led to expectations that the ECB might ease its monetary policy in the near future.
At the same time, the US Dollar (USD) is maintaining a strong position. The US Dollar Index (DXY) remains firm, hovering around 108.20, as the greenback benefits from its safe-haven status.
The ongoing uncertainty in global markets has strengthened demand for the US Dollar. Moreover, President Donald Trump's recent comments about imposing heavy tariffs on North America and BRICS countries have added further pressure on the Euro.
This combination of factors has kept EUR/USD under pressure, as investors focus on the broader strength of the US Dollar.
US Dollar Strengthens Amid Tariff Threats and Fed's Cautious Stance
On the US front, the US Dollar (USD) continues to maintain strength, with the US Dollar Index (DXY) trading around 108.20. The greenback's appeal as a safe-haven currency is bolstered by recent comments from former President Donald Trump.
He reiterated his plans to impose hefty tariffs on countries in North America and the BRICS nations, creating further uncertainty in global markets.
Trump took to his social media platform, TruthSocial, warning that any country attempting to create or back a new currency to replace the US Dollar would face a 100% tariff and be shut out of the US market.
Market experts believe that Trump's use of tariffs is part of his broader economic strategy, which could potentially lead to inflationary pressures in the US economy. This could support the Federal Reserve (Fed) in maintaining its current interest rate stance.
The Fed recently decided to keep interest rates unchanged in the range of 4.25%-4.50% and indicated that it will remain cautious until there is clear progress in reducing inflation or signs of weakness in the labor market.
Looking ahead, the next key data point for the US Dollar will be the Personal Consumption Expenditure (PCE) Price Index for December, set to be released at 13:30 GMT. Economists expect a slight rise in core PCE inflation to 0.2% on a monthly basis, compared to 0.1% in November. Year-on-year, core PCE inflation is expected to stay steady at 2.8%.
EUR Faces Pressure Amid Slowing Inflation and ECB's Cautious Outlook
On the EUR front, the Euro (EUR) is facing pressure as it weakens against other currencies. This decline comes amid a slowdown in inflation in six German states, with softer-than-expected Consumer Price Index (CPI) data for January.
The lower inflation figures have raised confidence that the Eurozone is on track to return to the European Central Bank’s (ECB) target inflation rate of 2%. This could potentially lead to the ECB easing its monetary policy in the future.
ECB President Christine Lagarde expressed optimism in her recent statement, declaring a victory over inflation for this year. The ECB reduced its Deposit Facility Rate by 25 basis points (bps) to 2.75%, signaling confidence in its fight against rising prices.
Meanwhile, Estonian Central Bank chief Madis Muller mentioned that it is realistic to expect inflation to be near 2% by mid-year. However, Lagarde cautioned that the ECB is still in “restrictive territory” and that future decisions will be made on a meeting-by-meeting basis, depending on the incoming data.
Looking ahead, investors are keenly awaiting the Eurozone’s Harmonized Index of Consumer Prices (HICP) data for January, which is set to be released on Monday. Before that, the preliminary German HICP data will be published at 13:00 GMT.
However, the impact of the German data is expected to be limited, as inflation in six states has already provided a clear picture of current price trends.
EUR/USD – Technical Analysis
EUR/USD is consolidating near $1.03889, struggling to gain traction after recent downside pressure. The pair is hovering around the pivot point at $1.03887, acting as a key battleground for bulls and bears.
Immediate resistance is at $1.04291, with further hurdles at $1.04667 and $1.05118. A break above these levels could strengthen bullish sentiment and push EUR/USD toward fresh highs.
On the downside, immediate support is at $1.03413, with stronger levels at $1.03069 and $1.02665. A break below $1.03413 could accelerate selling pressure, reinforcing the bearish outlook. The 50-day EMA at $1.04290 is acting as a dynamic resistance level, limiting upside potential.
Technically, the pair remains in a cautious stance, with buyers attempting to hold ground above $1.03819. A move above this level could trigger a retest of $1.04291, aligning with the 50-day EMA. However, failure to sustain above the pivot point may push the pair lower, bringing critical support levels into focus.
The outlook remains neutral-to-bullish as long as EUR/USD holds above $1.03819. A decisive break above $1.04291 could shift momentum in favor of the bulls, while a dip below $1.03413 would reinforce a bearish bias, signaling further declines.
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S&P500 (SPX) Price Analysis – Jan 31, 2025
Daily Price Outlook
The S&P 500 (SPX) is currently trading around the 6,071 level, reaching an intra-day high of 6,086. Despite this upward movement, the index is facing resistance due to increasing economic uncertainty and trade tensions fueled by US President Donald Trump’s aggressive tariff policies.
Investors remain cautious as Trump reiterated plans to impose a 25% tariff on Canada and Mexico while confirming that China would also face new trade restrictions.
However, no specific timeline has been provided for these measures, leading to uncertainty in the financial markets.
Moreover, Trump has threatened 100% tariffs on BRICS nations if they attempt to introduce an alternative currency to challenge the US dollar in global trade.
These developments have heightened risk aversion, with investors weighing the potential impact on global economic stability and corporate earnings.
Mixed US Economic Data and Fed's Cautious Stance Weigh on S&P 500
However, the US economic outlook remains mixed, further complicating the S&P 500’s trend. On the data front, the latest report from the Department of Commerce showed that the US Gross Domestic Product (GDP) Annualized (Q4) declined to 2.3%, missing the expected 2.6% and falling from the previous quarter’s 3.1% growth.
This lower-than-expected GDP figure has added to concerns about a potential slowdown in economic activity.
At the same time, Initial Jobless Claims for the week ending January 24 came in at 207K, better than the forecast of 220K and improving from the previous week’s 223K. While this indicates some resilience in the labor market, it is not strong enough to offset broader concerns about economic growth.
Meanwhile, the US Dollar Index (DXY) remains higher, trading above 104.00, as the Federal Reserve’s hawkish stance continues to support the greenback.
The Fed recently decided to hold interest rates steady in the 5.25%-5.50% range, marking a pause after three consecutive rate hikes.
Fed Chair Jerome Powell emphasized the need for further progress on inflation or signs of labor market weakness before considering rate cuts.
This cautious approach from the central bank has contributed to uncertainty in equity markets, preventing the S&P 500 from gaining further momentum.
US Tariffs and Economic Data Impact on the S&P 500
On the flip side, the US President has announced plans to impose tariffs on imports of critical industries, including computer chips, pharmaceuticals, steel, aluminum, and copper, aiming to shift production back to the United States.
Treasury Secretary Scott Bessent has proposed universal tariffs starting at 2.5%, which could rise to as much as 20%, reflecting Trump’s broader protectionist stance.
Looking ahead, market participants are closely watching key economic data, including the US Personal Consumption Expenditures (PCE) Price Index, due later on Friday.
This data will provide further insights into inflation trends and potential future actions by the Federal Reserve, which could influence the direction of the S&P 500 in the coming weeks.
S&P 500 – Technical Analysis
The S&P 500 continues its upward trajectory, currently trading at 6071.18 after gaining 0.53%. The index remains above the key pivot level at 6071.18, suggesting that bullish momentum is still intact.
Immediate resistance is seen at 6127.64, with further upside targets at 6171.70 and 6219.27. A break above these levels could extend the rally toward fresh highs as investor sentiment remains positive.
On the downside, immediate support lies at 6013.62, with additional key levels at 5969.55 and 5904.50. A drop below 6013.62 could trigger a corrective move, potentially testing lower support levels.
However, with the 50-day EMA positioned at 5971.80, buyers may step in on any pullback, keeping the broader trend intact.
Technically, the S&P 500 remains in a strong bullish trend, with higher highs and higher lows confirming positive momentum. As long as the index sustains above 6058, buyers are likely to remain in control, with a potential move toward 6127 in the near term.
Conversely, a failure to hold above 6013.62 could invite profit-taking and open the door for a pullback toward 5969.55.
Overall, the outlook remains bullish, with traders eyeing a breakout above 6127.64 for continued gains. However, monitoring volume and broader market sentiment will be key in confirming further upside.
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AUD/USD Price Analysis – Jan 30, 2025
Daily Price Outlook
During the European trading session, the AUD/USD currency pair continued its losing streak, staying under pressure around the 0.6215 level.
The Aussie dollar has been struggling for the past four days, mainly due to a strong US dollar and cautious market sentiment.
However, the Australian dollar found some support after the release of the Export Price Index. The Australian Bureau of Statistics showed that export prices rose by 3.6% in Q4 2024, bouncing back from a 4.3% drop in Q3. This marked the first increase in export prices since Q4 2023, giving the Aussie dollar a slight boost.
Meanwhile, the US Dollar Index (DXY) remained stable around 108.00, reflecting the dollar’s strength. The Federal Reserve, as expected, kept interest rates unchanged at 4.25%-4.50% in its January meeting.
This came after three rate cuts since September 2024, totaling 1%. With the Fed signaling a cautious approach, the US dollar held firm, keeping pressure on the AUD/USD pair.
Australian Dollar Faces Pressure Amid Rate Cut Expectations and Mixed Economic Data
On the AUD front, the Australian Dollar (AUD) extended its losing streak against the US Dollar (USD) for the fourth straight day on Thursday, but the AUD/USD pair saw some recovery after the release of key data.
The Australian Bureau of Statistics reported that export prices rose by 3.6% in Q4 2024, bouncing back from a 4.3% decline in the previous quarter.
This marked the first increase since Q4 2023, giving the Aussie dollar a brief boost. Additionally, Australia’s Import Price Index rose by 0.2% in Q4 2024, recovering from a 1.4% drop in Q3, with surging gold prices playing a big role due to investors seeking safe-haven assets.
Meanwhile, speculation about future interest rate cuts in Australia added to market pressure on the AUD. Major banks like ANZ, CBA, Westpac, and National Australia Bank (NAB) now expect a 25 basis point rate cut from the Reserve Bank of Australia (RBA) in February, earlier than previously expected.
This is driven by easing inflationary pressures toward the end of 2024. The RBA has kept the official cash rate at 4.35% since November 2023, but it is holding out for inflation to sustainably return to its target range of 2%-3% before making any cuts, which could influence the AUD/USD pair further.
USD Strengthens Amid Fed’s Cautious Stance and Awaited US GDP Data, Putting Pressure on AUD/USD
On the US front, the US Dollar (USD) strengthened, putting pressure on the AUD/USD pair. The US Federal Reserve (Fed) kept interest rates unchanged at 4.25%-4.50% in its January meeting, as expected.
However, the Fed did not signal any immediate rate cuts, which helped maintain the strength of the US dollar.
Fed Chair Jerome Powell emphasized that the central bank would need to see significant progress on inflation or weakness in the labor market before making any changes to its policy. This cautious stance from the Fed further supported the US dollar.
Traders are now awaiting the release of the US fourth-quarter GDP data, which is expected to show a slowdown in growth, with a forecast of 2.6% compared to the previous 3.1%. Inflation concerns also linger, as the Q4 GDP Price Index is expected to rise to 2.5%, up from 1.9%.
Meanwhile, political developments, including the possibility of new tariffs proposed by Treasury Secretary Scott Bessent, could also influence the USD’s future strength, adding uncertainty to the market.
AUD/USD – Technical Analysis
The AUD/USD pair continues to face downward pressure, trading at $0.62202, below the $0.62428 pivot level. A stronger U.S. dollar and risk-off sentiment have kept the Australian dollar under pressure, limiting any significant recovery attempts.
Technically, the 50-day EMA at $0.62668 is reinforcing resistance, aligning with the immediate resistance at $0.62632. A break above this level could lead to a retest of $0.62927, while further bullish momentum may push prices toward $0.63235.
However, given the prevailing bearish sentiment, upside potential remains limited unless there’s a fundamental shift in market conditions.
On the downside, immediate support stands at $0.62110, with a break below this level exposing AUD/USD to further losses toward $0.61865 and $0.61648. A sustained move below $0.62110 could accelerate selling pressure, with the pair possibly extending losses if risk aversion strengthens.
From a trading perspective, a sell position below $0.62425 aligns with a take profit target at $0.61980 and a stop loss at $0.62687, reflecting the ongoing bearish momentum. The market is currently struggling to gain traction, and without a break above the pivot level, the bearish bias remains intact.
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