USD/JPY Price Analysis – Jan 23, 2025
Daily Price Outlook
The USD/JPY currency pair has been experiencing a mixed performance, with recent movements showcasing a downward trend.
This shift comes as the Japanese Yen (JPY) gains some traction, recovering from a one-week low against the US Dollar (USD).
The primary reason behind this decline is the growing anticipation that the Bank of Japan (BoJ) will hike interest rates at the conclusion of its two-day policy meeting.
Market participants are also reacting to Japan’s better-than-expected Trade Balance data, which showed a surplus of ¥130.9 billion in December, reversing expectations of a deficit. Resilient export growth of 2.8% year-on-year further supports the JPY.
However, subdued local demand, reflected by lower-than-expected import growth, adds caution to the outlook. The
Meanwhile, the US dollar has faced pressure amid expectations that the Federal Reserve may lower interest rates this year due to easing inflation in the US. This was seen as another key factor behind the USD/JPY’s recent bearish movements.
Further Recovery in US Bond Yields and Its Impact on USD/JPY Pair
On the US front, the US dollar has found some support due to a modest recovery in US Treasury bond yields, which acts as a tailwind for the USD/JPY pair.
Moreover, the risk-on sentiment in the broader financial markets has contributed to the USD holding steady above its monthly lows. However, the impact of bond yields on the USD/JPY pair remains limited due to the ongoing anticipation of the BoJ’s policy decision.
Traders are also closely monitoring US labor market data, such as the Weekly Initial Jobless Claims, for further insights into the economic outlook.
While the USD remains supported by bond market dynamics, the pair’s performance continues to be influenced by Japan’s policy stance and trade data.
Growing Acceptance of BoJ Rate Hike and Its Impact on USD/JPY Pair
On the other hand, the USD/JPY pair is being influenced by expectations that the Bank of Japan (BoJ) will raise interest rates at its January 23-24 meeting, potentially from 0.25% to 0.50%. This would be the highest rate since 2008.
The BoJ aims to tackle rising prices and encourage wage increases, which are critical for Japan's economic growth.
This move contrasts with the US Federal Reserve, as markets expect the Fed to cut rates twice later this year. As a result, the Japanese yen has gained strength, pushing the USD/JPY pair lower.
However, the US dollar remains supported by high bond yields and positive market sentiment, preventing a major drop. Traders are now closely watching the BoJ’s decision and US news for further direction.
USD/JPY – Technical Analysis
USD/JPY is currently trading at 156.69, marking a slight increase of 0.13% as the pair stays above the pivot point at 156.39. The bullish momentum remains intact, supported by the 50-day Exponential Moving Average (EMA) at 155.89, which acts as a key support level.
Immediate resistance is seen at 157.34, with further upside targets at 158.18 and 158.88. A sustained break above these levels could drive the pair higher, reflecting continued dollar strength amid evolving market conditions.
On the downside, immediate support lies at 155.56, followed by key levels at 154.91 and 154.09. A breach below these support zones could trigger a bearish correction, with selling pressure potentially gaining traction. However, the technical outlook suggests a cautiously bullish sentiment as long as the pair holds above the pivot.
Fundamental drivers, including expectations for U.S. monetary policy and risk sentiment, remain pivotal for USD/JPY movements. Traders are keeping a close watch on upcoming economic releases and central bank statements, which could influence the pair’s trajectory in the near term.
A buy position is recommended above 156.385, targeting 157.319, with a stop loss at 155.762 to limit potential downside risks.
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- GOLD Price Analysis – Jan 23, 2025
GOLD Price Analysis – Jan 22, 2025
Daily Price Outlook
Gold prices surged to new heights during the Asian trading session, continuing a three-day winning streak as they reached $2,758.
This rally is being fueled by heightened trade war fears and speculation that the Federal Reserve (Fed) will cut interest rates later this year.
The price of gold has been significantly impacted by escalating trade tensions between the United States and other countries. US President Donald Trump's threats to impose tariffs on Canada and Mexico have raised concerns about a potential global trade war.
As a result, investors have flocked to gold, a traditional safe-haven asset, to protect their wealth from any potential economic fallout.
Accordingly, the fear of a trade war has pushed gold prices to their highest level since early November, marking a major milestone for the yellow metal.
Investors are increasingly seeking gold as a hedge against market volatility and geopolitical instability, driving its recent price surge.
Fed Rate Cut Speculation Boosts Gold's Appeal Amid Yield Decline
In addition to trade concerns, there is growing speculation that the Federal Reserve will lower interest rates twice before the end of the year. On the data front, US Retail Sales for December increased by 0.4% month-over-month, reaching $729.2 billion. This was below expectations of a 0.6% rise and lower than the previous month’s 0.8% increase.
In the meantime, the US Consumer Price Index (CPI) rose by 2.9% year-over-year in December, up from 2.7% in November.
On a monthly basis, CPI increased by 0.4%, slightly higher than the previous month’s 0.3%. Core CPI, which excludes volatile food and energy prices, increased by 3.2% annually, a bit lower than the 3.3% expected by analysts.
Despite weaker retail sales data, the US Dollar Index (DXY) is holding steady at around 108.00. The dollar faced some pressure after President Trump chose not to impose new tariffs on his first day in office but directed agencies to look into trade deficits.
His warnings to countries like Mexico, China, and the EU about possible tariffs could influence inflation, affecting the Fed’s future rate decisions.
Therefore, the speculation of Fed rate cuts has led to lower US Treasury bond yields, making gold more attractive as an investment. This has supported gold’s bullish momentum, driving its price higher as investors seek safer, non-yielding assets.
GOLD (XAU/USD) – Technical Analysis
Gold prices are trading at $2,752.22, up 0.26%, as the market grapples with mixed signals amid evolving economic conditions. The metal hovers near the pivot point at $2,752.96, a crucial level that could dictate short-term price movements.
A sustained move below this level may reinforce bearish momentum, with immediate support at $2,738.05 and deeper levels at $2,721.88 and $2,703.20. A break below these supports could open the door for further downside, with sellers eyeing the 50-day EMA at $2,715.81 as a potential downside target.
On the upside, resistance is seen at $2,768.80, followed by key levels at $2,783.31 and $2,797.39. A break above $2,768.80 could trigger further buying interest, potentially challenging the $2,783.31 resistance, which aligns with recent highs. However, for now, the bullish momentum remains constrained by the technical landscape.
From a technical perspective, gold is trading within a narrow range, with the 50-day EMA acting as dynamic support. The market remains cautious, with traders weighing the impact of inflation data and central bank policies.
The outlook suggests a cautious stance, with potential selling pressure intensifying below $2,752, targeting $2,732, with a stop-loss set at $2,765 to manage risk effectively.
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- GBP/USD Price Analysis – Jan 22, 2025
GBP/USD Price Analysis – Jan 22, 2025
Daily Price Outlook
During the European trading session, the GBP/USD currency pair struggled to halt its downward movement, remaining under pressure around the 1.2348 level. It reached an intra-day low of 1.2312, continuing its decline.
The primary factor behind this drop is the recovery of the US Dollar, as reflected in the slight rise of the US Dollar Index (DXY), which tracks the value of the Greenback against six major currencies.
This shift helped the USD gain some strength after hitting a two-week low of 107.90 earlier in the week. Market sentiment is also being affected by uncertainty surrounding former President Trump's tariff plans, which have led to mixed reactions in the global financial landscape.
On the positive side, the GBP is performing well against its major peers, benefiting from risk-on sentiment that has favored currencies like the Pound.
However, the outlook for the GBP remains uncertain as the Bank of England (BoE) is widely expected to reduce interest rates by 25 basis points to 4.5% during its February policy meeting, which could weigh further on the currency. This combination of factors leaves the GBP/USD pair in a precarious position for the near term.
Uncertain Outlook for GBP as BoE Expected to Cut Rates Amid Economic Concerns
On the BoE front, the outlook for the Pound Sterling remains uncertain as the Bank of England (BoE) is expected to cut interest rates by 25 basis points (bps) to 4.5% in February.
This decision follows soft economic data, including weak inflation and retail sales numbers for December, as well as modest GDP growth.
Moreover, weak labor demand from the three months ending in November has prompted traders to price in a rate reduction. The BoE faces challenges with economic growth slowing down, prompting the need for such a move.
However, there are still concerns regarding rising wage growth in the UK, which could keep inflation pressures high, particularly in the service sector.
On Tuesday, the Office for National Statistics (ONS) reported that average earnings excluding bonuses increased by 5.6%, which was faster than the expected 5.5% and higher than the previous figure of 5.2%.
This wage growth could be a key factor for the BoE to consider when deciding on future rate cuts, as higher wages could continue to fuel inflation.
Looking ahead, traders and investors will be watching the upcoming preliminary S&P Global/CIPS Purchasing Managers Index (PMI) data for January, which is set to be released on Friday.
This data will provide further insight into the UK economy and could influence the BoE's decision on interest rates, as well as the performance of the Pound Sterling in the coming weeks.
Therefore, the Bank of England's expected rate cut and concerns over wage growth could weigh on the Pound, limiting its strength against the US Dollar. The uncertainty surrounding the UK's economic outlook may lead to further pressure on the GBP/USD pair.
GBP/USD – Technical Analysis
The GBP/USD pair is trading at $1.23350, down 0.08%, as it hovers near critical support levels amid a cautious market sentiment.
The pivot point at $1.23443 serves as a key reference level for traders, with the pair struggling to sustain gains above it. A sustained move below this pivot could accelerate selling pressure, with immediate support at $1.22704, followed by further downside targets at $1.22151 and $1.21609.
The presence of the 50-day EMA at $1.22459 provides additional support, suggesting a potential slowdown in bearish momentum should the price approach this level.
On the upside, resistance levels are identified at $1.24064, $1.24540, and $1.25056. A break above these resistance levels could signal a reversal in sentiment, potentially attracting fresh buying interest.
However, given the current market dynamics, selling pressure is likely to dominate unless the pair manages to hold above $1.23443.
From a technical standpoint, GBP/USD remains under short-term bearish pressure, with the recommended sell entry below $1.23434.
A move toward the take-profit target of $1.22707 remains in play, with a stop-loss positioned at $1.23902 to manage risk effectively. Traders should remain vigilant to upcoming economic releases that could influence price action and shift momentum.
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EUR/USD Price Analysis – Jan 22, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair sustained its upward trend and remained well bid around the 1.0448 level, reaching an intra-day high of 1.0452.
However, the major factor behind this upward trend is largely attributed to investor sentiment, as market participants cautiously await further details on the United States (US) tariff plans.
These plans could have a impact on the Eurozone, and traders are closely monitoring any developments that might create fresh opportunities or risks for the EUR/USD exchange rate.
Despite the recent gains, the outlook for EUR/USD remains uncertain, as geopolitical and economic factors continue to shape its direction.
President Trump’s threats of imposing tariffs on the Eurozone add an element of volatility, while the European Central Bank (ECB) is expected to ease some of its restrictive policies, moving toward a more neutral 2% inflation target.
This could provide some support to the euro. However, with mixed signals coming from both the US and Eurozone economies, the EUR/USD pair's performance will depend on how these factors unfold in the coming days.
EUR/USD Outlook Uncertainty Amid US Tariff Threats and ECB Rate Cuts
On the EUR front, the shared currency has shown a significant recovery in recent days. However, the outlook for EUR/USD remains uncertain due to concerns over US tariffs. President Trump has threatened to impose tariffs on the Eurozone, adding pressure to the currency pair.
In response, European Union (EU) officials have emphasized that instead of retaliating, the EU should focus on improving its competitiveness and developing stronger capital markets. This shift in strategy is meant to better position the region in the face of potential trade tensions.
Meanwhile, ECB President Christine Lagarde spoke at the World Economic Forum, stating that Europe must be ready for any US tariffs. She also mentioned that the tariffs would likely be more selective in nature.
The ongoing trade tension between the EU and US has worsened since Trump’s withdrawal from the Paris Climate Agreement, which had set targets for reducing greenhouse gas emissions. This move has further strained EU-US relations, with the possibility of more economic challenges ahead.
On the monetary policy front, traders expect the European Central Bank (ECB) to cut interest rates by 25 basis points (bps) in each of its next four meetings.
ECB policymaker Yannis Stournaras has suggested that these cuts are necessary to bring inflation closer to the ECB’s 2% target by the end of 2025.
He also warned that US tariffs could speed up these rate cuts in the Eurozone, adding further uncertainty to the market.
Therefore, the news of potential US tariffs on the Eurozone, along with ECB rate cuts and trade tensions, adds uncertainty to the EUR/USD pair. This could lead to increased volatility, with the euro potentially weakening if tariff threats intensify or if rate cuts accelerate.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.04117, down 0.12%, as the currency pair navigates a cautious market environment amid evolving macroeconomic conditions. The price remains slightly above the pivot point at $1.03904, which acts as a critical level for near-term directional bias.
A sustained move above this level could bolster bullish sentiment, targeting immediate resistance at $1.04339, with subsequent levels at $1.04844 and $1.05352. However, failure to break above the resistance zones may limit upside momentum, keeping the pair within a consolidation phase.
On the downside, immediate support is seen at $1.03428, followed by key support at $1.02906 and $1.02388. A break below these levels could invite further selling pressure, potentially driving the pair toward lower support zones and increasing bearish sentiment in the market.
The 50-day EMA, currently at $1.03375, is providing a key dynamic support level, reinforcing the significance of maintaining levels above $1.03910 to sustain a bullish outlook.
From a technical perspective, the pair remains in a neutral to slightly bullish trend, with buyers expected to step in above $1.03910, targeting $1.04636 as a near-term profit objective.
However, downside risks persist, with a stop-loss level at $1.03388 to mitigate potential losses. Traders should watch for upcoming economic releases and market sentiment shifts that could influence price action.
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GOLD Price Analysis – Jan 21, 2025
Daily Price Outlook
GOLD (XAU/USD) – Technical Analysis
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- USD/CAD Price Analysis – Jan 21, 2025
AUD/USD Price Analysis – Jan 21, 2025
Daily Price Outlook
During the European trading session, the AUD/USD currency pair struggled to halt its downward momentum, hovering around the 0.6231 level and hitting an intra-day low of 0.6209.
This continued decline could be attributed to heightened risk aversion as market participants closely monitor US President Donald Trump’s economic policies, particularly his stance on tariffs.
Meanwhile, the US Dollar Index (DXY), which tracks the performance of the US dollar against six major currencies, surged to approximately 108.50. Hence, this was seen as as anothr key factor that put pressure on AUD/USD pair.
AUD/USD Pressure Amid Trade Tensions and RBA Rate Cut Expectations
On the AUD front, the AUD/USD pair remains subdued after US President Donald Trump made a remark about potentially placing tariffs on China if a TikTok deal is reached but not approved by China.
This statement came shortly after Trump signed an executive order delaying the TikTok ban by 75 days.
Since Australia has strong trade ties with China, any changes in China’s economy can directly impact Australian markets. This has put pressure on the Australian dollar, causing it to stay under pressure against the US dollar.
The Australian stock market, however, saw some positive movement, with the S&P/ASX 200 Index climbing to nearly 8,400, its highest level in six weeks.
This rally followed Trump’s second-term inauguration, as markets reacted positively to his decision not to impose new tariffs.
Despite this optimism in the equity market, the Australian dollar is struggling, as traders remain cautious about potential economic developments related to trade with China.
Looking ahead, traders are increasingly expecting the Reserve Bank of Australia (RBA) to cut interest rates, possibly as soon as next month.
This expectation is driven by the latest inflation data, which shows core inflation has fallen to its lowest level since the fourth quarter of 2021.
Moving ahead, the investors attention is now turning to Australia’s upcoming quarterly inflation report. This report could offer more clues about the future direction of interest rates and provide further insights into the outlook for the AUD/USD pair.
AUD/USD – Technical Analysis
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USD/CAD Price Analysis – Jan 21, 2025
Daily Price Outlook
During the European trading session, the USD/CAD currency pair has sustained its upward trend, trading around 1.4424 and reaching an intraday high of 1.4518. This bullish momentum is largely due to market reactions to recent policy developments.
The Canadian dollar faced selling pressure after US President Donald Trump hinted at imposing 25% tariffs on imports from Canada and Mexico, potentially starting in February. This announcement has fueled fears of economic challenges for Canada, weakening the CAD.
Meanwhile, the US Dollar recovered modestly from its recent two-week low. Traders expect Trump's protectionist policies to drive inflation higher, which could prompt the Federal Reserve (Fed) to maintain its hawkish stance on interest rates. This outlook has supported the USD and pushed the USD/CAD pair higher.
Despite the rally, further gains in the pair are capped by mixed sentiment, with traders weighing the potential economic impacts of tariffs and inflation concerns.
USD/CAD Rises Amid Tariff Concerns and Inflation Data Anticipation
On the CAD front, the Canadian Dollar has come under pressure due to concerns over US President Donald Trump’s plan to impose 25% tariffs on imports from Canada and Mexico by early February.
This announcement has raised fears of economic strain, weakening the CAD against the USD. However, a slight recovery in crude oil prices has supported the commodity-linked Loonie, preventing further declines in the USD/CAD pair.
Traders are also cautious ahead of Canada’s latest inflation report, scheduled for release today. Statistics Canada is expected to report a 1.8% increase in December’s Consumer Price Index (CPI) compared to the previous year.
Core inflation data, which excludes volatile items like food and energy, will also be published by the Bank of Canada (BoC).
While November’s core CPI showed a slight 0.1% monthly contraction, it rose by 1.6% on an annual basis.
These numbers are crucial as they will influence the BoC’s monetary policy decisions, especially after it recently cut interest rates by 175 basis points since June 2024, with the current rate standing at 3.25%.
USD/CAD Fluctuates as Trump’s Tariffs and Inflation Expectations Influence Market Sentiment
On the US front, the broad-based US dollar (USD) is seeing a modest recovery after dropping to a two-week low. This decline was driven by concerns that President Trump's protectionist policies, like imposing tariffs, could push up inflation.
As a result, investors believe the Federal Reserve (Fed) will keep interest rates high, which in turn boosts the USD against the Canadian Dollar (CAD), pushing the USD/CAD pair above the 1.4500 mark. However, several factors are limiting any further gains for the USD.
Investors are also betting that the Fed will reduce interest rates twice by the end of the year. This expectation is based on signs that inflation in the US is slowing down.
As a result, US Treasury bond yields have fallen sharply, which has put some pressure on the USD. Additionally, positive sentiment in the stock markets is making investors less focused on the dollar as a safe-haven asset, further limiting its strength.
Meanwhile, the Canadian Dollar (CAD) is being supported by rising crude oil prices. As a commodity-linked currency, the CAD benefits from oil price gains, which helps keep the USD/CAD pair from rising further.
Traders are also cautious and waiting for Canada's upcoming inflation data, which will play a key role in deciding the future direction of the CAD.
USD/CAD – Technical Analysis
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EUR/USD Price Analysis – Jan 20, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair gained momentum, edging higher towards the 1.0321 level. The pair's upward movement was supported by a decline in the safe-haven demand for the US Dollar (USD), particularly in anticipation of US President-elect Donald Trump’s inauguration.
Furthermore, the gains in EUR/USD were amplified as investors positioned themselves ahead of the event.
However, the outlook for the Euro (EUR) remains clouded, as market participants expect the European Central Bank (ECB) to implement a series of interest rate cuts in its upcoming policy meetings, adding uncertainty to the pair's future direction.
EUR Outlook Uncertain Amid Risk-On Sentiment and ECB Rate Cut Expectations
On the EUR front, the shared currency has been gaining strength as investors adopt a risk-on approach, awaiting US President-elect Donald Trump’s inauguration.
Despite this, the outlook for the Euro (EUR) remains uncertain. as traders are concerned that the European Central Bank (ECB) may cut interest rates multiple times in the coming months.
The market is pricing in a 100 basis point reduction by mid-summer, with a 25 basis point cut expected in each of the next four ECB meetings.
These dovish expectations are driven by the belief that Eurozone inflation will slow and return to the ECB’s target of 2%. A key factor contributing to this outlook is the expectation of lower service sector inflation this year.
Analysts at Capital Economics noted that the small rise in inflation in December was mainly due to transport and holiday sectors, which are sensitive to oil prices. They anticipate oil prices will decline, easing inflationary pressures in the Eurozone.
Therefore, the ECB's expected rate cuts and subdued inflation outlook could weaken the Euro, limiting gains for the EUR/USD pair, especially if the US Dollar strengthens due to domestic policies.
US Dollar Pressure and Fed Policy Expectations Could Support EUR/USD Gains
On the US front, the broad-based US Dollar Index (DXY), which measures the dollar's value against six major currencies, has been declining towards the 109.00 level.
The Greenback is under pressure as investors react to the expectation that President-elect Donald Trump will soon declare a national emergency upon taking office.
This would allow him to ramp up domestic energy production and undo some of the climate change policies put in place by President Joe Biden, according to Bloomberg.
Apart from this, Fox News Digital reports that Trump plans to sign over 200 executive orders on his first day in office, which may include policies like stricter immigration controls, tax cuts, and higher import tariffs.
These measures are expected to boost US growth and inflation, which could ultimately be favorable for the US Dollar. Investors anticipate that these changes will allow the Federal Reserve (Fed) to keep interest rates at current levels for a longer period.
Hence, the CME FedWatch tool shows that traders expect the Fed to maintain borrowing rates in the 4.25%-4.50% range for the next three policy meetings.
However, analysts at Morgan Stanley suggest that the Fed may cut interest rates in March, as inflation showed signs of slowing in December.
The Consumer Price Index (CPI) report for December revealed that core inflation, which excludes food and energy prices, rose at a slower pace of 3.2% year-over-year.
Therefore, the declining US Dollar and expectations of longer Fed rate hikes could weaken the USD, supporting potential gains for the EUR/USD pair, especially if Eurozone inflation remains subdued.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.03055, up 0.38%, as the pair hovers around key technical levels amid cautious sentiment in the forex market. The pair has been attempting to recover from recent lows, but upside momentum remains constrained by overhead resistance levels.
On the 4-hour chart, the immediate pivot point stands at $1.03295, a critical threshold that the pair is currently testing. A decisive move above this level could open the door to further gains, with immediate resistance at $1.03720, followed by secondary hurdles at $1.04338 and $1.05030.
However, failure to sustain momentum above the pivot point may reinforce downside pressure, with key support levels at $1.02406, followed by $1.01867, and deeper support at $1.01288, which could act as potential rebound zones.
From a technical perspective, the 50-day EMA, currently positioned at $1.02841, suggests a mildly bullish bias, with prices hovering slightly above it. This could indicate short-term buying interest, but a sustained break below the EMA may signal renewed bearish pressure.
In conclusion, a short position below $1.03304 could offer a favorable risk-reward setup, targeting $1.02405 for take-profit, with a stop-loss placed at $1.03851, ensuring protection against potential upward spikes.
Traders are advised to monitor market sentiment closely, as upcoming economic data releases and geopolitical developments could introduce volatility.
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- GOLD Price Analysis – Jan 20, 2025
GOLD Price Analysis – Jan 20, 2025
Daily Price Outlook
Gold prices (XAU/USD) initially faced losses but managed to recover, trading above $2,700. However, the early drop was driven by a stronger US Dollar, which gained traction on the back of upcoming President-elect Donald Trump’s inauguration.
Although, the gains in the dollar could be limited possibly due to softer-than-expected US inflation data as it raises expectations of potential Fed rate cuts. On the other hand, the ongoing geopolitical tensions in the Middle East and the Russia-Ukraine conflict continue to drive demand for gold as a safe-haven asset.
US Dollar Gains Strength Amid Policy Concerns and Economic Data, Impacting Gold Prices
On the US front, the broad-based US dollar has gained traction, hovering around 109.30, supported by rising US Treasury yields. This boost in the Greenback comes amid concerns about former President Trump's policy proposals, such as imposing tariffs, extending tax cuts, and deporting illegal immigrants.
Analysts believe the future of US interest rates will depend on how these policies unfold, with Trump’s upcoming executive orders likely to play a key role.
Investors are also watching the Federal Reserve’s (Fed) next moves, with a majority expecting no change in rates at the January meeting but forecasting hikes starting in March.
Despite these developments, US Treasury yields have been lower, driven by growing expectations that the Fed might cut rates twice in 2025.
This has put downward pressure on yields, with the 2-year and 10-year US Treasury notes currently at 4.23% and 4.60%, respectively.
On the data front, US retail sales grew by just 0.4% in December, weaker than expected, signaling slower consumer spending.
The US Consumer Price Index (CPI) rose 2.9% annually, in line with expectations, with the core CPI, which excludes volatile food and energy prices, climbing 3.2%.
Therefore, the Federal Reserve has noted slight to moderate growth in the economy, driven by strong holiday sales, but manufacturing showed signs of slowing.
With mixed signals from economic data, traders are cautious about the outlook for the US economy, which could weigh on gold prices as the dollar remains strong and expectations for rate cuts fluctuate.
Geopolitical Tensions and Conflicts Drive Safe-Haven Demand for Gold
On the geopolitical front, ongoing tensions in the Middle East and the Russia-Ukraine conflict could drive more safe-haven flows into gold.
Russian forces gained control of two more settlements in Ukraine's Donetsk region, continuing their steady advance westward. As conflicts and uncertainties rise, investors often turn to gold as a safer investment, which could push gold prices higher.
Therefore, the combination of these geopolitical events, along with economic factors in the US, adds to the volatility, making gold an attractive option for those seeking stability in uncertain times.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is currently trading at $2,707.70, up 0.18%, as the market consolidates above the key support zone.
The metal faces immediate resistance at $2,736.52, with further barriers at $2,752.21. On the downside, support is seen at $2,676.58, followed by stronger levels at $2,659.46 and $2,641.38, which could provide a safety net against potential declines.
The 50-day Exponential Moving Average (EMA) stands at $2,683.19, reinforcing a bullish bias as long as prices remain above this level.
The pivot point at $2,722.01 remains a critical juncture; a sustained move above it could pave the way for further gains, while failure to hold this level may lead to increased selling pressure.
Technical indicators suggest that gold is maintaining an upward trajectory, with buyers likely to step in on dips. However, the market remains sensitive to macroeconomic factors, including interest rate expectations and geopolitical developments, which could introduce volatility.
A break above $2,736.52 would confirm bullish momentum, targeting $2,752.21 in the short term. Conversely, a drop below the $2,695 entry level may trigger a retest of key support areas.
Traders should closely watch for a breakout above resistance levels, while maintaining caution around the $2,676.58 support, as a breach could signal a shift in sentiment.
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GBP/USD Price Analysis – Jan 20, 2025
Daily Price Outlook
During the European trading session, the GBP/USD currency pair extended its bullish momentum, trading firmly around the 1.2197 level and reaching an intraday high of 1.2222.
The rise in the currency pair was somewhat unexpected, as weak UK retail sales data for December typically signals a slowing economy and would usually weaken the GBP.
However, the increase in demand for UK gilts, which are considered safer investments during uncertain times, may have supported the GBP. Additionally, a broader appetite for riskier assets could have played a role in the pair's upward movement, as investors seemed willing to take on more risk despite the weak economic data.
Furthermore, the pair benefited from a weakening US Dollar as its safe-haven appeal diminished ahead of the swearing-in ceremony of Donald Trump as President.
GBP/USD Gains Driven by Weak Retail Sales, Lower Gilt Yields, and BoE Rate Cut Expectations
On the GBP front, the gains in the GBP/USD currency pair were partly driven by increased demand for UK gilts.
Despite weak UK retail sales data for December, which typically signals a slowing economy, the rising appetite for riskier assets ahead of US President-elect Donald Trump’s inauguration supported the Pound.
The demand for UK gilts caused yields on 30-year bonds to drop, from a more-than-26-year high of 5.47% on January 13 to around 5.20%.
This decline in yields reflects investors seeking the safety of government bonds, which in turn helped lower borrowing costs for the UK government.
However, the surprise drop in the UK Retail Sales for December added further pressure, accelerating expectations for the Bank of England (BoE) to adopt a more dovish stance. Retail Sales contracted by 0.3%, much worse than the expected 0.4% growth.
This disappointing data led analysts, including those at Oxford Economics, to forecast a 100 basis point rate cut by the BoE, bringing interest rates down to 3.75% by the end of the year.
Despite the Pound's recent rise, UK gilt yields have fallen more sharply, reflecting growing concerns about a potential BoE rate cut.
The drop in yields has kept the focus on dovish BoE expectations, which tend to be negative for the Pound.
However, UK equity markets have surged as Chancellor Rachel Reeves announced she wouldn’t need to raise taxes or cut public spending to meet her economic goals.
Looking ahead, the next key event for the Pound will be the release of UK employment data for the three months ending November, due on Tuesday, which could impact further market movement.
US Dollar Weakens Ahead of Trump’s Inauguration, Outlook Remains Positive Amid Economic Policy Expectations
On the US front, the broad-based US Dollar weakened on Monday as the safe-haven appeal of the currency diminished ahead of Donald Trump’s swearing-in ceremony as President. This helped the GBP/USD pair rebound near the 1.2200 level during the European session.
The US Dollar Index (DXY), which measures the Dollar's strength against six major currencies, dropped to around 109.00, reflecting reduced demand for the Greenback.
Despite this short-term weakness, the broader outlook for the US Dollar remains optimistic. Investors expect Trump’s economic policies to be growth-focused and inflationary, potentially supporting the US economy in the long run.
Reports suggest Trump plans to sign over 200 executive orders on his first day, potentially addressing issues like immigration, tariffs, and tax cuts, which could have significant economic implications.
Looking ahead, the US economic calendar is relatively light this week, with the key release being the S&P Global preliminary PMI data for January, due on Friday. According to the CME FedWatch tool, traders are anticipating more than one 25-basis-point interest rate cut this year, with the first expected in June.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.22141, up 0.44%, as the pair edges higher in early trading amid cautious market sentiment. The pound has shown resilience, but upside momentum remains constrained by key resistance levels, with investors closely monitoring macroeconomic data and central bank cues.
On the 4-hour chart, the immediate pivot point at $1.22453 is a crucial level to watch. A break above this threshold could pave the way for further upside, targeting immediate resistance at $1.23125, followed by higher resistance levels at $1.24064 and $1.24962.
However, failure to clear the pivot point may invite renewed selling pressure, with immediate support located at $1.21034, followed by deeper levels at $1.20174 and $1.19346, which could act as potential rebound zones if downward momentum intensifies.
Technically, the 50-day EMA, currently positioned at $1.22441, suggests a neutral to bearish outlook, as the price remains slightly below this key level. A sustained move beneath the EMA may indicate further bearish pressure, potentially driving the pair toward support zones.
In conclusion, a short position below $1.22465 could provide an attractive risk-reward setup, with a take-profit target set at $1.21019 and a stop-loss placed at $1.23155 to mitigate potential upside risks.
Traders should remain vigilant as market dynamics could shift swiftly amid changing economic conditions and geopolitical factors.
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