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Daily Pivots: (S1) 1.4260; (P) 1.4303; (R1) 1.4327; More...

Intraday bias in USD/CAD remains neutral for the moment. Strong support is expected from 1.4260 cluster support (38.2% retracement of 1.3418 to 1.4791 at 1.4267), which is also close to 55 D EMA (now at 1.4269), to bring rebound. On the upside, above 1.4501 minor resistance will turn bias back to the upside for retesting 1.4791 short term top. However, firm break of 1.4260 will indicate that deeper correction is underway, and turn bias to the downside.

In the bigger picture, long term up trend is tentatively seen as resuming with breach of 1.4667/89 key resistance zone (2020/2015 highs). Next target is 100% projection of 1.2401 to 1.3976 from 1.3418 at 1.4993. This will remain the favored case as long as 1.3976 resistance turned holds (2022 high), even in case of deep pullback.

Daily Pivots: (S1) 0.6269; (P) 0.6286; (R1) 0.6311; More...

Intraday bias in AUD/USD remains neutral for the moment. With 0.6329 resistance intact, outlook will stay bearish. On the downside, break of 0.6239 minor support will turn bias back to the downside for retesting 0.6087 low. However, firm break of 0.6329 will bring stronger rebound to 38.2% retracement of 0.6941 to 0.6087 at 0.6413, even just as a corrective move.

In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.6516) holds.

Daily Pivots: (S1) 1.0309; (P) 1.0345; (R1) 1.0398; More...

EUR/USD is still bounded in consolidation from 1.0176 and intraday bias stays neutral. Outlook will remain bearish as long as 38.2% retracement of 1.1213 to 1.0176 at 1.0572 holds. On the downside, break of 1.0176 will resume whole fall from 1.1213. However, decisive break of 1.0572 will raise the chance of reversal, and target 61.8% retracement at 1.0817.

In the bigger picture, immediate focus is on 61.8 retracement of 0.9534 (2022 low) to 1.1274 (2024 high) at 1.0199. Sustained break there will solidify the case of medium term bearish trend reversal, and pave the way back to 0.9534. However, reversal from 1.0199 will argue that price actions from 1.1274 are merely a corrective pattern, and has already completed.

Daily Pivots: (S1) 1.2368; (P) 1.2411; (R1) 1.2491; More...

Intraday bias in GBP/USD stays neutral for the moment. Corrective pattern from 1.2099 could extend with stronger rebound. But upside should be limited by 38.2% retracement of 1.3433 to 1.2099 at 1.2609. On the downside, break of 1.2248 support will bring retest of 1.2099 low. Firm break there will resume whole fall from 1.3433. However, decisive break of 1.2609 will raise the chance of near term reversal, and target 61.8% retracement at 1.2923.

In the bigger picture, rise from 1.0351 (2022 low) should have already completed at 1.3433 (2024 high), and the trend has reversed. Further fall is now expected as long as 1.2810 resistance holds. Deeper decline should be seen to 61.8% retracement of 1.0351 to 1.3433 at 1.1528, even as a corrective move. However, firm break of 1.2810 will dampen this bearish view and bring retest of 1.3433 high instead.

Daily Pivots: (S1) 0.9108; (P) 0.9126; (R1) 0.9150; More…

Intraday bias in USD/CHF remains neutral as consolidation from 0.9200 is still extending. Outlook stays bullish with 0.8956/64 support zone intact. On the upside, firm break of 0.9200/9223 will resume the whole rally from 0.8374 and carry larger bullish implication. However, sustained break of 0.8964 will be a sign of reversal and turn bias back to the downside.

In the bigger picture, decisive break of 0.9223 resistance will argue that whole down trend from 1.0342 (2017 high) has completed with three waves down to 0.8332 (2023 low). Outlook will be turned bullish for 1.0146 resistance next. Nevertheless, rejection by 0.9223 will retain medium term bearishness for another decline through 0.8332 at a later stage.

Daily Pivots: (S1) 151.90; (P) 152.25; (R1) 152.86; More...

Immediate focus is now on 153.70 support turned resistance as USD/JPY's rebound from 150.92 extends. Firm break of 153.70 will argue that correction from 158.86 has already completed after drawing support from 38.2% retracement of 139.57 to 158.86 at 151.49. Such development will also keep the rally from 139.57 intact. Further rise should then be seen to retest 158.86 next. ON the downside, however, sustained trading below 151.49 will suggest that whole rise from 139.57 has completed, and bring deeper fall to 61.8% retracement at 146.32 next.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low). In case of another fall, strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Yen struggled in the Asian session and stayed weak, with renewed selling pressure driven by a combination of rising US Treasury yields and ongoing concerns over trade policy developments. Market participants are still digesting the implications of US President Donald Trump's decision to reintroduce tariffs on steel and aluminum imports, with Canada and the EU voicing strong opposition. Japan has now joined Australia in formally requesting an exemption, but there is little clarity on whether any exceptions will be granted. The focus has now shifted to Trump’s impending announcement of "reciprocal tariffs," which he indicated would be unveiled either yesterday or today. Until the full scope of these measures is known, uncertainty in currency markets is likely to persist.

Meanwhile, Fed Chair Jerome Powell’s testimony overnight reinforced expectations that the central bank is in no rush to adjust its policy stance. His remarks confirmed that the current pause in rate cuts could last for an extended period, particularly if inflation remains sticky. Fed funds futures continue to price in roughly 50% probability of a rate cut occurring in June, suggesting that market participants are still divided on the timing of Fed’s next move.

The upcoming release of US consumer inflation data will be a critical factor in shaping those expectations. Headline CPI is forecast to remain steady at 2.9%, while core CPI is projected to dip slightly from 3.2% to 3.1%. However, any upside surprise could further push expectations for rate cuts into the second half of the year.

In the currency markets, Sterling has emerged as the strongest performer so far this week, followed by Euro and Aussie. At the other end of the spectrum, Yen is the weakest major currency, Swiss franc and Kiwi are also underperforming. Dollar and Loonie are trading in a more mixed manner.

Technically, US 10-year Treasury yield has found strong support at 38.2% retracement of 3.603 to 4.809 at 4.348. The subsequent rebound has brought attention back to the 4.590 resistance. Firm break above this point would indicate that pullback from 4.809 has concluded, setting the stage for stronger rally to retest that high. Given the close correlation between US yields and USD/JPY, further bounce in Treasury yields could provide additional lift for the pair, pushing it back toward 158.86 high.

In Asia, at the time of writing, Nikkei is up 0.34%. Hong Kong HSI is up 1.34%. China Shanghai SSE is down -0.12%. Singapore Strait Times is down -0.09%. Japan 10-year JGB yield is up 0.025 at 1.341, at the highest level since 2011. Overnight, DOW rose 0.28%. S&P 500 rose 0.03%. NASDAQ fell -0.36%. 10-year yield rose 0.044 to 4.537.

Fed's Williams: Current modestly restrictive policy well positioned to achieve dual mandate

New York Fed President John Williams stated in a speech overnight that policy remains “well positioned” to balance the dual mandate. He added that the current “modestly restrictive” policy is expected to support a gradual return to 2% inflation while maintaining economic growth and labor market resilience.

Nevertheless, Williams also acknowledged the high degree of uncertainty surrounding the economic outlook, particularly concerning fiscal, trade, immigration, and regulatory policies.

On the labor market, Williams noted that it has reached a “good balance” after a period of "unsustainably tight conditions" in prior years. He highlighted that wage growth has now aligned with productivity gains, which should keep inflationary pressures contained. He projected inflation at around 2.5% this year and expects it to reach the Fed’s 2% target “in coming years.”

Williams also forecasted that the unemployment rate would remain stable between 4% and 4.25% throughout the year, with GDP growth expected to hold around 2% both in 2025 and 2026.

ECB's Schnabel: Europe must rethink export-driven model amid geopolitical fragmentation

ECB Executive Board member Isabel Schnabel emphasized in a speech that while interest rate cuts could help "mitigate economic weakness", they are not a cure-all for the deeper "structural crises" facing Eurozone.

She pointed to persistent issues such as high energy prices, declining competitiveness, and labor shortages, which continue to weigh on the region’s economic outlook.

Schnabel acknowledged the growing pressures facing Europe’s economy, particularly in light of Donald Trump’s return to the White House and his trade policies.

“The export-led growth model needs to be reconsidered in the face of this increasing geopolitical fragmentation,” she stated.

USD/JPY Daily Outlook

Daily Pivots: (S1) 151.90; (P) 152.25; (R1) 152.86; More...

Immediate focus is now on 153.70 support turned resistance as USD/JPY's rebound from 150.92 extends. Firm break of 153.70 will argue that correction from 158.86 has already completed after drawing support from 38.2% retracement of 139.57 to 158.86 at 151.49. Such development will also keep the rally from 139.57 intact. Further rise should then be seen to retest 158.86 next. ON the downside, however, sustained trading below 151.49 will suggest that whole rise from 139.57 has completed, and bring deeper fall to 61.8% retracement at 146.32 next.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low). In case of another fall, strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Key Highlights

• Gold started a fresh surge above the $2,900 resistance and traded to a new record high.
• A key bullish trend line is forming with support at $2,855 on the 4-hour chart.
• Bitcoin is struggling to clear the $100,000 resistance zone.
• The US Consumer Price Index could rise 2.9% in Jan 2025 (YoY).

Gold Price Technical Analysis

Gold prices started a fresh rally above the $2,850 resistance. The bulls pumped the price above the $2,900 level and the price traded to a new record high.

The 4-hour chart of XAU/USD indicates that the price traded as high as $2,942. It settled well above the 100 Simple Moving Average (red, 4 hours) and the 200 Simple Moving Average (green, 4 hours).

The current price action is bullish and indicates chances of more upsides. On the upside, immediate resistance is near the $2,940 level. The next major resistance sits near the $2,955 level.

A clear move above the $2,955 resistance could open the doors for more upsides. The next major resistance could be $2,980, above which the price could rally toward the milestone level at $3,000.

On the downside, initial support is near the $2,865 level. The first key support is near $2,855. There is also a key bullish trend line forming with support at $2,855 on the same chart. The next major support is near the $2,820 level.

The main support is now $2,805. A downside break below the $2,805 support might call for more downsides. The next major support is near the $2,740 level.

Looking at Bitcoin, the price attempted a recovery wave but the bears are still active below the $100,000 level.

Economic Releases to Watch Today

• US Consumer Price Index for Jan 2025 (MoM) – Forecast +0.3%, versus +0.4% previous.
• US Consumer Price Index for Jan 2025 (YoY) – Forecast +2.9%, versus +2.9% previous.
• US Consumer Price Index Ex Food & Energy for Jan 2025 (YoY) – Forecast +3.1%, versus +3.2% previous.

New York Fed President John Williams stated in a speech overnight that policy remains “well positioned” to balance the dual mandate. He added that the current “modestly restrictive” policy is expected to support a gradual return to 2% inflation while maintaining economic growth and labor market resilience.

Nevertheless, Williams also acknowledged the high degree of uncertainty surrounding the economic outlook, particularly concerning fiscal, trade, immigration, and regulatory policies.

On the labor market, Williams noted that it has reached a “good balance” after a period of "unsustainably tight conditions" in prior years. He highlighted that wage growth has now aligned with productivity gains, which should keep inflationary pressures contained. He projected inflation at around 2.5% this year and expects it to reach the Fed’s 2% target “in coming years.”

Williams also forecasted that the unemployment rate would remain stable between 4% and 4.25% throughout the year, with GDP growth expected to hold around 2% both in 2025 and 2026.

ECB Executive Board member Isabel Schnabel emphasized in a speech that while interest rate cuts could help "mitigate economic weakness", they are not a cure-all for the deeper "structural crises" facing Eurozone.

She pointed to persistent issues such as high energy prices, declining competitiveness, and labor shortages, which continue to weigh on the region’s economic outlook.

Schnabel acknowledged the growing pressures facing Europe’s economy, particularly in light of Donald Trump’s return to the White House and his trade policies.

“The export-led growth model needs to be reconsidered in the face of this increasing geopolitical fragmentation,” she stated.