Sample Category Title

GBP/USD's extended rally last week suggests that stronger rise is underway even still as a correction to fall from 1.3433. Initial bias stays on the upside this week for 1.2810 resistance first. Firm break there will target 61.8% retracement of 1.3433 to 1.2099 at 1.2923 next. On the downside, below 1.2562 minor support will turn intraday bias neutral again first. But another rise will remain in favor as long as 1.2331 support holds, in case of retreat.

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.

In the long term picture, price actions from 1.0351 (2022 low) are seen as a corrective pattern to the long term down trend from 2.1161 (2007 high) only. Outlook will be neutral at best as long as 1.4248 structural resistance holds, even in case of strong rebound.

USD/CHF gyrated lower last week as corrective pattern from 0.9200 extended. While deeper decline cannot be ruled out, larger rally is still expected to continue as long as 38.2% retracement of 0.8374 to 0.9200 at 0.8884 holds. On the upside, above 0.9053 will bring retest of 0.9200 resistance. However, sustained break of 0.8884 will indicate bearish reversal, and target 61.8% retracement at 0.8690 instead.

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.

In the long term picture, price action from 0.7065 (2011 low ) are seen as a corrective pattern to the multi-decade down trend from 1.8305 (2000 high). Fall from 1.0342 (2016 high) is seen as the second leg. Sustained break of 55 M EMA (now at 0.9131) will indicate that the third leg has already started. However, rejection by 55 M EMA again, followed by break of 61.8% retracement of 0.7065 to 1.0342 at 0.8317, will pave the way back to 0.7065.

AUD/USD's rebound from 0.6087 extended higher last week but lost momentum again just ahead of 38.2% retracement of 0.6941 to 0.6087 at 0.6413. Initial bias is turned neutral this week first. On the downside, firm break of 0.6327 will suggest that the corrective rebound has completed, and bring deeper fall to retest this low. Nevertheless, sustained break of 0.6413 will pave the way back to 61.8% retracement at 0.6615, even still as a correction.

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 0.6505) holds.

In the long term picture, prior rejection by 55 M EMA (now at 0.6823) is taken as a bearish signal. But for now, fall from 0.8006 is still seen as the second leg of the corrective pattern from 0.5506 long term bottom (2020 low). Hence, in case of deeper fall, strong support should emerge above 0.5506 to contain downside to bring reversal. However, this view is subject to adjustment if current decline accelerates further.

USD/CAD turned into sideway consolidations last week and outlook is unchanged. Initial bias remains neutral this week first and further fall is expected with 1.4378 resistance intact. Decline from 1.4791 is seen as a correction to rally from 1.3418. Break of 1.4150 will target 1.3946 cluster support (61.8% retracement of 1.3418 to 1.4791 at 1.3942).

In the bigger picture, long term up trend is tentatively seen as resuming with prior 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 support holds (2022 high), even in case of deep pullback.

In the longer term picture, up trend from 0.9506 (2007 low) is in progress and possibly resuming. Next target is 61.8% projections of 0.9406 to 1.4689 from 1.2005 at 1.5270. While rejection by 1.4689 will delay the bullish case, further rally will remain in favor as long as 55 M EMA (1.3420) holds.

GBP/JPY's decline last week should confirm prior rejection by 55 D EMA (now at 192.44) which is a bearish sign. However, downside is still contained well above 187.04 support. Initial bias remains neutral this week first. On the downside, firm break of 187.04 will extend the fall from 199.79 towards 180.00 support.

In the bigger picture, price actions from 208.09 are seen as a correction to rally from 123.94 (2020 low). Strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. However, sustained break of 152.11 will bring deeper fall even still as a correction.

In the longer term picture, while a medium term top was formed at 208.09 (2024 high), it's still early to conclude that the up trend from 122.75 (2016 low) has completed. But GBP/JPY is at least in a medium term corrective phase, with risk of correction to 55 M EMA (now at 173.92).

EUR/JPY's steep decline last week confirmed prior rejection by 55 D EMA (now at 160.47), which is a bearish sign. But downside is contained above 155.72 support so far. Initial bias is neutral this week first. On the downside, firm break of 155.72 will be a strong sign that whole fall from 175.41 is resuming. Retest of 154.40 support should be seen next and firm break there should confirm.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). Strong support should be seen from 38.2% retracement of 114.42 to 175.41 at 152.11 to contain downside. However, sustained break of 152.11 will bring deeper fall even still as a correction. Next target will be 100% projection of 175.41 to 154.40 from 166.67 at 145.66.

In the long term picture, while 175.41 is at least a medium term top, it's still early to conclude that up trend from 94.11 (2012 low) has completed. A medium term corrective phase is in progress with risk of deeper fall back to 55 M EMA (now at 148.45).

EUR/GBP's decline from 0.8472 resumed by breaking through 0.8290 support last week. Initial bias stays on the downside this week despite weak momentum. Further fall should be seen to retest 0.8221 low. Nevertheless, firm break of 0.8308 minor resistance will turn bias back to the upside for stronger rebound to 0.8376 resistance instead.

In the bigger picture, the medium term down trend remains intact with EUR/GBP staying well inside the falling channel. Prior rejection by 55 W EMA (now at 0.8431) also affirm bearishness. Decisive break of 0.8201/8221 support zone will resume whole down trend from 0.9449 (2020 high) and carry larger bearish implications.

In the long term picture, price action from 0.9499 (2020 high) is seen as part of the long term range pattern from 0.9799 (2008 high). Range trading should continue between 0.8201 and 0.9499, until there is clear signal of imminent breakout.

EUR/AUD's decline last week suggests that corrective pattern from 1.6800 is still extending. With a temporary low formed at 1.6355, initial bias is neutral this week first. On the downside, below 1.6355 will target 61.8% retracement of 1.5963 to 1.6800 at 1.6283. On the upside, firm break of 1.6631 resistance will suggest that the correction has likely completed, and rise from 1.5963 is finally ready to resume.

In the bigger picture, with 1.5996 key support (2024 low) intact, larger up trend from 1.4281 (2022 low) is still in favor to resume through 1.7180 at a later stage. Nevertheless, sustained break of 1.5996 will indicate that such up trend has completed and deeper decline would be seen.

In the longer term picture, rise from 1.4281 is seen as the second leg of the pattern from 1.9799 (2020 high), which is part of the pattern from 2.1127 (2008 high). As long as 55 M EMA (now at 1.6090) holds, this second leg could still extend higher. However, sustained trading below 55 M EMA will open up the bearish case for extending the decline through 1.4281 low.

EUR/CHF dipped lower last week but stayed above 0.9359 support. Initial bias remains neutral this week first. On the downside, firm break of 0.9359 will revive the case that choppy rise from 0.9204 is merely a correction and has completed. Deeper fall should then be seen back to retest 0.9204 low. However, firm break of 0.9516 and sustained trading above 0.9481 fibonacci level will carry larger bullish implication and extend the rise from 0.9204.

In the bigger picture, sustained trading above 38.2% retracement of 0.9928 to 0.9204 at 0.9481 should confirm that whole fall from 0.9928 has completed at 0.9204. Further rally should then be seen back to 61.8% retracement at 0.9651 and above. However, another rejection by 0.9481 will keep outlook bearish for extending larger down trend through 0.9204 at a later stage.

In the long term picture, as long as 0.9928 resistance holds, the multi-decade down trend remains intact, with decline from 1.2004 (2018 high) as another falling leg. Decisive break of 0.9252 (2023 low) will confirm long term down trend resumption to 61.8% projection of 1.1149 to 0.9407 from 0.9928 at 0.8851.

• US equity markets experienced a slight downturn due to concerns about inflation impacting consumer spending, highlighted by Walmart’s cautious outlook.
• The upcoming US PCE data is crucial as the Fed’s preferred inflation measure.
• Japanese inflation data will also be key this week as markets eye the Bank of Japans next move.
• German elections take place over the weekend in what could be massive for Europe as a whole.

Week in Review: Tariff Chatter Continues to Drive Market Moves

Markets had another interesting week as US President Donald Trump pledged more tariffs ahead. A potential peace deal appears to be gaining traction between Russia and Ukraine but this did little to dent the appeal of Safe havens as Gold continues to hold the high ground.

US Equity markets did take a slight hit toward the backend of the week largely driven by news from Walmart.

The $780 billion retailer reported strong holiday and January sales, thanks to wealthier customers looking for deals. However, it warned that inflation could hurt shoppers, causing its stock value to drop by 6%. This shows that the economic optimism seen after Donald Trump’s election may be starting to fade.

Walmart acknowledged “uncertain times,” which led to a cautious outlook and a $50 billion drop in its market value. Being a key indicator of U.S. spending habits, Walmart’s concerns matter. Even Donald Trump admitted that “inflation is back,” and research shows consumer confidence in business and jobs fell sharply in January.

Wall Street is also uneasy. David Kelly, a strategist at JPMorgan, warned about risks to economic growth from new policies, including tariffs and deportations. If Walmart is feeling nervous, it could signal a growing wave of fear in the economy.

This was compounded by weak US data as the S&P Global data showed that U.S. business activity barely grew in February as worries about import tariffs and major government spending cuts increased.

The S&P 500 and Nasdaq 100 both printed fresh highs before a selloff on Thursday and Friday, reflecting the market’s concerns about these developments.

Source: LSEG

On the commodities front, Gold continued its advance this week but did have a bit of a seesaw run. The one concern that bulls may have is that this week’s rally failed to print fresh all-time highs. Is this a sign that bullish pressure may be waning?

Oil prices had an interesting week with gains every day before a significant selloff on Friday left Brent crude trading flat for the week. Supply jitters continue to persist, but President Trump’s wish of lower energy and oil prices clearly is weighing on the minds of market participants. News filtered through today that the US is putting pressure on Iraq to restart the pipeline to Turkey which could explain the fall in Oil prices, or at least partially so.

On the FX front, the US Dollar struggled this week largely due to a massive selloff on Thursday. This was a surprise given that Wednesday FOMC minutes showed the Fed is concerned about the impact of tariffs on inflation. This has led to the idea that rate cuts may be pushed back later in the year than had been previously anticipated.

The Week Ahead: US CPE Will be Key After Hot US CPI data, German Elections are in Focus as Well

Asia Pacific Markets

The main focus this week in the Asia Pacific region for me will be inflation data from Japan while we also have some Chinese data to monitor.

The week’s key focus is Tokyo’s inflation data, expected to hold at 3.3% in February. Rising fresh food prices may drive costs up, but energy subsidies should balance this out. The BoJ will monitor if higher food costs, like rice, are affecting consumers. Economic data suggests a slow recovery, with industrial output improving due to exports and retail sales boosted by better wages and more tourists.

China’s schedule for economic data is light in the last week of February. On Tuesday, the People’s Bank of China is expected to decide on the medium-term lending facility (MLF) rate. Since the focus has shifted to the 7-day reverse repo rate as the main policy tool, no changes to the MLF rate are expected this month. Any surprise however could have a knock on effect on emerging markets.

Europe + UK + US

In developed markets, the US CPI release last week really stoked concerns about higher rates for longer. However, Fed Chair Powell was quick to stress how the Fed prefers the PCE data as their inflation gauge and cautioned against reading too much into the CPI release.

Next week’s PCE data includes the Fed’s preferred inflation measure, the core personal consumer expenditure (PCE) deflator. While the core CPI rose by a concerning 0.4% month-on-month, other data suggests that the core PCE deflator is likely to show a smaller increase of 0.3%. To reach the 2% yearly inflation target, monthly inflation needs to average 0.17%. Due to these factors, it’s unlikely we’ll see any rate cuts before the September FOMC meeting.

Europe’s most industrialized economy faces a big weekend as Germans head to the polls in what will be a key election for Europe as a whole. The German economy faces a host of challenges while the question of immigration has also been a key campaign point.

The elections could have an impact on both the Euro and German Bunds as well when the market opens on Sunday night.

Chart of the Week

This week’s focus is on the US Dollar Index (DXY) after Thursday’s selloff and a break of the key level of support at 107.00.

Moving into next week and with the PCE data on the horizon, will the DXY rebound? That is the big question for market participants.

Currently the DXY has found support at the 100-day MA resting at 106.47 with a bullish inside bar candle close on Friday.

This leaves me to believe that we could get some bullish strength on Monday and perhaps a retest of the 107.00 handle.

More tariff chatter could help propel the DXY above the support turned resistance at 107.00, however in the absence of tariff chatter the DXY may grind sideways until the release of the PCE Data.

US Dollar Index Daily Chart – February 21, 2025

Source:TradingView.Com (click to enlarge)

Key Levels to Consider:

Support

• 106.47
• 106.13
• 105.63

Resistance

• 107.00
• 108.00
• 108.49