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Donald Trump’s inauguration went almost smoothly. The US markets were closed, the Chinese stocks were in a better mood on a ‘good’ phone call between Trump and Xi, and the European equity markets opened higher on Monday stagnated with hesitation but sentiment got better toward the end of the session.

Surprise, Trump didn’t throw a punch to China in the first few minutes of his presidency and the WSJ reported that he would study the trade policies and the relationships with China, Canada and Mexico instead. The latter gave hope that Trump’s trade policies wouldn’t be as aggressive as he promised. As a reaction, the US and European futures rose and the US dollar fell significantly. The EUR/USD, for example, rallied to 1.0434 after opening the week near 1.0285, while Cable rose from below 1.22 to 1.2344. Even the Canadian dollar and the Mexican peso gained more than 1% against the greenback. And the gap between the gold and copper prices between New York and London tumbled on softened tariff threats.

But wait... the dollar jumped again, erasing losses versus most major currencies as Donald Trump later said that Canada and Mexico could be subject to 25% tariffs from February 1st. Any remarks could hit China anytime, as well. So yes, the US futures are slightly positive this morning but the European futures are in the red. The dollar is higher and the CSI 300 has given back the early-session gains.

Welcome to Trump 2.0 during which investors will be served a good dose of adrenaline, volatility and unpredictability. And, before I forget, the Trump coin tanked 20% after Melania launched her own coin... I don’t know what to say about that.

Back to reality

Ok... so this morning, we are back to the inflation worries on tariff threats that pushes the US dollar higher against many majors. The EURUSD is back below the 1.04 level. Technically, yesterday’s rally didn’t damage any medium-term levels, the rally remained short of the 50-DMA and the minor 23.6% Fibonacci retracement on September to now selloff – a big part of which was explained by the potential negative impact that Trump’s tariff policies would have on the European economies. So, we remain in that narrative. The outlook remains comfortably negative for the euro, the tops look like good selling opportunities due to hawkish risks regarding the Federal Reserve (Fed) – that is expected to face higher inflation, versus dovish risks facing the European Central Bank (ECB) - on potential negative impact of Trump policies on European economic tissue under the condition of inflation being under control. Yesterday’s German PPI figure came in negative on a monthly basis and gave support to the ECB doves.

Across the Channel, yesterday’s rebound in sterling versus the dollar didn’t threaten any important levels either, and sterling remains under the pressure of discomfort regarding how the British government will deliver the promised growth when finances are so tight. In Japan, the USDJPY tests the 50-DMA to the downside. Here, the hawkish Bank of Japan (BoJ) bets regarding a highly possible rate hike this Friday keeps the yen bulls in charge of the market and that gives the yen room to extend gains. Elsewhere, the AUDUSD – which also jumped more than 1% on hope that tariffs wouldn’t be *that* aggressive - is under pressure this morning, while the USDCHF sees support near the 90 cents mark.

What’s next? No one knows, but the positive pressure on the dollar against most majors – except the yen – should continue on the back of fears that Trump tariffs would boost inflation in the US and keep the Fed hawks close to the market. On the first day of Trump presidency, the Fed funds futures are pricing a possible 25bp rate cut from the Fed in May meeting – but the probabilities are close to a coin flip; everything is subject to change – and sometimes rapid changes.

In energy, Trump unsurprisingly wants to scrap climate, DEI policies and declare an energy emergency to – obviously – support fossil fuels, increase domestic production and replenish the strategic petroleum reserves. Increasing domestic production would soften the price of crude, but replenishing the SPR would pump oil out of the market and push its price higher. In the short-run, the impact from replenishing the strategic reserves could outweigh (because doing that would withdraw oil from market quickly), while increasing production takes time. But because Trump wants energy to be cheap, he would be advised to act slowly – which could have a limited impact on oil prices. In all cases, the energy companies will likely be well supported by Trump policies – and we could see further gains in the sector on the rollback of climate-focused policies at the expense of clean energy and climate friendly sectors. Voila.
Netflix time

Netflix is due to announce its Q4 results today after the bell. The company is expected to almost double its earnings per share compared to the same time last year, and post an almost 15% growth in revenues. A strong report could send the stock price to above $900 again and bring the $1000 mark back in the scope, while a disappointment could trigger a deeper downside correction in the stock price, with next important support seen at $795 per share – the 100-DMA and $756 per share, the minor 23.6% Fibonacci retracement on 2022 to today rally. In all cases, Netflix remains an investors’ darling: 21 analysts out of 30 have a buy rating on tipranks, 7 thinks holding the stock is just fine, only 2 issued sell recommendation over the past three months.
Before we go

The European ZEW sentiment index and Canadian CPI are on today’s economic calendar. But we can no longer look at the economic calendar, scheduled events and meetings and predict that the market moves will be mostly driven by those. A comment from Trump could land at anytime and change the whole picture. Again, welcome to Trump Act 2.

In focus today

Markets continue to pay close attention to President Trump's initial actions. It is expected that he will issue a series of executive orders to further build his momentum throughout the week, resulting in US news dominating the headlines.

Today, the German ZEW index for January is released. The assessment of the current economic situation has remained on a downward trend while expectations for the future have rebounded lately. It will be interesting to see if these developments changed in January.

Economic and market news

What happened overnight

In the US, President Trump was busy overnight saying he would impose 25% tariffs on imports from both Canada and Mexico over border problems on 1 February. He also threatened the EU over the US trade deficit with Europe, suggesting that either tariffs or increased EU oil purchases from the US could be a solution. The potential tariffs on China were linked to whether a TikTok deal could be reached. Additionally, he signed several executive orders, including restricting entry into the US, deploying troops at the Mexican border, withdrawing the US from the World Health Organization and pardoning 1.500 January-6 rioters.

What happened yesterday

In the US, Donald Trump was inaugurated as the 47th President and delivered his first address in this role. In his speech, he outlined his legislative and policy priorities, centered around ushering in an American golden age, with a focus on anti-immigration measures and unleashing US oil production. It was also announced that the US also is withdrawing from the Paris accord, dealing a massive blow to international climate efforts. Noticeably absent, no tariffs were announced causing the USD to lose the momentum it had been gaining in the days before the inauguration.

Equities: Global equities rose yesterday ahead of the Trump inauguration. It is important to remember that most cash trading was closed, as the US had a bank holiday for Martin Luther King Day. Consequently, Trump and his team's performance should largely be assessed through the actions in futures, yields, FX, and related assets. We have witnessed some roller-coaster moves, but nowhere near what one might have expected or feared. As we are now past the most speeches and the first batch of executive orders has been signed, we can conclude that the inauguration did not have an outsized market impact. In other words, what we saw and heard from Trump and his team yesterday was more or less as expected. It was merely the first day in office for the president, which investors viewed positively for risky assets when he was elected back in November.

Asian cash markets were mixed this morning, with Chinese H-shares in Hong Kong leading the advance. This could be seen as a result of the lack of comments on China in the presidential speeches, where tariffs against Canada and Mexico received more attention from the president. European futures are lower this morning but have fluctuated during this morning's trading. At the time of writing, the Euro Stoxx 50 futures are down by 0.3%, which again must be characterised as a non-outsized move. US futures are marginally in the green, though it is important to note that the US has some catching up to do with the European cash session from yesterday.

FI: With US closed for Martin Luther King's Day and all focus on President Trump's inauguration, FI markets were very calm trough the European session yesterday. Overnight, a softer-than-expected series of executive orders from the new president triggered a significant rally in US rates markets, with the 10Y UST yield down 9bp to roughly 4.55%, and the 2s10s curve flattening some 3bp. While the risk associated with Trump's policy package persists, we believe that long-term US yields have further room to decline. There is ample scope to factor in additional rate cuts in 2025-26, beyond the current pricing of 70bp, should inflation data continue to soften.

FX: The USD initially weakened against the rest of G10 currencies yesterday following a Wall Street Journal story that suggested US will not rush into new trade restrictions. Meanwhile, that partly reversed overnight with Trump specifying plans to enact 25% tariffs on Mexico and Canada by 1 February. Alongside broader risk sentiment the CAD and MXN both took a hit although to levels that remain stronger via-a-vis the USD than prior to the Wall Street Journal article. The FX market will remain highly alert to tariff news in the coming sessions, and we expect quite a bit of noise.

Key Highlights

• Gold started a fresh upward move above the $2,675 resistance.
• A key bullish trend line is forming with support at $2,690 on the 4-hour chart.
• Oil prices corrected some gains and traded below $78.80.
• EUR/USD was able to recover above the 1.0300 resistance zone.

Gold Price Technical Analysis

Gold prices remained well-bid near the $2,620 zone against the US Dollar. The price formed a base and started a fresh increase above $2,650 and $2,675.

The 4-hour chart of XAU/USD indicates that the price even climbed above $2,688 to move into a positive zone. The price surpassed the 100 Simple Moving Average (red, 4 hours) and the 200 Simple Moving Average (green, 4 hours).

It traded toward $2,725 before there was a short-term downside correction. The price dipped below the $2,720 and $2,710 levels. On the downside, initial support is near the $2,690 level.

There is also a key bullish trend line forming with support at $2,690 on the same chart. The first key support is near $2,672. The next major support is near the $2,665 level.

The main support is now $2,655. A downside break below the $2,655 support might call for more downsides. The next major support is near the $2,620 level.

On the upside, immediate resistance is near the $2,725 level. The next major resistance sits near the $2,740 level. A clear move above the $2,740 resistance could open the doors for more upsides. The next major resistance could be $2,750, above which the price could rally toward the $2,765 level.

Looking at Oil, there was a minor rejection near the $80.00 zone and the price corrected below the $78.80 level.

Economic Releases to Watch Today

• UK Claimant Count Change for Dec 2024 – Forecast 10.3K, versus 0.3K previous.
• UK ILO Unemployment Rate for Nov 2024 (3M) – Forecast 4.3%, versus 4.3% previous.

Donald Trump was sworn in as the 47th President of the United States yesterday, unveiling an aggressive "America First" agenda that has significant implications for both domestic and global economies. Among his key priorities are large-scale deportation operations and reducing environmental regulations, signaling potential shifts in labor markets and energy industries. Trump also aims to impose higher tariffs on imports early in his presidency, a move likely to increase costs for U.S. consumers while provoking retaliatory measures from trading partners. While his policies have sparked widespread concern over trade disruptions, Trump has pledged to streamline government operations—a potential boon for economic efficiency. Furthermore, his vow to end the Russia-Ukraine conflict, though uncertain, could stabilize geopolitical tensions and benefit global markets.

Last week on the economic front, U.S. Consumer Price Index (CPI) data for December came in below expectations, suggesting inflationary pressures may be easing. Federal Reserve Governor Christopher Waller indicated that this trend could prompt multiple interest rate cuts this year if it continues, a development that may stimulate borrowing and investment. However, U.S. retail sales slightly missed expectations, hinting at weaker consumer demand.

Currencies

The strong rise in the USD since October has paused after last week’s weaker-than-expected U.S. inflation data. Earlier, the dollar had surged as U.S. long-term bond yields rose, with markets expecting higher inflation under Trump’s presidency. However, if Trump’s policies are seen as less inflationary than expected, the USD could weaken further.

Some analysts believe the BOJ may raise official interest rates at this week’s meeting, which could trigger a sell-off in USD/JPY and add more pressure on the dollar. At the same time, AUD/USD and GBP/USD, which have fallen sharply in recent weeks, may attract buyers, offering potential opportunities for traders.

USD Index Daily Chart

Stock Markets

U.S. stock markets have regained strength following last week’s weaker-than-expected inflation data and the official start of Trump’s presidency. The Dow and S&P 500, which had retraced much of their initial post-election rally in the past two months due to higher-than-expected U.S. interest rates, are now showing signs of recovery.

Among the sectors expected to benefit most from Trump’s policies is the oil industry, as the new administration aims to reduce regulations limiting oil extraction. Chevron, for instance, has seen significant gains this year, as highlighted in the chart below, reflecting optimism about the sector's growth prospects.

Chevron Daily Chart

In the electric vehicle space, Tesla’s boom has slowed, but its upward trend remains intact, due to the close relationship between Elon Musk and Donald Trump. However, this alliance could end at any time, making it essential for bullish traders to stay cautious, prepare for potential losses, and consider shifting bearish if necessary.

Meanwhile, the Nikkei 225 has repeatedly failed to break through the 40,000 resistance level since Trump’s election, despite continued yen weakness. Rising living costs in Japan, outpacing wage growth, remain a key challenge for the Japanese economy, contributing to the index's struggles.

Bond Market

The closely watched U.S. 10-year Treasury yield has climbed 1% since September, reaching 4.65%, and is approaching the key resistance level of 5% as markets scale back expectations for interest rate cuts. However, last week’s weaker-than-expected U.S. inflation data caused yields to decline, providing a boost to U.S. stock markets while pushing the USD lower. The market will also be closely watching policy announcements from Trump in the coming weeks to see if they are as inflationary as expected.

In Japan, bond yields are also trending higher as the Bank of Japan signals a possible increase in official interest rates. The 10-year Japanese bond yield has doubled over the past year to 1.19%, reflecting a notable shift in Japan’s traditionally low-rate environment.

Commodities

Crude oil prices have risen this year, driven by U.S. sanctions on Russia’s oil industry, which have significantly reduced global supply. Trump’s presidency is expected to further impact the oil market, as he supports expanded oil exploration in the U.S. While this could boost domestic production, Trump has also indicated he will seek ways to push oil prices significantly lower during his term. Additionally, his stated desire to end the Russia-Ukraine war, if successful, could further push oil prices down by reducing geopolitical risk premiums.

Crude Oil Daily Chart

Gold has also moved higher in 2025, despite the strong USD and higher interest rates. Investors view gold as a safe-haven asset to hedge against potential instability in the global economy should Trump’s policies create disruptions. If the USD continues to weaken, gold prices may see further upside, potentially returning to the highs set in October 2024.

Bitcoin

Bitcoin has been trading sideways around the $100,000 mark over the past two months, as the market awaited the start of Trump’s presidency. With Trump now sworn in as president, Bitcoin has begun pushing higher once again. Traders are increasingly optimistic, aiming to drive prices to new highs as Trump has recently reiterated his support for cryptocurrencies.

Upcoming Events to Watch This Week

This week is relatively quiet on the economic front, with the key data releases scheduled for Friday, including U.S. PMI and existing home sales. These reports may provide insight into the health of the U.S. economy but are unlikely to cause significant market volatility. Meanwhile, the Bank of Japan is expected to raise official interest rates from 0.25% to 0.50%, a move that is likely to create substantial volatility in the yen and Nikkei as markets react to this shift in monetary policy.

The market’s primary focus will be on Trump’s initial actions as president. While his expected crackdown on immigration may have limited market impact, any remarks he makes about tariffs could significantly influence sentiment. If his comments hint at a potential trade war, this could raise concerns about global trade and negatively affect market stability. Traders will be closely monitoring his statements for signs of direction on these critical issues.

This Week's Trump Trades

Here are trade ideas based on this week's market trends:

USD/JPY: Focus on selling opportunities as the pair appears vulnerable to further downside. Target a break of the key support level at 155.00, which could open the door to additional declines. Monitor Bank of Japan developments closely, as any rate changes could increase volatility.

Bitcoin: The uptrend is gaining momentum, with bullish sentiment returning after Trump’s inauguration. Look for a potential test of $110,000 and higher as traders push for new highs. Buying near key support levels could provide favorable entry points for those with a bullish outlook.

Crude Oil: The recent ceasefire between Israel and Gaza, coupled with Trump’s presidency, is reducing tensions in the Middle East. This geopolitical easing, along with expectations of increased U.S. production, could push crude oil prices lower. Traders should consider selling rallies, targeting lower levels in the short term.

S&P 500: The S&P 500 could push higher this week, buoyed by the start of Trump’s presidency as he enacts his "America First" agenda. Look to buy dips on the S&P 500, as optimism around Trump’s policies may provide continued support for the index.

Short Term Elliott Wave view in GBPJPY shows the decline from 12.30.2024 high is in progress as a 5 waves impulse. Down from 12.30.2024 high, wave 1 ended at 195.72 and wave 2 rally ended at 198.25. Pair has resumed lower in wave 3 towards 190.06 as the 30 minutes chart below shows. Wave 4 unfolded as a zigzag Elliott Wave structure. Up from wave 3, wave ((a)) ended at 192.91, wave ((b)) ended at 191.46 and wave ((c)) ended at 193.05. This completed wave 4 in higher degree.

Pair has turned lower in wave 5. Down from wave 4, wave (i) ended at 191.21 and wave (ii) ended at 192.4. Wave (iii) lower ended at 189.6 and wave (iv) ended at 190.2. Final leg wave (v) ended at 189.323 which completed wave ((i)) of 5. Pair corrected higher in wave ((ii)) with internal subdivision of a double three. Up from wave ((i)), wave (w) ended at 190.61 and wave (x) ended at 189.87. Final leg wave (y) ended at 192.01 which completed wave ((ii)) in higher degree. Near term, as far as pivot at 193.05 high stays intact, expect pair to extend lower.

GBPJPY 30 Minutes Elliott Wave Chart

GBPJPY Elliott Wave Video

https://www.youtube.com/watch?v=qYg1wlTynjg

The USDJPY pair fluctuated around the 156.15-156.20 level on Monday. The pair recently bounced off the lower boundary of a long-term upward channel but faced resistance near 156.55-156.60. If the pair breaks above this level, it could rise toward 157.00 and potentially higher to 158.00 or the recent high of 158.85. On the downside, strong support is seen near 155.25 and 155.00, with a break below these levels possibly triggering further declines toward 154.00 or lower. The Japanese Yen gained some support from improving machinery orders and expectations of a Bank of Japan rate hike. At the same time, uncertainty around US trade policies and upcoming events keeps traders cautious.

CADJPY – D1 Timeframe

Having an SBR (Sweep-Break-Retest) pattern on the daily timeframe chart often indicates a long-term opportunity. This case is fascinating because of a fair-value gap at the initial break of structure. In any case, the retest of the demand zone is necessary for the bullish sentiment.

CADJPY – H4 Timeframe

The price action on the 4-hour timeframe chart shows a much clearer picture of the price action. At this point, the SBR pattern is a lot clearer, too. As mentioned earlier, the trigger for the bullish entry is the demand zone, as highlighted by the rectangular shape.

Analyst’s Expectations:

• Direction: Bullish
• Target: 109.919
• Invalidation: 106.193

The EURUSD pair remains weak, with key support levels at 1.0176 and the significant parity level at 1.0000. On the upside, resistance is at 1.0436 and 1.0486, while the broader downtrend will likely continue unless the pair breaks above 1.0775. The US Dollar has been under pressure due to disappointing economic data and uncertainty around Federal Reserve policies, while the Euro struggles with weak growth in Europe, especially in Germany. Both central banks—the Fed and ECB—are expected to tread cautiously, with potential rate changes depending on inflation and economic conditions. Investors will watch closely for updates on financial data and policy shifts to gauge the pair’s next moves.

EURCAD – D1 Timeframe

Typically, when price breaks structure on the higher timeframe with a Fair Value Gap, it tends to climb back towards the gap in an attempt to fill it. Currently, on the daily timeframe chart of EURCAD, we find prices inching back towards the FVG region, with further confluence from the rally-base-drop supply zone at the origin of the impulsive move. Let’s see the lower timeframe now.

EURCAD – H4 Timeframe

On the 4-hour timeframe chart, we are presented with an SBR pattern arising from the sweep above the previous high, followed immediately by a break of structure. The retest of the supply zone is the preferred point of entry since it enjoys further confluence from the trendline resistance and is located at the 88% Fibonacci retracement level.

Analyst’s Expectations:

• Direction: Bearish
• Target: 1.47235
• Invalidation: 1.50865

• USDCHF reversed from the resistance zone
• Likely to fall to support level 0.9000

USDCHF currency pair recently reversed from the resistance zone located between the key multi-month resistance level 0.9185 (which stopped the daily uptrend last April), the resistance trendline of the daily up channel from September and the upper daily Bollinger Band.

The downward reversal from this resistance zone created the daily Evening Star, which stopped the previous sharp upward impulse sequence (C) from December.

USDCHF currency pair can be expected to fall to the next round support level 0.9000, the former resistance from December.

• GBPUSD reversed from support area
• Likely to rise to resistance level 1.2365

GBPUSD currency pair recently reversed up with the daily Hammer from the support area located between the long-term support level 1.2095 (former Double Bottom from October), lower daily Bollinger Band and the support trendline of the daily down channel from September.

The upward reversal from this support area started the active medium-term upward correction (4).

Given the strength of the nearby support level 1.2095 and the significant US bearish sentiment, GBPUSD currency pair can be expected to rise to the next resistance level 1.2365.