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USD Fundamental Analysis
Last Week’s Highlights:
- ISM Manufacturing PMI - Greater than Forecast
- Geo-Political Events
- Middle East and Gaza Policy
- US-Ukraine-Russia Conflict
- JOLTS Job Openings - Lower than Forecast
- ISM Services PMI - Lower than Forecast
- ADP Non-Farm Employment Change - Greater than Forecast
- Non-Farm Payroll - Lower than Forecast
- Unemployment Claims - Greater than Forecast
We have mixed readings for USD last week after all the Red Folders.
We are not seeing bullish follow-through following the USD not so favorable results.
As of now, we are ranging overall and currently hovering below the equilibrium or the 50% of the range which is not good if we stay long.
Technical outlook will adjust once Red Folders come up this week:
Main event this week is the USD CPI.
- Bullish Factors: The dollar is gaining strength due to renewed global trade tensions following tariff announcements from the U.S. This has heightened investor demand for the dollar as a safe-haven currency. Strong U.S. economic indicators, including employment figures, add further support to the greenback's outlook.
- Bearish Risks: The potential cooling of the U.S. economy and anticipation of inflation data could dampen dollar momentum. If inflation slows, the Federal Reserve may signal rate cuts, which would weaken the dollar. Escalating trade tensions may also disrupt global growth, indirectly impacting demand for the dollar.
- Overall: While the dollar currently benefits from safe-haven demand and economic strength, its bullish stance remains fragile due to looming inflation data and the potential for Federal Reserve policy adjustments. This creates a mixed but cautiously optimistic outlook for this week.
Potentially, we could test the low or the support level.
Levels to watch out for reaction are:
- 107 Support Level
- 110.200 Resistance Level
Hence, since we are not seeing strength with USD, we can look for strength opportunities in favor of the Foreign Pairs (AUD, NZD, EUR, GBP, CAD, CHF) against the Dollar unless proven otherwise by the data this week and market reaction.
GOLD Analysis
Gold has been increasing in strength since the rate cut of the US Dollar.
This affects the resiliency of the USD vs Gold as Gold became more appealing than Dollar due to dovish notes of Powell and impending rate cuts in the coming months.
Gold prices have recently surged to record highs, driven by several key factors:
1. Escalating Trade Tensions: The U.S. administration's announcement of new 25% tariffs on steel and aluminum imports have heightened global trade uncertainties. In response, investors are flocking to gold as a safe-haven asset to mitigate potential economic risks.
2. Inflation Concerns: The imposition of tariffs is expected to increase production costs, potentially leading to higher consumer prices. This inflationary pressure enhances gold's appeal as a hedge against rising inflation.
3. Central Bank Purchases: Central banks, particularly in emerging markets, have been significantly increasing their gold reserves. This trend reflects a desire to diversify assets and reduce reliance on the U.S. dollar, further supporting gold prices.
These combined factors have propelled gold prices to unprecedented levels, with some analysts projecting that the metal could reach $3,000 per ounce in the near future.
As of now, we are not seeing any weakness with Gold with H1 timeframe.
We can look for bullish opportunities at the blue shade as this shows that this is the retest level since:
- Its the bullish level of the previous range before it broke out.
- Usually, previous resistance levels become support after price breaks out from it.
AUDUSD Analysis
AUD has now been performing good for the past weeks to months as the Greenback or the Dollar have picked up steam.
Dollar further increased strength after Trump’s victory that made Dollar ideal.
Last week, we did not see strength for the Dollar but only swept the low.
Sweeping of the low could mean that price tried to go down but only took out the liquidity below in the form of stop losses and went up.
If we are picking up steam with AUD, we’d like AUD to trade to and through at 0.63305 level.
On the daily, we can see that we are now at a premium level, above the 50% of the whole range from 0.61310 to 0.63305.
We’d be strong bullish with this once as long as we trade to and break through at the resistance level.
NZDUSD Analysis
In recent days, the NZD/USD exchange rate has experienced minor fluctuations, with a high of 0.5700 USD on February 5 and a low of 0.5530 USD on February 3.
The U.S. dollar has strengthened following recent tariff announcements by President Donald Trump, including a 25% tariff on all steel and aluminum imports. This move has heightened concerns over a potential global trade war, impacting currencies such as the Euro, Australian dollar, and New Zealand dollar.
Given these developments, the NZD may face downward pressure in the short term due to global trade uncertainties and a strengthening USD. However, domestic factors and future trade negotiations will play crucial roles in determining the NZD's trajectory.
Like the AUD, we are seeing NZD gaining strength after sweeping the 0.55412 support level.
We have not seen any weakness as of now. Unless,
We can see a potential upside with NZD once we trade to and breakthrough of the 0.57232 resistance level.
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