Tag: DXY

  • A Multi-Decade Trend Reversal Underway in EUR/USD?

    A Multi-Decade Trend Reversal Underway in EUR/USD?


    The sharp contrast between Europe’s newfound unity and the ongoing tariff chaos in the US has been a defining theme in the financial markets. Euro’s extraordinary strength last week reflected growing investor confidence in the region’s strategic shift toward fiscal expansion and defense spending. From the formation of the “Coalition of the Willing” to the ReArm Europe initiative, they highlighted a strong, coordinated response to challenges, be it geopolitical or economic. That could set the stage for a long-term structural shift in European markets.

    Meanwhile, the US continued to grapple with trade policy uncertainty, with tariffs now more seen as a drag on sentiment and economic growth rather than a source of inflationary pressure. The recent exemptions granted to Canada and Mexico only reinforced the perception of inconsistency in Washington’s trade strategy. The lack of clarity on future policy moves has started to weigh on investor sentiment. That, if persists, could lead to a outflow of capital from the US and weakening the Dollar further.

    From a technical points of view, EUR/USD has shown clear signs of a potential long-term bullish reversal. The pair’s strong surge last week suggests that the multi-year downtrend may have bottomed out, with further upside potential if Europe successfully executes its ambitious fiscal and defense spending plans. However, challenges remain, including implementation risks and the broader impact of trade tensions on European exports.

    Currency market performance last week reflected the shifting sentiment. Euro ended as the strongest performer, followed by Sterling and Swiss Franc, which also benefited from Europe’s renewed economic confidence.

    On the other hand, Dollar closed as the worst performer, struggling under the weight of investor skepticism and diminishing safe-haven appeal. Elsewhere, Canadian Dollar and Australian Dollar also underperformed, indicating that risk-off sentiment remains present, particularly in the US. Yen and Kiwi positioned themselves in the middle of the performance spectrum.

    Europe’s Bold Shift Ignites Market Optimism

    Last week brought a seismic shift in Europe’s geopolitical, defense, and fiscal policies. In a move not seen in decades, the region is asserting greater strategic independence while ramping up economic stimulus. The changes were embraced by investors with enthusiasm, fueling rallies in European assets, particularly in Euro and German equities.

    Euro surged 4.4% against Dollar, its best weekly performance since 2009. Meanwhile, Germany’s 10-year yield posted its biggest jump since the fall of the Berlin Wall. DAX hit fresh record highs, with cyclical and defense-related stocks leading the charge.

    At the heart of this shift is the “ReArm Europe” initiative, which commits the EU to a significant defense buildup. European Commission President Ursula von der Leyen has proposed mechanisms to mobilize up to EUR 800B in special funds. This landmark decision not only strengthens military readiness, but also reduces reliance on external allies.

    Further reinforcing this new direction, EU leaders took a bold stand against Hungarian Prime Minister Viktor Orbán, overriding his veto on aid to Ukraine. In an unusual move, member states issued a separate statement reaffirming their unified support for Kyiv.

    Meanwhile, in Germany, despite ongoing coalition talks, CDU leader Friedrich Merz wasted no time aligning with the SPD to push for loosening of the “debt brake”, which would unlock EUR 500B for infrastructure projects. Additionally, defense spending above 1% of GDP will be permanently exempt from fiscal constraints. Over the next decade, these measures could increase government spending by a staggering 20% of GDP. The scale surpasses even that seen after German reunification in the 1990s.

    This massive fiscal shift in Germany carries significant upside potential for both domestic and Eurozone growth. With a sharp boost in public spending, it could also act as a buffer against potential US tariffs. For years, European growth has been held back by fiscal conservatism—but now, these bold new policies could reshape the region’s economic future for years to come.

    Technically, DAX might be rebuilding upside momentum as seen in D MACD. Current up trend should head to take on 161.8% projection of 14630.21 to 18892.92 from 17024.82 at 23921.87. Decisive break there would target 200% projection at 25550.22 next. Nevertheless, firm break of 22226.34 support will suggest DAX has topped for the near term at least, and consolidations should follow first.

    Is Euro Entering a Long-Term Bull Cycle?

    As Europe embarks on a new era of fiscal expansion and policy coordination, Euro’s looks well-positioned for a prolonged rally and with prospects of long term bullish trend reversal.

    Another key factor supporting Euro is the growing belief that ECB is nearing a pause in its policy easing cycle. With monetary policy now “meaningfully less restrictive”, as described by President Christine Lagarde, a pause could start as soon as in April. ECB could opt for a wait-and-see approach, to assess how trade policy, fiscal initiatives, and broader geopolitical risks play out.

    However, key risks remain, including escalation in trade disputes with the US, as well as how effectively Europe executes its ambitious spending plans. The coming months will be crucial in determining whether this historic shift translates into sustained economic momentum or if internal and external headwinds slow down the Euro’s resurgence.

    Technically, EUR/USD’s strong rally suggests that fall from 1.1274 (2023 high) has completed as a correction, with three waves down to 1.0176. Firm break of 1.1274 would resume larger rally from 0.9534 (2022 low), to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916.

    More significantly, if the bullish case is realized, that would push EUR/USD through the two-decade falling channel resistance, which could be an important sign of long term trend reversal.

    US Stocks at Risk of Bearish Trend Reversal Amid Tariff Chaos

    US stocks endured a turbulent week as investors wrestled with the unpredictable nature of President Donald Trump’s trade policies. The volatility has taken a clear toll on market sentiment, with technical indicators increasingly pointing to bearish trend reversal in major indexes. The coming weeks could prove decisive in determining whether the strong uptrend that has defined the past few months has reversed or if equities can regain their footing.

    S&P 500 logged its worst week since September, falling -3.1%, while DOW dropped -2.4%. NASDAQ was hit hardest, tumbling -3.5%.

    The implementation of 25% tariffs on Canadian and Mexican imports on March 4, had initially sent markets into a tailspin. However, Trump’s decision on Thursday to pause tariffs on USMCA-covered goods for another month only added to the confusion, as investors struggled to decipher the long-term direction of trade policy.

    This chaotic cycle of tariff imposition followed by temporary reversals has created an uncertain and fragile investment environment. Businesses remain hesitant to make forward-looking decisions, while consumer confidence is showing signs of strain. The erratic nature of US trade policy has left markets with little clarity, and the risk of further deterioration in sentiment remains high.

    Nevertheless, Friday’s non-farm payroll report provided some relief, as job growth remained near its recent average, unemployment stayed within its recent range, and wage growth held robust. The data suggested that, at least for now, the feared economic fallout from tariffs has not yet materialized in a meaningful way. However, lingering uncertainty around trade and global economic conditions continues to weigh on sentiment.

    Meanwhile, Fed Chair Jerome Powell reiterated on Friday that the central bank is in no rush to cut rates, stating that the Fed is “well-positioned to wait for clarity.” Powell’s cautious stance contrasts with growing market expectations for rate cuts, as investors bet on economic weakness forcing the Fed’s hand.

    While a hold in March remains the base case, with 88% odds, Fed fund futures now price in a 52% probability of a 25bps rate cut in May, up sharply from 33% a week ago and 26% a month ago. This suggests that investors are bracing for the possibility of further economic softening, with Fed being forced to act sooner than its current guidance suggests.

    Technically, DOW’s up trend should still be intact as long as 41844.89 support holds. However, firm break there will argues that it’s already in correction to the up trend from 28660.93 (2022 low). Sustained trading below 55 W EMA (now at 41332.86) will further solidify this bearish case. Next target will be 38.2% retracement of 28660.94 to 45087.75 at 38812.71.

    As for NASDAQ, it’s now pressing 55 W EMA (at 17878.67). Sustained break there will also indicate that it’s already correcting the up trend from 10088.82 (2022 low). Next target is 38.2% retracement of 10088.82 to 20204.58 at 16340.36.

    As for Dollar Index, last week’s steep decline and strong break of 55 W EMA (now at 105.31) argues that corrective pattern from 99.57 (2023 low) has completed with three waves up to 110.17. Near term risk will now stay on the downside as long as 55 D EMA (now at 106.91) holds. Further downside acceleration will raise the chance that Dollar Index is indeed resuming the whole down trend from 114.77 (2022 high) .

    While it’s still too early to confirm the bearish case, firm break of 100.15 support could set up further medium term fall to 100% projection of 114.77 to 99.57 from 110.17 at 94.97.

    The challenge for Dollar is that risk aversion no longer seems to be offering support. Tariffs are providing little help unlike what it did this year. Meanwhile, Fed appears poised to resume rate cuts sooner than expected. With these factors in play, it’s unclear what could drive a rebound for the greenback, other then implosion of Euro and other currencies

    EUR/CHF Weekly Outlook

    EUR/CHF surged to as high as 0.9634 last week but faced strong resistance from long term falling channel and retreated. Initial bias stays neutral this week first and some more consolidations could be seen. Further rally will be expected as long as 55 4H EMA (now at 0.9467) holds. On the upside, above 0.9634, and sustained trading above 0.9651 fibonacci level will pave the way back to 0.9928 key resistance next.

    In the bigger picture, the strong break of 55 W EMA (now at 0.9482) is a medium term bullish sign. Sustained break trading above long-term falling channel resistance (at around 0.9620) would suggest that the downtrend from 1.2004 (2018 high) has bottomed at 0.9204. Stronger rally should then be see to 0.9928 key resistance at least.

    In the long term picture, bullish signs are emerging. However, the important hurdle at 0.9928 resistance, which is close to 55 M EMA (now at 0.9960), is needed to be taken out decisively before considering long term trend reversal. Otherwise, outlook is neutral at best.



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  • Safe-Haven Demand Fuels Dollar Rally Amid Trade, Geopolitical Turmoil

    Safe-Haven Demand Fuels Dollar Rally Amid Trade, Geopolitical Turmoil


    Market sentiment took a decisive turn for the worse last week, with risk aversion dominating across asset classes. The combination of deteriorating domestic economic conditions in the US and heightened global uncertainties has fueled concerns that risk appetite could weaken further. Equities faced renewed selling pressure, yields dropped sharply.

    Domestically, US economic data painted a troubling picture. Consumer confidence deteriorated sharply, while weak personal spending data and a rise in jobless claims suggested that the labor market could be facing new headwinds. With the economy looking increasingly fragile, concerns are mounting that the economy may struggle to maintain momentum, reinforcing speculation about Fed rate cuts.

    Externally, the risk of a full-blown trade war continues to escalate. US President Donald Trump doubled down on his aggressive tariff agenda, reaffirming the March 4 deadline for 25% tariffs on Canada and Mexico and indicating that the EU would be next in line with reciprocal tariffs.

    Geopolitical tensions also worsened, particularly after a dramatic Oval Office showdown between Trump, Vice President JD Vance, and Ukrainian President Volodymyr Zelenskiy. The meeting, initially expected to pave the way for a mineral deal between the US and Ukraine—potentially a step toward resolving the Russian invasion—ended in failure. With US-Ukraine relations strained and no clear resolution in sight, uncertainty in the region remains elevated.

    On the bright side, markets have scaled up expectations for a Fed rate cut in the first half of the year. However, it’s unclear whether additional monetary easing will truly bolster risk sentiment or simply underscore the extent of the economic challenges ahead. A rate cut could offer short-term relief for risk assets, but it might also underscore fears of an impending downturn in domestic activity.

    In the forex market, Dollar emerged as the clear winner for the week, benefiting from risk aversion rather than rate expectations. Sterling and Swiss Franc followed as the next strongest currencies, with the UK seemingly avoiding US tariff threats and the Franc gaining from both risk aversion and Euro weakness. At the other end of the spectrum, commodity currencies struggled, with New Zealand Dollar leading the declines, followed by Australian and Canadian Dollars. Meanwhile, Euro ended in a mixed manner, with the initial post-German election boost fading as tariff threats weighed. Yen also struggled to extend its rally, leaving it stuck in the middle of the performance ladder.

    Investors Pin Hopes on Fed Easing as Stocks Sell Off, But Is Relief Temporary?

    US equity markets ended February on a weak note, with NASDAQ suffering a sharp -3.5% weekly decline despite a late recovery. S&P 500 also lost nearly -1%, while DOW managed to close about 1% higher, benefiting from recovery after leading the selloff earlier in the month. However, the broader market sentiment remained fragile.

    For the entire month, NASDAQ dropped -4%, marking its worst monthly performance since April 2024. S&P 500 fell -1.5%, while the DOW ended down -1.6%. Several factors weighed on market sentiment, including intensifying trade war risks, particularly as the scheduled 25% tariffs on Canada and Mexico approach on March 4. The more consequential reciprocal tariffs, set to take effect on April 2, also remain a source of significant uncertainty.

    US economic data further exacerbated concerns, with sharp decline in consumer confidence, jump in jobless claims, and contraction in personal spending, all pointing to risk of extended weakness in household demand. These indicators have fueled doubts about the strength of US consumption, which remains a critical driver of economic growth.

    With these headwinds and decline in PCE core inflation as released on Friday, expectations for another Fed rate cut in the first half of the year continued to rise. Fed fund futures now price in a 94% probability of a 25bps cut to 4.00%-4.25% in June, up significantly from 63% just a week ago. This growing optimism about resumed Fed easing has provided some support to market sentiment. But it remains unclear whether it will be enough to reverse the pre-dominating risk-off mood or merely slow the pace of decline.

    Technically, NASDAQ is tentatively drawing support from 38.2% retracement of 15708.53 to 20204.58 at 18487.09. Strong rebound from current level, followed by firm break of 55 D EMA (now at 19440.85) will suggest that the corrective pattern from 20204.58 has completed. That will also keep the medium term up trend intact for another rally through 20204.58 at a later stage.

    However, sustained break of 18487.09 will raise the chance that a larger scale correction has already started. In the bearish case, NASDAQ should be correcting whole uptrend from 10088.82 (2022 low). Further break of 55 W EMA (now at 17866.91) will confirm this bearish case and pave the way to 38.2% retracement of 10088.82 to 20204.58 at 16340.36.

    Risk Aversion Drags Yields Down, But Lifts Dollar Higher

    Risk aversion was also evident in the US bond markets, with 10-year Treasury yield tumbling sharply to its lowest level since December. The sharp drop highlights growing concerns over economic uncertainty and trade tensions.

    Technically, current development suggests that rise from 3.603 (2024 low) has completed at 4.809 already, well ahead of 4.997 (2023 high). Current fall is seen as another downleg in the sideway corrective pattern from 4.997. Deeper decline is expected to 61.8% retracement of 3.603 to 4.809 at 4.063 next. Risk will stay on the downside as long as 55 D EMA (now at 4.452) holds, in case of recovery.

    Dollar Index clear reacted more to risk aversion than falling yields and Fed cut expectations. The’s strong bounce towards the end of the week and the break of 55 D EMA (now at 107.31) suggests that fall from 110.17 has completed at 106.12. That came after defending 38.2% retracement of 100.15 to 110.17 at 106.34. Further rise should be seen to 108.52 resistance. Firm break there will target a retest on 110.17 high.

    In the bigger picture, Dollar Index is holding comfortably above 55 W EMA (now at 105.37), and thus rise from 100.15 and 99.57 should still be intact. Break of 110.17 will pave the way back to 114.77 (2022 high) at a later stage.

    NZD/USD and AUD/USD Sink, Eye 2025 Lows for Support

    Kiwi and Aussie were the worst-performing currencies last week, each losing around -2.4% against the greenback. With risk sentiment deteriorating downside pressure on these two currencies could persistent. The key focus now is whether risk aversion would intensify and push NZD/USD and AUD/USD through this year’s lows to resume the long term down trend. There these key support levels could offer a breather to them.

    Technically, NZD/USD’s steep decline last week suggests that corrective rebound from 0.5515 should have completed at 0.5571 already. Retest of 0.5515 should be seen next. Strong support from there could bring rebound to extend the corrective pattern with another rising leg. But outlook will stay bearish as long as 38.2% retracement of 0.6378 to 0.5515 at 0.5848 holds. Firm break of 0.5515 will resume the long term down trend to 61.8% projection of 0.7463 to 0.5511 from 0.6378 at 0.5172.

    Similarly, AUD/USD’s corrective rebound from 0.6087 should have completed at 0.6407. Retest of 0.6087 low should be seen next. Strong rebound from there would extend the corrective pattern with another rising leg. But outlook will stay bearish as long as 38.2% retracement of 0.6941 to 0.6087 at 0.6413 holds. Firm break of 0.6087 will resume the long term down trend to 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806.

    Bitcoin and Gold Tumble on Risk-Off Sentiment

    Bitcoin and Gold struggled under renewed risk aversion last week, extending their losses in line with broader market weakness. While Gold retains a comparatively better outlook, both assets remain vulnerable to ongoing volatility.

    Bitcoin suffered a sharp fall, decisively breaking 89127 support, confirming medium-term topping at 109571. The current slide is seen as a correction of the entire uptrend from the 15452 (2022 low). Deeper decline toward 55 W EMA (now at 74129) is expected.

    Strong support could emerge from the 73812 cluster zone (38.2% retracement of 15452 to 109571 at 73617) to bring rebound, at least first attempt. However, downside risks remain as long as 55 D EMA (now at 95288) caps any recovery.

    Decisive break of 73617/73812 zone could extended the decline to 50k mark, which is close to 49008 support and 61.8% retracement at 51405.

    By contrast, Gold’s outlook is less overtly bearish. 2956.09 is seen as a short term top only, for now. Subsequent pullback is viewed primarily as a correction of the rise from 2584.24. Strong support might be seen from 55 D EMA (now at 2792.05) to bring rebound, and set the base for uptrend resumption at a later stage.

    However, considering that Gold was just rejected by 3000 psychological level sustained trading below 55 D EMA would argue that larger scale correction in underway. In the bearish case, Gold could be starting a medium term decline back to 55 W EMA (now at 2522.33).

    EUR/USD Weekly Outlook

    EUR/USD reversed after edging higher to 1.0527 last week, and the development suggests that consolidation from from 1.0176 has already completed. Initial bias stays on the downside this week for retesting 1.0176/0210 support zone first. Firm break there will resume whole fall from 1.1213, and carry larger bearish implications. On the upside, above 1.0419 minor resistance will turn intraday bias neutral. But outlook will stay bearish as long as 38.2% retracement of 1.1213 to 1.0176 at 1.0572 holds.

    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.

    In the long term picture, down trend from 1.6039 remains in force with EUR/USD staying well inside falling channel, and upside of rebound capped by 55 M EMA (now at 1.0929). Consolidation from 0.9534 could extend further and another rising leg might be seem. But as long as 1.1274 resistance holds, eventual downside breakout would be mildly in favor.



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  • Dollar at Crossroads: Rebound Possible, But Bearish Risks Intensify

    Dollar at Crossroads: Rebound Possible, But Bearish Risks Intensify


    Dollar closed the week broadly lower, with the only exception being its slight gains against the even weaker Yen. Risk-on sentiment dominated global markets, fueling strong rallies in equities across the US, Europe, and Hong Kong, which in turn kept the greenback under pressure.

    The greenback had previously enjoyed a tariff-driven boost earlier in the month, but that narrative has largely unwound following the delay in implementing reciprocal tariffs. This shift has more than offset growing expectations that Fed will maintain a prolonged pause in rate cuts.

    Dollar Index is now at a critical technical juncture. A bounce from current levels is possible. However, if risk-on sentiment persists and intensifies, deeper pullback could materialize, with risk of leading to bearish trend reversal.

    While Dollar’s outlook appears increasingly vulnerable, other major currencies are struggling to establish clear directions. Most non-dollar pairs and crosses ended the week within their prior ranges, reflecting a lack of conviction among traders.

    Euro emerged as the strongest performer. Sterling followed behind, and then Aussie. On the weaker side, Yen underperformed the most, Dollar and Loonie followed in the lower tier. Swiss franc and Kiwi ended in middle positions.

    S&P 500 Nears Record as Markets Welcome Reciprocal Tariff Delay

    Investor sentiment in the US was broadly positive with major stocks indexes closing the week higher. S&P 500 even surged to just below its record high. Fed’s pause in its policy easing cycle is likely to continue for an extended period, but the market seems unfazed. Instead, focuses were on robust economic fundamentals and easing immediate tariff risks.

    A key driver of the upbeat mood is US President Donald Trump’s plan for reciprocal tariffs, which, for the moment, lacks immediate enforcement. The administration has pledged to investigate and develop country-specific tariffs by April 1 under the guidance of Commerce Secretary. That would potentially provide ample time for negotiations and compromises with major trading partners. As a result, immediate trade disruptions appear unlikely, prompting relief in equity markets.

    Meanwhile, Fed Chair Jerome Powell reiterated in his semiannual testimony to Congress that the central bank is in “no hurry” to cut interest rates again. Market participants have largely adjusted their expectations for the next Fed rate cut, now anticipating it more likely in the second half of the year rather than the first.

    Powell’s message also aligns with the data: January’s CPI and core CPI both accelerated, and PPI also exceeded expectations, indicating that price pressures may still be lingering. These figures support the Fed’s decision to maintain a restrictive rate stance until inflation shows more convincing signs of moderating. Meanwhile, disappointing January retail sales figures indicates slower pace of consumer spending, and Fed is unlikely needed to revert to tightening to curb inflation.

    Technically, S&P 500 should be ready to resume its long term up trend. Further rise is expected as long as 6003.00 support holds. Next near term target is 61.8% projection of 5119.26 to 6099.97 from 5773.31 at 6379.38.

    A larger question looms over whether S&P 500 can decisively break through long-term rising channel resistance (now around 6436). If it manages to do so, it could trigger medium-term acceleration 138.2% projection of 2191.86 to 4818.62 from 3491.58 at 7121.76.

    DAX Surges to New Highs as Hopes for Ukraine Ceasefire Lift Sentiment

    European markets staged an even stronger robust rally last week, with investors embracing a wave of optimism fueled by delayed US tariffs and renewed hopes of stability on the geopolitical front, with expectations for steady, gradual rate cuts from ECB in the background.

    The pan-European STOXX 600 index chalked up its eighth consecutive week of gains—its longest winning streak since Q1 2024—and hit a fresh intra-week record.

    One critical boost to confidence is the possibility that negotiations to end the war in Ukraine might soon begin. US President Donald Trump confirmed that he has held discussions with Ukrainian President Volodymyr Zelensky and Russian President Vladimir Putin, signaling that negotiations to end the war will begin immediately. Such a resolution could not only stem the loss of life but also reignite investment in the region, delivering a strong catalyst for further economic expansion across Europe.

    A cessation of hostilities in Ukraine would likely pave the way for significant investment programs, particularly in infrastructure and reconstruction. This influx of capital could be a tailwind for the manufacturing and industrial sectors throughout the EU, driving demand for goods and services.

    In Germany, DAX extended its record run with strong momentum. Near term outlook will stay bullish as long as 21759.97 support holds. Next target is 161.8% projection of 14630.21 to 18892.92 from 17024.82 at 23921.87.

    In the larger picture, DAX is clearly in an acceleration phase and could be targeting 161.8% projection of 8255.65 to 16290.19 from 11862.84 at 24862.73 before topping.

    Hong Kong Stocks Surge as China AI Optimism Builds

    Asian markets closed out the week with mixed performance, reflecting divergent regional drivers. Hong Kong’s HSI stole the show, and soared to a four-month high, underpinned by shifting investor sentiment toward a less aggressive US tariff policy and excitement around China’s tech sector.

    The Hong Kong market’s volatility was evident in the HSI’s deep profit-taking pullback on Thursday, followed by a strong 4% rebound on Friday—an indication of how quickly sentiment can swing once trade uncertainties eased with delay of Trump’s reciprocal tariffs.

    Another critical factor fueling the advance is the surge of optimism surrounding Chinese technology companies, particularly after the emergence of AI-related developments with DeepSeek.

    Unlike the brief recoveries seen last year, many analysts view the current run-up in Hong Kong’s equities as more than a short-lived, stimulus-driven bounce. They see a paradigm shift, with investors recognizing new opportunities in Chinese tech with prospect of long-term sector expansion.

    The result could be a stronger, more resilient rally that may endure longer than earlier bursts of optimism…. provided global trade tensions remain manageable.

    Technically, last week’s extended rise in HSI should confirm that correction from 23241.74 has completed at 18671.49 already. Near term outlook will stay bullish as long as 21070.05 resistance turned support holds. Firm break of 23241.74 will confirm resumption of whole medium term rise from 14794.16. Next target is 100% projection 16964.28 to 23241.74 from 18671.49 at 24948.95, which is close to 25k psychological level.

    In the bigger picture, the strong support from 55 W EMA is clearly a medium term bullish signal. It’s still way too early to confirm that whole long term down trend from 33484.08 (2018 high) has reversed. But even as a corrective move, rise from 14597.31 could extend to 61.8% retracement of 33484.08 to 14597.31 at 26269.33 before topping.

    Dollar at a Crossroads as Risk Sentiment Keeps Pressure On

    Dollar Index finds itself at a pivotal juncture following last week’s significant decline. A short-term bounce remains possible if the index can defend 38.2% retracement of 100.15 to 110.17 at 106.34. If strong support emerges at this point, it would reinforce the idea that recent price action is merely a consolidation pattern. That would keep the rally from 100.15 intact, setting the stage for an eventual break of 110.17 high.

    However, the growing appetite for risk across global markets could add additional weight on the greenback. Decisive break below the 106.34 support would deepen the correction to 55 W EMA (now at 105.23). Sustained break of 55 W EMA will argue that whole rise from 99.57 (2023 low) has already completed and a more significant trend reversal is underway.

    Compounding Dollar’s woes, U.S. Treasury yields have not offered the usual support. 10-year yield reversed quickly after briefly climbing to 4.660%. Even in a more optimistic scenario,10-year yield appears to be extending consolidation between the 4.809 high and 38.2% retracement of 3.603 to 4.809 from 4.348, leaving Dollar without a strong tailwind from the rates market.

    AUD/USD Weekly Report

    AUD/USD’s break of 0.6329 resistance last week indicates that rebound from 0.6087 is at least correcting the whole fall from 0.6941. Initial bias is now on the upside for 38.2% retracement of 0.6941 to 0.6087 at 0.6413. On the downside, however, break of 0.6234 support will suggest that the rebound has completed and bring retest of 0.6087 low.

    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.

    In the long term picture, prior rejection by 55 M EMA (now at 0.6846) 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.



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  • Dollar’s Wild Week Ends in Uncertainty, Awaits Next Tariff Cue

    Dollar’s Wild Week Ends in Uncertainty, Awaits Next Tariff Cue


    Dollar faced significant volatility last week as shifting trade policy signals from the White House left investors scrambling for clarity. Initially, tariffs on Canadian and Mexican imports were imposed, only to be quickly suspended for 30 days following new agreements on border security and fentanyl control. Now, the focus turns to “reciprocal tariffs,” a move that could see the US impose duties equivalent to those faced by American exports in key markets.

    While traders hope for clarity once the reciprocal tariffs are officially announced, the risk of another abrupt reversal remains high. The unpredictability of the administration’s trade stance, particularly regarding its approach toward key partners like the European Union, suggests continued volatility in currency markets. Until the full scope of Trump’s trade strategy is revealed, market sentiment is likely to remain fragile, with investors hesitant to commit to a firm direction.

    Amid these confusions, Yen stood out as the strongest performer, supported by positive economic data that reinforced expectations of further BoJ rate hikes. Canadian Dollar followed behind, benefiting from a temporary tariff reprieve and stronger-than-expected employment report. Meanwhile, Australian and New Zealand Dollars managed to recover some ground, but their gains were limited by the continued US tariffs on Chinese goods and the lack of any progress in US-China trade negotiations.

    On the weaker side, Euro was the worst-performing currency, struggling under the weight of tariff threats. Despite its late-week bounce, Dollar ended the week near the bottom of the performance rankings. British Pound also weakened after the BoE delivered a surprisingly dovish rate cut, while the Swiss Franc was also soft.

    Duel Uncertainty of Trade War and Hawkish Fed Outlook in the US

    Investors in US financial markets are grappling with two major uncertainties—President Donald Trump’s evolving tariff strategy and Fed’s interest rate outlook. This dual uncertainty has led to volatile but indecisive trading in major equity indices and large price swings in Dollar, reflecting broader confusion in the markets.

    Trump’s Tariff Play: Economic Policy or Political Leverage?

    The core intention behind Trump’s tariff policies remains unclear. His administration initially imposed 25% tariffs on imports from Canada and Mexico, only to suspend them for 30 days following agreements with both nations on border security and fentanyl control measures. This move suggests that Trump may be using tariffs as a tool for securing non-trade-related concessions rather than purely as an economic strategy. The immediate delay in enforcement highlights that these tariffs could be more of a negotiation tactic than an outright protectionist measure.

    However, fresh concerns emerged on Friday when Trump said that the US would announce, in the coming days, “reciprocal tariffs” on a range of trading partners to ensure American exports are treated “evenly.” This move, if implemented broadly, could have far-reaching economic consequences, particularly if the US targets major trade partners like the European Union. Unlike the previous round of tariffs during Trump’s first term, which were primarily aimed at China, this time the scope appears much wider, raising the specter of more extensive trade disruptions.

    The biggest risk is that tariffs could become an ongoing feature of US trade policy rather than a temporary bargaining tool. With Trump also eyeing the EU as a target, the outlook for global trade is highly uncertain. For now, investors are clearly staying in wait-and-see mode, monitoring Trump’s next steps closely.

    Strong US Job Market to Keep Fed on Hold, Inflation Risks Re-Emerging?

    While trade concerns dominate the headlines, the strength of the US labor market has reinforced expectations that Fed will remain in a prolonged pause on rate cuts.

    Dallas Fed President Lorie Logan articulated a noteworthy point last week. She argued falling inflation with robust labor market means interest rates are already near neutral. That would leave little room for further easing in the near term. Fed would then stay on hold until there is clear evidence of a labor market slowdown, not just declining inflation.

    Friday’s non-farm payroll report added weight to this narrative. While job growth slowed to 143K, falling short of expectations, revisions to previous months were significant, with December’s figure being adjusted upward to 307K. Additionally, the unemployment rate unexpectedly declined from 4.1% to 4.0%, suggesting that the labor market remains resilient. Wage growth also accelerated, with average hourly earnings rising 0.5% mom —above expectations—bringing the annual increase to 4.1%.

    Another concerning development in recent data was the sharp rise in consumer inflation expectations. University of Michigan’s Surveys of Consumers revealed that short-term inflation expectations jumped from 3.3% to 4.3%, the highest level since November 2023. Long-term inflation expectations also ticked higher, reaching 3.3%, marking the highest reading since June 2008.

    If inflation expectations continue rising alongside strong wage growth, Fed could face renewed pressure to reconsider its monetary policy stance. A scenario where inflation remains stubbornly above target while employment stays strong could force Fed to maintain high rates longer than markets currently anticipate. In an extreme case, policymakers may even have to consider reintroducing rate hikes—an outcome that is not currently priced into the market but remains a potential risk, albeit minor.

    S&P 500 Stuck in Range, Upside Appears Limited

    Technically, S&P 500’s price actions from 6128.18 (Jan high) are still corrective looking, suggesting larger up trend remains intact. However, even in case of up trend resumption, loss of momentum as seen in D MACD could limit upside at 61.8% projection of 5119.26 to 6099.97 from 5773.31 at 6379.38.

    On the other hand, strong break of 55 D EMA (now at 5970.70) would put 5773.31 structural support into focus. Firm break of 5773.31 will argue that a medium term top was already in place, and larger scale correction is underway.

    Sideway Trading to Continue in Dollar Index and 10-Year Yield

    Dollar Index’s initial spike was capped below 110.17 resistance, and followed by steep pull back. Overall outlook is unchanged that consolidation pattern from 110.17 is still extending. In case of another selloff, downside should be contained by 38.2% retracement of 100.15 to 110.17 at 106.34 to bring rebound. However, firm break of 110.17 is needed to confirm up trend resumption, which is unlikely for the near term. Hence, sideway trading is set to continue for a while.

    10-year yield’s fall from 4.809 extended lower last week but recovered notably on Friday to close at 4.487. As long as 38.2% retracement of 3.603 to 4.809 at 4.348 stays intact, price actions from 4.809 are viewed as a corrective pattern. Break of 4.590 will bring stronger rebound. But upside should be limited by 4.809, at least on first attempt. That is, similar to Dollar Index, range trading will likely continue for a while.

    EUR/JPY and GBP/JPY Tumble as Yen Rides Rate Expectations and Trade Uncertainty

    Yen emerged as a dominant force in the forex markets last week, with EUR/JPY and GBP/JPY among the biggest losers, down -2.7% and -2.3% respectively. The shift was driven by a combination of declining US and European benchmark yields, alongside increasing expectations of further BoJ rate hikes. These factors reinforced the Yen’s bullish momentum and kept both EUR/JPY and GBP/JPY under heavy selling pressure.

    BoJ board member Naoki Tamura, the most hawkish voices within the central bank, continued to advocate his view that interest rates should rise to at least 1% by the end of fiscal 2025. His stance gained additional credibility after IMF also backed a gradual rate hike approach, recommending that the policy rate reach the midpoint of 1.5% within the 1-2% neutral range by the end of 2027.

    The case for BoJ tightening has been reinforced by strong nominal wage growth, with real wages increasing for a second consecutive month. More importantly, the wage gains are feeding into stronger consumption, a critical factor in sustaining inflation at the central bank’s 2% target. If this trend continues, BoJ will have even more reason to proceed with further hikes.

    Meanwhile, Euro came under additional pressure from Trump’s tariff threats. With a formal reciprocal tariff announcement expected soon, the EU is almost certain to be included, raising fears of another prolonged trade conflict. Given the region’s reliance on exports, such a development could have a significant negative impact on Eurozone already sluggish growth prospects, forcing ECB to take a more dovish stance than currently anticipated.

    ECB Chief Economist Philip Lane has been advocating for a “middle path” in policy easing, balancing inflation risks with economic headwinds. However, should tariffs materialize, ECB might be forced to accelerate rate cuts to cushion the economy from external shocks

    The UK has fared somewhat better as it is not a primary target of Trump’s trade measures. However, BOE’s unexpectedly dovish rate cut last week has left the Pound vulnerable too. Notably, hawkish policymaker Catherine Mann made a surprising U-turn, voting for a 50bps rate cut, a sharp departure from her previous stance. The base case still remains a quarterly 25bps cut throughout 2025 for BoE, but the risk is now tilted slightly toward a more aggressive easing cycle.

    Technically, as selloff in EUR/JPY intensified, the development in the next few weeks would be crucial. Attention will be on 100% projection of 100% projection of 166.7 to 156.16 from 164.89 at 154.38, which is close to 154.40 key support.

    Firm break there will resume whole pattern from 175.41 medium term top. More importantly, that would make 38.2% retracement of 114.42 to 175.41 at 152.11 key long term fibonacci level vulnerable.

    For GBP/JPY, the focus will be on 100% projection of 198.94 to 189.31 from 194.73 at 185.10. Decisive break there could prompt downside acceleration through 180.00 low to resume whole decline from 208.09 medium term top. That would at least put 38.2% retracement of 123.94 to 208.09 at 175.94 as next target.

    USD/CAD Weekly Outlook

    USD/CAD spiked higher to 1.4791 last week but reversed sharply from there. Nevertheless, downside is contained by 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 1.4264). There is no sign of reversal yet. Initial bias remains neutral this week first. On the upside, above 1.4501 minor resistance will turn bias back to the upside for stronger rebound. Larger up trend is expected to resume through 1.4791 at a later stage. However, firm break of 1.4260 will indicate that deeper correction is underway.

    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.

    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 (1.3392) holds.



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  • Yen Rises Further as IMF Backs Gradual BoJ Tightening; Dollar Awaits NFP Impact

    Yen Rises Further as IMF Backs Gradual BoJ Tightening; Dollar Awaits NFP Impact


    The forex market was relatively subdued during Asian session, with one clear exception: Japanese Yen continues to outperform. Fresh data from Japan showed a 2.7% yoy increase in household spending, not only marking the first rise in five months, but also the fastest pace since August 2022. Paired with this week’s solid wage growth figures, the numbers suggest real wage gains are driving consumption—a development that could reinforce BoJ’s push toward gradual policy normalization.

    Additionally, IMF offered further support for Yen by endorsing a gradual rise in BoJ rates to a neutral range of 1-2% by the end of 2027. Although this view appears somewhat conservative compared to hawkish BoJ board member Naoki Tamura’s call for a 1% rate by the second half of fiscal 2025, the gap isn’t significant. If Japan’s inflation and wage growth hold up, it’s feasible that interest rates could reach the midpoint of 1.5% within a few quarters from Tamura’s target.

    Attention now shifts to the US non-farm payroll report, with prospects of upside surprise. Dallas Fed President Lorie Logan raised an interesting argument that Fed may not ease policy further unless the labor market noticeably softens, even if inflation trends lower. A strong NFP reading would bolster expectations for an extended Fed pause. However, it may not be enough to spark an upside breakout in the Dollar from recent ranges, given ongoing uncertainties tied to US trade policies.

    Overall for the week so far, Dollar is currently the worst performer, followed by Euro, and then Sterling. Yen is the best, followed by Loonie, and then Aussie. Swiss Franc and Kiwi are positioning in the middle.

    Technically, CHF/JPY’s break of 168.02 support confirms resumption of fall from 177.29. This decline is seen as the third leg of the corrective pattern from 180.05 high. Further fall is expected as long as 168.54 support turned resistance holds. Firm break of 100% projection of 177.29 to 168.02 from 175.80 at 166.53 should bring deeper fall through 165.28 support to 138.2% projection at 162.98.

    In Asia, at the time of writing, Nikkei is down -0.72%. Hong Kong HSI is up 1.05%. China Shanghai SSE is up 1.02%. Singapore Strait Times is up 0.83%. Japan 10-year JGB yield is up 0.0339 at 1.301. Overnght, DOW fell -0.28%. S&P 500 rose 0.36%. NASDAQ rose 0.51%. 10-year yeld rose 0.018 to 4.440.

    NFP may beat expectations, but unlikely to trigger Dollar range breakout

    Today’s US Non-Farm Payroll report is the focal point for market participants, with consensus estimates pointing to 169k new jobs in January and an unemployment rate holding steady at 4.1%. Average hourly earnings growth is expected at 0.3% month-over-month, maintaining the robust wage gains of recent months.

    There are indications the data could surprise to the upside. Latest ISM surveys showed employment components improving, with manufacturing’s gauge jumping from 45.4 back into expansion at 50.3, and services employment rising to 52.3 from 51.3. ADP private payrolls number also showed a solid 183k increase, little changed from December’s 176k. Meanwhile, initial jobless claims remain near historical lows, with the four-week moving average inching up only slightly from 213k to 217k.

    If today’s jobs report beats expectations, the case for Fed to maintain its pause on easing for longer would strengthen. However, persistent uncertainties—especially US trade policies—may limit the Dollar’s ability to rally significantly. While a strong labor market may keep rate cuts at bay, investors will weigh other geopolitical and economic factors before pushing the greenback through key near term resistance levels.

    Technically, Dollar Index is currently extending the consolidation pattern from 110.17 short term top. In case of deeper pull back, downside should be contained by 38.2% retracement of 110.15 to 110.17 at 106.34 to bring rebound. On the upside, firm break of 110.17 is needed to confirm resumption of recent up trend. Otherwise, outlook would remains neutral for more sideway trading.

    Fed’s Logan sees rates on hold “for quite some time” even if inflation drops

    Dallas Fed President Lorie Logan suggested at a BIS conference overnight that interest rates may remain on hold for “quite some time,” even if inflation continues to move closer to the 2% target. She emphasized that a decline in inflation alone would not be a sufficient trigger for policy easing, as long as labor market conditions remain strong.

    She argued that such a scenario would “strongly suggest that” interest rate is already pretty close to neutral, “without much near-term room for further cuts”.

    Instead, Logan highlighted that signs of a weakening labor market or a slowdown in demand would be more relevant factors in determining when easing should begin.

    BoC’s Macklem warns tariff threats already weighing on confidence

    Speaking at a conference in Mexico City, BoC Governor Tiff Macklem raised concerns over the economic uncertainty stemming from U.S. President Donald Trump’s tariff threats. He noted that “threats of new tariffs are already affecting business and household confidence, particularly in Canada and Mexico.”

    “The longer this uncertainty persists, the more it will weigh on economic activity in our countries,”  he warned.

    Macklem stressed that central banks face a challenging task in managing the economic fallout. He explained that policymakers cannot counteract both “weaker output” and “higher inflation” simultaneously.

    The challenge will be to assess the downward pressure on inflation from reduced economic activity while balancing it against the upward pressure from higher input costs and supply chain disruptions caused by tariffs.

    IMF backs BoJ’s gradual rate hikes, sees policy rate moving toward neutral by 2027

    Nada Choueiri, deputy director of IMF’s Asia-Pacific Department and mission chief for Japan, stated that IMF remains “supportive” of BoJ’s current monetary policy course. She emphasized that rate hikes should be implemented in a gradual and flexible manner to ensure that domestic demand continues to recover.

    Choueiri projected that BoJ’s policy rate could rise “beyond 0.5%” by the end of this year, with a longer-term path toward the “neutral level” by the end of 2027.

    IMF estimates Japan’s neutral rate to be within a band of 1% to 2%, with a midpoint of 1.5%.

    Also, IMF maintains an optimistic outlook for Japan’s economy, forecasting 1.1% GDP growth in 2025, supported by increasing wages and stronger consumer spending.

    Given these projections, IMF expects BoJ to continue its tightening cycle in a controlled manner.

    USD/JPY Daily Outlook

    Daily Pivots: (S1) 150.83; (P) 151.86; (R1) 152.48; More…

    USD/JPY is now pressing 38.2% retracement of 139.57 to 158.86 at 151.49 as fall from 158.86 extended. Strong bounce from current level will keep this decline as a correction, and retain near term bullishness. Firm break of 153.70 support turned resistance will turn bias back to the upside for stronger rebound. However, sustained break of 151.49 will raise the chance of bearish reversal, and target 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). The range of medium term consolidation should be set between 38.2% retracement of 102.58 to 161.94 at 139.26 and 161.94. Nevertheless, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:30 JPY Household Spending Y/Y Dec 2.70% 0.30% -0.40%
    05:00 JPY Leading Economic Index Dec P 108.9 108.1 107.5
    07:00 EUR Germany Industrial Production M/M Dec -2.40% -0.70% 1.50% 1.30%
    07:00 EUR Germany Trade Balance (EUR) Dec 20.7B 17.1B 19.7B
    07:45 EUR France Trade Balance (EUR) Dec -5.3B -7.1B
    08:00 CHF Foreign Currency Reserves (CHF) Jan 731B
    13:30 CAD Net Change in Employment Jan 26.5K 90.9K
    13:30 CAD Unemployment Rate Jan 6.80% 6.70%
    13:30 USD Nonfarm Payrolls Jan 169K 256K
    13:30 USD Unemployment Rate Jan 4.10% 4.10%
    13:30 USD Average Hourly Earnings M/M Jan 0.30% 0.30%
    15:00 USD Wholesale Inventories Dec F -0.50% -0.50%

     



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  • Dollar Slumps as Risk-On Mood Prevails Under Trump’s First Week

    Dollar Slumps as Risk-On Mood Prevails Under Trump’s First Week


    Dollar ended the week as the worst-performing major currency, largely weighed down by strong risk-on sentiment that took hold after President Donald Trump’s first week in office. Investors had anticipated more aggressive trade measures from the new administration, but Trump instead struck a relatively softer tone on tariffs, leading to improved risk appetite in equities and other growth-sensitive assets. Meanwhile, the extended consolidation in US Treasury yields offered little help to the greenback.

    The delayed implementation of tariffs has been a major factor buoying market optimism. In the absence of immediate trade disruptions, stocks continued their robust rally, while Treasury yields remained in a rangebound consolidation phase. Until Trump shows concrete follow-through on his tariff threats, the dominant trends of rising equity prices and a softer Dollar appear likely to remain intact.

    Among the other major currencies, Yen finished the week as the second worst performer. Briefly, anticipation of a BoJ rate hike lent the yen some support, but once the hike was finally delivered, Yen returned to a downbeat mode as risk-seeking flows dominated. Swiss Franc was also soft, lacking safe-haven demand in this upbeat environment. But Loonie was the third worst performer, dragged down by specific concerns that Trump’s tariff policies would target key Canadian exports.

    On the other side of the spectrum, identifying a clear winner among Euro, Sterling, Aussie, and Kiwi is a bit difficult. Sterling may have a slight edge, helped by reduced US trade threats and encouraging PMI reports. Euro is similarly supported by easing tariff concerns and improving economic indicators. At the same time, Aussie and Kiwi have found a boost from Trump’s softer stance on China, coupled with a favorable risk environment. It may take another week or two for these four to sort out their relative strength, but for the moment, they continue to benefit from Dollar weakness and positive sentiment across global markets.

    US Stocks Soar to Record as Trump’s First Week Brings Tariff Delays

    US stocks extended their strong near-term rally last week, as S&P 500 notched fresh record highs while DOW and the NASDAQ Composite followed closely behind. The robust performance across all three major indexes, which each notched their second consecutive positive week, signals a resurgence in the bull market after a brief December pullback. S&P 500 and Nasdaq rose by 1.7%, while DOW outperformed with a 2.2% weekly gain, reflecting broad-based optimism among investors.

    From our perspectives, the major factor driving this renewed optimism is President Donald Trump’s restraint on initiating tariffs, at least so far. Despite months of trade-related rhetoric, the first week of his presidency ended without any clear action to impose levies on major U.S. trading partners, even including China. Trump’s softer tone, particularly when asked about tariffs on China—he told Fox News “I’d rather not have to use it”—has bolstered hopes that strict trade measures might be delayed, imposed in a more controlled way, or even significantly scaled back.

    Indeed, the earliest date for tariff implementation against Canada, Mexico, and China is February 1, but there is no guarantee that any decision will be finalized that quickly. Further delays remain plausible. Tariffs on other trading partners might not even come until after a formal review, following the timeline laid out in a presidential memorandum. Given that reports from these reviews are due on April 1, additional tariff changes, if they occur, may not take effect until 30 to 60 days after that date—pushing any significant shifts into late spring or early summer. This timeline has helped calm fears of a near-term inflation spike, which, in turn, reduces the odds of Fed feeling compelled to return to monetary policy tightening.

    Compounding the positive sentiment is Trump’s commentary at the World Economic Forum in Davos. He emphasized his view that lower oil prices should prompt the Fed to cut interest rates “immediately”—though most economists and market participants view this more as presidential wishful thinking rather than a credible policy signal. In reality, oil prices only retreated slightly last week, and technical indicators still suggest that crude has more room to rise. In particular, WTI (West Texas Intermediate) has maintained the robust uptrend since December, with prospect of continued upside.

    Geopolitical factors could also buoy oil prices further, especially ongoing tensions centered on Russia and Iran. According to Citi, “heightened, sustained geopolitical risks in Iran/Russia-Ukraine could potentially wipe out the 2025 oil balance surplus.” Citi went on to revise its quarterly Brent forecasts upward to USD 75 per barrel in the first quarter, USD 68 in the second, USD 63 in the third, and USD 60 in the fourth. These projections suggested that any near term pullback in oil might remain shallow, which complicates the global inflation picture.

    Meanwhile, market traders are largely ignoring Trump’s request for Fed to cut rates. Fed funds futures currently project around a 98% probability that the central bank will keep its benchmark rate steady at 4.25-4.50% during the upcoming meeting at the end of January. The futures market also prices in roughly a 70% chance of one more rate cut in June, to a 4.00-4.25% range, but indicates no further easing for the rest of 2025 and well into 2026.

    Unless inflation surprises to the upside—whether via unexpected tariff moves or a significant oil price shock—monetary policy looks set to remain on a cautious but steady path down. For now, that sense of stability, combined with a lack of immediate trade disruptions, continues to support the bullish sentiment on Wall Street.

    Dollar Index Extends Pullback as Yields Consolidate and Stocks Surge

    S&P 500’s up trend resumed last week by breaking through 6099.97 resistance. Further rally is expected as long as 55 D EMA (now at 5938.64) holds, in case of retreat. Next target is 61.8% projection of 5119.26 to 6099.97 from 577.3.31 at 6379.38.

    In the bigger picture, the key question is whether S&P 500 could power through long term channel resistance (now at around 6400) and sustain above there. If it could, the up trend could further accelerate towards 138.2% projection of 2191.86 to 4818.62 from 3491.58 at 7121.76 in the medium term

    10-year yield recovered after initial dip to 4.552 but overall outlook is unchanged. Consolidation pattern from 4.809 should continue with risk of deeper pull back to 55 D EMA (now at 4.458) and possibly below. But strong support should be seen from 38.2% retracement of 3.603 to 4.809 at 4.348 to contain downside and bring rebound. Rise from 3.603 is expected to resume at a later stage to retest 4.997 high.

    Dollar’s correction from 110.17 extend lower and breached 55 D EMA (now at 107.32). While some support might be seen from 55 D EMA to bring recovery, risk will continue to stay on the downside as long as 110.17 holds. Correction/consolidation in yields and strong risk-on sentiment would continue to give Dollar Index some pressure in the near term.

    Nevertheless, while deeper fall is in favor, downside should be contained by 38.2% retracement of 100.15 to 100.17 at 106.34 to bring rebound. Rise form 100.15 is expected to resume through 110.17 to retest 114.77 high at a later stage.

    Gold is among the biggest beneficiaries of Dollar’s near term weakness. The pickup in momentum as seen in D MACD is raising the chance of up trend resumption. Decisive break of 2789.92 would extend the long term up trend to 138.2% projection of 1160.17 to 2074.84 from 1614.60 at 2878.67, or even further to 161.8% projection at 3094.53.

    Nevertheless, firm break of 2724.60 resistance turned support should revive our original view, and extend the corrective pattern from 2789.92 with a third leg towards 2536.67 support before up trend resumption.

    WTI crude oil extended the retreat form 81.01 short term top last week. While deeper fall cannot ruled out, near term outlook will stay bullish as long as 55 D EMA (now at 73.34) holds. Rise from 65.63 is expected to resume through 81.01 at a later stage.

    Current preferred interpretation is that consolidation pattern from 95.50 (2023 high) has completed with three waves down to 65.63 (2024 low). Firm break of 87.84 resistance would solidify this bullish case, and at least bring a retest of 95.50 key resistance.

    EUR/USD Weekly Outlook

    EUR/USD’s rebound from 1.0176 short term bottom accelerated higher last week and there is no sign of topping yet. Initial bias stays on the upside this week for 38.2% retracement of 1.1213 to 1.0176 at 1.0572 sustained break of 1.0572 will raise the chance of bullish reversal, and target 61.8% retracement at 1.0817. On the downside break of 1.0371 minor support will retain near term bearishness and bring retest of 1.0176 low.

    In the bigger picture, outlook is mixed as fall from 1.1274 (2023 high) could either be the second leg of the corrective pattern from 0.9534 (2022 low), or another down leg of the long term down trend. Strong support from 61.8 retracement of 0.9534 to 1.1274 at 1.0199 will favor the former case, and sustained break of 55 W EMA (now at 1.0722) will argue that the third leg might have started. However, sustained trading below 1.0199 will favor the latter case and bring retest of 0.9534 low.

    In the long term picture, down trend from 1.6039 remains in force with EUR/USD staying well inside falling channel, and upside of rebound capped by 55 M EMA (now at 1.0973). Consolidation from 0.9534 could extend further and another rising leg might be seem. But as long as 1.1274 resistance holds, eventual downside breakout would be mildly in favor.



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  • Global Markets Look Beyond Trump’s Inauguration as Local Drivers Take the Lead

    Global Markets Look Beyond Trump’s Inauguration as Local Drivers Take the Lead


    Global markets are buzzing in anticipation of Donald Trump’s inauguration on January 20, yet the latest developments suggest investors may already be looking past the immediate impact. Despite speculation surrounding Trump’s policies—particularly tariffs—various benchmarks and asset classes are charting their own directions based on localized drivers and monetary policy expectations.

    In the US, the strong bounce in major stock indexes owes something to hopes of expansive fiscal stimulus under Trump. However, a significant portion of the rally can be traced to an improving inflation outlook and the view that Fed remains on track to further monetary easing. Additionally, the lack of significant concern over tariffs impacting inflation suggests that investors may not see Trump’s trade policies as an immediate threat to the US economy.

    Meanwhile record-breaking runs in FTSE and DAX signal distinct optimism. UK investors are banking on additional BoE easing after disappointing GDP, retail sales, and CPI data highlighted ongoing struggles. Germany’s DAX is supported by ECB’s dovish leanings as well as hopes of a political turnaround after snap elections in Germany in February. Market enthusiasm for Europe clearly isn’t driven by any expectation of beneficial tariffs; rather, local factors are in control.

    Japan, not a prime target of Trump’s tariff rhetoric, saw Nikkei weighed down by intensifying speculation about a looming Bank of Japan rate hike. This dynamic stands in sharp contrast to the overarching risk-on atmosphere elsewhere.

    In the currency markets, Yen emerged as the strongest performer last week, propelled by bets on BoJ action. Australian and New Zealand dollars followed suit, aided by the broader risk-on mood. On the weaker side of the spectrum, Canadian Dollar was the worst-performing currency, finally something reflecting potential vulnerability to Trump’s trade policies as BoC may have underestimated the economic risks posed by tariffs. Sterling also underperformed while Dollar was similarly subdued. Euro and Swiss Franc ended the week in middle positions.

    Risk Appetite Returns: DOW, S&P 500, NASDAQ End Week with Solid Gains

    Risk-on sentiment returned to US equity markets this week, with all three major indexes posting strong gains. DOW surged 3.69% for the week, S&P 500 rose 2.91%, and NASDAQ climbed 2.45%. Technically, the robust rebound eased fears of an imminent bearish reversal, affirming that recent pullbacks were likely just corrections within a broader uptrend.

    Market attention was drawn to Fed Governor Christopher Waller’s remarks at CNBC’s “Squawk on the Street”, interpreted by some as a dovish tilt. He expressed confidence that the inflationary stickiness seen in 2024 will begin to “dissipate” in 2025 and described himself as “more optimistic” about inflation than many of his Fed colleagues. Waller indicated the potential for three or four 25bps rate cuts this year, contingent on favorable inflation data.

    However, it should emphasized that Waller also tempered this optimism with caution, acknowledging that “If the data doesn’t cooperate, then you’re going to be back to two, maybe even one”.

    Waller left the door open for a rate cut in March, remarking that such a move “cannot be completely ruled out.” However, the message underlying was still consistent with market expectation that May or June might be more likely.

    Overall, despite the dovish interpretation by some, Waller’s comments suggest a flexible, data-dependent approach rather than a clear commitment to easing. The comments also largely aligned with market pricing.

    Nonetheless, inflation data for December did provide some relief. While, headline CPI rose from 2.7% to 2.9% yoy, core CPI edged down from 3.3% to 3.2%. This incremental progress reduces pressure on the Fed to maintain restrictive policy for an extended period. More importantly, that makes a return to tightening less likely.

    Futures pricing didn’t change much over the week, reflecting a 97.9% chance that Fed will hold rates steady at 4.25–4.50% at the January meeting, with a 72.4% chance of another hold in March. The probability of a May rate cut stands at 44%, rising to 66% by June. By year-end, markets still project a 52.1% chance of just one rate cut, reducing rates to 4.00–4.25%.

    Technically, DOW’s break of 55 D EMA (now at 43038.33) suggests that pullback from 45073.63 has completed at 41844.98 already. The medium term channel holds intact, as well as the up trend. Whether DOW is ready for another record run through 45073.63 would depend on the momentum of the next rise.

    But even in case that corrective pattern from 45073.63 is going to extend with another falling leg, downside looks more likely than not to be contained by cluster support level at around 40k, with 39889.05 resistance turned support, and 38.2% retracement of 32327.20 to 45073.63 at 40204.49.

    NASDAQ’s price actions from 20204.58 are also clearly corrective looking so far, with notable support from 18671.06 resistance turned support. With this support intact, larger up trend should resume through 20204.58 sooner rather than later.

    Yields and Dollar Index Form Short-Term Top With Improved Risk Sentiment

    Improved risk sentiment in US markets has triggered pullback in both 10-year Treasury yield and the Dollar Index, suggesting a temporary pause in their recent rally.

    Technically, a short term top is likely in place at 4.809 in 10-year yield, considering that D MACD has crossed below signal line. More consolidations should follow in the near term below 4.809, with risk of deeper pull back to 55 D EMA (now at 4.434). But outlook will continue to stay bullish as long as 38.2% retracement of 3.603 to 4.809 at 4.348 holds. Another rally through 4.809 to retest 4.997 high is expected, though breaking the psychological 5% level may prove challenging without stronger momentum.

    Dollar Index could have formed a short term top at 110.17 too, just ahead of 61.8% projection of 100.15 to 108.87 from 105.42 at 110.31, with D MACD crossed below signal line. Deeper retreat could be seen to 108.07 resistance turned support, or even further to 55 D EMA (now at 107.15). But near term outlook will stay bullish as long as 38.2% retracement of 100.15 to 110.17 at 106.34 holds. Firm break of 110.17 will resume the rally to 100% projection at 113.34.

    FTSE and DAX Surge to Record Highs

    Risk-on sentiment was also evident in the European equity markets, with FTSE 100 and DAX surged to new record highs. The optimism was fueled by expectations of rate cuts, positive economic projections, and hopes for political stability.

    In the UK, a trio of softer economic data—GDP, retail sales, and CPI—reinforced market expectations for BoE easing. Markets now anticipate more than 75 basis points of rate cuts throughout 2025, compared to just 50 basis points priced in the prior week. A 25bps rate cut in February is now universally expected.

    Supporting this sentiment, IMF upgraded its UK growth forecast for 2025 by 0.1 percentage points to 1.6%, making the UK the third-fastest-growing G7 economy after the US and Canada. IMF attributed this optimism to increased government investment, improved household finances, and anticipated rate cuts.

    That’s a strong nod to the Labour government despite wide criticism on its Autumn Budget. Meanwhile, IMF also projects BoE’s headline rate to fall from 4.75% to 3.75% by year-end.

    Technically, FTSE’s break of 8474.41 confirmed that triangle consolidation from there has completed at 8002.34, and larger up trend has resumed. Next target is 61.8% projection of 7404.08 to 8474.41 from 8002.34 at 8663.80.

    In Germany, DAX surged to new record on improving risk appetite and expectations of continued ECB easing.

    ECB’s December meeting minutes leaned towards the dovish side, and revealed discussions about a more aggressive 50-basis-point cut. The central bank ultimately favored a measured approach, with consensus on a more controlled pace of easing, to allow for checkpoints to confirm that disinflation remains on track.

    While IMF downgraded its 2025 growth forecasts for Germany and France, the outlook still points to modest recovery. Germany, previously expected to grow by 0.8%, is now forecasted to expand by just 0.3%, marking a slow rebound from two years of contraction. France’s growth forecast was also reduced by 0.3 percentage points to 0.8%. The positive side of the forecasts is that both economies are expected to regain some footing this year.

    It should also be noted that markets are probably pricing in a degree of optimism around the February 23 snap elections, which could lead to greater political stability and more consistent economic policies in Germany.

    Technically, DAX should now be on track to 100% projection of 14630.21 to 18892.92 from 17024.82 at 21287.52 next.

    Nikkei Weighed by BoJ Hike Risks, SSE Struggles to Rebound

    Investor sentiment in Asia, however, was much less optimistic, with Japan facing headwinds from growing expectations of Bank of Japan policy normalization, while China’s economic recovery struggles to inspire confidence amid external pressures.

    In Japan, speculation over a rate hike at the upcoming January 23–24 BoJ meeting has intensified. Governor Kazuo Ueda and Deputy Governor Ryozo Himino have repeatedly hinted at the possibility of policy tightening, with analysts interpreting their comments as preparation for market adjustments.

    Additionally, reports suggest BoJ is likely to raise its inflation forecasts in its quarterly outlook, highlighting upside risks fueled by the persistently weak Yen and elevated import costs. Internally, BoJ policymakers believe that stabilizing inflation expectations around the 2% target could allow short-term rates to rise as high as 1% without hindering economic growth.

    Traders are pricing in an 80% chance of a rate hike from 0.25% to 0.50%.

    Nikkei weakened for the week on expectations of BoJ’s normalization move, but stayed above 37651.07 support.

    Outlook is unchanged that price action from 42426.77 are developing in to a medium term three wave consolidation pattern, with rebound from 31156.11 as the second leg.

    For now, another rally cannot be ruled out, but strong resistance should emerge below 42426.77 to limit upside. Firm of 37651.07 support will in turn indicate that the third leg has likely commenced, and bring deeper fall to 35253.43 support and below

    In China, Shanghai SSE Composite struggled to generate meaningful gains other than a mild recovery.

    China’seconomy grew 5.4% yoy in Q4, lifting full-year GDP growth to 5.0%, matching the government’s target.Meanwhile, market rumors suggest Beijing is hesitant to use Yuan depreciation as a tool to counter tariffs from a second Trump presidency. Analysts believe sharp currency depreciation, as seen during Trump’s first term, could harm the struggling economy more than it would help.

    However, market confidence remains subdued, and the stock market recovery appeared technical rather than driven by fundamentals.

    SSE found support at the 50% retracement level of 2,635.09 to 3,674.40 at 3154.74, but remained capped below 55 D EMA (now at 3279.16).

    Risk remains on the downside for the near term for SSE. Break of 3140.90 will extend the corrective fall from 3674.40 to 61.8% retracement at 3032.11. Nevertheless, sustained break above the 55 D EMA will indicate that stronger near term rebound is underway back towards 3494.86 resistance.

    USD/CAD Weekly Outlook

    USD/CAD’s late break of 1.4466 resistance confirms larger up trend resumption. Initial bias is back on the upside this week for 1.4667/89 long term resistance zone. For now, outlook will stay bullish as long as 1.4302 support holds, in case of retreat.

    In the bigger picture, up trend from 1.2005 (2021) is in progress for retesting 1.4667/89 key resistance zone (2020/2015 highs). Decisive break there will confirm long term up trend resumption. Next target is 100% projection of 1.2401 to 1.3976 from 1.3418 at 1.4993. Medium term outlook will remain bullish as long as 1.3976 resistance turned holds (2022 high), even in case of deep pullback.

    In the longer term picture, price actions from 1.4689 (2016 high) are seen as a consolidation pattern, which might have completed at 1.2005. That is, up trend from 0.9506 (2007 low) is expected to resume at a later stage. This will remain the favored case as long as 1.3418 support holds.



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  • Dollar Gains Momentum as Fed Cuts Come Into Question

    Dollar Gains Momentum as Fed Cuts Come Into Question


    The US markets last week were shaped by two dominant themes: uncertainty surrounding trade policies of the incoming US administration and the impact of robust US economic data. Initial market confusion, driven by ambiguous signals regarding tariffs, created significant volatility. However, this indecisiveness gave way to clarity as strong US data reaffirmed the resilience of the economy, casting doubt on the likelihood of more Fed rate cuts in 2025.

    US Treasury yields surged as markets recalibrated their expectations for Fed policy, while equities faced notable selling pressure. This dual development provided a substantial boost to Dollar, which ended the week broadly higher. While some traders remain cautious, wary of surprises tied to US political developments, the Dollar’s upward momentum appears poised to persist, supported by the hawkish shift in Fed expectations and strong macroeconomic fundamentals.

    Across the Atlantic, Sterling faced intense pressure, falling sharply as concerns over fiscal de-anchoring took center stage. Rising UK gilt yields, coupled with a weakening Pound, highlighted fears of a negative spiral for the UK’s fiscal health. Investors are increasingly concerned that higher borrowing costs could exacerbate fiscal imbalances, particularly in an environment of tepid growth and stagflationary risks. Sterling’s underperformance made it the worst performer among major currencies.

    Elsewhere, Canadian Dollar emerged as the strongest currency of the week, but only for consolidating recent losses. Yen followed Dollar as the third strongest, benefiting from a late-week risk-off environment. On the other hand, Aussie and Kiwi, reflecting their risk-sensitive nature, were among the weakest performers. Euro and Swiss Franc ended in middle positions.

    Fed Pause to Extend, Rate Cuts in 2025 Less Certain, Hike Risks Emerge?

    Dollar and US Treasury yields soared last week, while equities took a hit, as a new idea gained traction: Fed might refrain from any rate cuts in 2025. This shift in market sentiment emerged after several catalysts converged, including robust employment data, jump in inflation expectations, and public remarks from key Fed officials. Traders are now rethinking their scenarios for the months ahead, pricing in the possibility that the central bank will remain on hold longer than previously thought.

    Driving the narrative is the unexpectedly strong December non-farm payroll report. Employers added 256k new jobs, surpassing consensus forecasts of 150k and even outpacing the monthly average of 186k for 2024. Unemployment rate dipped back to 4.1%, reinforcing the view that the labor market is in solid shape.

    These data points suggest not only a healthy labor market but also reacceleration in hiring after last year’s elections, bolstered by expectations of pro-business policies under the incoming Trump administration. If these dynamics persist, the labor market could tighten further, reigniting inflationary pressures. The timing of these numbers matters greatly too, as they have arrived just as the market was anticipating a more tempered economy heading into 2025.

    Another factor reshaping investor expectations is the January University of Michigan survey, which revealed a marked rise in inflation expectations. One-year inflation forecasts jumped from 2.8% to 3.3%, the highest since May, while long-run expectations climbed to 3.3%, not seen since June 2008. These developments highlight a growing concern that inflation could move beyond Fed’s comfort zone, especially with additional fiscal and trade policies fueling price pressures ahead.

    In parallel, the incoming Trump administration’s policy stance, in particular on trade, adds more complexity. While the president-elect denied reports of a shift to sector-specific tariffs out of concerns over political backslash, subsequent speculation about declaring a national economic emergency to justify tariffs has left markets unsettled.

    It should be emphasized that these scenarios are not mutually exclusive. Trump could still use emergency powers to target specific sectors or countries. This uncertainty is likely to persist at least until his inauguration on January 20.

    Looking at Fed, three key takeaways have taken form. First, a pause in January appears virtually locked in, with robust data and upbeat official commentary reinforcing the case for no immediate move. Second, markets are now leaning toward the next cut being postponed until May, representing a prolonged window of inactivity. Third, there is a growing notion that Fed could deliver just one cut in 2025 or potentially none at all, should inflation remain elevated and growth hold steady.

    Meanwhile, central bank communication has echoed these changing expectations. Former rate-cut proponents at Fed have begun to indicate growing consensus that policy easing may be nearing an end. However, it should be clarified that Fed Governor Michelle Bowman described December’s cut as the “final step” in the “recalibration” process only. She stopped short of declaring an outright end to the cycle. Still, Bowman’s words imply that a higher threshold for further reductions is now in play.

    Adding to the hawkish tilt, analysts from Bank of America have raised the possibility of a Fed rate hike rather than additional cuts. Such a scenario isn’t the baseline, given that policies are still restrictive, despite being close to neutral. Fed appears content to let existing policy restrictions work their way through the economy for now.

    However, significant acceleration in core inflation—particularly if it exceeds 3%—could force Fed policymakers to reconsider their stance. But then the bar for a hike is also high.

    DOW Correction Deepens, 10-Year Yield and Dollar Index Power Up

    Technically, DOW’s correction started to take sharp as the decline from 45703.63 resumed last week. Two near term bearish signal emerged recently, rejection by 55 D EMA and break of rising channel support.

    Further fall is expected as long as 55 D EMA (now at 43504.46) holds, targeting 38.2% retracement of 32327.20 to 45073.63 at 40204.49. Nevertheless, this decline is seen as correcting the rise from 32327.20 only. Hence strong support should be seen from 40204.49 which is close to 40k psychological level, to contain downside.

    Also, the broader US equity markets remain relatively resilient, with S&P 500 and NASDAQ hold well above support levels at 5669.67 and 18671.06, respectively. These two levels will need to be decisively broken to confirm broader medium-term corrections. Without such breaks, the overall market appears to be in a sideways consolidation phase, with DOW underperforming.

    10-year yield’s rally from 3.603 reaccelerated last week and powered through 61.8% projection of 3.603 to 4.505 from 4.126 at 4.683. Further rally is now expected in the near term to 4.997 high. And possibly further to 100% projection at 5.028. In any case, near term outlook will remain bullish as long as 4.517 support holds during any pullbacks.

    The bigger picture in 10-year yield still suggests that up trend from 0.398 (2020 low) is ready to resume. Consolidations from 4.997 (2023 high) should have completed at 3.603 already.

    It may still be a bit early, but this bullish medium term scenario is getting closer. Firm break of 4.997 will target 38.2% projection of 0.398 to 4.997 from 3.603 at 5.359.

    Dollar Index’s rally from 100.15 continued last week and remains on track to 61.8% projection of 100.15 to 108.87 from 105.42 near term target. Decisive break there will target 100% projection at 113.34. In any case, near term outlook will stay bullish as long as 107.73 support holds.

    In the bigger picture, Dollar index now looks on track to retest 114.77 key resistance (2022 high). But more importantly, considering the strong support from rising 55 M EMA, it might also be ready to resume the long term up trend from 70.69 (2008 low), with its sight on 61.8% projection of 89.20 to 114.77 from 100.15 at 115.95.

    Fiscal De-anchoring Fears Send UK Bond Yields Soaring, Pound Plunging

    The UK also found itself at the center of market attention last week, with 10-year Gilt yield surging to its highest level since 2008. At the same time, Sterling sank to a more-than-one-year low against Dollar.

    The simultaneous rise in bond yields and depreciation of the currency has raised alarm bells, as some analysts interpret it as a sign of fiscal de-anchoring. In this scenario, higher yields push up borrowing costs, compounding fiscal worries and creating a negative feedback loop.

    Investors have increasingly voiced concern about stagflationary environment in the UK, marked by both subdued economic growth and rising inflationary pressures. The Autumn Budget, with its array of tax and fiscal measures—including an increase in employers’ national insurance contributions—appears to have hindered economic activity to a greater extent than initially expected.

    Comparisons to the “Truss Crisis” of 2022 have naturally emerged. Back then, the mini-budget proposed by Prime Minister Liz Truss and Chancellor Kwasi Kwarteng triggered a dramatic collapse in Sterling from 1.16 to 1.05 against Dollar, alongside a sudden spike in Gilt yields. Those moves, however, were entirely reversed within a few weeks once both the Chancellor and Truss resigned, paving the way for a change in policy direction.

    The scope of last week’s market shifts is notably smaller by comparison, providing a measure of reassurance that the current situation may not descend into a repeat of that crisis. Nonetheless, market sentiment appears less likely to stabilize quickly this time, as there is no indication of immediate change in key government positions.

    Prime Minister Keir Starmer and Chancellor of the Exchequer Rachel Reeves are expected to remain in office despite the current headwinds, which differs markedly from the abrupt reshuffling seen in 2022. Without a rapid pivot in fiscal policy, the overhang of higher borrowing costs and fragile investor confidence could persist, prolonging downward pressure on Sterling and upward pressure on bond yields.

    The confluence of looming stagflation, renewed fiscal anxieties, and limited policy flexibility casts a shadow over Sterling’s outlook. Where the pound plummeted sharply during the Truss episode—only to bounce back swiftly—the new environment suggests a more gradual but persistent decline.

    Technically, with last week’s strong rally, EUR/GBP’s is now back on 0.8446 resistance, which is close to 55 W EMA (now at 0.8444). Decisive break there will firstly confirm medium term bottoming at 0.8221, after drawing support from 0.8201 (2022 low). Further rally should be seen to 0.8624 cluster resistance ( 38.2% retracement of 0.9267 to 0.8221 at 0.8621), even as a correction. Reactions from there would then decide whether the whole down trend from 0.9267 (2022 high) has reversed.

    As for GBP/CHF, it has clearly struggled to sustain above flat 55 W EMA, which kept outlook neutral at best. Break of 1.1106 support will indicate that rebound from 1.0741 has completed, and deeper fall should be seen back to this support. More importantly, downside acceleration below 1.1106 will raise the chance that fall from 1.1675 is resuming the long term down trend, which could send GBP/CHF through 1.0741 to retest 1.0183 (2022 low) at least.

    AUD/USD Weekly Report

    AUD/USD’s break of 0.6169 key support level last week confirms larger down trend resumption. Initial bias stays on the downside this week for 61.8% projection of 0.6687 to 0.6198 from 0.6301 at 0.5999. For now, outlook will stay bearish as long as 0.6301 resistance holds, in case of recovery.

    In the bigger picture, down trend from 0.8006 (2021 high) is resuming with break of 0.6169 (2022 low). 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 0.6587) holds.

    In the long term picture, prior rejection by 55 M EMA (now at 0.6846) 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.



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