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*The dollar weighed on the soft Job Opening data from yesterday and slid to its previous strong support price levels.
*The Canadian dollar improved as President Trump delayed levies on Canada.
*Donald Trump stepped in on the Gaza-Israel geopolitical issue; the development will have a direct impact on gold.
Market Summary
The market remains fixated on Donald Trump’s impending policies, which could significantly sway sentiment across multiple asset classes, including the U.S. dollar and equities. The greenback, already pressured by the delay in tariffs on Mexico and Canada, faced further headwinds after the JOLTs Job Openings report missed market expectations. Despite this setback, traders believe the dollar’s weakness is temporary, with steady U.S. Treasury yields potentially providing support.
On Wall Street, equities held steady as investors monitored Trump’s next moves. However, the Nasdaq’s upward momentum was curbed by disappointing earnings from Alphabet Inc. and AMD, which dampened sentiment in the tech sector.
In the forex market, the Canadian dollar saw a sharp rebound after Trump’s tariff delay on Canada, but USD/CAD has now approached a key support level, warranting caution for a potential technical rebound. Meanwhile, all eyes are on tomorrow’s Bank of England interest rate decision, with markets pricing in a rate cut that could weigh on the recently strengthened British pound.
In the commodities space, geopolitical tensions remain in focus, particularly Trump’s remarks regarding ownership claims over Gaza and the relocation of Palestinians. Gold prices continue to hover at record highs as safe-haven demand remains robust, while oil struggles to find footing near recent lows.
Current rate hike bets on 19th March Fed interest rate decision:
Source: CME Fedwatch Tool0 bps (100.0%) VS -25 bps (0%)
Market Movements
The Dollar Index (DXY) fell sharply following a disappointing U.S. JOLTs Job Openings report, which dropped to 7.6M, missing expectations of 8.01M and marking a significant decline from the previous 8.156M reading. This weak labor data, coupled with ongoing trade uncertainties, has weighed on the dollar’s outlook. With the Nonfarm Payrolls (NFP) report due on Friday, market participants are closely watching for further signs of labor market weakness that could influence Federal Reserve policy expectations.
The Dollar Index is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 41, suggesting the index might extend its losses after breakout since the RSI stays below the midline.
Resistance level: 108.75, 109.90
Support level: 107.85, 107.05
Gold surged to a new record high after gaining nearly 1% in the previous session, as renewed U.S.-China trade tensions fueled safe-haven demand. President Donald Trump imposed a 10% tariff on Chinese imports, prompting a muted but targeted retaliation from Beijing. While China’s response was more restrained compared to previous trade conflicts, investors remain cautious about the potential economic fallout. Additionally, markets are closely watching whether tariffs could reignite U.S. inflation, which could have ripple effects on Federal Reserve policy.
Gold prices are trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 73, suggesting the commodity might enter overbought territory.
Resistance level: 2855.00, 2875.00
Support level: 2835.00, 2825.00
The Pound Sterling capitalized on the recent weakness in the U.S. dollar, with GBP/USD breaking above its previous high, signaling a bullish bias. The greenback remains under pressure following a shift in U.S. trade policies and weaker-than-expected job data, which weighed on market sentiment. Meanwhile, traders are closely watching the Bank of England’s upcoming monetary policy decision, as expectations of a potential rate cut could directly impact the pair’s momentum. A dovish stance from the BoE may limit further upside for GBP/USD, while any hawkish surprises could reinforce the pair’s bullish breakout.
The GBPUSD has rebounded by more than 1.6% from its recent low level, suggesting a bullish bias for the pair. The RSI has broken above the 50 level, while the MACD has broken above the zero line, suggesting that bullish momentum is forming.
Resistance level: 1.2505, 1.2620
Support level: 1.2408, 1.2310
The EUR/USD pair continues its upward momentum, driven by upbeat eurozone economic data this week. The euro found support after Monday’s CPI reading exceeded market expectations, fueling speculation that the ECB may maintain a more hawkish stance in the near term. Meanwhile, the U.S. dollar remains subdued, struggling to gain traction amid shifting market sentiment. Looking ahead, today’s PMI readings from both the U.S. and eurozone will be pivotal in determining the pair’s next move. Strong eurozone data could reinforce the bullish bias, while any upside surprise in U.S. PMI could provide support for the greenback and cap further gains in EUR/USD.
The EUR/USD has gained nearly 1.5% in the recent session, suggesting a bullish bias for the pair. Traders may eye the critical resistance level at 1.0400; a break above such a level would be a solid bullish signal for the pair. The RSI has been rising while the MACD has a golden cross at the bottom, suggesting that the bearish momentum is vanishing.
Resistance level: 1.0458, 1.0530
Support level: 1.0345, 1.0232
The Japanese yen (JPY) is poised to extend its gains as the Bank of Japan (BoJ) adopts a more hawkish stance on interest rates. BoJ Governor Kazuo Ueda told the Japanese parliament that the central bank aims to achieve 2% inflation on a sustainable basis and that underlying inflation should exclude one-off factors. This signals that if inflation remains above 2%, the BoJ could maintain higher interest rates, supporting yen strength against the dollar.
USD/JPY is trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum, while RSI is at 32, suggesting the pair might extend its losses since the RSI stays below the midline.
Resistance level: 153.85, 155.35
Support level: 152.55, 150.95
The Canadian dollar has been heavily influenced by Donald Trump’s speech and trade policies, particularly regarding Canada. The USD/CAD pair has now reached a critical support level, which has held for over a month, suggesting the potential for a technical rebound. Today’s U.S. PMI reading will be a key driver for the pair. A stronger-than-expected print could bolster the U.S. dollar, supporting a rebound in USD/CAD. Conversely, a weaker PMI could reinforce the pair’s downward bias, allowing the loonie to extend its gains.
The USD/CAD dropped about 3% from its highest level in decades, suggesting that downside pressure has been strong in the recent session. The RSI has declined from the overbought zone, while the MACD has broken below the zero line, suggesting that the pair is now trading with bearish momentum.
Resistance level: 1.4435, 1.4550
Support level: 1.4210, 1.4095
Oil prices showed mixed movements on Tuesday as U.S.-China tariff disputes and escalating tensions with Iran created uncertainty in energy markets. President Donald Trump reinstated his “maximum pressure” campaign on Iran, signing a memorandum instructing the U.S. Treasury to impose strict sanctions aimed at reducing Iranian oil exports to zero. As Iran, the third-largest OPEC producer, extracts 3.3 million barrels per day (3% of global output), these sanctions are expected to tighten oil supply. However, concerns over weaker global demand due to trade war uncertainties have capped oil’s gains.t
Crude oil prices are trading higher following the prior rebound from the support level. MACD has illustrated increasing bullish momentum, while RSI is at 47, suggesting the commodity might extend its gains since the RSI rebounded sharply from oversold territory.
Resistance level: 75.05, 77.60
Support level: 72.05, 69.60
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5 February 2025, 05:45 President Trump Intervenes Israel-Gaza Geopolitical Issue
4 February 2025, 04:30 Trump Delays Tariffs, CAD Surges
31 January 2025, 03:15 Eye on Today’s PCE
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