Tariff tension, US core PCE, month end flow

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The door is now open for the next major upside extension towards the 2018 high at 1.4377. Setbacks should be well supported above 1.2000 on a monthly close basis.

• R2 1.2729 – 17 December high – Strong
• R1 1.2716 – 26 February/2025 high – Medium
• S1 1.2563 –  19 February low – Medium
• S2 1.2545 – 14 February low – Strong

GBPUSD – fundamental overview

The Pound hasn't been able to avoid the sentiment downturn amidst ongoing trade tension. No major surprises from the details out of PM Starmer's meeting with President Trump. Trump talked about the special relationship of the two countries, the US being a partner in developing Ukraine oil and gas, and how he is inclined to back a UK deal on Chagos. Key standouts on Friday’s calendar come from German retail sales, UK Nationwide housing, German unemployment, ECB consumer inflation expectations, German inflation, Canada GDP, US core PCE, and Chicago PMIs.

USDJPY – technical overview

The market is looking to resume the longer-term uptrend after an intense correction in 2024. A higher low is ideally sought out above 140.00 in favor of a bullish continuation. The October monthly close back above 150.00 strengthens the case for longer-term uptrend resumption.

• R2 154.80 – 12 February high – Strong
• R1 152.32 – 19 February high – Medium
• S1 148.84 – 24 February/2025 low – Medium
• S2 148.64 – 3 December low – Strong

USDJPY – fundamental overview

Friday's softer Tokyo CPI data has opened more downside pressure on the Yen. And as per Thursday's insights, CFTC Yen positioning is tracking at extreme levels, while the one month vol risk premium is also trading at elevated levels. This suggests there could be more Yen selling on the horizon. Corporate flows could also be factoring into Yen selling into fiscal year end. Key standouts on Friday’s calendar come from German retail sales, UK Nationwide housing, German unemployment, ECB consumer inflation expectations, German inflation, Canada GDP, US core PCE, and Chicago PMIs.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6000 would give reason for rethink. A monthly close back above 0.7000 will take the big picture pressure off the downside and strengthen case for a bottom.

• R1 0.6409 – 21 February/2025 high – Strong
• R2 0.6331 – 24 January high – Medium
• S1 0.6200 – Figure – Medium
• S2 0.6164 – 17 January low – Medium

AUDUSD – fundamental overview

The Australian Dollar was already struggling with this week's run of softer Aussie data and is under more pressure on Friday on the back of the latest comments from President Trump that he will pile on another 10% of tariffs on China after March 4. Key standouts on Friday’s calendar come from German retail sales, UK Nationwide housing, German unemployment, ECB consumer inflation expectations, German inflation, Canada GDP, US core PCE, and Chicago PMIs.

USDCAD – technical overview

A sustained hold above 1.3000 over the past several months signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in at the 1.5000 psychological barrier. Setbacks should be very well supported ahead of 1.4000.

• R2 1.4595 – 30 January high – Strong
• R1 1.4500 – Figure – Medium
• S1 1.4270 – 5 February low – Medium
• S2 1.4151 – 14 February/2025 low – Strong

USDCAD – fundamental overview

The Canadian Dollar has come back under pressure this week as President Trump says tariffs on Canada and Mexico are on schedule to proceed as planned next week. Risk off flow and lower oil are also factoring into CAD weakness. Key standouts on Friday’s calendar come from German retail sales, UK Nationwide housing, German unemployment, ECB consumer inflation expectations, German inflation, Canada GDP, US core PCE, and Chicago PMIs.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5469 will intensify bearish price action.

• R2 0.5818 – 12 December high – Medium
• R1 0.5773 – 21 February/2025 high – Medium
• S1 0.5600 – Figure – Medium
• S2 0.5541 – 13 January low – Medium

NZDUSD – fundamental overview

Most of the weakness we've been seeing is in sympathy to the Australian Dollar and some bigger picture risk off flow as trade tension escalates. Key standouts on Friday’s calendar come from German retail sales, UK Nationwide housing, German unemployment, ECB consumer inflation expectations, German inflation, Canada GDP, US core PCE, and Chicago PMIs.

US SPX 500 – technical overview

The longer term uptrend remains intact and dips continue to be exceptionally well supported. Critical support comes in at 5770, with only a break back below this level to compromise the structure and open the door for a more significant corrective decline. Until then, the focus remains on a continued push to fresh record highs.

• R2 6152 – 19 February/Record high – Strong
• R1 6014 – 26 February high – Medium
• S1 5805 – 10 January low – Medium
• S2 5770 – 13 January/2025 low – Strong

US SPX 500 – fundamental overview

Going forward, it will be important to keep an eye on Trump trade policies, inflation, bigger picture economic data and the Fed policy outlook. Any of these variables are capable of easily ruffling some feathers and we've already seen a little of this as 2025 gets going.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 3000 area. Setbacks should now be well supported above 2500 on a monthly close basis.

• R2 3000 – Psychological – Strong
• R1 2957 – 24 February/Record high – Medium
• S1 2730 – 27 January low – Medium
• S2 2689 – 20 January low – Medium

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in recent months with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported over the coming months.