AUD/USD analysis on January 21, 2025

During the Asian session, the Australian dollar continues to develop the bullish momentum formed at the beginning of the week. AUD/USD quotes are testing the 0.6345 level for an upward breakout, updating local highs since February 24.Data on the number of applications for unemployment benefits in the United States will be published today at 15:30 (GMT+2). It is expected that the number of initial requests will decrease from 242.0 thousand to 235.0 thousand for the week of February 28, and repeat requests (for the week of February 21) may grow from 1,862 million to 1,880 million.The February labor market report will be released tomorrow at 15:30 (GMT+2), which may influence further Fed decisions. It is predicted that the number of new jobs outside the agricultural sector will grow from 143.0 thousand to 160.0 thousand, and the average hourly wage will slow down from 0.5% to 0.3% in monthly terms. The annual wage rate will remain at 4.1%, while the unemployment rate will remain at 4.0%.On Thursday morning, Australia's foreign trade data was released. Exports increased by 1.3% in January, which was 0.1% higher than in December, while imports decreased by 0.3% after rising by 5.9% in the previous month. As a result, the trade surplus expanded from 4.92 billion to 5.62 billion Australian dollars, exceeding expectations of 5.50 billion. Market participants also assessed the data on the number of building permits, which increased by 6.3% month-on-month and 21.7% year-on-year in January, compared with 1.7% and 12.2% a month earlier.Investors continue to analyze the minutes of the last RBA meeting, at which the rate was reduced by 25 basis points to 4.10% for the first time since the beginning of the COVID-19 pandemic. The head of the regulator, Michelle Bullock, noted the stability of the labor market, but expressed doubts about the return of inflation to the target 2.0% at lower rates, especially against the background of uncertainty caused by the US tariff policy. According to the ASX rates indicator, the market estimates the probability of another 25 basis point rate cut at the next meeting on April 1 at 14%.AUD/USD technical analysis for todayOn the daily AUD/USD chart, the Bollinger indicator shows a horizontal reversal, which indicates a narrowing of the price range. The MACD indicator is growing and holds a strong buy signal. Stochastic maintains its upward momentum, but is approaching the overbought zone, which indicates a possible correction in the short term.Trading recommendations- It is advisable to enter the purchase after the breakdown of the 0.6373 level upwards with a target of 0.6450. It is recommended to set the stop loss at 0.6330.- An opportunity for sales will appear in the event of a rebound from the 0.6373 level and a breakdown of the 0.6330 level downwards with a target of 0.6250. In this case, the stop loss should be placed at 0.6373.

FOREX Fundamental analysis for EUR/USD on March 6, 2025Investors expected fiscal stimulus from the Donald Trump administration, which could strengthen the American economy and push the EUR/USD pair to parity. However, instead, the markets received large-scale fiscal initiatives from Germany, which led to a strengthening of the euro and a possible reversal of the downtrend for the main currency pair, which changes the positioning and, consequently, forex trading strategies.The US decision to suspend military assistance to Ukraine was a catalyst for Europe, which realized the need for independent protection. The new German leader Friedrich Merz, by analogy with Mario Draghi in 2012, promised to do everything possible to save the economy. His first steps include creating a $500 billion special fund for infrastructure development and freeing military spending from the fiscal brake imposed in 2009.Expectations of large-scale issues led to a sharp rise in German bond yields, which was the most significant daily increase since 1990. The narrowing of the difference between the yields of German bunds and American treasuries pushed the EUR/USD pair above the 1.08 level. The last time the euro was at these values was during the US presidential election in November last year.Germany can afford fiscal stimulus worth up to $1.6 trillion. This will increase the level of public debt from the current 62% to 120% of GDP, which is comparable to the US figures. Morgan Stanley estimates that total defense and infrastructure spending will exceed €1 trillion.Bank of America forecasts the German economy to grow from 0% to 1.5-2% starting in 2027. Goldman Sachs raised its forecast for German GDP by 0.2 percentage points to 0.2% in 2025 and by 0.5 percentage points to 1.5% in 2026. The ECB is also expected to cut rates twice this year instead of three times.EUR/USD rally: correction or new trend?Rumors are growing in the Forex market that the current growth of EUR/USD is not just a correction, but the beginning of a new trend. The risks of a reversal for the euro on the charts of weeks and months have become positive for the first time in six months. However, traders are still waiting for the euro to fall in 3-6 months, given the risks of a large-scale trade war between the US and the EU.The day before, a labor market report from ADP was released in the United States, showing that employment in the US private sector increased by only 77,000 in February, which was one of the weakest indicators over the past two years. This reinforces expectations of an early resumption of the Fed's monetary easing cycle, which puts pressure on the US dollar.Trading recommendationsWorking out the target of buyers at the level of 1.0810 allowed us to lock in part of the profit. The further dynamics of EUR/USD will depend on the pivot level of 1.0810. In case of a fall below 1.0785, the possibility of selling can be considered, but the current market situation indicates a high probability of continued growth of the pair.

During Tuesday's Asian session, the US dollar showed a moderate decline. USD/CHF is trying to break down the 0.8960 level. The weakening of the US currency is due to the factors of technical analysis by John Murphy, as well as investor caution before the release of key statistics on employment in the United States.The ADP report on employment dynamics in the US private sector will be published tomorrow at 3:15 p.m. (GMT+2). Forecasts suggest a reduction from 183,000 to 140,000, which may increase pressure on the Fed in the context of possible monetary policy easing. At the moment, the market is planning two interest rate cuts of 25 bps in the second half of 2025.On Friday at 15:30 (GMT+2), official data on the US labor market will be released, according to which the number of jobs in the non-agricultural sector may grow from 143,000 to 153,000. The average hourly wage growth is likely to be 4.1% year-on-year, and will slow down from 0.5% to 0.3% month-on-month. The unemployment rate is expected to remain at 4.0%.The Swiss franc is receiving additional support due to strong macroeconomic statistics. The SVME business activity index rose from 47.5 to 49.6 points in February, exceeding analysts' forecasts (48.4 points). At the same time, the ISM manufacturing index in the United States decreased from 50.9 to 50.3 points, indicating a slowdown in activity in the sector.Inflation data will be released in Switzerland tomorrow at 09:30 (GMT+2). The consumer price index for February is expected to rise by 0.5% after falling by 0.1% a month earlier, and in annual terms the figure will be 0.4%. This factor may influence the rhetoric of the Swiss National Bank, which is likely to take a pause in interest rate changes.In addition, the SNB ended 2024 with a record profit of 80.7 billion francs. The value of gold on the regulator's balance sheet increased by 21.2 billion francs, the profit from operations in foreign currency amounted to 67.3 billion francs, while losses from positions in national currency reached 7.4 billion francs.Technical analysis indicates a further weakening of the dollar. The Bollinger bands on the daily chart are narrowing, signaling consolidation in the short term. The MACD is in the negative zone, confirming the bearish sentiment, and the Stochastic, having turned away from the overbought zone, indicates a possible decline.Sales are advisable after a confident breakdown down to the level of 0.8952 with the potential to decline to 0.8865. The stop loss is 0.9000.Purchases are possible in case of a rebound from 0.8952 and a breakdown of 0.9000 upwards. In this case, the target level is 0.9075 and the stop loss is 0.8952.

The Eurozone: labor market stability and monetary policy prospectsThe focus of European investors' attention is shifting to the unemployment rate data for January. The labor market in the Eurozone continues to show resilience, remaining at a record low of 6.3%. Analysts' expectations also point to the continuation of this value, which confirms the stability of employment in the region.Global economic developmentsAsia: unexpected increase in unemployment in JapanIn Japan, the unemployment rate in January turned out to be higher than expected, rising to 2.5% against the expected 2.4% and the December value of 2.4%. At the same time, the ratio of vacancies to applicants rose to 1.26 in November (1.25 was expected), which may indicate a gradual recovery in demand for labor.USA: ISM index signals slowdown in manufacturing sectorThe February ISM index in the manufacturing sector fell from 50.9 to 50.3 (50.7 was expected), indicating stagnation in the recovery of industrial production. Interestingly, the PMI was revised upward from 51.6 to 52.7, creating a contradictory signal for investors. An additional risk to inflation remains the continued rise in commodity prices, which may be exacerbated by the introduction of new tariffs.Eurozone: inflation continues to slow downIn February, annual HICP inflation dropped to 2.4% from 2.5% (expected 2.3%). Core inflation also turned out to be higher than expected, falling from 2.7% to 2.6% (2.5% was expected). The main factor of the decline is the slowdown in price growth in the service sector, caused by the weakening of economic activity in recent months and the effects of the base. These data reinforce expectations of an easing of the ECB's monetary policy, but the risks of wage growth remain, which may slow the decline in inflationary pressures. Core inflation is expected to fall below 2% by the summer as prices for goods and services weaken.Additionally, the manufacturing PMI was revised up from 47.3 to 47.6, which confirms expectations of a gradual recovery in the industrial sector. It is predicted that by the end of summer, the indicator will reach the level of 50, which will be an indicator of economic expansion.Sweden: manufacturing sector shows growthThe Swedish manufacturing PMI strengthened, rising from 53.0 to 53.5 due to increased production, orders and employment. The exception was the delivery time component, which decreased slightly, but overall the dynamics remains positive. The average figure for the last six months is 52.9, which confirms the steady growth of the industrial sector.Trade wars and geopolitical risksUS President Donald Trump has confirmed the introduction of 25% tariffs on all imported goods from Canada and Mexico from March 4. This increased fears in the markets and caused sharp fluctuations in financial assets. In addition, duties on Chinese goods were increased from 10% to 20%, which creates the risk of a new escalation of the trade conflict.Trump also announced an agreement with Taiwanese company TSMC to build five new semiconductor manufacturing plants in the United States worth $100 billion. These measures are aimed at reducing dependence on Chinese technology.In addition, the United States announced the suspension of military assistance to Ukraine in order to put pressure on President Zelensky in negotiations with Russia. This step strengthens Russia's position and forces European countries to reconsider their strategy of supporting Kiev. Against this background, the shares of European defense companies have shown a sharp increase, as investors are pricing in an increase in military spending in the region.Stock markets: reaction to political risksStock markets have demonstrated multidirectional dynamics. European indexes rose despite the risks of tariffs, while U.S. stocks were under pressure due to the uncertainty of Trump's trade policy. The main US indices closed lower: Dow -1.5%, S&P 500 -1.8%, Nasdaq -2.6%, Russell 2000 -2.8%.Interestingly, the Chinese stock market showed growth despite the introduction of 20% tariffs on exports. This can be explained by the revaluation of assets and the weak representation of Chinese companies in global investor portfolios.The largest technology companies (MAG 7) lost 3.1%, and the cryptocurrency market also came under pressure. This indicates a redistribution of capital from high-risk assets to more sustainable sectors.Bonds and foreign exchange markets: reaction to global changesIn debt markets, a sharp rise in expectations of increased military spending in Europe has triggered bond sales, especially at the far end of the yield curve. The yield of 30-year German securities increased by 10 bps, and 10-year – by 9 bps, exceeding the level of 2.5%. Additional pressure was exerted by an increase in the supply of debt instruments – Belgium placed 15-year bonds, the Netherlands issued new 10-year securities, and Austria offered investors bonds maturing in 2035 and 2053.In the foreign exchange market, the Swedish krona (SEK) strengthened, as the growth of European assets contributed to the demand for currencies with a high correlation with the region's economy. EUR/SEK dropped to 11.00. The EUR/USD pair strengthened by 1%, approaching the 1.05 mark. At the same time, the Canadian dollar came under pressure due to the US tariff policy.Oil prices declined after OPEC+ unexpectedly decided to stick to its planned production increase from April, while markets expected current quotas to remain in place. This has increased volatility in the commodity market and is putting pressure on oil-producing countries.ConclusionsFinancial markets continue to be highly dependent on political decisions. The main events are the escalation of the US trade wars with Canada, Mexico and China, the tightening of pressure on Ukraine and the prospects for a reduction in ECB rates. Markets are pricing in increased geopolitical risks, which supports the growth of European assets and puts pressure on high-price American stocks. In the coming weeks, investors will closely monitor the dynamics of inflation and the reaction of central banks to changes in global trade.

FOREX Fundamental analysis for EUR/USD on March 4, 2025Donald Trump confirmed his intentions by launching 25% tariffs on imports from Mexico and Canada. This decision, which he called the "North American war," excludes the possibility of negotiations. The US president said that the only way to avoid duties is to move production facilities, including automobile plants, to the United States. Despite this, the EUR/USD pair showed growth due to capital flight from the United States to Europe.Goldman Sachs estimates that tariffs on Mexican and Canadian goods could raise consumer prices in the United States by 0.6 percentage points, and on Chinese goods by another 0.1 points. This could force the Fed to keep rates high for longer or even raise them, which would theoretically support the US dollar. However, with impending stagflation (a combination of stagnation and inflation), the Federal Reserve may be forced to ease policy to support the economy. Signs of stagflation are already visible in the Purchasing Managers' Index (PMI) data in the manufacturing sector.Goldman Sachs does not rule out a scenario in which tariffs will be canceled or their introduction postponed at the last moment. Judging by the reaction of EUR/USD, the market also hopes for such an outcome. Increased demand for European assets contributes to the flow of capital from the United States to Europe, which supports the euro.For the third month in a row, European stock indexes have shown better dynamics compared to American ones. American stocks look overvalued, and the growing competition in the field of artificial intelligence makes investments in technology companies less attractive. At the same time, Europe, like Russia before, is demonstrating resilience. Despite expectations of collapse due to sanctions, the Russian economy has grown thanks to the military industry. Similarly, the expansion of defense spending in Europe supports rising bond yields, especially German ones.Lower yields on US Treasury bonds amid fears of stagflation and rising yields on European bonds are reducing the difference between them. This creates the foundation for the strengthening of EUR/USD. However, European optimism may be excessive. Donald Trump has already declared a trade war on Mexico, Canada and China, and it is unlikely that he will stop before imposing tariffs against the EU. This could undermine the fragile recovery of the European economy and lead to an outflow of capital from the region.The growth potential of EUR/USD looks limited. A fall of the pair below the level of 1.0440 may call into question the expediency of long positions opened from the level of 1.0420. In this case, it is worth considering the possibility of a coup and the formation of sales. However, for now, long positions remain relevant, and they should be held.

FOREX Fundamental analysis for EUR/USD on March 3, 2025At first glance, the spring growth of the euro could be explained by the EU's desire to take a leading role in resolving the conflict in Ukraine and increase defense spending. Theoretically, this could stimulate the economic growth of the region. However, the deterioration of relations between Kiev and Washington only highlights the continuing geopolitical risks that are putting pressure on the euro rather than supporting it. The true reasons for the movement of the EUR/USD pair lie deeper.The future of EUR/USD largely depends on how tough Donald Trump will apply tariff measures. If the US trading partners agree to make concessions, the administration may grant deferrals, which will weaken the dollar. In this context, the markets reacted positively to Scott Bessent's statement that Mexico had agreed to impose tariffs similar to those imposed by the United States on imports from China. This gave hope for a possible freeze of the 25% duties on Mexican imports scheduled for March.An additional factor of pressure on the dollar was the calls by the US Treasury Secretary for Canada to follow Mexico's example and create an economic bloc opposed to China. He also expressed confidence that inflation in the United States will continue to decline due to government spending cuts and lower energy prices, which are already reflected in falling bond yields and mortgage rates.The latest inflation data confirmed the downward trend. In January, the personal consumption expenditures (PCE) index dropped from 2.6% to 2.5%, while its three–month average dropped to 2.2%, and its six-month average dropped to 2.3%. However, the main disinflationary effect is related to the underlying effects of early 2024, and as they weaken, inflationary pressures may increase again.The markets have adjusted their forecasts for the Fed's policy. If earlier investors expected that tariffs would increase inflation and force the Fed to keep a tight policy, now they fear that protectionism will provoke a slowdown in the US economy. In this case, the Fed may be forced to ease monetary policy, which will lead to a weakening of the dollar. Futures markets are already taking into account the probability of a rate cut of 70 bps, which brings this figure closer to 85 bps of the expected ECB rate cut.A combination of factors – the possible postponement of tariffs against Mexico and Canada, as well as expectations of a softer Fed policy – allowed the euro to go on the offensive. A breakout of the key resistance level of 1.042 may trigger a rally and become a buying signal. However, an unsuccessful attempt to gain a foothold above this mark will retain the relevance of previously opened short positions.

During Thursday's morning session, USD/CHF is showing steady growth, developing the bullish momentum formed the day before. Quotes are testing the 0.8970 level for an upward breakout, retreating from the local lows recorded on December 23, 2024. Market participants expect the publication of important macroeconomic statistics from the United States, which may have a significant impact on the further dynamics of the pair.Gross domestic product (GDP) data for the fourth quarter of 2024 will be published today at 15:30 (GMT+2). The growth rate of the American economy is expected to remain at the same level of 2.3%. January data on durable goods orders will also be presented, which is projected to grow by 2.0% after a 2.2% decline in the previous month. Orders for capital goods excluding the defense and aviation sectors may adjust from 0.4% to 0.3%.In addition, the market will receive data on the number of applications for unemployment benefits. It is expected that the number of initial requests for the week of February 21 will increase from 219.0 thousand to 221.0 thousand, while repeat requests (for the week of February 14) will remain at 1.869 million. On Friday at 15:30 (GMT+2), key data on consumer inflation will be published — the Personal consumption Expenditures Index (PCE). The baseline indicator is projected to slow down from 2.8% to 2.6% in annual terms, and to correct from 0.2% to 0.3% on a monthly basis. The broader PCE index may decline from 2.6% to 2.3%, keeping the monthly value at 0.3%.Swiss GDP data for the fourth quarter of 2024 will be published at 10:00 (GMT+2). Annual growth is expected to slow from 2.0% to 1.6%, and from 0.4% to 0.2% in quarterly terms. The day before, market participants noticed a decrease in the index of economic expectations from the Center for European Economic Research (ZEW) in February from 17.7 points to 3.4 points, indicating a deterioration in economic sentiment.USD/CHF technical analysis for todayOn the daily chart, the Bollinger indicator indicates a steady decline, while the price range is narrowing, reflecting the mixed nature of trading in the short term. The MACD indicator is trying to turn towards growth, but retains a bearish signal. Stochastic is showing active growth, leaving the oversold zone, which signals the possible development of upward dynamics in the near future.Trading recommendations- Long positions: it is advisable to open purchase deals after a confident breakout of the 0.9000 level with a target of 0.9075. It is recommended to set the stop loss at 0.8952.- Short positions: an opportunity for sales will appear in case of a breakdown down to the level of 0.8929. The target will be 0.8865. In this case, the stop loss should be placed at 0.8952.

A revised estimate of fourth-quarter GDP will be released in the United States this afternoon. Preliminary data showed a slowdown in economic growth to 2.3%, while private consumption remained steady. In addition, Fed representatives are expected to speak, including Hammack, Harker, Barkin and Schmid. Their statements may clarify the regulator's current position on future mitigation policy.In the euro area, investors are waiting for statistics on the growth of lending and money supply in January. These indicators play an important role in assessing the degree of rigidity of the ECB's monetary policy. The data may affect expectations regarding possible steps by the Central Bank in the coming months.The consumer price index in Spain will be published today, which will give a preliminary idea of the dynamics of inflation in the Eurozone before the release of general data on Monday. Inflation is projected to decrease due to falling energy prices and a slowdown in service price growth, which is due to the effect of last year's high base.Norges Bank will present the results of its survey on inflation expectations. Analysts assume that the projected inflation rate will continue to decline in both the short and long term. Important attention will also be paid to forecasts for wage growth in 2025-2026. In addition, the published employment data for January will help determine whether the December job losses were really a trend or temporary.An Economic Trend Indicator from the National Institute of Economic Research will be released in Sweden. Key attention will be paid to how companies plan to adjust prices, especially after the release of high data on the producer price index (PPI) and inflation. In addition, data on the trade balance and household lending are expected today.US trade policy remains one of the main factors of market uncertainty. Despite the previously announced dates for the introduction of tariffs on imports from Canada and Mexico (March 4), the White House allowed them to be postponed to April 2. However, conflicting statements from officials leave the possibility that tariffs will take effect as early as next week. At the same time, Donald Trump again threatened to impose 25% duties on EU goods, including cars. In general, these statements confirm that tariff policy is being used as an instrument of pressure in negotiations.President of Ukraine Volodymyr Zelensky said that the success of the mining deal with the United States will depend on the upcoming negotiations with Donald Trump. He stressed that the agreement is part of a broader cooperation with Washington and may be included in future security guarantees. In turn, Trump confirmed that Zelensky would arrive in the United States on Friday to sign the agreement, but noted that the United States does not plan to provide Ukraine with expanded security guarantees, placing this responsibility on Europe.The European Commission has presented the "Clean Industrial Deal" strategic plan aimed at stimulating economic growth and accelerating the decarbonization process. The program provides for increased investments in environmentally friendly technologies, lower energy costs and easier reporting for small and medium-sized businesses. However, no short-term impact on economic growth is expected, as no significant increase in government spending is envisaged under the program. The EU plans to raise 100 billion euros (about 0.6% of GDP), but it is still unclear where these funds will come from. Most of the financing is likely to be provided by private capital.The situation on the marketsStock indexesThe US stock markets showed mixed dynamics yesterday. The S&P 500 index ended the day unchanged, while the European Stoxx 600 rose 1%. Despite the new tariff threats, the US markets stopped a four-day decline. In general, there is a rotation of capital in favor of cyclical sectors, including technology, consumer goods and banks. Nvidia's report provided particularly strong support to the market, which exceeded profit and revenue expectations, dispelling concerns about overheating of the artificial intelligence market.Debt marketsYesterday, there was moderate demand for European debt securities amid concerns about a slowdown in economic growth in the United States. The yield on 10-year US bonds fell by 30 basis points, reaching 4.25%, while 10-year German bunds fell by only 10 bps. The yield difference between the US and Germany narrowed to 181 bps. In the evening, there were reports of a possible postponement of the increase in US tariffs until April, which also had an impact on the impact on the bond market.CurrenciesIn the foreign exchange market, the US dollar, the British pound and the Japanese yen strengthened. The Scandinavian currencies, as well as the Australian and New Zealand dollars, showed a weakening. The EUR/USD exchange rate was trading near 1.05, EUR/SEK rose above 11.15, and EUR/NOK - around 11.70.