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DXY: consolidation before the Fed's decision

US Dollar Index, index, DXY: consolidation before the Fed\'s decision

US Dollar Index (DXY) trading idea on January 29, 2025

During Wednesday's Asian session, the dollar index (DXY) remains around 107.70, demonstrating consolidation amid low market activity. Investors remain cautious ahead of the meeting of the US Federal Reserve System (Fed), the results of which will be announced this evening.

According to the FedWatch Tool, the probability that the Fed will leave the key rate at 4.5% is estimated at 99.5%. However, the main focus will be on the press conference of the head of the regulator, Jerome Powell, who may shed light on the Fed's further steps in monetary policy.

With inflation accelerating, experts do not expect a quick transition to policy easing. Data on the consumer price index (CPI) in the United States shows an increase of 2.9% in December after 2.7% in November, which may force the Fed to adhere to a wait-and-see strategy. If the regulator confirms that rates will remain high for a long period, this may strengthen the dollar's position.

Trade risks remain an additional driver of the dollar's growth. On Monday, the US president announced plans to impose new import tariffs on computer chips, pharmaceuticals, steel, aluminum and copper.

Donald Trump's goals are:

• Relocation of production to the USA
• Support for American manufacturers
• Reducing dependence on foreign goods

In addition, the White House administration confirmed tough trade measures against Canada and Mexico, which will take effect on February 1. If the policy of protectionism continues to intensify, it may put pressure on global trade and support the dollar as a defensive asset.

We believe that the dollar index will continue to strengthen relative to other forex currency indices and we suggest placing a pending DXY order.

• Buy Stop: 107.90
• Take Profit: 109.00
• Stop-Loss: 107.50

In the coming days, the movement of the dollar index will depend on the Fed's rhetoric, the dynamics of inflation in the United States and the Trump administration's further steps in terms of international trade.

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Forex analysis and forecast for GBP/USD for today, February 18, 2025
GBP/USD, currency, Forex analysis and forecast for GBP/USD for today, February 18, 2025 In Tuesday's morning session, GBP/USD is declining, offsetting the previous day's growth, when the pair updated local highs on December 19th. Currently, the price is testing the key level of 1.2600 for a downward breakdown, while markets are awaiting the publication of data on the UK labor market today at 09:00 (GMT+2).The average wage is projected to accelerate from 5.6% to 5.9% in December. This may indicate an increase in inflationary risks. The unemployment rate is likely to rise from 4.4% to 4.5%, and the number of applications for unemployment benefits in January will rise from 0.7 thousand to 10.0 thousand.Today at 11:30 (GMT+2), the head of the Bank of England, Andrew Bailey, will make a speech in which he can comment on the prospects for further interest rate cuts. Earlier, he noted that the economic growth rate remains stable, despite the improvement in data for the fourth quarter of 2024.: GDP grew by 0.1% quarter-on-quarter and by 1.4% year-on-year. However, the regulator lowered its GDP growth forecast for 2025 to 0.75% from the previously expected 1.0%.At the last meeting of the Bank of England on February 6, the rate was reduced by 25 basis points to 4.50%. The accompanying statement indicated that inflation could accelerate to 3.7% in the third quarter of 2025, after which it would begin to slow down. At the same time, economic growth remains below expectations, but forecasts suggest an acceleration in the second half of 2025.Inflation data for January will be published tomorrow at 09:00 (GMT+2). The annual consumer price index is expected to rise from 2.5% to 2.8%, while monthly prices may decrease by 0.3%. The base rate of inflation may increase from 3.2% to 3.6%.Retail sales data for January will be released on Friday at 09:00 (GMT+2), and S&P Global business activity indices for February at 11:30 (GMT+2). The index in the manufacturing sector is expected to grow from 48.3 to 48.5 points, and in the services sector from 50.9 to 51.0 points. For comparison, similar data for the United States suggest a continuation of the level of 51.2 points in the manufacturing sector and an increase from 52.9 to 53.2 points in the services sector.Technical analysis of GBP/USD for todayOn the daily chart, the Bollinger indicator shows an expansion of the price range, which paves the way for further growth. The MACD indicator retains a strong buy signal. Stochastic has bounced off the maximum values and is turning down.Trading recommendations- Short positions: can be considered after breaking down the 1.2550 level with a target of 1.2450. It is recommended to set the stop loss at 1.2600.- The upward breakdown of the 1.2650 level will indicate the return of bullish dynamics. In this case, we open purchases with a target of 1.2776. The stop loss is 1.2600.
Feb 18, 2025 Read
Financial market analysis on February 18, 2025
EUR/USD, currency, USD/CAD, currency, EUR/GBP, currency, Financial market analysis on February 18, 2025 Today, markets are eagerly awaiting a meeting of American and Russian officials in Saudi Arabia for peace talks initiated last week by President Trump. Ukrainian President Zelensky has clearly stated that any negotiations on the status of Ukraine without its participation will be invalid. These events can have a significant impact on the geopolitical situation and investor sentiment.In Germany, the February ZEW index is published, reflecting expectations of the economic situation. In January, there was a positive surprise: the assessment of the current economic situation increased after a six-month decline. It will be interesting to see if this momentum, which has already been confirmed in the PMI and Ifo figures, continues. In the UK, labor market data for December and January are being released today. Particular attention is paid to the dynamics of wages, as wage growth remains a key factor for the Bank of England, despite the continued weakening of demand for labor. In Sweden, the main focus is on the detailed report on the consumer price index for January, published at 08:00 Central European time. The unexpected increase in core inflation (CPIF excluding energy) was impressive, which may indicate an increase in inflationary pressures and have serious consequences for the Riksbank's policy for 2025.In Australia, the Reserve Bank lowered its target rate by 25 basis points to 4.1%, the first reduction since 2020. This decision confirms that inflation is slowing, although the outlook remains uncertain.In Europe, the crisis talks in Paris among the leaders of the region underlined the commitment to the strategy of "security through strength" to protect Ukraine. At the same time, cooperation with Washington remains critical to achieving peace. NATO Chief Mark Rutte and the Prime Minister of the Netherlands stressed their readiness to provide additional security measures for Ukraine. Despite the US decision to negotiate with Russia without the participation of European allies, British Prime Minister Keir Starmer expressed his willingness to send peacekeeping troops provided American support. In response to these events, shares in the defense sector have reached new highs, and Denmark is considering setting up a fund for 50 billion Danish crowns to increase defense spending in the coming years.In Sweden, the monthly labor market survey is expected to be published today. It is predicted that the current weak employment rate will stabilize, but significant improvements in the unemployment rate are not expected – this is in line with the latest PES data, showing a steady unemployment rate and a return of the number of layoffs to historical averages after a sharp increase in early autumn.Stock, bond and currency marketsStock markets showed moderate growth yesterday, although trading volumes remained modest due to the closure of the American stock exchanges on the holiday. European markets gained about 0.5%, setting a new record closing level for the year. Shares of defense companies rose especially strongly – the Swedish SAAB recorded an increase of 16% in a day, and by 30% in a week. Despite this, the overall dynamics remained in standby mode, and the volatility measured by the VIX increased again this morning. Futures rose slightly in the American market.The debt market focuses on increasing government spending on defense and assistance to Ukraine. The EU is considering various options for financing these costs, from co–financing to temporarily suspending fiscal rules, as happened during the Covid-19 crisis. As a result, bond yields in Europe rose, but the difference between bond yields in the periphery and central countries remained relatively narrow, indicating that there was no apparent desire to flee to safety.In the foreign exchange market, the Japanese yen showed strong results, becoming the clear leader in the G10 group, which was facilitated by the unexpectedly strong growth of the Japanese economy in the fourth quarter of 2024. Taking into account the closure of the US markets due to the holiday, EUR/USD remained stable slightly below 1.05. The USD/CAD pair has stabilized just below 1.42, while attention on the Canadian side is shifting to January inflation data, which will be published at 14:30 Central European time. The EUR/GBP exchange rate dropped to around 0.8300. The announcement by the Riksbank to roll out payments of 7.9 billion Swedish kronor over two months is not expected to have a significant impact on the market. In addition, EUR/SEK dropped below 11.22 and EUR/NOK dropped below 11.64, reflecting pressure on the Scandinavian currencies.
Feb 18, 2025 Read
EUR/USD: we buy, but sales can start at any moment
EUR/USD, currency, EUR/USD: we buy, but sales can start at any moment FOREX Fundamental analysis for EUR/USD on February 18, 2025The idea that the fate of Europe can be decided without its direct participation is causing serious concern to European countries. This is especially true against the background of the threat of new tariffs from Donald Trump, which are already negatively affecting the EU economy. The Bundesbank predicts that US protectionism could reduce Germany's GDP by 1.5 percentage points. Combined with the uncertainty surrounding the peace talks on Ukraine, this is forcing the EUR/USD bulls to retreat.Direct negotiations between the United States and Russia are causing nervousness. Rumors that Donald Trump will not allow the EU to discuss the fate of Ukraine are increasing tensions. At the same time, Washington demands security guarantees from Europe, which forces the bloc to look for non-standard solutions. For example, the EU allowed countries to expand military spending, violating the 3% of GDP budget deficit rule. This was made possible by a clause that was previously applied only in the context of a serious economic crisis.Increased military spending may support Eurozone GDP, but Trump's tariffs remain a serious risk. To save the economy, the ECB is likely to continue easing monetary policy. According to Bloomberg forecasts, the regulator will reduce the deposit rate three times in 2025. However, some analysts are starting to lay expectations for the resumption of the monetary easing cycle only in March 2026, which is a negative factor for EUR/USD.The Fed's position and inflation risksThe Fed, in turn, has no plans to resume easing monetary policy until stable disinflation returns. FOMC official Christopher Waller believes that this approach is the right one. He hopes that the situation in 2024 will repeat itself: after the acceleration of inflation at the beginning of the year, the indicators will begin to slow down from the second quarter, which will allow the Fed to begin lowering rates in September.However, the chances of a repeat of last year's scenario are slim. Trump's tariffs and fiscal incentives may accelerate inflation, and his plans to reduce government spending, lower oil prices and treasury yields still look questionable. For example, a federal court in Washington has temporarily suspended mass layoffs at the Consumer Financial Protection Bureau.EUR/USD forecastSooner or later, the EUR/USD pair will return to a downward trend amid divergences in monetary policy and economic growth between the US and the EU. The only question is when it will happen. So far, our forex strategy of the day is to use bounces from the support levels of $1,044 and $1,042 to form long positions, and breakouts of these levels down to sell.
Feb 18, 2025 Read
AUD/USD analysis and forecast for today, February 17, 2025
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Feb 17, 2025 Read
Financial market analysis on February 17, 2025
EUR/USD, currency, GBP/USD, currency, USD/JPY, currency, EUR/NOK, currency, Financial market analysis on February 17, 2025 European leaders are meeting in Paris today to discuss the future of European security, support for Ukraine, and strengthen Europe's position in negotiations to end the war in Ukraine. This is happening against the background of US President Donald Trump's initiatives to start a negotiation process with Russia, while limiting the participation of European countries.Markets continue to monitor political developments, including a possible truce in Ukraine, upcoming elections in Germany on Sunday, and any signs of negotiations between Trump and Xi Jinping over the recent tariff hike.Economic data and market newsThe main event of the week will be the publication of PMI indices in most major countries, with the exception of China, on Friday. Special attention will be paid to data on the Eurozone to confirm whether the region's economy continues to recover due to rising real incomes and lower interest rates.Employment data for the month will be released in Sweden today. The labor market situation is expected to stabilize, but without a significant improvement in the unemployment rate. This is in line with last week's PES report, which showed a steady unemployment rate and a return of layoffs to historical averages.USA: Secretary of State Marco Rubio said that Ukraine and Europe will participate in any real negotiations to end the war. Peace talks will begin this week in Saudi Arabia between representatives of the United States and Russia. Ukraine's role in this process remains unclear.Japan: GDP for the fourth quarter exceeded expectations, reaching 2.8% (forecast: 1.0%), while consumption growth slowed less than expected, remaining at 0.1% (forecast: -0.3%). These data supported the yen and increased the likelihood of further rate hikes by the Bank of Japan.Eurozone: employment in the fourth quarter of 2024 increased by 0.1% in quarterly terms, which confirms the stability of the labor market. Spain showed strong employment growth of 1.0%, while in Germany the indicator remained at 0.0%.Norway: The Payroll Committee has published a report before the central negotiations. Inflation is expected to fall to 2.5% in 2025, which may limit the risks of wage growth. We expect four rate cuts in 2025.Stock, bond and currency marketsStocks: The U.S. and European stock markets were virtually unchanged on Friday, ending the week with gains of more than 1.5%. Europe has outperformed the United States in terms of dynamics (9% since the beginning of the year versus 4% in the United States). The VIX index fell below 15, which is the lowest since the end of January.Bonds: Global bond yields remain uncertain despite lower expectations for Fed rate cuts. The yield on 10-year US Treasury bonds is in the range of 4.4–4.6%.Currencies: The US dollar weakened last week as markets reduced their long positions on the greenback due to Trump's controversial policy. EUR/USD approached 1.05, while USD/JPY returned to the range of 152-153. The Scandinavian currencies also strengthened, with EUR/SEK below 11.25 and EUR/NOK near 11.65.
Feb 17, 2025 Read
EUR/USD: markets are tired of tariff threats
EUR/USD, currency, EUR/USD: markets are tired of tariff threats FOREX Fundamental analysis for EUR/USD on February 17, 2025The Fed, despite its reluctance to cut rates, only serves as additional support for the US dollar. The main force is the White House. With the arrival of the new president, forex trading on the news has started to play with new colors. However, as soon as the market stops taking Donald Trump's tariff threats seriously, and the Treasury announces a possible decline in 10-year bond yields, the EUR/USD pair begins to rise. The situation is aggravated by weak data on retail sales in the United States for January, which showed the worst dynamics in the last two years.Investors are tired of the constant uncertainty associated with tariff threats. Markets are increasingly inclined to believe that Trump's statements are more preparation for negotiations than real steps towards imposing duties. For the fourth week in a row, speculators have been reducing long positions in the dollar, which opens up the potential for further growth of EUR/USD.Market participants stop paying attention to the difference in the pace of monetary easing between the Fed and the ECB, believing that this factor has already been taken into account in current quotes. At the same time, a series of positive data on the Eurozone, including GDP growth of 0.1% in the fourth quarter, supports the "bulls" for EUR/USD.Markets are not afraid of the upcoming parliamentary elections in Germany on February 23. On the contrary, expectations of a victory for the opposition conservatives led by Friedrich Merz are seen as a positive factor for the euro, as this may lead to an expansion of government spending. In addition, rumors about the possible start of peace talks on Ukraine add to optimism, as the end of the conflict may contribute to the return of capital to the region.However, the euphoria may be short-lived. Donald Trump is not abandoning tariffs, but only postponing their introduction. The growth of GDP and business activity in the Eurozone is largely due to an increase in imports from the United States before the possible imposition of duties. In addition, peace talks between Moscow and Kiev are unlikely to end quickly, even with the participation of the United States.The Treasury's plans to reduce the yield on 10-year bonds by reducing government spending and changing the issue structure also look risky. Sooner or later, greed in the markets may give way to fear, which will return interest in the US dollar. This is likely to happen in the second half of March, so the euro bulls still have time to grow.Trading recommendationsLong positions on EUR/USD remain relevant. A confident breakout of the 1.0535 resistance will open the way to the targets at 1.0615 and 1.0710. However, the upward movement will be slower than in the second half of February, and as we approach these levels, the risks of a reversal and a return to a downward trend will increase.
Feb 17, 2025 Read
Financial market analysis on February 14, 2025
EUR/USD, currency, EUR/GBP, currency, S&P 500, index, Financial market analysis on February 14, 2025 Analysis of the macroeconomic situationKey data is being released in the United States today: January reports on retail sales and industrial production. Retail sales, which are the main driver of the country's economic growth, are of particular interest because they reflect the state of private consumption, which continues to play a crucial role in the economy.Industrial production will also be carefully analyzed by investors, as its dynamics will allow them to assess how stable the manufacturing sector remains in the current economic uncertainty.In addition to these data, investors' attention is focused on annual producer price figures, which exceeded expectations in January. The annual growth was 3.6% compared with the forecast of 3.3%, while the monthly figure coincided with the consensus and remained at 0.3%. These data have already had an impact on the bond market, contributing to lower yields.Updating the situation in EuropeIn the Eurozone, the focus has shifted to employment data for the fourth quarter of 2024. Employment is projected to show a slight increase of 0.1% in quarterly terms, with Spain playing a key role in maintaining positive momentum, which is important for the overall growth of the region. In the UK, data has been published indicating stronger–than-expected GDP growth in the fourth quarter of 2024 - 0.1% in the quarter, and the December figure was 0.4% month-on-month. The expansion in the industrial sector, services, and manufacturing had a positive impact, despite the downturn in construction. However, the decline in private consumption in the fourth quarter created additional pressure on the economy, although expectations for further recovery remain optimistic.In Switzerland, January inflation turned out to be higher than expected by the baseline indicator – annual growth was 0.9% instead of the projected 0.6%, while the overall consumer price index remained at 0.4%. These data may adjust the forecasts of the SNB, which at the last meeting expected inflation at 0.3% in the first quarter of 2025. In addition, new inflation statistics will be published in the coming days before the next SNB meeting, scheduled for March 20.In Norway, a survey on investment in the oil sector confirmed expectations of a gradual slowdown in investment in 2025, and a decline in investment is also forecast next year. This is important because the reduction in capital investment leaves room to stimulate economically sensitive sectors.Stock, debt and foreign exchange marketsStock markets continued to show moderate activity. On Thursday, there was a "risk-on" effect: US indices recovered due to the growth of technology sector stocks, and the VIX volatility index dropped to 15, reflecting an improvement in investor sentiment. In Europe, cyclical companies led the way in terms of growth, which supported both the S&P 500 and the Stoxx 600, increasing their performance by about 1.1%. However, small companies did not show significant improvement, and trading activity remained at the market level.In debt markets, global bond yields declined despite strong data on the US CPI. This is due to the fact that the expected increase in inflation rates and adjustments to statistical data did not have a significant impact on long-term indicators. The yield curve in the United States and Europe is showing moderate strengthening, and spreads between bonds of different countries have widened slightly.There have been significant fluctuations in the foreign exchange market. EUR/USD is gradually rising, thanks to reports of Zelensky's willingness to make territorial concessions to achieve peace, which supported the euro. The Swedish krona showed resilience, although it temporarily dropped to 11.22, then stabilized above 11.25. The Norwegian krone faced pressure due to weak internal data, which led to a temporary decrease in its ratio to the Swedish currency below 0.97. The Polish zloty continues to strengthen, reducing the euro's exchange rate against it to around 4.17.ConclusionToday's macroeconomic and market developments continue to have a significant impact on global financial markets. The publication of data on retail sales and industrial production in the United States, as well as updated inflation figures in Switzerland and survey results in Norway, create conditions for further monetary policy adjustments. At the same time, positive signals from the Eurozone and the UK indicate a possible recovery in economic activity. Investors should closely monitor data and geopolitical developments, as they will determine the dynamics of stock, debt, and currency markets in the coming weeks.
Feb 14, 2025 Read
Forex analysis and forecast for USD/CHF for today, February 14, 2025
USD/CHF, currency, Forex analysis and forecast for USD/CHF for today, February 14, 2025 In Friday's morning trading session, USD/CHF is showing signs of recovery after yesterday's decline. At the moment, the pair is testing the 0.9045 level, trying to break up, while market participants are waiting for new drivers to arrive that can set the direction of movement.Today, investors will closely monitor a number of macroeconomic releases from the United States. At 15:30 (GMT+2), retail sales data for January is published, while it is expected that the overall figure may change from 0.4% to -0.1%, and excluding the automotive sector – from 0.4% to 0.3%. Then, at 16:15 (GMT+2), attention will be focused on statistics on industrial production, which is projected to slow down from 0.9% to 0.3%. Additionally, the markets continue to analyze inflation data: the producer price index rose from 3.3% to 3.5% year-on-year, exceeding expectations of 3.2%, and the monthly indicator changed from 0.5% to 0.4% compared with the forecast of 0.3%. Excluding food and energy products, the base index slowed from 3.7% to 3.6% (forecast – 3.3%), and the monthly index decreased from 0.4% to 0.3%. These figures correspond to the Fed's rhetoric, which is confirmed by Jerome Powell, noting that with signs of a recovery in inflation and positive economic activity, there is no need for urgent measures to lower rates.On Thursday, data on consumer inflation in Switzerland was published, where annual growth decreased from 0.6% to 0.4%, which is in line with expectations. The monthly indicator remained at 0.1%. Today, at 09:30 (GMT+2), it is planned to publish data on producer and import price indices, where analysts predict a slight increase of 0.1% after zero dynamics in December. UBS Group AG economists point out that if the United States imposes high customs tariffs on Swiss exports, the pharmaceutical sector could suffer the most, as it accounts for 60% of exports, which significantly exceeds the volume of imported products. In the long term, this may encourage the relocation of pharmaceutical companies' manufacturing and research facilities to the United States.USD/CHF technical analysis for todayOn the daily chart, the Bollinger Band indicator shows a transition to the horizontal phase, which indicates stable but not intense price movement within a fairly wide range. The MACD indicator continues to decline and retains a sell signal. Stochastic is rapidly approaching the lower levels, which indicates the risks of oversold US dollar in the short term.If the 0.9000 level breaks down, it is recommended to consider short positions with a target mark of about 0.8929, and a stop loss can be placed at 0.9037.If the price breaks through and fixes above 0.9075, a reversal towards growth is possible, and we will consider the formation of long positions with a target level of 0.9153 and a stop loss at 0.9037.
Feb 14, 2025 Read
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