EUR/USD: dollar wins in any election outcome

AUD/USD analysis on January 27, 2025The Australian dollar remains stable after the publication of the latest macroeconomic data. The index of business activity in the manufacturing sector rose to 49.8 points in January (previous reading: 47.8), but remains in the stagnation zone. In the service sector, the index dropped from 50.8 to 50.4 points, approaching the critical value of 50 points. Due to the celebration of Australia Day, today's market activity is limited, and the further movement of the pair will depend on new fundamental drivers.The US dollar index remains near the level of 107.50. The dollar is supported by geopolitical events. US President Donald Trump has intensified his aggressive rhetoric on trade policy. On Sunday, January 26, there was a diplomatic conflict with Colombia over the deportation of illegal migrants. Colombian President Gustavo Petro refused to allow American planes to land, accusing the United States of improper treatment of deportees. In response, Donald Trump threatened to impose 25% duties on all goods from Colombia, with a possible increase to 50%. Despite the escalation, the parties quickly came to an agreement, which underlined the seriousness of the US intentions in matters of trade policy.Against the background of domestic statistics, the continued growth of sales in the secondary housing market has become a positive signal for the US economy. In December, volumes increased by 2.2% and reached 4.24 million homes against 4.15 million a month earlier. This indicates a partial recovery in the real estate markets, one of the weakest sectors of the American economy.AUD/USD technical analysis for todayOn the daily chart, the AUD/USD pair is trying to exit the descending channel, the boundaries of which are defined by the levels 0.6280–0.6140.Technical indicators give a buy signal• The moving averages of the alligator indicator are directed upwards, increasing the discrepancy with the signal line.• The Awesome Oscillator (AO) histogram has completely moved into the positive zone, confirming the bullish momentum.Trading recommendations• Long positions: open after the breakdown and consolidation above the level of 0.6330 with a target at 0.6450. The stop loss is set at 0.6280.• Sales: they will be relevant if they decrease and consolidate below 0.6260. The nearest target is 0.6140. The stop loss is at 0.6320.

Today, the markets' attention is focused on the Ifo business climate index in Germany. Investors are interested in whether the Ifo data will support the positive dynamics unexpectedly shown by the German PMI on Friday?This week promises to be a busy one. Central bank meetings are in the spotlight. On Wednesday, the Riksbank (Sweden), the Bank of Canada and the US Federal Reserve will announce their rate decisions. The ECB meeting will be held on Thursday. In addition, significant macroeconomic data is expected to be released - the preliminary GDP of the Eurozone for the 4th quarter, data on the GDP of individual countries, as well as preliminary inflation for January in Spain (on Thursday). Inflation data in Germany and France for January will be published on Friday. In the US, the key events will be durable goods orders (Tuesday), Q4 GDP (Thursday) and PCE inflation (Friday).Key events of the past daysChinaChina's national PMI indexes showed a decline in January. The composite index fell to 50.1 (previous reading: 52.2), due to a slowdown in both the manufacturing and service sectors. The manufacturing index dropped to 49.1 (expectation: 50.1, previous reading: 50.1), the lowest since August 2024. Chinese authorities said the decline was partly due to the upcoming holidays. Data on industrial profits were also published, which decreased by 3.3% in 2024.GeopoliticsThe United States has confirmed the extension of the ceasefire between Israel and Lebanon until February 18. The initial agreement was reached in November, ending the 14-month conflict between Israel and Hezbollah.PMI in EuropeOn Friday, the key event was the release of PMI data for January. In the Eurozone, the composite index rose to 50.2 (expectation: 49.7, previous value: 49.6), indicating a recovery in business activity. The main contribution was made by the manufacturing sector, whose index rose to 46.1 (expectation: 45.3). The service sector PMI remained virtually unchanged at 51.4, supporting expectations of 0.2% QoQ GDP growth in the first quarter.UK PMIThe UK PMI data also exceeded forecasts. The composite index rose to 50.9 (expectation: 50.1), indicating an improvement in business activity, especially in the service sector. However, continued price pressures remain a challenge for the Bank of England. Despite this, analysts expect a 25bp rate cut at the next meeting on February 6..US PMIIn the USA, the dynamics of the PMI turned out to be mixed. The composite index dropped to 52.4 amid an unexpected drop in the service index to 52.8 (expectation: 56.5), while the manufacturing PMI rose to 50.1, beating forecasts. In the manufacturing sector, there is a recovery in demand in both the domestic and foreign markets, which indicates stabilization.The situation on the financial marketsStock marketsGlobal stock indexes declined on Friday after eight days of gains. In the US, the Dow, S&P 500, Nasdaq and Russell 2000 each lost 0.3–0.5%. Asian markets are mostly trading in the red this morning. The focus is on the technology sector, where concerns are growing about competition from DeepSeek AI, which could affect U.S. leadership in technology and chips.CurrenciesOn the Forex market on Friday, the EUR/USD pair overcame the 1.05 level on the back of strong PMI data from the Eurozone. Nevertheless, the US dollar strengthened due to the resumption of tariff threats from Donald Trump. The pound showed some correction, despite the weak start to the year.BondsEuropean ten-year bond rates rose by 3 bps on Friday thanks to unexpectedly strong PMIs, which lowered expectations for further ECB rate cuts.This week will be a key week for understanding the direction of central banks' monetary policy. Investors are closely watching the rhetoric of the Fed, the ECB and other regulators, as well as data on inflation and economic growth.

The US dollar is showing moderate growth against the Swiss franc and is gradually recovering after a slight decline at the end of last week. At the moment, USD/CHF is testing the 0.9070 level for an upward breakout. However, pressure on the dollar remains, largely due to weak US macroeconomic data released last Friday.The index of business activity in the United States services sector in January fell sharply from 56.8 to 52.8 points, which turned out to be significantly worse than analysts' expectations (56.5 points). In the manufacturing sector, on the contrary, there was a recovery from 49.4 to 50.1 points, which exceeded expectations (49.6 points). The markets also noticed a decrease in the consumer confidence index from the University of Michigan from 73.2 to 71.1 points.Market expectationsThe key event this week will be the US Federal Reserve meeting on Wednesday. However, most investors are confident that the regulator will keep the interest rate at the current level of 4.50%.Meanwhile, Donald Trump's rhetoric about interest rates and duties has again attracted the attention of market participants. On Friday, the president expressed a desire to see further rate cuts and announced a softening of his position on import duties. However, since February 1, new tariffs for Mexico and Canada still come into force, and last weekend similar measures were introduced against Colombia.Switzerland is expected to publish data on foreign trade for December on Thursday. The previous figures showed an increase in exports to 23.68 billion francs, while imports rose to 18.26 billion francs, which allowed the trade balance to reach a surplus of 5.42 billion francs.USD/CHF technical analysis for todayOn the daily chart, the Bollinger Band indicator maintains neutral dynamics. The MACD indicator warns of the weakness of the downtrend: Stochastic, having pushed off from the oversold zone (the "20" level), demonstrates a confident upward movement.Trading recommendations• Buy - a confident breakout of the 0.9075 level will be a signal for the formation of long positions with a target of 0.9153. Recommended stop loss level: 0.9037.• Sale - in case of a rebound from the 0.9075 level and a breakdown down to 0.9037, it is advisable to open short positions with a target of 0.8957. Recommended stop loss: 0.9075.The market continues to look for new drivers for movement. The key factors of this week will be the Fed's decisions and the publication of data on Switzerland's foreign trade.

FOREX fundamental analysis for EUR/USD on January 27, 2025Donald Trump continues to be a master of high-profile statements, which often have little real action behind them. His strategy of "diplomacy under pressure" has repeatedly demonstrated its essence. As a rule, these are threats of large-scale tariffs or promises of drastic measures that are eventually postponed in order to reach a compromise.All this creates instability that resembles the situation in 2017, when the US dollar began to lose ground after an initial rise caused by the Republican's election victory.The example of Colombia vividly illustrates this tactic. After Bogota refused to accept deportation migrants by military aircraft, Trump threatened tariffs of 25%, which could rise to 50%. However, the reality turned out to be less dramatic - Colombia agreed to the US terms, and the tariffs were never imposed.Meanwhile, hedge funds and asset managers have been building up long positions in the dollar since the fall and have reached their highest levels since 2019. There are several reasons:1. Fears of trade wars and the possible imposition of tariffs immediately after Trump's inauguration.2. The gap in the economic growth rates of the United States and the Eurozone.3. The ECB's projected reduction in the deposit rate against the background of the Fed's stable policy.However, the market is starting to change its vision. Trump's words are loud, but his actions are not so radical. The unexpected improvement in business activity in the Eurozone stands in stark contrast to the slowdown in the US PMI. Reducing the gap in economic growth between regions is becoming a strong argument in favor of strengthening the euro against the dollar.Against this background, the market lowered expectations for the scale of the ECB's monetary easing from 95 to 88 basis points, which strengthened the position of European bonds, supported the euro and changed priorities in forex hedging. Three key factors that previously supported the "bears" on EUR/USD began to lose their strength. This led to the collapse of long positions in the dollar and triggered a correction of the EUR/USD pair.EUR/USD: how long will the correction last?The market situation remains ambiguous. On the one hand, Trump's threats to cut Fed rates and impose tariffs are undermining confidence in the dollar. On the other hand, the understanding that many of the president's statements remain only words weakens the effect of such threats.The probability of introducing some tariffs remains high, which may turn EUR/USD back into a downward trend. If we look at John Murphy's technical analysis, the pair's inability to gain a foothold above 1.047 or its rebound from the level of 1.054 will be a signal for the formation of short positions.EUR/USD technical analysisEUR/USD continues to trade in a short-term uptrend. At the moment, the pair is correcting downwards, probably to the support area 1.0429 - 1.0420. After testing this zone, it will be possible to consider purchases with the first target at 1.0471, and the second target near the January 24 high of 1.0521.The trend line is shifting to 1.0383 - 1.0369. If the price corrects to this area, then long positions can also be considered from it.If the pair gains a foothold above last Friday's high, the growth may continue to the Golden Zone of 1.0554 - 1.0545.

AUD/USD analysis on January 24, 2025On Friday, AUD/USD continues to adjust upwards and is trading around 0.6315, showing moderate growth against the background of the weakening of the US currency.The Australian dollar remains neutral after the release of key macroeconomic data. In December, the index of business activity in the Australian manufacturing sector rose from 47.8 to 49.8, but still remains below the stagnation level (50 points), indicating a slowdown in the recession. In the services sector, the index dropped from 50.8 to 50.4, confirming the weak growth that has been observed over the past four months.Analysts at Bank of America Corp. Inflation is forecast to slow down in Australia in the fourth quarter. According to preliminary estimates, the consumer price index may grow by only 0.2% on a monthly basis, which will lead to a decrease in the annual value from 2.8% to 2.3%. The main factor in slowing down inflation remains the reduction in the cost of electricity.The US Dollar Index (USDX) is trading at 107.50, well below its annual high of 109.60. Investors' attention has shifted to the US labor market.Initial applications for unemployment benefits increased from 217,000 to 223,000 in a week.The total number of applications increased from 1,853 million to 1,899 million.Despite the inauguration of Donald Trump as president of the United States, there have been no significant changes in economic policy so far, which increases uncertainty in the market.AUD/USD Technical Analysis for todayOn the daily chart, the pair is trying to exit the descending channel with dynamic boundaries of 0.6280–0.6150.Technical indicators signal a possible increase:The EMA lines of the Alligator indicator are pointing up and approaching the signal line.The Awesome Oscillator indicator (AO) is approaching the transition to a positive zone.Trading RecommendationsLong positions: it is recommended to open when the price breaks and fixes above the level of 0.6350 with a target of 0.6450. Set the stop loss at 0.6300. Implementation period: 7 days or more.Short positions: possible when the level of 0.6280 breaks down with a target of 0.6150. The stop loss is 0.6350.The current dynamics indicate that the market is ready for a possible trend reversal, which makes technical levels key for determining the further direction of the pair's movement.

The USD/JPY pair found strong support at 154.80, after which it was able to turn around and break through the important pivot resistance levels of 155.50 and 155.80, gaining a foothold in the uptrend zone.On the 4-hour chart, it is noticeable that the pair overcame the 38.2% Fibonacci retracement level from a downward movement from a high of 158.87 to a low of 154.77. Quotes also broke through the 200-period simple moving average (green line) and approached the 100-period moving average (red line), which underlines the growing bullish momentum.Resistance levelsAt the moment, the pair is facing the first significant obstacle in the area of 156.80, which coincides with the 50% Fibonacci retracement level from the aforementioned downward movement.The next key resistance is at 157.30. A confident breakdown of this level can set the direction for further growth and allow the pair to reach resistance at 158.00. Consolidation above the last level will create conditions for the continuation of the uptrend.Support levelsThe nearest support for the pair is located near the level of 155.80. In case of further decline, the 155.50 zone will become the next key support level. If sellers overcome this mark, USD/JPY may fall to 155.00, which will increase the downward pressure.ConclusionsThe USD/JPY pair is showing a steady upward trend, but further movement depends on the ability to break through resistance at the levels of 156.80 and 157.30. In the event of a correction, market participants' attention is focused on the key supports of 155.80 and 155.50, which will determine the likelihood of a deepening pullback.

In Friday morning trading, USD/CAD shows a moderate decline, regaining some of yesterday's strengthening. The quotes have gone down to 1.4335 and are testing the level for a downward breakout. Market participants are focused on the upcoming macroeconomic statistics releases from the United States.Today at 16:45 (GMT+2), investors' attention will be focused on the S&P Global business activity indices for January. A moderate correction from 49.4 to 49.6 points is expected in the manufacturing sector, while a decrease from 56.8 to 56.5 points is expected in the services sector. These data are unlikely to have a significant impact on the US dollar. Additionally, the University of Michigan Consumer Confidence Index will be published at 17:00 (GMT+2). The forecast is 73.2 points.The impact of monetary policyTraders' main focus is on the actions of Central Banks. Next Wednesday at 21:00 (GMT+2). The US Federal Reserve System (Fed) will announce the decision on the interest rate. Most market participants do not expect changes in the monetary policy rate, but the regulator's comments may set the tone for the dollar.At the same time, the Bank of Canada, whose meeting is scheduled for today at 16:45 (GMT+2), may decide to reduce the key interest rate by 25 basis points. This move will put pressure on the Canadian dollar. Weak macroeconomic indicators indicate the likelihood of such a scenario. In December, the consumer price index in Canada slowed from 1.9% to 1.8% in annual terms, and the monthly value decreased from 0.0% to -0.4%. Retail sales data for November also turned out to be worse than expected: the overall figure remained unchanged, while sales excluding cars decreased by 0.7%, instead of the projected 0.1% increase.USD/CAD technical Analysis for todayOn the daily chart, the Bollinger indicator indicates a flat, but the price range remains wide enough to match the current market volatility. The MACD continues to decline, maintaining the sell signal — the histogram remains below the signal line. Stochastic stabilized at the "20" mark, signaling a possible oversold pair in the short term.Trading Recommendations1. Sale:Open positions after the breakdown of the 1.4300 level downwards.Target is 1.4200.Stop loss is 1.4350.2. Buy:Consider long positions after a rebound from the 1.4300 level and a breakdown of resistance at 1.4350.Target is 1.4435.Stop loss is 1.4300.The current dynamics of the USD/CAD pair indicates the need for careful monitoring of the news background and monetary decisions of Central Banks, as they remain the main drivers of the exchange rate movement.

FOREX fundamental analysis for EUR/USD on January 24, 2025When the EUR/USD exchange rate depends solely on the rhetoric of the US president, the volatility of currency pairs is inevitable. Morgan Stanley analysts note that there are still enough "bulls" for the dollar in Forex, but their positions are starting to weaken. The reason is the slowdown in inflation, which may prompt the Federal Reserve to lower interest rates. In addition, the lack of progress in fiscal negotiations in Congress and a softer US trade policy also threaten the dollar's position. However, the dollar needs a trigger, and recently this role has been played by Donald Trump's statements.Davos and Trump's ambitionsAt the World Economic Forum in Davos, the US president stressed that businesses should produce products in America, promising the lowest tax rates in the world for those who fulfill this condition. Otherwise, according to him, tariffs will follow. In addition, he demanded that OPEC lower oil prices, arguing that this would slow down inflation.Donald Trump attributes lower energy prices to lower inflation, arguing that this will create conditions for lower Fed rates. Although energy resources did make a significant contribution to the growth of the PCE price index in 2024 (by 40%), core inflation remains above 3%. According to forecasts by Wall Street Journal experts, the inflation rate in 2025 may rise to 2.7%, due to the pro-inflationary policy of the Trump administration.Global risk appetite and EUR/USD movementTrump's harsh statements about oil and ending the conflict in Ukraine have caused a surge of optimism in global stock markets. US indices have reached new historical highs, and global risk appetite has supported EUR/USD.The US president also stated his commitment to ending the armed conflict in Ukraine, emphasizing the role of OPEC, which, according to him, hinders the achievement of peace by its actions. If the situation in Eastern Europe stabilizes, this could be a significant factor in strengthening the euro. Recall that in 2022, the EUR/USD exchange rate fell below parity due to the energy crisis in Europe. The resumption of gas supplies and lower prices could stimulate the economic recovery of the Eurozone.The euro was also supported by Trump's words that he does not seek to impose new tariffs against China, noting that he has "always had good relations" with Xi Jinping. However, investors remember how in 2018-2019, similar comments by the US president were accompanied by the imposition of duties.EUR/USD technical analysisEUR/USD is growing and approaching the maximum on January 22. If the quotes consolidate above the extreme, then buyers will try to break through the Target zone of 1.0481 - 1.0453. If successful, the growth will continue to the Golden zone of 1.0554 - 1.0545.We will open new purchases in the uptrend format on a corrective decline to the support areas of 1.0365 - 1.0356 and 1.0319 - 1.0305. The main target of buyers will be the maximum on January 22.Forecast and trading strategy for EUR/USDReactions to Donald Trump's statements are difficult to predict due to his volatile rhetoric, but markets continue to adapt. Expectations for a Fed rate cut remain moderate, and an end to the conflict in Ukraine and lower oil prices still look like long-term prospects.Trading PlanOur forex trading strategies give preference to EUR/USD sales on any corrective growth. Optimal levels for forming short positions:• 1,047• 1,054