FOREX fundamental analysis for EUR/USD on January 20, 2025
Donald Trump's political promises are shaping traders' expectations, leading to a record increase in net longs for the US dollar to the levels of 2019. The President-elect declares his intention to deal with every crisis with unprecedented speed and determination. However, such statements cause concern, because something can go wrong. It is possible that the outlook for EUR/USD will be less gloomy than previously expected.
From the point of view of macroeconomics, the reasons for strengthening the dollar are obvious. The United States demonstrates greater resilience compared to the European economy. The International Monetary Fund forecasts US GDP growth of 2.8% in 2024, while only 0.8% is expected for the Eurozone. The consensus forecast of 73 Wall Street Journal experts predicts an acceleration of inflation in the United States to 2.7% by the end of 2025, which exceeds October expectations of 2.3%. By the end of 2026, the personal consumption expenditure index is expected to reach 2.6%, with the tariffs imposed by Trump adding 0.5 percentage points to this figure.
Experts predict an increase in import duties for China by 23 percentage points and by 6 percentage points for other countries, which will lead to an average tariff increase of 10 percentage points. These changes may be untimely due to the continuing acceleration of inflation.
Against the background of these expectations, the probability of a Fed rate hike in 2025 has increased to 25%, although Wall Street Journal analysts predict a rate cut of 50 bp. These factors should help strengthen the dollar. However, the 8% rally in the fourth quarter hints that many positive factors are already embedded in the current dollar exchange rate. As a result, extended speculative long positions on the USD index can bring losses to traders, rather than become a reason for joy. If something goes wrong, EUR/USD will have an opportunity for correction.
In the early days of the Trump presidency, investors' attention will focus on tariffs. Unlike in his first term, when he started with fiscal stimulus to support the economy before trade wars, Trump now risks weakening the U.S. economy before stimulating its growth with tax cuts. If the economy starts to slow down, the Fed may resume the easing cycle, which will be a positive signal for EUR/USD.
In my opinion, the gradual introduction of tariffs will initially weaken the dollar, and then lead to its growth. On the contrary, a sharp increase in import duties may push EUR/USD to parity, followed by a recovery. At the moment, it is advisable to consider a two-way strategy: buy EUR/USD from 1.0335 and sell from 1.0255.
EUR/USD technical analysis
EUR/USD is trading in the corridor between the levels of 1.0315 - 1.0260. The short-term trend remains downward. Near the level of 10315, we will consider selling the asset with a target of 1.0260. If the price fixes below the 1.0260 mark, it will be possible to form new sales with a target at the minimum of January 13.
The option for buying involves a breakdown and price consolidation above the level of 1.0315. In this case, long positions with the main target at the upper target zone of 1.0481 - 1.0453 become relevant.
USD/CHF analysis on January 20, 2025On Monday, USD/CHF is working out a correction, signaling a possible continuation of growth. The asset is trading around 0.9127, against the background of low volatility of currency pairs due to the weekend in the United States.In December, the Swiss producer price index remained at 106.3 points, 0.9% lower than in December 2023, with an annual average of -1.7%. The increase in the cost of cocoa, chocolate products and coffee was offset by lower prices for pharmaceutical products, metals, semi-finished products and building materials. The slowdown in inflation in the manufacturing sector creates favorable conditions for the economy and supports the intentions of the Swiss National Bank to continue easing monetary policy.Despite the stability of the Swiss franc, recent fluctuations in the US dollar exchange rate have had little effect on the dynamics of USD/CHF. Currently, the US dollar index is at 108.90, approaching the annual high of 109.90. Investors' attention is focused on the inauguration of Donald Trump, who promises immediate changes in domestic policy. In addition, data on the US real estate market for December show a sharp increase in the volume of new home construction to 1,499 million, and the number of building permits issued amounted to 1,483 million, which reduces the likelihood of an early change in the monetary policy of the Federal Reserve System.USD/CHF technical analysis for todayOn the daily chart, the pair is approaching the resistance line of the ascending channel with dynamic boundaries of 0.9300–0.9020. Technical indicators indicate a possible strengthening of the buy signal. The lines of the Alligator indicator are diverging, and the histogram of the Awesome Oscillator (AO) indicator is forming correction bars in the positive zone.Trading Recommendations- long positions when the level of 0.9170 breaks up with a target of 0.9310. The stop loss should be set at 0.9120.- selling is advisable when the level of 0.9080 breaks down with a target of 0.8910. It is recommended to place the stop loss at the level of 0.9130. 
During Monday's Asian session, USD/JPY is correcting from local highs, trading near the level of 156.12. After a sharp rise last week, the US dollar came under pressure amid expectations of the inauguration of Donald Trump, scheduled for today. The new president promises to impose increased import duties on goods from Mexico, Canada and China, which is causing concern in the market.The Japanese yen, in turn, found support in positive macroeconomic statistics. Orders for machinery products increased by 10.3% year-on-year in November, exceeding the 5.6% increase a month earlier. On a monthly basis, the indicator rose by 3.4%, with a forecast decline of 0.4%. Although industrial production decreased by 2.2% in November, it was slightly better than expected. In annual terms, the decrease was 2.7%, compared to 2.8% previously. The percentage of production capacity utilization fell by 1.9%, and the index of activity in the service sector decreased by 0.3%, which also turned out to be worse than expected.US industrial production data released on Friday showed an increase of 0.9% in December, which exceeded forecasts of 0.3%. All this adds interest to the upcoming meeting of the Bank of Japan on January 24. It is expected that the rate will be raised from 0.25% to 0.50% and will reach its maximum since 2008, which may lead to further tightening of monetary policy. This can be supported by rising wages and the desire to achieve the 2.0% inflation target.The head of the Bank of Japan, Kazuo Ueda, is likely to confirm his readiness for further adjustments if the Trump administration's policy does not create additional risks for the Japanese economy. Friday's inflation statistics may show an acceleration of the base index to 3.0%, which will be an additional factor in favor of the "hawkish" rhetoric.USD/JPY technical analysis for todayThe Bollinger Band indicator on the daily chart signals an expansion of the range, while the price returns to its lower limit. The MACD indicator confirms the potential for decline, approaching the zero level from above. Stochastic is turning up, which may indicate a possible development of short-term upward dynamics.It is advisable to form short positions when breaking down the level of 155.50 with a target of 154.50 and a stop loss at 156.00.The return of the uptrend and the activation of purchases will be indicated by an upward breakdown of the level of 156.50. In this case, the target of buyers becomes the level of 157.50. We will set the stop loss at 156.00. 
During Asian trading on Thursday, the pound weakened against the US dollar, retreating to the level of 1.2208, after violent movements the day before.Investors are following the inflation data for December with interest. The monthly figures showed an increase from 0.1% to 0.3%, while the annual figures decreased from 2.6% to 2.5%, which turned out to be worse than expected at 0.4% and 2.6%, respectively. Core inflation rose from 0.0% to 0.3%, but decreased from 3.5% to 3.2% year-on-year. Experts warn that inflationary pressures may intensify in the coming months due to rising energy prices and tax indexation under the new Labor budget. In the first half of the year, inflation may reach 3.0%, which is significantly higher than the Bank of England's target of 2.0%.Economists polled by Reuters expect the Bank of England to cut rates four times this year to support the economy. However, the growth of inflationary risks may force the regulator to slow down the pace of monetary expansion. The majority of respondents predict a reduction in rates by 25 basis points, to the level of 3.75%.In the US, annual inflation accelerated from 2.7% to 2.9% in December, which confirms the validity of the Fed's cautious approach to lowering rates in 2025. Monthly CPI figures increased from 0.3% to 0.4%, while the base indicators slowed from 3.3% to 3.2% in annual terms and from 0.3% to 0.2% on a monthly basis. The index of business activity in the manufacturing sector of the Federal Reserve Bank of New York in January fell from 2.1 to -12.6 points, significantly worse than the forecast of 3.0 points.Today, the attention of British investors is focused on the GDP data for November. An increase of 0.2% is expected after a decrease of 0.1% in the previous month. Industrial production is projected to grow by 0.1% after falling by 0.6%, but the annual dynamics may worsen from -0.7% to -1.0%.On the daily chart of GBP/USD, the Bollinger Band indicator shows a downward trend with a slight narrowing of the range from above. The MACD warns of a possible upward reversal, while the Stochastic retains short-term growth potential.After breaking down the 1.2150 level, it is recommended to open short positions with a target of 1.2036 and a stop loss at 1.2200.For purchases, you should wait for the breakout of the 1.2261 level. The target is 1.2400. Stop loss at 1.2200. 
FOREX Fundamental analysis for EUR/USD on January 16, 2025The first public statement by Scott Bessent, a candidate for the post of treasury secretary, that the United States should preserve the dollar's status as the world's reserve currency, instantly reversed the growth of EUR/USD observed after the release of inflation data in the United States. It seems that the administration of Donald Trump does not plan to significantly weaken the dollar, which creates room for further depreciation of the main currency pair.At first glance, the data on the consumer price index (CPI) looked ambiguous. Annual inflation accelerated from 2.7% to 2.9%, while monthly inflation showed the best result in a year. However, the main contribution to the price increase was made by a 4% increase in gas prices. At the same time, core inflation decreased from 3.3% to 3.2% in annual terms and to 0.2% on a monthly basis, the slowest growth in the last six months.The markets immediately reacted to this data: Treasury bond yields declined, stock indexes showed the best dynamics since the election of Donald Trump, and forecasts for the Fed rate were revised. The probability that the rate will remain unchanged in 2025 has dropped from 26% to 16%, and the probability of more than one reduction has increased from 35% to 50%.Comments from FOMC representatives added volatility to currency pairs. John Williams, President of the Federal Reserve Bank of New York, confirmed the stability of the disinflationary trend. His colleague from the Federal Reserve Bank of Richmond, Thomas Barkin, said that the latest data confirms the movement of inflation towards the target level. Austan Goolsbee of the Federal Reserve Bank of Chicago noted that inflation dynamics continues to improve.Against this background, the EUR/USD rally seemed logical. An increase in global risk appetite, lower yields and an increased likelihood of a resumption of the Fed's easing cycle supported the euro. In addition, speculators, amid rumors of the gradual introduction of import tariffs, began to reduce long positions in the dollar.However, even if the Fed starts cutting rates, it will be slower than other central banks. ECB Chief Economist Philip Lane expressed concern about the possibility of deflation returning to the Eurozone, and ECB Vice President Luis de Guindos stated the priority of economic growth over the return of inflation to the target level, which indicates the continuation of the cycle of monetary policy easing by the European regulator.The trader's trading plan for EUR/USD assumes that both the dollar and the euro have their weaknesses, which increases the likelihood of consolidation of the pair. However, if Donald Trump starts actively implementing his election promises, the EUR/USD bulls will have to retreat. The strategy of selling EUR/USD on growth with targets around 1.012 and 1 remains relevant. 
GBP/USD trading idea on January 15, 2025On Wednesday in the Asian session, GBP/USD shows a slight decrease, trading near the level of 1.2200. The pound remains near multi-month lows, due to the fall in the value of British government bonds and weak macroeconomic statistics, which increase the likelihood of further monetary easing by the Bank of England.Investors are evaluating the UK inflation data released this morning. In December, the consumer price index increased by 2.5% year-on-year, which is lower than the forecast of analysts who expected growth to 2.7%, and lower than the November figure of 2.6%. On a monthly basis, inflation increased by 0.3% against 0.1% in November. Core inflation, excluding volatile categories such as food and energy, increased by 3.2% year-on-year compared with the previous value of 3.5%. These data may give the Bank of England grounds to resume interest rate cuts in order to stimulate the economy and mitigate the effects of the new government's tax reform. Sarah Breeden, Deputy Governor of the Bank of England, noted last week that current macroeconomic data support the idea of a gradual rate cut. In this regard, UBS analysts expect that in February the British regulator may continue the cycle of monetary expansion.Additional pressure on the pound is exerted by the crisis of the UK debt market. The yield on 30-year bonds has reached its highest in 26 years, raising concerns about the country's fiscal sustainability. Investors are actively selling off British bonds amid rising government debt, slowing economic growth and ongoing inflation risks. Rising yields have already increased the government's debt service costs, which may lead to the need for higher taxes and government spending cuts. This worsens the prospects for the British economy and increases pressure on the GBP/USD pair.Pending GBP/USD orders:Sell Stop at 1.2160 with a target at 1.1900 and a stop loss at 1.2250. 
AUD/USD analysis on January 15, 2025By the middle of the week, AUD/USD rose to 0.6192, reflecting cautious optimism in the market.At the same time, traders are cautious ahead of the publication of December inflation data in the United States, which may affect the prospects for interest rate cuts by the Federal Reserve in 2025.Earlier, the Australian dollar partially recovered its positions after the reaction of the US dollar to the statistics on the producer price index.Key events for AUDOn Thursday, Australia will publish an employment report, which is an important indicator of the state of the labor market. These data are crucial for adjusting the forecasts for interest rate dynamics of the Reserve Bank of Australia (RBA).At the end of the month, fresh inflation data for the fourth quarter of 2024 will be published. These indicators will play a key role in shaping expectations regarding the upcoming RBA meeting and its decisions on borrowing rates.Currently, investors estimate the probability of a rate cut at the February RBA meeting at 70%. In the case of such a scenario, the rate may decrease by 25 basis points from the current 4.35% per annum. The market has already taken this opportunity into account in prices.Nevertheless, the continuing uncertainty about the future policy of the RBA and the target rate level deters investors from taking active action, limiting the AUD's growth potential.AUD/USD technical analysis for todayOn the 4-hour chart, the AUD/USD pair is forming an upward wave with a target at 0.6211. It is expected that this level will be tested today, after which a decline to 0.6161 is possible. A consolidation zone is likely to form around this mark. If the pair breaks through this zone up, a correction to 0.6290 may begin. In case of a breakdown downwards, a new wave of decline is possible with a target of 0.6116. The MACD indicator supports this scenario, as its signal line is below the zero mark, but pointing upwards.On the hourly chart, the pair is forming a wave of growth towards 0.6211, which is expected to be reached today. Then a correction wave to 0.6161 is possible. The Stochastic oscillator confirms this scenario, as its signal line is above the 50 mark and is moving up to 80.ConclusionThe recent recovery of the Australian dollar is being held back by uncertainty surrounding the RBA's future decisions. Key internal data, including employment and inflation figures for the fourth quarter, significantly affect market expectations. The main forex indicators point to the short-term growth potential of AUD/USD, however, further success of buyers will depend on clarity regarding the RBA's policy and general economic conditions. 
During the Asian session on January 15, NZD/USD tends to stay above the 0.5600 mark, receiving moderate support from statistics on the New Zealand Institute of Economic Research (NZIER) business confidence index. In the fourth quarter, the indicator increased by 16.0% after the previous decrease of -1.0%.An additional growth factor for the New Zealand currency was data on the construction sector and China's foreign trade. The number of building permits issued increased by 5.3%, recovering from a decrease of 5.2% in the previous month. China's exports grew by 10.7% year-on-year after rising by 6.7%, exceeding the forecasted 7.3%, while imports increased by 1.0%, which also exceeded expectations. Against this background, China's trade surplus increased from $97.44 billion to $104.84 billion in December, which is higher than the projected $99.8 billion.The signing of the Comprehensive Economic Partnership Agreement between New Zealand and the UAE was also a significant event. This agreement is aimed at expanding trade and investment between the two countries, with a projected growth of up to 5.0 billion dollars by 2032.The pressure on the US dollar yesterday was exerted by data on industrial inflation, which caused a revision of expectations for the Fed rate. In December, the annual production price index rose to 3.3% from 3.0% in November, but was lower than the projected 3.4%. The monthly figure dropped to 0.2%, which is worse than expected at 0.3%.Today, investors' attention is focused on December data on inflation in the United States, where it is expected to rise from 2.7% to 2.9%, while the base index is projected to remain at 3.3%.On the daily chart, the Bollinger indicator shows sideways dynamics with a wide price range corresponding to the current market activity. The MACD and Stochastic give a steady buy signal, supporting bullish sentiment.The formation of long positions is recommended after the breakdown and consolidation of the price above the level of 0.5607 with a target of 0.5700 and a stop loss at 0.5571.A pullback from the 0.5607 level downwards, followed by a breakdown of the 0.5571 support, can serve as a signal for sales. The target will be 0.5511. We will place the stop loss at 0.5607. 
FOREX Fundamental analysis for EUR/USD on January 15, 2025Financial markets are gradually recovering from the initial shock caused by a series of unexpected events. The initial panic provoked by news of Trump's massive tariff plans, fears of the spread of the British debt crisis, and Bank of America's forecast of a possible Fed rate hike in 2025 is beginning to give way to a more balanced assessment of the situation. This is reflected in the corrective movement of the EUR/USD pair.Particular attention is drawn to the fact that Trump is in no hurry to refute Bloomberg's information about the phased introduction of tariffs, unlike his reaction to the Washington Post publication. Such silence is interpreted by the market as an indirect confirmation of information, encouraging speculators to reduce long positions in the dollar.On the British front, Rachel Reeves is trying to calm the markets by emphasizing that the sharp rise in government bond yields is not a direct result of government measures. Despite the increased volatility, the Treasury intends to adhere to the established rules of borrowing. This position contributed to the stabilization of the pound and, as a result, the euro.It is noteworthy that the so-called British debt crisis is largely a reflection of the rapid rise in yields on U.S. Treasury bonds. Analysts at State Street Global Advisors warn that overcoming the 5% barrier for 10-year treasuries could trigger a drop in EUR/USD to parity.Despite the stability of the American labor market, historical experience shows that the transition from easing to tightening monetary policy during the year is extremely rare. Since 1994, such a reversal has been observed only once, in 1998, when the Fed was forced to ease policy due to the collapse of Long-Term Capital Management, but then returned to tightening after the situation stabilized.The futures market is currently pricing in one Fed rate cut in 2025 with a second one less than 10% likely, while the ECB is expected to make three or four cuts. This divergence in expectations largely explains the current decline in EUR/USD.The publication of the December US CPI will be a key factor in determining the forex trading strategy. Analysts' forecasts are divided: 39 experts expect growth of 0.3% mom, 32 predict 0.2%. This uncertainty leaves room for both continued correction and resumption of the downtrend.In the short term, the resumption of disinflation may trigger a pullback of EUR/USD to the levels of 1.039 and 1.0445, creating the opportunity to form long positions. However, the loss of the 1.03 level, especially against the background of strong inflation data from the United States, will be a signal for the resumption of sales.