MARKET OVERVIEW
Markets are on watch for the FED’s rate decision later this week. Trump has called for an immediate rate cut, although markets widely expect the FOMC to hold rates this month. Will Trump’s demand influence the FED to reconsider its stance?
There are differing views among analysts, largely due to the market’s current focus on how Trump’s inflationary policies might impact the economy. Global forex patterns indicate increased volatility across major currency pairs.
Dollar prices rose after Trump announced plans to impose tariffs on Colombia, following the country’s refusal to allow U.S. military planes carrying deported migrants to land. Concerns about tariffs have resurfaced, with fears that their implementation could weigh on precious metals and significantly impact other currencies. If Trump fulfills his promise to impose broad international tariffs, it could have a lasting effect on portfolio allocation and global markets.
In addition to the FED decision on Thursday, other significant events are lined up for this week:
- Tuesday: SNB Chairman Jordan is expected to outline the central bank’s direction for the Franc, alongside the U.S. CB Consumer Confidence report.
- Wednesday: Australia’s CPI release, the BOE Governor’s speech, and the Bank of Canada’s rate decision.
- Thursday: The Eurozone monetary policy statement with the ECB press conference, as well as the U.S. Advance GDP and unemployment data.
- Friday: The European CPI, Canadian GDP, U.S. Core PCE Price Index, and Employment Cost Index will be released.
GOLD
Gold prices are currently experiencing increased selling momentum, as indicated by the MACD. However, the RSI suggests a potential turnaround before momentum normalizes. Candlestick patterns indicate a bullish continuation, reinforcing entry point strategies for traders seeking long positions. If Trump proceeds with inflationary policies, analysts and markets may turn to gold as a hedge against Dollar risks. Auto trade alerts can help traders capitalize on price fluctuations.
SILVER
Silver prices remain consolidated and are likely to stay in this range until a catalyst prompts a directional move. Silver prices are being kept low for now, potentially serving as a hedge against gold once it reaches overpriced levels. As silver approaches historic highs, another bullish run is anticipated. Candlestick patterns confirm this bullish setup.
The RSI indicates oversold conditions, while the MACD suggests a possible continuation of selling volume. Auto trade alerts can assist traders in identifying breakout opportunities. Portfolio allocation should consider silver’s potential upside as an alternative to gold.
DXY (US Dollar Index)
The Dollar is seeing increased bullish movement ahead of the FED rate decision. While the RSI signals overbought conditions, the MACD reflects growing bullish volume, suggesting a continuation. However, overall price action remains bearish, with 107.834 serving as strong resistance. Global forex patterns indicate heightened volatility, and auto trade alerts should be utilized to navigate this period effectively.
GBPUSD
The Pound has gained significantly, breaking above its previous swing high and shifting overall momentum. Entry point strategies suggest caution as prices reach 1.24754, exceeding initial expectations. Candlestick patterns indicate a potential price normalization soon. Portfolio allocation should be adjusted to account for long-term weakness in the Pound.
AUDUSD
The Australian Dollar opened with a price gap, suggesting a possible return to fill it. However, if prices fail to reach 0.63407, a decline is likely. Candlestick patterns support a bullish trend, making entry point strategies crucial for optimal trade execution. Auto trade alerts can signal key breakout moments.
NZDUSD
The Kiwi Dollar is declining, with the RSI recovering from oversold conditions and signaling a shift in momentum similar to the Aussie Dollar. The MACD shows rising bearish volume. Global forex patterns suggest a potential return to bearish momentum. Auto trade alerts can help traders monitor for potential reversals.
EURUSD
Euro prices have returned below 1.04672, with the MACD crossing to suggest growing bearish volume. However, the RSI indicates oversold conditions. Candlestick patterns highlight key resistance levels, making entry point strategies vital. Portfolio allocation should account for long-term Euro weakness.
USDJPY
On Friday, the BOJ raised interest rates by 25 basis points to 0.5%, marking the highest short-term borrowing costs in 16 years. The central bank projected inflation reaching its 2% target, suggesting potential further rate hikes. Candlestick patterns show consolidation, and auto trade alerts can help capture breakouts.
USDCHF
The Franc remains below 0.90743, despite the Dollar’s recent gains. The MACD hints at a bullish move but lacks volume, while the RSI has yet to show a clear directional bias. Entry point strategies suggest waiting for confirmation before trading. Portfolio allocation should consider USD strength against the CHF.
USDCAD
The Canadian Dollar is expected to weaken further after Trump threatened tariffs on Colombia. If Trump follows through, additional tariffs could be imposed on Canada, Mexico, and China by February 1, impacting CAD. Global forex patterns highlight potential disruptions, while auto trade alerts can help traders anticipate price shifts.
The MACD reflects increasing volume, while the RSI is quickly normalizing, indicating a potential momentum shift. Although the market opened with a gap—suggesting an order fill—overall, the market remains bullish in the long term.
COT REPORT ANALYSIS
- AUD – WEAK (4/5)
- GBP – WEAK (5/5)
- CAD – WEAK (4/5)
- EUR – WEAK (5/5)
- JPY – WEAK (3/5)
- CHF – WEAK (5/5)
- USD – STRONG (4/5)
- NZD – WEAK (4/5)
- GOLD – STRONG (5/5)
- SILVER – STRONG (5/5)
By leveraging candlestick patterns, entry point strategies, auto trade alerts, portfolio allocation, and global forex patterns, traders can refine their approach to navigating these markets effectively.
