Downtrend Eases, but Outlook Remains Gloomy

Economic

Forex

Summary:

The pound fell on Friday. During the European session, GBPUSD traded at 1.2204, down 0.27% on the day. Since the US dollar firmly established its strength last October, GBPUSD has declined by 8.8% overall.

SELL GBPUSD

EXP

TRADING

1.21934

Entry Price

1.19630

1.23850

1.21626 -0.00742 -0.61%

0.0

Pips

Flat

1.19630

Exit Price

1.21934

Entry Price

1.23850

Fundamentals

Disappointing UK data was released on Friday. Retail sales in December fell 0.3% MoM, lower than the revised 0.1% increase in November and also below the expected 0.4%. On a quarterly basis, retail sales in the fourth quarter declined by 0.8%. The pound fell in response.

The weak retail figures indicate that UK consumers cut back on spending during the crucial Christmas season. Consumers remain cautious about inflation concerns and the expectation of high interest rates.

Consumer spending is a key driver of economic growth. The decline in retail sales has sparked concerns about stagflation. Stagflation, a pernicious combination of high inflation and low growth, will further damage businesses and households.

After several months of no growth, the UK economy only grew by 0.1% in November.

Chancellor Rachel Reeves is displeased with the weak GDP and retail sales data. Reeves proposed a "tax and spend" budget in October 2024 and acknowledged that she needs the economy to show stronger growth to increase tax revenue and implement her spending plans. If the weak economy does not improve soon, Reeves may find herself in a difficult situation.

Market Observations: Over the past week, widespread selling in the market was triggered by concerns about persistently high inflation and slow economic growth. The pound plummeted. Although the pound's decline eased after data released on Wednesday showed a slowdown in consumer price growth, its outlook remains gloomy.

The recent decline in GBPUSD is due to the deterioration of the UK's economic growth expectations relative to the US. The US economic growth outlook for this year has improved, leading to a widening interest rate differential between the US and the UK, thereby weakening the GBPUSD exchange rate.

In the US, retail sales in December increased by 0.4% MoM. The upwardly revised retail sales in November showed a growth of 0.8%, lower than the expected 0.6%. Annual retail sales grew by 3.9%, below the downwardly revised 4.1% increase in November and above the expected 4.0%. These figures indicate that consumer spending remains robust and the Federal Reserve is not likely to face pressure to cut interest rates in the near term.

The upcoming events next week, including Trump's inauguration and the UK wage data to be released on Tuesday, may trigger another round of selling.

Downtrend Eases, but Outlook Remains Gloomy _1

Technical Analysis

The intraday trend of GBPUSD remains neutral with a bearish outlook for the future. The support level at 1.2306 has now turned into a resistance level. It is expected that the larger decline starting from 1.3433 will continue.

On the downside, if the price breaks below 1.2099, the downtrend will resume, targeting 1.1863.

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.2235

Target Price: 1.1863

Stop Loss: 1.2385

Valid Until: Febuary 1, 2025, 23:55:00

Support: 1.2167/1.2099/1.2042

Resistance: 1.2251/1.2306/1.2354

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The EUR/USD pair hovers near the key 1.0300 level in Friday's European session, trading within Thursday's narrow range.

SELL EURUSD

EXP

TRADING

1.02600

Entry Price

1.01000

1.04000

1.02600 -0.00386 -0.37%

0.0

Pips

Flat

1.01000

Exit Price

1.02600

Entry Price

1.04000

The EUR/USD currency pair exhibited restrained movement on Friday, trading cautiously near the pivotal 1.0300 level during the European session. This stagnation reflects broader market sentiment as investors exercise caution ahead of President-elect Donald Trump’s inauguration and anticipated policy announcements. With markets remaining in a holding pattern, the pair oscillates within Thursday’s range, suggesting traders are awaiting fresh catalysts to define its trajectory.

The upcoming inauguration of President-elect Donald Trump has heightened market anticipation for concrete details about his economic agenda. Speculation is rife that his policies could lead to a seismic shift in the United States’ economic trajectory and its interactions with global trade partners. Market analysts widely expect Trump’s proposed measures to spur inflation and economic growth. However, these same policies have raised concerns about potential trade wars, with protectionist strategies threatening to destabilize existing trade agreements. Trump’s rhetoric about prioritizing "America First" resonates strongly, suggesting the introduction of tariffs and renegotiations of trade deals. These moves could enhance the U.S.’s negotiating power but may also provoke retaliatory measures from trading partners, potentially disrupting the global trade ecosystem.

Scott Bessent, Trump’s nominee for Treasury Secretary, reinforced the administration’s stance during his Senate Finance Committee testimony on Wednesday. Bessent emphasized the urgency of addressing the current tax regime, warning of dire consequences if reforms are not implemented. “If we do not renew and extend, then we will be facing an economic calamity,” he stated, underlining the necessity of policy shifts to avert a $4 trillion tax burden on the middle class. Bessent also echoed Trump’s protectionist leanings, arguing that such measures are essential to counter unfair trade practices and bolster U.S. competitiveness. His comments suggest a government laser-focused on economic revitalization, albeit through contentious means.

Meanwhile, the U.S. Dollar Index (DXY), a benchmark for the dollar’s performance against a basket of six major currencies, edged higher on Friday. The index holds firm above the critical 109.00 support level, demonstrating resilience despite mounting expectations of a Federal Reserve interest rate cut this year. Market participants have recalibrated their outlook on monetary policy following the release of December’s core Consumer Price Index (CPI) data. The core CPI, which strips out volatile food and energy prices, decelerated to 3.2% year-over-year—its lowest level in over four years. This slowdown has prompted traders to increase bets on a dovish pivot by the Fed, further complicating the dollar’s outlook in the coming months.

Technical Analysis

From a technical perspective, EUR/USD remains trapped within a tight range, hovering around the 50-day Exponential Moving Average (EMA). The pair’s inability to break decisively in either direction underscores the market’s indecision. The stochastic oscillator has shown a clear loss of positive momentum, reinforcing expectations of a continuation of the bearish trend. A critical support level at 1.0220 appears to be the next downside target, with a break below this threshold likely opening the path toward 1.0100. Conversely, any breach of the resistance at 1.0325 would negate the bearish scenario, potentially triggering an intraday bullish correction.

The expected trading range for the day is between support at 1.0210 and resistance at 1.0365. The trend forecast remains bearish.

TRADE RECOMMENDATION

SELL EURUSD

ENTRY PRICE: 1.0260

STOP LOSS: 1.0400

TAKE PROFIT: 1.0100

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

NZD/USD depreciates as the US Dollar halts its losing streak, despite weaker US retail sales and inflation data bolstering rate cut expectations.

SELL NZDUSD

EXP

TRADING

0.56000

Entry Price

0.54500

0.56800

0.55752 -0.00313 -0.56%

0.0

Pips

Flat

0.54500

Exit Price

0.56000

Entry Price

0.56800

The New Zealand Dollar (NZD) continued its downward trajectory against the US Dollar (USD) on Friday, with the NZD/USD pair trading near 0.5590 during European hours. This marks the second consecutive day of losses, driven by a strengthening USD and mixed economic signals from both the US and China. While the Greenback finds support from technical factors, the NZD faces challenges despite positive economic developments from China, a key trading partner for New Zealand.

The US Dollar Index (DXY), which measures the USD’s strength against a basket of six major currencies, rebounded to approximately 109.20, snapping a four-day losing streak. The Greenback’s recovery comes despite weaker-than-expected US economic data that has reinforced expectations for a dovish Federal Reserve stance in 2024.

US Retail Sales for December rose by 0.4% month-over-month (MoM), missing the consensus estimate of a 0.6% increase and falling short of November’s revised 0.8% gain. The subdued retail sales data highlights potential softness in consumer spending, a critical driver of the US economy.

Adding to the dovish sentiment, the core Consumer Price Index (CPI) — which excludes volatile food and energy prices — rose by 3.2% year-over-year (YoY) in December, slightly below both the market forecast and the prior month’s 3.3% print. On a monthly basis, core CPI increased by 0.2%, decelerating from November’s 0.3% rise. The data reinforces market speculation that the Federal Reserve may pivot toward rate cuts, with many analysts expecting two reductions by the end of 2024.

Federal Reserve officials, however, continue to express measured optimism. Chicago Fed President Austan Goolsbee noted that the US labor market appears to be stabilizing near full employment levels, countering fears of a significant economic downturn. This sentiment aligns with the broader narrative that while inflation is moderating, the US economy remains resilient.

Meanwhile, the New Zealand Dollar attempted to find footing, buoyed by robust economic data from China. As New Zealand’s largest trading partner, China’s economic performance heavily influences the NZD’s trajectory. Recent data from China exceeded market expectations, providing a potential tailwind for the Kiwi.

China’s Gross Domestic Product (GDP) grew by 5.4% YoY in the fourth quarter of 2024, significantly outpacing the 4.6% expansion recorded in Q3 and beating the market consensus of 5%. On a quarterly basis, GDP rose by 1.6%, matching expectations and improving from the 0.9% growth in Q3.

Other key Chinese economic indicators also painted a positive picture. December’s annual retail sales rose by 3.7%, exceeding forecasts of 3.5% and November’s 3.0% increase. Industrial production climbed to 6.2%, well above the 5.4% forecast and the previous month’s 5.4% print. These figures underscore China’s economic resilience, which could offer indirect support to the NZD through improved trade dynamics.

Technical Analysis

From a technical perspective, the NZD/USD pair remains under pressure, trading near the resistance line of a descending channel. The pair’s inability to sustain levels above the 0.5620 mark signals a continuation of bearish momentum. Key support levels are identified at 0.5540 and 0.5450, which could serve as immediate downside targets in the near term.

The 50-day Exponential Moving Average (EMA50) continues to act as a resistance level, reinforcing the bearish outlook. A break above 0.5620 would challenge this narrative, potentially triggering a bullish correction toward 0.5738. However, the broader trend remains tilted to the downside as long as the pair stays below this critical threshold.

The expected trading range for the day lies between the 0.5550 support and the 0.5650 resistance, with a bearish bias prevailing unless a significant catalyst shifts market sentiment.

TRADE RECOMMENDATION

SELL NZDUSD

ENTRY PRICE: 0.5600

STOP LOSS: 0.5680

TAKE PROFIT: 0.5450

Risk Warnings and Disclaimers

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Winkelmann

Cryptocurrency

Summary:

As Trump's move into the White House approaches, Ethereum has rebounded from its lows, with its upward momentum likely to continue.

BUY ETH-USDT

EXP

TRADING

3373.50

Entry Price

4080.00

3130.00

3466.89 +45.15 +1.32%

0.0

Pips

Flat

3130.00

Exit Price

3373.50

Entry Price

4080.00

Fundamentals

Recently, expectations for the Fed's policy adjustments have been in constant flux. Particularly since the start of the year, traders have been continually reducing their bets on rate cuts. The US dollar and US Treasury yields have surged significantly, while the US stock market and the cryptocurrency market have been undergoing sustained high-level market corrections. Ethereum has been underperforming, once plummeting to a two-month low.

However, the weakening of the US non-farm payrolls in December and the cooling of core inflation have reignited hopes for two rate cuts by the Fed this year. The latest released initial jobless claims and retail sales data both fell short of expectations, causing US Treasury yields to narrow their gains again. Fed official Christopher Waller even made a rare dovish remark, stating that inflation continues to ease and there could be three to four rate cuts this year. This has boosted optimistic market sentiment, leading to rebounds in both the US stock market and the cryptocurrency market.

Moreover, Trump's impending inauguration is also a factor. Given his friendly stance towards cryptocurrency regulation, this short-term effect may also propel Ethereum to further gains. Ripple has been surging for several days, setting an example ahead of time.

Technical Analysis

Trump's Inauguration Nears, Ethereum Salutes with a Surge_1

From the 4-hour chart, we can see that ETHUSDT has rebounded after a high-level pullback. The highs and lows are gradually rising, suggesting that the correction may have ended and the trend could have shifted to an upward movement. The price may further test the recent highs in the future.

Traders can attempt to go long on dips, with a short-term entry point around 3330 when the price stabilizes. The target can be set near 4080, with a stop-loss placed below the support level of 3160.

Trading Recommendations

Trading Direction: Buy

Entry Price: 3330

Target Price: 4080

Stop Loss: 3130

Support: 3160/3330

Resistance: 3720/4080

Risk Warnings and Disclaimers

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Manuel

Cryptocurrency

Summary:

ETH has rebounded to $3,313, signaling potential for a bullish continuation. The recovery aligns with the RSI reaching 25 on the 12-hour chart, a level commonly associated with oversold conditions.

BUY ETH-USDT

EXP

TRADING

3310.58

Entry Price

4000.00

2850.00

3466.89 +45.15 +1.32%

0.0

Pips

Flat

2850.00

Exit Price

3310.58

Entry Price

4000.00

PostFinance AG, a state-owned Swiss bank, has taken a significant step in expanding its cryptocurrency offerings by introducing staking services for Ethereum. This feature, available through its e-finance platform and mobile app, allows ETH holders to earn rewards while contributing to the network’s operations. Beyond staking, PostFinance already supports trading for 11 cryptocurrencies and offers specific savings programs for select digital assets.

The staking option aligns with the bank’s broader plans to enhance its crypto services for its customer base. Ethereum staking enables the network to validate transactions, providing participants with passive income. Individual staking requires a minimum deposit of 32 ETH, making institutional options like PostFinance’s service particularly attractive for retail investors unable to meet this threshold.

PostFinance has positioned itself as a pioneer, claiming to be "the first systemically important bank in Switzerland to offer staking services." Additionally, the bank has expressed its intention to extend staking opportunities to other cryptocurrencies beyond Ethereum, further cementing its leadership in the crypto banking sector.

Across the Atlantic, President-elect Donald Trump is reportedly preparing an executive order to elevate cryptocurrencies as a strategic priority for his administration. According to sources familiar with the plan, this initiative aims to establish the U.S. as a global leader in blockchain technologies and digital assets.

The proposed order, which could be unveiled as early as next week, seeks to designate cryptocurrencies as a "national priority." It will likely shape how government agencies regulate the sector and encourage collaboration with private industry.

One notable aspect of the plan is the creation of an advisory council comprising blockchain experts to guide public policies in the space. Additionally, there are indications that the order might include a review of ongoing legal disputes involving major players like Binance and Ripple Labs Inc., signaling a shift in regulatory stance.

This approach marks a stark departure from the Biden administration, which initiated over 100 enforcement actions against the crypto industry in recent years.

Another intriguing component of Trump’s potential crypto policy is the establishment of a national Bitcoin reserve. The U.S. government currently holds nearly $20 billion worth of Bitcoin seized during criminal investigations. This fund could be formalized as a strategic asset to bolster the nation’s financial position in an increasingly digital world.

Market anticipation of more favorable crypto regulations under Trump’s administration has already driven Bitcoin’s price to nearly $100,000 since the November elections. This rally underscores growing optimism within the crypto space. ETH Recovery From Oversold Levels Signals Potential Upside_1

ETH Recovery From Oversold Levels Signals Potential Upside_1

Technical Analysis

Ethereum began the week with notable declines, briefly touching $2,918. However, the price did not close below the critical local support level of $3,031. Following this dip, ETH has rebounded to $3,313, signaling potential for a bullish continuation. The recovery aligns with the RSI reaching 25 on the 12-hour chart, a level commonly associated with oversold conditions.

Currently, the 100-period and 200-period moving averages are positioned at $3,217 and $3,566, respectively. Ethereum has recently closed above the 200-period moving average, a bullish signal that could attract renewed demand. If current market conditions persist, the medium-term target for ETH is the local high of $4,089.

Trading Recommendations

Trading direction: Buy

Entry price: 3314

Target price: 4000

Stop loss: 2850

Validity: Jan 27, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Cryptocurrency

Summary:

Over the past four days, Ethereum investors have witnessed a net withdrawal of 160,000 ETH from staking contracts. Ethereum ETFs have managed to curb the outflow of funds, yet the modest inflows suggest that institutional investors are still harboring skepticism. Should the price of Ethereum breach the $3,550 resistance level, a potential surge to above $4,400 is on the horizon.

BUY ETH-USDT

EXP

PENDING

3082.00

Entry Price

3690.00

2860.00

3466.89 +45.15 +1.32%

Pips

PENDING

2860.00

Exit Price

3082.00

Entry Price

3690.00

Fundamentals

Ethereum prices experienced a robust rally of over 5% on Wednesday, in response to the release of the U.S. December Consumer Price Index (CPI) data. Following the disclosure of the U.S. December Core CPI data, which came in below market expectations, Ethereum joined the upward trajectory of the cryptocurrency market.

Despite a gradual resurgence of optimism in the market, Ethereum staking flows have yet to show signs of improvement. Over the past four days, the total volume of staked Ethereum has declined by 160,000 ETH, with a marginal uptick observed on Tuesday. This development further exacerbates the trend of escalating staking withdrawals that have been in motion since last November, subsequent to Trump's presidential election victory and the commencement of the cryptocurrency market's rebound. Since that juncture, Ethereum staking contracts have witnessed a reduction of nearly 800,000 ETH.

Concurrently, data from Coinglass indicates that Ethereum recorded an inflow of $1.2 million on Tuesday, thereby breaking the streak of consecutive outflows spanning the past four days. In spite of the recent upswing in the cryptocurrency market, the minimal inflows serve as an indicator that institutional investors remain doubtful regarding the true alleviation of bearish pressures. Within the last 24-hour period, the liquidation amount for Ethereum stood at $46.46 million. The aggregate liquidated long positions amounted to $11.27 million, while the liquidation of short positions surpassed $35.19 million.

Technical Analysis

Ethereum prices mounted a strong upward movement on Wednesday, effectively reversing the prior downtrend. On Thursday, Ethereum prices are anticipated to exhibit a pullback, attributable to profit-taking activities.

Amidst yesterday's ascent, the Relative Strength Index (RSI) has transcended the neutral threshold, intensifying bullish momentum in the ensuing period. However, the Stochastic Oscillator currently resides in the overbought territory, implying a potential correction in Ethereum prices. A subsequent pullback near the $3,000 psychological level is expected to be followed by an accelerated upward trend. In the event that Ethereum prices surmount the $3,550 resistance level, a rally to above $4,400 is a plausible scenario.

Conversely, a daily closing price dipping below the $2,817 support level would negate the bullish narrative and precipitate a decline in Ethereum prices towards the $2,200 mark. Traders are advised to adopt a strategy of selling at buying low and selling high.

Trading Recommendations

Trading Direction: Long

Entry Price: 3082

Target Price: 3690

Stop Loss: 2860

Valid Until: January 31, 2025, 23:55:00

Support: 3254/3099/3008

Resistance: 3475/3550/3686

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

The GBPJPY is contending with sustained downward pressure, precipitated by the UK’s November GDP expansion undershooting market consensus. Concurrently, the market’s anticipation of an imminent interest rate hike by the Bank of Japan (BOJ) in the forthcoming week is bolstering the yen’s value.

SELL GBPJPY

EXP

TRADING

190.361

Entry Price

184.500

194.000

190.037 +0.221 +0.12%

0.0

Pips

Flat

184.500

Exit Price

190.361

Entry Price

194.000

Fundamentals

The GBPJPY experienced its second consecutive day of decline on Thursday, dipping again below the pivotal 190.00 threshold during the European trading session. The depreciation can be attributed to a confluence of factors, including the UK’s underwhelming economic metrics, with the November GDP registering a mere 0.1% MoM growth and the disparate performance across various sectors, thereby presenting a formidable challenge to the pound’s stability.

In parallel, the services index remained static at 0.1% in November. The monthly industrial and manufacturing production figures both contracted by 0.4% and 0.3% respectively, with both metrics falling short of market projections.

Moreover, official data revealing an unexpected deceleration in the UK’s aggregate inflation has intensified market expectations of an interest rate cut by the Bank of England. The yield on the UK’s 10-year sovereign bonds has retreated from its multi-decade apex to 4.73%, exerting a bearish influence on the pound.

The UK’s December Consumer Price Index (CPI) increased by 2.5% YoY, a deceleration from the 2.6% recorded in November and below the market-anticipated 2.7%. Despite the moderated growth rate, it still exceeds the Bank of England’s inflation target of 2%.

Additionally, as market speculation regarding a BOJ rate hike in the upcoming week continues to intensify, the yen has appreciated in value. These conjectures have propelled Japanese government bond yields to multi-year highs.

BOJ Governor Kazuo Ueda stated today that the central bank will “deliberate on the possibility of an interest rate increase” at the impending policy meeting scheduled for January 23-24. This marks the second occasion this week that Ueda has underscored this point.

Ueda’s remarks come as the BOJ is in the process of compiling a new quarterly economic report, which will form the foundation for its policy deliberations. Although the central bank governor has not committed to a definitive outcome, the reiterated messaging suggests that a rate hike is a viable option, barring any significant market disruptions triggered by the inauguration of US President-elect Trump on January 20.

However, there remains a divergence in market sentiment concerning the anticipated timing of the rate hike. A recent poll conducted from January 8 to 15 reveals that out of 61 economists surveyed, 59 anticipate the BOJ to elevate interest rates to 0.50% by the end of March. Nevertheless, only 20 respondents predict that this action will transpire at the current month’s meeting.

Technical Analysis

The GBPJPY’s breach of the interim low of 190.06 signifies a resumption of the downtrend that commenced at 198.94. The intraday bias is decidedly bearish, with the 188.06 level providing immediate support. A violation of this support threshold would imply the termination of the corrective pattern that originated at 180.00 and could herald the resumption of a more pronounced decline that began at 208.09.

On the upside, a successful penetration of the resistance level at 193.01 would forestall the bearish scenario and pivot the intraday bias back towards neutrality.

Trading Recommendations

Trading Direction: Sell

Entry Price: 191.48

Target Price: 184.50

Stop Loss: 194.00

Valid Until: January 31, 2025, 23:55:00

Support: 189.56/188.06/186.69

Resistance: 190.94/191.63/193.01

Risk Warnings and Disclaimers

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Downtrend Eases, but Outlook Remains Gloomy

Fundamentals

Technical Analysis

Trading Recommendations

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Risk Disclosure