EUR/JPY Extends Losses Amid BoJ Hawkish Comments, Eyes Further Downside

Economic

Summary:

The EUR/JPY continues to decline, reaching 158.45 during the European session, driven by hawkish comments from the Bank of Japan about potential interest rate hikes.

SELL EURJPY

Close Time

CLOSED

158.000

Entry Price

156.200

159.500

160.439 -0.939 -0.58%

23.5

Pips

Profit

156.200

157.765

Exit Price

158.000

Entry Price

159.500

The EUR/JPY currency pair continued its downward trajectory in the early European trading hours on Thursday, reaching a low of approximately 158.45. This marks an extension of its recent decline, spurred by a mix of Japanese economic policy signals and broader market dynamics that have bolstered the Japanese yen. The latest comments from key Bank of Japan (BoJ) officials, specifically regarding a potential interest rate hike in March, have amplified expectations of tightening monetary policy in Japan, thus contributing to the yen’s strengthening.

The most significant development in the EUR/JPY move comes from the hawkish stance taken by BoJ officials. In particular, BoJ Board Member Tamura Naoki made waves on Thursday by suggesting that the central bank may be forced to raise interest rates to at least 1% by the second half of Japan’s fiscal year, which begins in April. These remarks signal a shift from the BoJ’s long-standing ultra-loose monetary policy, a move which many market participants had long dismissed as unlikely in the face of Japan’s persistent deflationary pressures and economic stagnation.

Naoki’s comments come as the BoJ is under increasing pressure to curb inflation, which, while still low compared to other developed economies, has been gradually creeping up in recent months. The idea of raising rates to combat inflation is gaining traction, with some analysts predicting that the central bank might start tapering its ultra-loose stance sooner than previously expected. This prospect of higher interest rates in Japan, amid a backdrop of global monetary tightening, has contributed to the strengthening of the yen across the board, putting significant downward pressure on the EUR/JPY cross.

Technical Analysis

From a technical perspective, the EUR/JPY pair has been showing a clear bearish bias in recent sessions. The currency pair has been unable to maintain its footing above key resistance levels, and the downward momentum is becoming increasingly evident. The pair broke below the first significant negative target of 158.40, signaling a further buildup of negative momentum.

Key technical indicators are confirming the bearish outlook, with the pair remaining below the crucial 160.25 level. This level has acted as a significant resistance zone in recent trading, and the failure to sustain prices above this barrier reinforces the idea of a continued downward move. The immediate focus now turns to the support at 157.35, a level that traders will be watching closely. A break below this support would likely trigger a further acceleration of selling pressure, potentially driving the pair toward the 156.20 support zone.

The overall trend remains firmly bearish, as the pair has yet to show any convincing signs of a reversal. The combination of external factors, including the BoJ’s hawkish tone, and internal technical factors suggests that the downside risks for EUR/JPY are far from over.

TRADE RECOMMENDATION

SELL EURJPY

ENTRY PRICE: 158.00

STOP LOSS: 159.50

TAKE PROFIT: 156.20

Risk Warnings and Disclaimers

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Winkelmann

Forex

Summary:

The euro still faces dual challenges from Trump's tariff policies and the possible interest rate cuts by the ECB, limiting its upward space.

SELL EURUSD

Close Time

CLOSED

1.04000

Entry Price

1.02000

1.04700

1.08700 -0.00163 -0.15%

70.0

Pips

Loss

1.02000

1.04703

Exit Price

1.04000

Entry Price

1.04700

Fundamentals

There is no doubt that the market's attention has been completely drawn to Trump's tariff policies recently. Initially, the US announced a 25% tariff on products from Canada and Mexico and a 10% tariff on Chinese products. The market was worried that this would drive up US inflation, leading to a significant strengthening of the US dollar. However, the US quickly reached an agreement with Canada and Mexico, postponing the implementation of the tariffs for 30 days, which triggered a correction in the US dollar. Non-US currencies, including the euro, all showed a strong rebound.

However, as long as Trump's flip-flops on tariffs continue, the EU is highly likely to be the next region to encounter trade tariffs. The market generally expects this to push up US inflation and keep US interest rates at a relatively high level for a longer period, thus supporting the US dollar. At the same time, additional tariffs may further damage the European economy. The long-term environment of trade uncertainty itself will also put pressure on the euro. Moreover, the ECB may further cut interest rates, restricting the euro's rebound.

Technical Analysis

Euro Suppressed as Tariff Threats Looming _1

EURUSD keeps declining in the 4H chart. Despite a V-shape rebound, it drops below 1.04 due to the pressure at 1.044, indicating a bearish engulfing pattern. Therefore, EURUSD is likely to descend. In the long run, EURUSD could return to 1.00, thus the support at 1.02 becomes vital.

Selling at highs is recommended. Try to sell after EURUSD rebounds to 1.04 and set the target price at the support of 1.02 below. The stop-loss should be put above 1.044.

Trading Recommendations

Trading direction: Sell

Entry price: 1.040

Target price: 1.020

Stop loss: 1.047

Support: 1.020/1.028

Resistance: 1.044/1.052

Risk Warnings and Disclaimers

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Manuel

Commodity

Forex

Summary:

There is a slight divergence between the current RSI and past readings, which could indicate the possibility of a bullish reversal starting to take shape.

BUY USDCAD

Close Time

CLOSED

1.43235

Entry Price

1.45170

1.42150

1.44217 +0.00519 +0.36%

12.7

Pips

Loss

1.42150

1.43108

Exit Price

1.43235

Entry Price

1.45170

The latest ADP employment change figures from the United States revealed stronger-than-expected results for January, with a net increase of 183,000 in payrolls. This surpassed the anticipated drop to 150,000 from the revised December figure of 176,000. Although ADP employment numbers are considered an unreliable predictor for the upcoming U.S. Non-Farm Payrolls (NFP) report, the increase in jobs has helped boost investor confidence in the strength of the U.S. economy.

Looking ahead, the most crucial data release this week will be the U.S. Non-Farm Payrolls (NFP) report, which is due this Friday. Investors are anticipating a decline in the January NFP figure to 170,000, down from 256,000 in December. Market participants will also closely monitor revisions to the previous months’ data. Those hoping for rate cuts have become increasingly frustrated with the persistent strength of the U.S. economy, as labor statistics often receive upward revisions in subsequent releases.

Canada reported its first trade surplus in ten months in December, with exports exceeding imports. This was largely due to U.S. businesses building up inventory ahead of potential tariffs, providing support to the Canadian Dollar (CAD). Moreover, the U.S. tariffs alleviated some concerns over the imminent threat of a trade war. On Monday, President Trump agreed to a 30-day pause in his tariff threats against Mexico and Canada as both countries took steps to address U.S. concerns over border security and drug trafficking.

“Tariff concerns are easing—at least for now—which has allowed the CAD to stabilize,” said Shaun Osborne, chief currency strategist at Scotiabank. “Unless trade talks deteriorate significantly again, there’s a possibility that the peak of USD-CAD reached on Monday near 1.48 could mark a significant top for the spot rate,” he added.

Last week, the Federal Reserve (Fed) opted to leave interest rates unchanged, leaving the market guessing when the next rate cut might take place. Despite strong economic growth in the U.S.—with robust growth, persistent inflation, and low unemployment—the Fed has been cautious in its actions. It has recently shifted from acknowledging some progress on inflation to describing price pressures as "elevated." By maintaining the federal funds rate at 4.25%-4.50%, the Fed is signaling a wait-and-see approach amidst concerns about the impact of President Trump’s trade and fiscal policies. Could the Support Zone Spark a Buying Opportunity?_1

Could the Support Zone Spark a Buying Opportunity?_1

Technical Analysis

The USDCAD has recently reached an important support level near the 1.4280 zone, where the price has previously seen bullish momentum three times. This occurred after a decline earlier in the week when the price reached 1.4794 following President Trump’s comments regarding potential tariffs on trade partners Mexico and Canada. After both countries came to agreements with the U.S., prices returned to more typical levels, and this support zone has proven reliable in the past. Given this history, buying at these levels could represent a good entry price.

On the 4-hour chart, the RSI recently reached a low of 34, approaching the oversold territory. There is a slight divergence between the current RSI and past readings, which could indicate the possibility of a bullish reversal starting to take shape. On the other hand, a strong break below this support level could pave the way for further downside movement.

Trading Recommendations

Trading direction: Buy

Entry price: 1.4322

Target price: 1.4517

Stop loss: 1.4215

Validity: Feb 15, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Economic

Forex

Summary:

Influenced by expectations of interest rate hikes from the Bank of Japan (BOJ) and concerns over tariffs, the yen has strengthened. Trump and Shigeru Ishiba may discuss the issue of yen weakness.

BUY USDJPY

Close Time

CLOSED

151.496

Entry Price

156.750

148.200

147.596 -0.652 -0.44%

196.3

Pips

Loss

148.200

149.533

Exit Price

151.496

Entry Price

156.750

Fundamentals

On Wednesday, the yen strengthened against other G10 currencies and Asian currencies during the European trading session. Earlier, data released by Japan indicated that real wages in December increased by 0.6% YoY, marking the second consecutive month of growth. The steady rise in cash earnings for the Japanese workforce is likely to bolster current market expectations that the BOJ will raise interest rates at least once more this year.

Furthermore, the "tariff war" between the U.S. and other countries appears to be ongoing. Japanese Finance Minister Taro Aso stated that Japan will closely monitor the impact of the new tariffs announced by President Trump on the domestic currency and expressed concerns about the international ramifications of trade tariffs. "We need to carefully observe how exchange rates and other factors will be affected, as well as what form of monetary policy the U.S. will adopt in the future," Aso remarked. He also emphasized Japan's significant concerns regarding the potential impact of tariffs on the global economy.

This week, the market perceives a low risk that President Trump will threaten to impose additional tariffs on Japan during his upcoming talks with Prime Minister Shigeru Ishiba. However, the weakness of the yen could pose a problem. Currently, President Trump has not taken a particularly hard stance against Japan, but the possibility of him adopting a tougher position at this week's summit cannot be entirely ruled out.

As the trade policies of the Trump administration gradually take shape, inaction regarding the yen's weakness may lead to tariff risks. We anticipate that the risk of the USDJPY rising to 157.00 in the short term seems greater than the risk of falling below 148.62.

A Short-term Strong Rebound Is Expected_1

Technical Analysis

Due to rising wages in Japan and an increased expectation of interest rate hikes by the BOJ, the USDJPY has fallen to a nearly two-month low of 152.55. The intensifying expectations of interest rate cuts by the Federal Reserve have also contributed to the dollar's decline, pushing it to a new weekly low and further impacting the USDJPY.

The USDJPY has retraced from a short-term high of 158.86 and has broken below the critical support level of 153.70, indicating a downward bias during the trading session. The decline could extend further to the 38.2% retracement level of 151.49, which corresponds to the range between 139.57 and 158.86. A strong support level can be observed at this point, potentially leading to a rebound. However, as long as the resistance at 155.51 holds, the downward momentum is likely to persist. A sustained breach of 151.49 would increase the likelihood of a bearish reversal.

Key support levels for trading are experiencing a short-term rebound.

Trading Recommendations

Trading Direction: Buy

Entry Price: 151.50

Target Price: 156.75

Stop Loss: 148.20

Valid Until: February 20, 2025 23:55:00

Support: 151.49, 151.26, 148.66

Resistance: 153.13, 153.70, 154.47

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Economic

Summary:

On Wednesday, gold prices reached a new historical high, approaching US$2,880. With the Asian markets reopening after the Lunar New Year holiday, gold prices are expected to remain strong.

BUY XAUUSD

Close Time

CLOSED

2876.21

Entry Price

3000.00

2828.00

2978.77 +45.46 +1.55%

268.2

Pips

Profit

2828.00

2903.03

Exit Price

2876.21

Entry Price

3000.00

Fundamentals

Gold prices have surged this week, rising for the fifth consecutive day on Wednesday, reaching a historic high of around US$2,877, with an increase of over 2.5% for the week. Weak economic data from the U.S. further bolsters the case for the Federal Reserve to consider another interest rate cut, coupled with concerns over increased tariffs on major trading partners, driving gold prices higher.

Meanwhile, a new report from the World Gold Council on gold demand trends indicates that total gold demand is expected to grow by 1% YoY in 2024, reaching a record high of 4,974.5 tons. This surge in demand, driven by record prices due to geopolitical and economic uncertainties, as well as investors seeking safe-haven assets, has pushed the value of this demand to US$382 billion. Gold demand in the fourth quarter reached a record US$111 billion.

Louise Street, Senior Market Analyst at the World Gold Council, stated, "Geopolitical uncertainty remains high, which will always be a factor supporting investment in gold, whether it shifts from concerns over military conflicts to uncertainties surrounding trade conflicts." The report notes that geopolitical and economic uncertainties are expected to remain elevated in 2025, with central banks likely to once again view gold as a stable strategic asset.

Pullbacks Come with Buying Opportunities_1

Technical Analysis

As Chinese traders return to the market after the Lunar New Year holiday, the asset prices are expected to experience a catch-up rally, indicating that any brief declines or pullbacks present buying opportunities. However, given that the current trend in gold prices lacks historically significant reference levels, intraday pivot points are becoming increasingly crucial.

The pivot point level for this Wednesday is the first support level at US$2,831. From there, the next support level is at US$2,818, although it does not appear to be the most favorable.

The next resistance level to watch is US$2,869, followed by key round numbers such as US$2,880 and US$2,900. Beyond that lies the psychological barrier of US$3,000.

On the other hand, if the price falls below the US$2,800 level, it will revert to the initial support level, followed by US$2,785 (the high from January 24) and the weekly low of US$2,771.

Trading Recommendations

Trading Direction: Buy

Entry Price: 2855

Target Price: 3000

Stop Loss: 2828

Valid Until: February 20, 2025 23:55:00

Support: 2854, 2831, 2818

Resistance: 2872, 2880, 2890

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

EUR/USD rises above 1.0400 as US Dollar's risk premium eases, following a reduction in global trade war fears.

BUY EURUSD

Close Time

CLOSED

1.04199

Entry Price

1.08000

1.02000

1.08700 -0.00163 -0.15%

58.5

Pips

Profit

1.02000

1.04784

Exit Price

1.04199

Entry Price

1.08000

The EUR/USD pair has surged above the 1.0400 mark in a notable rally during Wednesday’s European session, extending its gains for the third consecutive day as the US Dollar (USD) continues its downward trajectory. This movement comes as the risk premium associated with the USD fades, with investors growing more confident that fears of an escalating global trade war are subsiding. As the market focuses on upcoming data releases from the United States, the outlook for both the Euro and the US Dollar remains in flux, with potential for significant volatility in the near term.

The US Dollar Index (DXY), which tracks the value of the Greenback against a basket of six major currencies, dropped to approximately 107.50, signaling a loss of some of the risk premium that had previously bolstered the currency. The decline comes as investors adjust their expectations, with the view that the scope of any potential trade war between the United States and its major trading partners is likely to remain limited.

While the trade war rhetoric between the US and China remains a key factor driving market sentiment, the broader concerns over global trade tensions seem to have eased. The focus has primarily been on the US-China relationship, with China retaliating against US tariffs by imposing its own tariffs on US exports, including agricultural products, automobiles, and energy items like coal and liquefied natural gas (LNG). The market has largely priced in this bilateral escalation, leaving investors to reassess their risk appetite.

At the same time, US President Donald Trump has used tariffs as a political tool in his efforts to secure favorable trade deals, especially with key partners such as Canada and Mexico. Recently, President Trump postponed the implementation of a 25% tariff on imports from these countries, leading to speculation that tariffs are more of a bargaining chip in his broader negotiation strategy than an actual economic threat. As a result, fears of a widespread global trade war have abated, contributing to the decline in the USD’s risk premium.

Looking ahead, the key driver for the US Dollar will be the upcoming Nonfarm Payrolls (NFP) report for January, set to be released on Friday. This highly anticipated data will be scrutinized for insights into the strength of the US labor market and its potential impact on the Federal Reserve's (Fed) monetary policy stance. In particular, the report will provide clarity on whether the Fed's current trajectory of tightening policy remains intact, or if the data will signal a potential shift in the central bank’s approach.

In addition to the NFP data, Wednesday’s session will also see the release of the ADP Employment Change and the ISM Services Purchasing Managers Index (PMI) for January, which could provide early indications of the direction of the US economy and influence the Fed’s decision-making process.

Meanwhile, the Euro (EUR) has been underperforming relative to its major peers, but this has not prevented EUR/USD from rising. The European Central Bank (ECB) remains in an easing cycle, with markets fully expecting additional rate cuts in the coming months. While ECB officials are optimistic about inflation returning sustainably toward the central bank’s target of 2%, the outlook for the Eurozone economy remains clouded by geopolitical risks and trade uncertainties.

In a recent interview with the Slovak newspaper Hospodarske Noviny, ECB Vice President Luis de Guindos indicated that inflation in the Eurozone is expected to approach the ECB’s target, though he cautioned that energy prices may cause some volatility in the near term. Guindos also emphasized that, despite the central bank's current trajectory, the final level of interest rates remains uncertain, underscoring the fluid nature of the ECB’s policy outlook.

The ECB's recent reduction of its Deposit Facility rate by 25 basis points to 2.75% further reinforces expectations that the central bank will continue to ease policy. Traders are now anticipating three additional rate cuts over the next three ECB meetings, which would bring rates closer to historic lows. However, this dovish stance has done little to support the Euro, as market participants are increasingly concerned about the potential for a trade war with the European Union.

US President Trump recently expressed his frustration with the EU, suggesting that tariffs on European imports are imminent, given that the EU has “really taken advantage of us” in trade negotiations. These comments have heightened concerns that the Eurozone could become the next target in Trump’s tariff campaign, potentially exacerbating the challenges facing the Euro.

Technical Analysis

From a technical perspective, EUR/USD is attempting to breach the key resistance level at 1.0385, with the pair currently positioned for a potential continuation of its bullish trend. The pair’s ability to move above the 50-day Exponential Moving Average (EMA) has strengthened the case for further gains, with the next target seen at 1.0800.

A break above this level could signal a more substantial move higher for EUR/USD, with the potential to test even stronger resistance levels. On the downside, the key support level lies at 1.0325, with a break below this point likely to trigger a reversal of the current bullish trend.

The expected trading range for the pair today is between 1.0300 as support and 1.0465 as resistance, with the trend forecast remaining bullish unless there is a decisive move below the 1.0325 level.

TRADE RECOMMENDATION

BUY EURUSD

ENTRY PRICE: 1.0420

STOP LOSS: 1.0200

TAKE PROFIT: 1.0800

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

old prices surged to new all-time highs near $2,870, driven by softer U.S. economic data and expectations for further Federal Reserve rate cuts.

BUY XAUUSD

Close Time

CLOSED

2870.82

Entry Price

2940.00

2820.00

2978.77 +45.46 +1.55%

343.9

Pips

Profit

2820.00

2905.21

Exit Price

2870.82

Entry Price

2940.00

Gold (XAU/USD) is on an extraordinary rally, marking its fifth consecutive day of gains as it touches new all-time highs near $2,870. The yellow metal has surged more than 2% this week alone, fueled by a combination of weakening U.S. economic data and growing expectations that the Federal Reserve will soon implement further interest rate cuts. As inflation concerns ease and trade tensions dissipate, Gold continues its relentless climb, confirming its role as the go-to safe haven asset in uncertain times.

This week’s price action reflects an ongoing shift in market sentiment, where investors, wary of volatility in other asset classes such as tech stocks, have flocked to Gold. This move is particularly pronounced as U.S. Treasury yields reach fresh lows, with inflation fears gradually fading. The precious metal’s latest gains also align with reports indicating that the trade war’s impact is quickly diminishing, offering more room for Gold to appreciate as it benefits from a combination of risk-off sentiment and dovish expectations from the Federal Reserve.

On the economic front, there are key indicators set to further bolster Gold’s upward trajectory. This Wednesday, the U.S. will release its Purchasing Managers Index (PMI) data for January, which could be pivotal in determining whether Gold can extend its bull run. A weaker-than-expected PMI print—especially a decline in the manufacturing or services sectors—would likely trigger another surge in Gold prices, pushing it even closer to the psychological $3,000 mark. Analysts are closely watching the final PMI data for any signs of further economic softening, as it would only serve to amplify expectations for the Federal Reserve to maintain or even cut rates further in the coming months.

The market is already anticipating that the Fed will leave interest rates unchanged at its next meeting on March 19, with the CME FedWatch tool showing an 83.5% probability of a status quo decision. A mere 16.5% probability points to a 25 basis point rate cut, further solidifying the view that the Fed's dovish stance is likely to persist. With these expectations in place, Gold is well-positioned to continue its ascent as investors flock to the safe haven in the absence of higher-yielding alternatives.

According to Bloomberg, traders and investors have increasingly shifted their focus from riskier assets like tech stocks to Gold as a safe haven. The precious metal’s recent surge is in part due to falling yields on U.S. Treasury bonds, which make Gold, a non-interest-bearing asset, more attractive by comparison. The decline in inflation concerns has played a significant role in this dynamic, as lower inflation expectations signal that the Fed may not have to take aggressive action on rates in the immediate future.

The pullback in U.S. yields—particularly in the 10-year Treasury bond, which is seen as a key benchmark for broader market sentiment—has provided further tailwinds for Gold. The yield on the 10-year note recently reached new lows, prompting many investors to reassess their portfolio allocations and increase their holdings in safe haven assets. As inflation expectations moderate, Gold’s appeal as a store of value in a low-rate environment becomes even more pronounced.

Technical Analysis

From a technical perspective, Gold’s bullish trend remains intact. The precious metal has successfully breached the $2,850 level, opening the door for a potential move towards $2,900. The price action is clearly organized by a bullish channel, with strong support at the $2,835 level. As long as Gold holds above this level, the current bullish momentum is expected to remain valid and active for the foreseeable future.

The anticipated trading range for Gold today is between support at $2,835 and resistance at $2,875, with the expectation that the market will continue to test these boundaries in the near term. The technical setup suggests that Gold has the potential to break higher, especially if external factors, such as weaker economic data or continued dovish commentary from the Fed, add fuel to the fire.

TRADE RECOMMENDATION

BUY GOLD

ENTRY PRICE: 2871

STOP LOSS: 2820

TAKE PROFIT: 2940

Risk Warnings and Disclaimers

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EUR/JPY Extends Losses Amid BoJ Hawkish Comments, Eyes Further Downside

Euro Suppressed as Tariff Threats Looming

Fundamentals

Technical Analysis

Trading Recommendations

Could the Support Zone Spark a Buying Opportunity?

Technical Analysis

A Short-term Strong Rebound Is Expected

Fundamentals

Technical Analysis

Trading Recommendations

Pullbacks Come with Buying Opportunities

Fundamentals

Technical Analysis

Trading Recommendations

EUR/USD Soars Above 1.0400 as US Dollar Risk Premium Eases Amid Diminishing Global Trade War Fears

Gold Prices Surge to Record Highs Amid U.S. Economic Softening and Rate Cut Speculation

Risk Disclosure