Rebound Could Be Exhausted, while a New Downturn Could Begin

Forex

Summary:

Market expects further easing by the Reserve Bank of New Zealand (RBNZ), potentially exerting downward pressure on the New Zealand dollar in the medium term. Conversely, the U.S. dollar is expected to strengthen, driven by expectations of tighter monetary policy and robust recent economic performance in the U.S., leading to a bearish outlook for the NZDUSD in the medium term.

SELL NZDUSD

EXP

TRADING

0.57550

Entry Price

0.53500

0.59400

0.57384 -0.00229 -0.40%

0.0

Pips

Flat

0.53500

Exit Price

0.57550

Entry Price

0.59400

Fundamentals

Recent data from New Zealand indicates a contraction in economic activity, evidenced by rising unemployment, a decline in employment figures, and subdued performance in select manufacturing and retail sales indicators. In response to these economic headwinds, the RBNZ has implemented consecutive interest rate cuts, most recently reducing the official cash rate by 50 basis points to 3.75%. Market expectations anticipate further easing in the future, driven by an uncertain economic outlook and persistent inflationary pressures, which is likely to exert downward pressure on the New Zealand dollar.

Conversely, in the U.S., the January CPI data revealed sustained inflationary pressures. Furthermore, the recent Federal Open Market Committee (FOMC) minutes indicated that several officials reiterated the necessity of maintaining a restrictive monetary policy stance until inflation demonstrates a clear downward trajectory. Coupled with robust recent economic data, this has led investors to anticipate higher yields on U.S. dollar-denominated assets, thereby bolstering the strength of the U.S. dollar.

Technical Analysis

Rebound Could Be Exhausted, while a New Downturn Could Begin_1

Recently, the NZDUSD has been rebounding following a significant decline, driven by the ongoing weakness of the U.S. dollar. As of the European trading session on February 21, the NZDUSD was consolidating around 0.5760.

In the 4H timeframe, the NZDUSD is approaching the 0.5800 resistance level, with consecutive long upper shadow in the 4H timeframe, indicating increasing bearish pressure.

Currently, if the NZDUSD confirms a weakening trend below the 0.5800 resistance, the initial support level to watch is 0.5690. A break below this level would suggest the potential end of the current rebound, and a continuation of the prior downtrend.

It is recommended to await the conclusion of the rebound and go short at the highs once signs of weakness emerge.

Trading Recommendations

Trading Direction: Sell

Entry Price: 0.5760

Target Price: 0.5350

Stop Loss: 0.5940

Valid Until: March 7, 2025 23:00:00

Support: 0.5677, 0.5599, 0.5515

Resistance: 0.5771, 0.5800, 0.5928

Risk Warnings and Disclaimers

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Warren Takunda

Commodity

Summary:

Gold prices retreated from their recent all-time highs on Friday amid profit-taking and a minor recovery in the U.S. dollar.

BUY XAUUSD

EXP

TRADING

2930.03

Entry Price

3000.00

2890.00

2935.98 -3.28 -0.11%

0.0

Pips

Flat

2890.00

Exit Price

2930.03

Entry Price

3000.00

Gold (XAU/USD) extended its retracement from record highs on Friday, slipping to a daily low near $2,920 during the European session. The decline follows a rally that saw the yellow metal surge to an all-time high of $2,955 on Thursday, fueled by safe-haven demand amid escalating geopolitical tensions and concerns over U.S. trade policies.

The retreat in gold prices was largely attributed to profit-taking as traders locked in gains following the recent rally. Additionally, a modest recovery in the U.S. dollar (USD) contributed to the pullback, as the greenback rebounded from its lowest level since December 10. The Federal Reserve's (Fed) cautious stance on interest rate cuts also played a role in capping gold's gains, prompting some short-term investors to exit their positions.

Despite the pullback, gold remains well-supported by macroeconomic factors, particularly concerns over U.S. trade policies under former President Donald Trump’s renewed influence. Trump's previous tariff implementations, including a 25% duty on steel and aluminum and a 10% tariff on Chinese imports, have reignited fears of a global trade war. With speculation that additional tariffs could be announced in the coming months, investors are hedging against potential economic instability by seeking refuge in gold.

Moreover, Trump's protectionist stance is expected to fuel inflationary pressures, further bolstering demand for the precious metal as a hedge against rising prices. Inflation remains a key concern for policymakers, with Fed officials offering mixed signals on the trajectory of interest rates.

St. Louis Fed President Alberto Musalem warned on Thursday that persistent inflation expectations and the risk of stagflation could pose significant challenges for the U.S. economy. Meanwhile, Fed Governor Adriana Kugler noted that inflation remains above the central bank’s 2% target, suggesting that the path toward price stability could be turbulent. However, Atlanta Fed President Raphael Bostic took a more dovish stance, hinting at the possibility of two rate cuts in 2025, dependent on evolving economic conditions.

Geopolitical tensions, particularly the Russia-Ukraine conflict, continue to act as a tailwind for gold. The recent intensification of Ukrainian drone attacks on Russian oil infrastructure has heightened concerns about supply disruptions, further supporting demand for safe-haven assets.

Additionally, the U.S. dollar remains under pressure due to expectations of Fed rate cuts, keeping gold resilient despite temporary pullbacks. The dollar index (DXY) remains near multi-month lows, with market participants pricing in a less aggressive Fed tightening cycle. A weaker dollar generally makes gold more attractive to foreign investors, further underpinning the metal’s bullish outlook.

Technical Analysis

From a technical perspective, gold remains in an overall uptrend despite the recent correction. The price action continues to respect key support levels, with the 50-day Exponential Moving Average (EMA) providing a floor around the $2,920-$2,924 range.

Gold's ability to close above $2,940 on Thursday indicates that bullish momentum remains intact. The four-hour chart suggests that gold is still in a long-term uptrend, with the moving averages pointing northeast, signaling further upside potential.

However, traders should remain cautious of short-term corrections, particularly amid profit-taking ahead of the weekend. The $2,920 level remains a critical support zone, and as long as prices stay above this threshold, the broader bullish outlook remains valid. A sustained move above $2,955 could open the door for a push toward the psychological $3,000 mark.

While gold has experienced a minor setback, the underlying bullish trend remains firmly in place. The combination of inflation concerns, geopolitical uncertainties, and expectations of a dovish Fed continue to provide strong support for the precious metal.

Short-term corrections should be viewed as opportunities rather than signs of a trend reversal. Investors looking to enter fresh long positions may find attractive opportunities on dips near $2,920, with the ultimate target set on further record highs in the coming weeks.

TRADE RECOMMENDATION

BUY GOLD

ENTRY PRICE: 2930

STOP LOSS: 2890

TAKE PROFIT: 3000

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The EUR/JPY pair continues its decline as the Japanese Yen strengthens on expectations of additional BoJ rate hikes.

SELL EURJPY

EXP

TRADING

157.600

Entry Price

155.000

160.000

156.112 -1.007 -0.64%

0.0

Pips

Flat

155.000

Exit Price

157.600

Entry Price

160.000

The EUR/JPY pair extends its downward momentum, slipping to around 156.55 during the early European session on Thursday. A confluence of factors is pressuring the Euro against the Japanese Yen (JPY), with the latter benefiting from rising speculation of additional rate hikes by the Bank of Japan (BoJ). Meanwhile, investors are also keeping a close watch on Germany’s upcoming Producer Price Index (PPI) data for January, which could offer fresh insights into inflation trends within the Eurozone’s largest economy.

Recent macroeconomic indicators out of Japan have strengthened the case for the BoJ to further tighten monetary policy. The nation’s latest GDP data exceeded expectations, while nominal wages saw their fastest increase in nearly three decades. These developments have bolstered confidence in Japan’s economic recovery, reinforcing market expectations of a continued exit from the central bank’s long-standing ultra-loose monetary policy.

According to a recent Reuters poll, 65% of economists now believe that the BoJ could raise rates to 0.75% in the third quarter of 2024. The ongoing labor negotiations in Japan are also painting a hawkish picture, with wage growth projected to hit 5.00%, up from 4.75% in the previous survey. Wage gains are a critical factor in sustaining inflation at the BoJ’s target level, providing further justification for rate hikes in the coming months.

Adding to the speculation, BoJ Board Member Hajime Takata emphasized on Wednesday the importance of gradually normalizing interest rates while acknowledging that Japanese bond yields are responding appropriately to the market’s economic outlook. These comments have intensified market expectations of imminent policy tightening, providing significant support for the yen while exerting downward pressure on the EUR/JPY cross.

The Euro is facing multiple challenges, with trade policy concerns from the United States adding another layer of uncertainty. Former US President Donald Trump, who remains a key figure in the upcoming election cycle, reiterated his stance on tariffs, suggesting that foreign automobiles could face a 25% duty. Additionally, semiconductor chips and pharmaceutical products are expected to see increased tariffs, with some measures potentially taking effect as early as April 2.

While the exact timeline and scope of these tariffs remain uncertain, the prospect of increased trade restrictions could weigh heavily on European manufacturers, particularly the German automotive sector. Germany, as the Eurozone’s economic powerhouse, has deep trade linkages with the US, and any punitive measures could dampen the Euro’s strength against its peers.

Another significant factor influencing the EUR/JPY pair is the stark contrast between the policy outlooks of the BoJ and the European Central Bank (ECB). Markets are currently pricing in aggressive rate cuts from the ECB over the next year, with expectations of 75 basis points in reductions, which would bring the policy rate down to 2.00%. This dovish outlook stands in stark contrast to the BoJ’s increasingly hawkish tone, further fueling downside pressure on EUR/JPY.

Technical Analysis

From a technical perspective, EUR/JPY is attempting a corrective bullish move after its recent decline. The pair has reclaimed the 157.30 level and is now targeting 158.20, potentially extending gains toward 158.65 if bullish momentum persists. However, any upside is likely to be temporary, with renewed selling pressure expected to emerge near resistance levels.

If the pair fails to sustain gains above 158.65, a renewed bearish wave could push prices back toward 156.60 and 155.50, reinforcing the overall downside bias. The expected trading range for today is between 157.00 and 158.60, with a bearish outlook prevailing in the medium term.

TRADE RECOMMENDATION

SELL EURJPY

ENTRY PRICE: 157.60

STOP LOSS: 160.00

TAKE PROFIT: 155.00

Risk Warnings and Disclaimers

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Manuel

Economic

Central Bank

Summary:

This zone could attract sellers anticipating a weakening Aussie, particularly as the pair approaches technical barriers.

SELL AUDUSD

EXP

PENDING

0.64300

Entry Price

0.62800

0.65150

0.63497 -0.00508 -0.79%

Pips

PENDING

0.62800

Exit Price

0.64300

Entry Price

0.65150

The most recent comments from Federal Reserve officials have highlighted the delicate balance the central bank faces in navigating inflation and economic stability. On Thursday, St. Louis Fed President Alberto Musalem voiced concerns about the dual risks of rising inflation expectations and the possibility of stagflation—an economic scenario that could prove challenging to counter. His remarks underscored the potentially difficult choices ahead for the Fed.

While many of Musalem’s colleagues maintain that inflation expectations remain anchored, he pointed to recent data suggesting otherwise. If inflation expectations begin to rise meaningfully, it could force the central bank to adopt a more restrictive policy stance, delaying any anticipated rate cuts.

Adding to this cautious sentiment, Federal Reserve Governor Adriana Kugler stated late Thursday that U.S. inflation still has “a long way to go” before reaching the central bank’s 2% target. She emphasized that the path to achieving this goal remains uneven and fraught with uncertainty, reinforcing the Fed’s wait-and-see approach.

Fresh U.S. labor market data released on Thursday added another layer to the narrative. Initial jobless claims for the week ending February 15 rose to 219,000, up from the previous week’s revised total of 214,000 (originally 213,000). This figure came in higher than the market consensus of 215,000, suggesting some softening in the labor market. However, the reports have done little to shift expectations that the Fed will remain on hold for several months.

Meanwhile, geopolitical and trade concerns resurfaced as former President Donald Trump announced on Wednesday that he plans to introduce new tariffs within the next month. These measures will include products such as lumber and forest goods, adding to previously announced plans to impose tariffs on imported automobiles, semiconductors, and pharmaceuticals. Such protectionist moves could reignite fears of trade tensions, which may weaken the Euro in the short term while adding to global economic uncertainty.

On Thursday night, Reserve Bank of Australia (RBA) Governor Michele Bullock delivered a clear message regarding the central bank’s cautious approach to monetary policy. She emphasized that their central projection suggests that if monetary policy is eased too quickly or too aggressively, the disinflationary process could stall, leaving inflation anchored above the midpoint of the target range. This statement reinforced the RBA’s data-driven approach, with Bullock noting that the board remains committed to assessing evolving risks rather than pre-committing to any particular course of action on interest rates.

While the strong employment growth seen recently is positive for job seekers, Bullock acknowledged that it may also signal more underlying strength in the economy than previously anticipated. This acknowledgment has kept the RBA vigilant, suggesting that despite their satisfaction with the progress made on inflation so far, their job is far from complete. The underlying concern remains that easing policy too early could undo the progress made, creating a scenario where inflation becomes entrenched above the desired range. AUDUSD Rally Faces Key Resistance Amid Overbought Signals_1

AUDUSD Rally Faces Key Resistance Amid Overbought Signals_1

Technical Analysis

The AUD/USD pair has maintained bullish momentum since breaking above the 100-period moving average, initiating its climb from the 0.6089 level. This upward movement has extended steadily, bringing the pair closer to the 200-period moving average, where it may encounter resistance near the key 0.6440 level. This zone could attract sellers anticipating a weakening Aussie, particularly as the pair approaches technical barriers.

The Relative Strength Index (RSI) is also nearing overbought territory, currently sitting at 67. A continued push higher could see the RSI fully enter overbought levels, potentially triggering profit-taking from bullish traders and inviting short positions from bears. Should the resistance zone exhibit bearish behavior, a pullback toward 0.6280 could be in play. Conversely, a strong bullish continuation might open the door to further upside, with the next leg of the rally gaining traction above resistance.

Trading Recommendations

Trading direction: Sell

Entry price: 0.6430

Target price: 0.6280

Stop loss: 0.6515

Validity: Mar 04, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Economic

Central Bank

Summary:

The EUR/AUD pair has been firmly in a bearish trend since February 13, retreating from the key resistance zone around 1.6630 after failing to break higher.

BUY EURAUD

EXP

TRADING

1.63898

Entry Price

1.65800

1.63050

1.64504 +0.00473 +0.29%

0.0

Pips

Flat

1.63050

Exit Price

1.63898

Entry Price

1.65800

Adding to the positive domestic backdrop, the preliminary reading of Australia’s Judo Bank Manufacturing Purchasing Managers' Index (PMI) showed a slight improvement, rising to 50.6 in February from 50.2 in January, according to the latest data from Judo Bank and S&P Global released on Friday. This indicates a modest expansion in manufacturing activity, suggesting resilience in the Australian economy despite global economic uncertainties.

Across the globe, European Central Bank (ECB) President Christine Lagarde maintained a cautious stance on monetary easing, dismissing the notion of a larger 50-basis-point rate cut and instead advocating for a more gradual, data-dependent approach. Despite the ongoing trade tensions and economic soft patches across the Eurozone, Lagarde remains optimistic that inflation will reach the ECB’s 2% target by 2025, suggesting that any policy adjustments would likely follow a measured and deliberate pace.

ECB policymakers continue to debate the outlook for interest rates, with Executive Board member Isabel Schnabel adding to the uncertainty. Yesterday, Schnabel stated that there should be a discussion about a potential “pause” in rate cuts, citing an uncertain inflation outlook and the need to avoid easing policy too aggressively. This divergence within the ECB adds another layer of complexity to the EUR/AUD dynamic, as traders weigh the potential for a more hawkish ECB against the RBA’s cautious optimism. Support Zone Could Trigger a Fresh Bullish Impulse_1

Support Zone Could Trigger a Fresh Bullish Impulse_1

Technical Analysis

The EUR/AUD pair has been firmly in a bearish trend since February 13, retreating from the key resistance zone around 1.6630 after failing to break higher. This downward momentum has now brought the pair to levels not seen since December of last year, approaching oversold conditions as reflected by the 4-hour RSI, which is flirting with the 30 mark. Historically, this area of support has proven significant, with the price finding bullish momentum here on two prior occasions. Should the support zone hold once again, it could set the stage for a new upward impulse, as the price has already begun forming tentative bullish candles, hinting at a possible reversal.

From a technical perspective, the 100-period and 200-period moving averages are currently positioned above the 1.6540 level, resting near the midpoint between the recent local high and low. This positioning suggests the formation of a potential sideways channel, where the price could continue consolidating until it converges with these moving averages once more. If this scenario plays out, EUR/AUD may see range-bound trading in the short term, with support around 1.6500–1.6540 and resistance near 1.6630, creating opportunities for traders to capitalize on the oscillations.

Trading Recommendations

Trading direction: Buy

Entry price: 1.6390

Target price: 1.6580

Stop loss: 1.6305

Validity: Mar 04, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

The Reserve Bank of New Zealand (RBNZ) has once again delivered a significant rate cut, with its statement remaining dovish.

BUY EURNZD

EXP

TRADING

1.82340

Entry Price

1.84500

1.81500

1.82030 -0.00203 -0.11%

0.0

Pips

Flat

1.81500

Exit Price

1.82340

Entry Price

1.84500

Fundamentals

The Reserve Bank of New Zealand (RBNZ) lowered its benchmark interest rate by 50 basis points to 3.75% on Wednesday, in line with market expectations. This marks the fourth consecutive meeting in which the RBNZ has cut rates. According to the statement, with inflation easing, further rate reductions are anticipated. The RBNZ forecasts the Official Cash Rate (OCR) to be 3.45% by June 2025 (previously 3.83%) and 3.1% by March 2026 (previously 3.43%). The committee expressed confidence in continuing to lower rates, noting that if economic conditions evolve as expected, there remains room for further OCR cuts in 2025.

Market Observations: The RBNZ's rate cut announcement on Wednesday reflects its cautious outlook on the economic outlook. Meanwhile, the dovish tone of the statement has led to a relative decline in the yield of holding New Zealand dollars (NZD). Given the market's sensitivity to interest rate differentials, the NZD may face depreciation pressure, which could, in turn, create upward potential for the EURNZD currency pair in the short term. Additionally, if the European Central Bank (ECB) maintains or tightens its monetary policy, the attractiveness of the Euro (EUR) relative to the NZD will further increase, creating a fundamental cross-market comparative effect.

Downtrend Initiates, Yet Rebound Remains Possible_1

Technical Analysis

Short- to Medium-Term Trends: On the daily chart, the EURNZD pair has recently been consolidating at the upper end of a broad range, exhibiting characteristics of a high-level consolidation. This indicates that buying pressure remains strong. However, the short-term trend is beginning to turn downward, as evidenced by the MA10 and MA20. The Relative Strength Index (RSI) is currently in the range of 50 to 65, showing no signs of overbought conditions and indicating that upward momentum remains healthy. The recent crossover of the MACD and signal line is also skewed towards a bullish signal, suggesting that buying momentum is accumulating.

Combining fundamental and technical analysis, the NZD is likely to face short-term pressure due to the rate cut, while the EUR shows relative strength on both fundamental and technical grounds. The asset is currently in a robust upward trend, and if key resistance levels are breached, further upside potential can be expected. However, investors should closely monitor market sentiment and changes in key technical levels, and adjust their trading strategies accordingly.

Trading Recommendations

Trading Direction: Buy

Entry Price: 1.8220

Target Price: 1.8450

Stop Loss: 1.8150

Valid Until: March 7, 2025, 23:55:00

Support: 1.8200/1.8157/1.8077

Resistance: 1.8302/1.8396/1.8497

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The British pound is holding steady against the U.S. dollar, recovering above the 1.2600 mark after Wednesday’s volatile trading.

BUY GBPUSD

EXP

TRADING

1.26000

Entry Price

1.27500

1.25000

1.26199 -0.00481 -0.38%

0.0

Pips

Flat

1.25000

Exit Price

1.26000

Entry Price

1.27500

The British pound found renewed strength against the U.S. dollar on Thursday, reclaiming ground above the 1.2600 level after a choppy session the day before. The latest price action indicates that selling pressure has eased for now, with technical indicators signaling potential for further gains—provided the pair can clear key resistance levels in the near term.

On Wednesday, GBP/USD initially gained traction following the release of the U.K.’s January inflation data, which showed persistent price pressures despite expectations of gradual cooling. The initial reaction pushed the pair higher, but a resurgent U.S. dollar, bolstered by a cautious market sentiment and a hawkish read on the Federal Reserve’s meeting minutes, led to a reversal.

The minutes from the Fed’s January policy meeting revealed that some officials remained concerned about factors such as trade and immigration policies potentially complicating the disinflation process. While no immediate changes to the Fed’s rate stance were hinted at, the cautious tone reinforced expectations that policymakers are unlikely to rush into rate cuts, providing intermittent support for the U.S. dollar.

However, in Thursday’s European session, a pullback in U.S. Treasury yields weighed on the greenback. The benchmark 10-year U.S. Treasury yield dipped toward 4.5%, reducing demand for the dollar and helping GBP/USD maintain its foothold above 1.2600.

Investors now turn their attention to the latest U.S. jobless claims data, set to be released later in the session. Consensus estimates suggest an increase in initial jobless claims to 215,000 for the week ending February 15. A reading below 200,000 could reinforce confidence in the resilience of the U.S. labor market, likely supporting the dollar and capping GBP/USD’s upside. Conversely, a significant rise in claims could reignite concerns about slowing economic momentum, potentially paving the way for a softer dollar and further gains for the pound.

Beyond U.S. labor market data, traders will also be watching Friday’s U.K. retail sales report for January. With consumer spending serving as a critical driver of the British economy, an upside surprise could provide an additional catalyst for GBP/USD’s bullish momentum. Conversely, weak retail figures might reignite concerns about slowing economic growth, adding pressure on the Bank of England’s monetary policy outlook.

Technical Analysis

From a technical perspective, GBP/USD is testing key levels that could determine its near-term trajectory. The pair has broken out of a previous uptrend channel but is now retesting a crucial support level. Should this support hold, a bullish continuation remains likely.

The Relative Strength Index (RSI) on the four-hour chart is trending upward toward 60, having bounced from the 50 region on Wednesday. This suggests that technical buyers remain engaged and that upside momentum could persist.

On the resistance front, GBP/USD faces immediate hurdles at 1.2650, which coincides with the 78.6% Fibonacci retracement level of the latest uptrend. A confirmed breakout above this region could open the door toward the next psychological resistance levels at 1.2700-1.2710 and further at 1.2750. Conversely, failure to break past 1.2650 could see renewed selling pressure, with initial support at 1.2575, followed by the 1.2530-1.2550 demand zone.

TRADE RECOMMENDATION

BUY GBPUSD

ENTRY PRICE: 1.2600

STOP LOSS: 1.2500

TAKE PROFIT: 1.2750

Risk Warnings and Disclaimers

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Rebound Could Be Exhausted, while a New Downturn Could Begin

Fundamentals

Technical Analysis

Trading Recommendations

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Technical Analysis

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Technical Analysis

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Technical Analysis

Downtrend Initiates, Yet Rebound Remains Possible

Fundamentals

Technical Analysis

Trading Recommendations

GBP/USD Rebounds Above 1.2600 Amid Dollar Weakness; Key Resistance at 1.2750 in Focus

Risk Disclosure