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Pound Gains Ground, Yen Faces Pressure from US Tariffs (01.28.2025)

The euro hovered near 1.05, supported by expectations of a 25-basis-point rate cut from the ECB, while the yen slipped below 155.5 per dollar, pressured by U.S. tariff threats but strengthened by the BOJ’s hawkish stance.

Gold steadied at $2,730 with Fed rate expectations and stronger dollar pressure, while silver consolidated around $30.5, balancing hopes for looser U.S. monetary policy against weak Chinese industrial demand. The British Pound neared $1.25 on UK PMI data despite potential BOE rate cuts.

TimeCur.EventForecastPrevious
  CNYHoliday (All Day) – Chinese New Year
13:30  USDDurable Goods Orders 0.1%-1.2%
15:00  USDCB Consumer Confidence 105.9 104.7

Euro Nears $1.05 Ahead of ECB Meeting

The euro hovered around the $1.05 mark at the end of January, nearing its highest level since December 16, as investors geared up for a series of central bank meetings this week. Expectations point to the European Central Bank cutting rates by 25 basis points on Thursday, marking the fifth reduction since rates peaked at over two-decade highs in late 2023. Markets are also anticipating clues about the ECB's outlook for the year, as additional rate cuts could be on the horizon in the coming months.

Meanwhile, the U.S. Federal Reserve is expected to maintain its current interest rates, while central banks in Canada and Sweden are likely to ease monetary policy further.

From a technical standpoint, the euro faces resistance at 1.0490, with additional resistance levels at 1.0515 and 1.0550 if it moves higher. On the downside, initial support is at 1.0355, followed by 1.0270 and 1.0225.

R1: 1.0490S1: 1.0355
R2: 1.0515S2: 1.0270
R3: 1.0550S3: 1.0225

Yen Retreats with US Tariff Concerns

The Japanese yen slipped below 155.5 per dollar on Tuesday, pulling back from six-week highs as the dollar strengthened following new tariff warnings from Donald Trump. Trump announced plans to impose tariffs on imported chips, pharmaceuticals, steel, aluminum, and copper to promote domestic production. The yen also gave up gains from the previous session, which had been driven by risk-off sentiment sparked by concerns over Chinese startup DeepSeek’s free open-source AI model potentially challenging the dominance of U.S. AI leaders.

Despite this retreat, the yen remains supported by the Bank of Japan’s hawkish monetary policy outlook. In January, 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 also projected that inflation would reach its 2% target in the latter half of its forecast period, hinting at the possibility of further rate hikes.

Technically, the key resistance level is at 158.60, with potential targets at 160.00 and 161.00 if the price breaks higher. On the downside, major support lies at 154.90, followed by 153.80 and 151.90.

R1: 158.60S1: 154.90
R2: 160.00S2: 153.80
R3: 161.00S3: 151.90

Trump Tariffs and Fed Stance Weigh on Gold

Gold steadied near $2,730 per ounce on Tuesday, holding its recent decline as traders awaited the start of the Federal Reserve’s two-day policy meeting later today. While the Fed is widely expected to keep interest rates unchanged, attention will be on Fed Chair Jerome Powell's remarks and the central bank’s response to President Donald Trump's calls for interest rate cuts. Gold’s appeal as an inflation hedge could weaken if Trump’s policies, perceived as inflationary, prompt the Fed to maintain elevated rates.

Further downward pressure came from a strengthening U.S. dollar, which gained following Trump’s latest tariff threats. In the previous session, gold fell 1.1% amid a broader market sell-off after Chinese AI startup DeepSeek triggered a sharp decline in tech stocks.

From a technical perspective, the first resistance level stands at $2,790, with further levels at $2,800 and $2,820 if the price moves higher. On the downside, initial support is at $2,730, followed by $2,660 and $2,630 if this level is breached.

R1: 2790S1: 2730
R2: 2800S2: 2660
R3: 2820S3: 2630

UK Pound Strengthens on Economic Resilience

The British Pound rose toward $1.25, nearing a three-week high, as investors focused on central bank meetings and U.S. trade policies. The Federal Reserve is expected to hold rates steady on Wednesday, while the ECB is likely to cut by 25 basis points on Thursday. In the UK, stronger-than-expected January PMI data highlighted economic resilience, though the Bank of England is still expected to cut rates by 25 basis points in February.

Meanwhile, U.S. trade tensions remain in focus after President Trump threatened tariffs on Colombia over a migrant dispute, pausing measures after Bogotá agreed to his terms. This follows recent trade actions targeting China, Canada, Mexico, and the EU.

Technically, resistance stands at 1.2460, with further levels at 1.2500 and 1.2600. Support is at 1.2420, followed by 1.2350 and 1.2265.

R1: 1.2460S1: 1.2420
R2: 1.2500S2: 1.2350
R3: 1.2600S3: 1.2265

Silver Prices Consolidate on Weak Chinese Manufacturing

Silver prices hovered around $30.5 per ounce, trading within a narrow range after reaching a one-month high of $30.8 on January 22. Market sentiment remains mixed, with expectations of looser monetary policy from the Federal Reserve offsetting concerns over weak industrial demand for silver. While the Fed is expected to leave rates unchanged, investors are hopeful that Chair Powell’s guidance will avoid a strongly hawkish tone, especially following softer inflation data.

Pro-inflation risks tied to higher import costs eased after President Trump softened his stance on tariffs against China. However, unexpected contraction in Chinese manufacturing at the start of the year, coupled with overcapacity in China’s solar panel sector, dampened the outlook for silver demand from its top industry.

Technically, the first resistance level will be 31.00. In case of this level’s breach, the next levels to watch would be 31.80 and 32.50 consequently. On the downside 29.85 will be the first support level. 28.80 and 28.50 are the next levels to monitor if the first support level is breached.

R1: 31.00S1: 29.85
R2: 31.80S2: 28.80
R3: 32.50S3: 28.50

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