Weekly Technical and Fundamental Analysis (07/01/25)

Stay ahead of the financial markets with this week’s comprehensive technical and fundamental analysis. We’ll cover the latest price trends for USD/JPY, EUR/USD, and XAU/USD, along with critical updates on global currencies like the Australian Dollar, Japanese Yen, and Euro. 

Let’s dive into the actionable insights to refine your trading strategies with Vestrado!

Weekly Technical Analysis

This analysis studies price movements, chart patterns, and key support and resistance levels to predict future market behavior. This week’s technical insights will help traders identify short-term and long-term opportunities in USD/JPY, EUR/USD, and XAU/USD.

USD/JPY H4 Analysis

Key Observations:

1. Trend Channel:
   • The pair trades within an upward-sloping channel marked by parallel green lines.
   • This suggests a medium-term bullish trend.
2. Support and Resistance Levels:
   • Support: 157.100 (red line).
   • Resistance: 160.100 (green line at the channel’s top).
3. Projection:
   • A bearish retracement is likely toward 157.100 support.
   • Post-retrace, the bullish trend is expected to resume toward 160.100 resistance.

Trading Implications:

• Short-term Bearish Play:
  • Look for selling opportunities if the price rejects resistance or breaks below intermediate support.
  • Target: 157.100.
• Long-term Bullish Play:
  • Look for buying opportunities near 157.100 support or upon confirmation of a breakout above 160.100.
  • Target: 160.100 or higher.

EUR/USD H4 Analysis

Key Observations:

1. Trend Analysis:
   • The pair trades within a downward-sloping channel, marked by red lines, indicating a bearish trend.
2. Support and Resistance Levels:
   • – Resistance Level: 1.03200 (indicated by the green line)  
   • – Support Level: 1.02300 (indicated by the red line)
3. Projection:
   • A bullish retrace is expected to test the 1.03200 resistance.
   • The bearish trend is likely to resume, targeting 1.02300 support.

Trading Implications:

• Short-term Bullish Opportunity:
  • Buy if upward momentum toward 1.03200 is confirmed.
  • Stop-loss: The recent lows observed within the channel are positioned below.
  • Target: 1.03200 resistance.
• Mid-term Bearish Play:
  • Sell upon encountering resistance at 1.03200, provided that this resistance level holds. 
  • Stop-loss: Establish at a level exceeding 1.03500.  
  • Target: Aim to establish support at 1.02300.

XAU/USD (Gold) H4 Analysis

Key Observations:

1. Trend Analysis:
   • Gold moves within an ascending channel (green trendlines), signaling a bullish trend.
2. Support and Resistance Levels:
   • Resistance: 2675.00.
   • Support: 2620.00.
3. Projection:
   • A bearish retracement is expected to test 2620.00 support.
   • The bullish trend will likely continue toward the 2675.00 resistance.

Trading Implications:

• Short-term Bearish Opportunity:
  • Sell if the price shows rejection or breaks down intraday support.
  • Placement of the stop-loss order should be executed above the most recent swing high.
  • The target support level is identified at 2620.00.
• Mid-term Bullish Opportunity:
  • Buy near 2620.00 support if it holds.
  • Stop-loss: Below 2615.00.
  • Target: 2675.00 resistance.

Weekly Fundamental Analysis

Fundamental analysis evaluates economic, political, and financial factors influencing currency prices. This week’s fundamental insights shed light on the Australian Dollar, Japanese Yen, Euro, and other major currencies, helping traders align their strategies with market conditions.

Australian Dollar (AUD):

• 2024 Recap:
  • Despite the Reserve Bank of Australia’s decision not to cut rates in 2024, the AUD fell by 9.1%, underperforming the Canadian and New Zealand dollars.
• Outlook:
  • Economic slowdown and moderating inflation increase the likelihood of an easing cycle. Rate cuts are anticipated in early 2025.

Japanese Yen (JPY):

• 2024 Recap:
  • The USD/JPY pair rose by 11.5% in 2024. The Bank of Japan’s gradual monetary policy normalization included lifting the overnight call rate from negative territory to 0.25%.
• Outlook:
  • With further rate hikes expected in 2025, the yen’s future performance depends on trade dynamics and monetary policies.

Euro (EUR):

• 2024 Recap:
  • The euro ended the year at its lowest level. The US-Eurozone macroeconomic divergence continues to weigh heavily on the currency.
• Outlook:
  • ECB rate cuts of 100 bp are expected in 2025, with limited political stability in France and low growth across the Eurozone.

British Pound (GBP):

• 2024 Recap:
  • Sterling saw the smallest loss (-1.7%) among G10 currencies. However, the Bank of England’s limited rate cuts reflect ongoing economic challenges.
• Outlook:
  • Further GBP weakness is likely, with rate cuts and political instability dampening prospects.

US Dollar (USD):

• 2024 Recap:
  • The Dollar Index rose by nearly 5% post-election, ending at a two-year high due to favorable interest rate differentials.
• Outlook:
  • While valuation concerns remain, the USD’s dominance may extend into Q1 2025, supported by labor market adjustments and Federal Reserve policy pivots.

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