
This week our foreign money strategists centered at the Australian This autumn 2024 CPI file and FOMC financial coverage commentary for attainable high quality setups within the Kiwi and U.S. Greenback.
Out of the 8 situation/worth outlook discussions this week, two discussions arguably noticed each fundie & technical arguments caused to turn into attainable applicants for a business & menace control overlay.

Watchlists are worth outlook & technique discussions supported by way of each basic & technical research, a a very powerful step in opposition to making a prime quality discretionary business concept sooner than operating on a menace & business control plan.
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AUD/JPY: Monday – January 27, 2025
AUD/JPY 1-Hour the Forex market Chart by way of TradingView
On Monday, our strategists had their points of interest set on Australia’s This autumn 2024 CPI replace and its attainable affect at the Australian greenback. In line with our Match Information, expectancies had been for inflation to ease from 2.3% y/y to two.5% y/y, whilst quarterly inflation used to be anticipated to tick down from 0.3% q/q to 0.2% q/q.
With the ones expectancies in thoughts, right here’s what we had been pondering:
The “Aussie Advance” Situation:
If the CPI knowledge got here in warmer than anticipated, we expected this may push RBA price lower expectancies additional into the longer term. We taken with AUD/USD for attainable lengthy methods if menace sentiment used to be certain, in particular given lowered expectancies of competitive Fed price cuts. In a risk-off atmosphere, EUR/AUD shorts made sense given the ECB’s basic dovish stance forward in their anticipated price lower.
The “Aussie Avalanche” Situation:
If Australian inflation figures disenchanted, appearing important cooling in worth pressures, we idea this may gas RBA price lower expectancies. We thought to be AUD/NZD for attainable brief methods in a risk-on atmosphere, particularly given New Zealand’s contemporary uptick in inflation expectancies. If menace sentiment leaned destructive, AUD/JPY brief seemed promising given the BOJ’s contemporary hawkish flip and emerging safe-haven call for.
What In reality Took place:
The This autumn 2024 CPI file confirmed significantly web weaker worth pressures:
Quarterly CPI got here in at 0.2% vs 0.3% anticipated
Annual headline CPI ticked as much as 2.5% as anticipated from 2.3%
Trimmed imply CPI (core) eased to 0.5% q/q from 0.8% earlier
Products and services inflation remained increased however eased to 4.3% yearly
Non-discretionary inflation fell to one.8%, lowest since March 2021
Key drivers incorporated:
Electrical energy costs fell 9.9% q/q because of Power Invoice Reduction Fund rebates
Housing and delivery prices each declined 0.7%
With out rebates, electrical energy costs would have risen 0.2% q/q
Marketplace Response:
This result basically caused our AUD bearish eventualities, and with menace sentiment leaning destructive following Trump’s tariff threats and China’s AI leap forward information, AUD/JPY become our focal point.
Having a look on the AUD/JPY chart, we noticed instant promoting drive after the weaker CPI knowledge, with the pair breaking underneath the minor beef up house round 97.00 on Monday and Tuesday.
The bearish momentum received further gas from BOJ Deputy Governor Himino’s feedback about attainable additional price hikes, riding AUD/JPY towards the S2 pivot beef up house (95.88) close to January’s lows. That’s the place we noticed the intraweek backside and reversal, most likely pushed by way of vast risk-on vibes and BOJ Governor Ueda tempering price hike expectancies a little on Friday.
The Verdict:
So, how’d we do? Our basic research accurately expected AUD weak spot on disappointing CPI knowledge, which materialized in weaker-than-expected numbers. Our technical research correctly recognized the emerging trendline spoil as a possible cause for shorts, which in fact performed out neatly sooner than the Australian CPI match.
We expect this dialogue used to be “extremely most likely” supportive of a web certain result as each basic and technical triggers aligned neatly. The transfer after the knowledge used to be a robust momentum transfer to the drawback, which supposed that energetic menace control used to be most likely now not wanted. And with a publish match transfer of 100 pips (proper round its day-to-day ATR), there used to be quite a lot of benefit to clutch for brief dealers. Total, a perfect attainable setup as the entirety coated up neatly and marketplace tendencies used to be favorable for our bias.
USD/JPY: Wednesday – January 29, 2025
USD/JPY 1-Hour the Forex market Chart by way of TradingView
On Wednesday, our strategists had their points of interest set at the FOMC Observation and its attainable affect at the U.S. greenback. In line with our Match Information, expectancies had been for the Fed to stay charges secure at 4.25%-4.50%, with markets on the lookout for indicators on long term coverage route and any adjustments to the committee’s financial outlook. With the ones expectancies in thoughts, right here’s what we had been pondering:
The “Greenback Dominance” Situation:
If the Fed maintained a much less dovish stance or driven again in opposition to competitive price lower expectancies, we expected this may spice up USD. We taken with USD/JPY for attainable lengthy methods if menace sentiment used to be certain, and the broad rate of interest divergence, even with the emerging rate of interest atmosphere in Japan. In a risk-off atmosphere, USD/CAD lengthy made sense given the BOC’s contemporary dovish shift, attainable tariff influences, and the hot dovish price lower from the BOC.
The “Greenback Decline” Situation:
If the Fed signaled openness to previous price cuts or expressed larger expansion considerations, we idea this may weigh on USD. We thought to be EUR/USD for attainable lengthy methods if menace sentiment stayed certain, in particular given the ECB’s much less dovish stance on sluggish coverage easing. If menace sentiment leaned destructive, USD/CHF brief seemed promising given the pair’s downtrend and place close to key resistance ranges and the franc’s standing as a secure haven foreign money.
What In reality Took place:
The Fed saved Fed Price range vary secure at 4.25%-4.50% as anticipated, however made a number of notable changes to their outlook:
Dropped earlier language about inflation having “made growth”
Changed hard work marketplace evaluation to notice stipulations “stay forged” as opposed to earlier “eased”
Maintained dedication to knowledge dependency for long term coverage selections
Determination used to be unanimous amongst vote casting individuals
Most significantly, Fed Chair Powell struck a significantly much less dovish tone within the press convention, emphasizing they’re “now not in a rush” to chop charges and want to see extra proof that inflation is transferring sustainably towards their 2% goal.
Marketplace Response:
This result basically caused our USD bullish eventualities, and with menace sentiment making improvements to from previous bearishness sparked by way of Chinese language AI tendencies and tariff considerations, we idea USD/JPY used to be arguably the most productive pair to look at.
Having a look on the USD/JPY chart, we noticed an preliminary pop after the FOMC match, however the pair endured its sturdy downtrend, failing to damage above the falling ‘highs’ trend, the principle technical situation to look at.
It’s most likely that with the FOMC now not in point of fact being a significant marketplace mover, USD/JPY investors grew to become their focal point to hawkish feedback from BOJ Deputy Governor Himino about attainable additional price hikes. The pair endured decrease to sooner or later check the S2 Pivot house, the place patrons took again regulate, like each benefit taking and a response to BOJ Governor Ueda’s feedback that financial coverage remains to be very accommodative and can most likely stay in an effort to beef up Jap financial task.
The Verdict:
So, how’d we do? Our basic research expected USD power on a hawkish Fed stance, however the match didn’t appear to be bullish sufficient to maintain USD bullishness for lengthy, a minimum of in opposition to information headlines surrounding individuals of the Financial institution of Japan.
This didn’t result in a sustained upside spoil of the falling ‘highs’ trend, the habits that we had been observing for to make a prime quality lengthy business setup.
With out the predicted worth response mentioned in our unique watch publish, we predict this dialogue didn’t beef up a web certain result as no high quality business alternative advanced.
This result is a smart reminder that having more than one recreation plans is essential, in addition to staying nimble when the marketplace doesn’t practice our playbook!
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