- Commerce Conflict 2.0 could set off a stagflation narrative because it includes not solely US-China commerce however with different main buying and selling companions.
- Commodities currencies could face additional headwinds as a consequence of deteriorating world financial progress prospects.
- Watch the 0.6330 key medium-term resistance on the AUD/USD and the 1.4300 key medium-term help on the USD/CAD.
On 1 February, US President Trump formally “fired” his flagship commerce tariffs coverage by imposing 25% tariffs on items from Canada and Mexico and a ten% levy on merchandise from China through the issuance of govt orders.
Whereas tariffs-related orders haven’t been executed on European Union exports to the US, Trump has remarked that commerce tariffs will “undoubtedly occur” on European items, which sparked a sell-off within the Euro and European benchmark inventory indices in the present day; the tumbled by 1.2% to revisit its latest 13 January swing space of 1.0190 and export-dependent Germany’s shed 1.7%
Commerce Conflict 2.0 is completely different from the US-China Commerce Conflict which was enacted in January 2018 by way of protection as this time spherical it includes main buying and selling companions of the US, on prime of the continuing US-China Tech Conflict.
Commerce Conflict 2.0 Might Set off Adverse Whiplash on Commodities Currencies
Therefore, it might set off a widespread adverse sentiment on world progress prospects, threat of stagflation narrative could also be again on the radar of speculative gamers within the monetary markets which in flip creates a adverse suggestions loop on larger beta commodities associated currencies that has a direct correlation to world financial progress comparable to (base steel proxy comparable to ), (oil proxy).
Allow us to do a deep dive into the prospects of the Aussie greenback and Loonie from a technical evaluation perspective over a medium-term horizon (multi-month).
AUD/USD Adverse Response at 50-Day Transferring Common
Fig 1: AUD/USD medium-term pattern as of 4 Feb 2025 (Supply: TradingView)
The latest rebound seen within the AUD/USD from its latest 13 January swing low space has been stalled proper at its downward sloping 50-day transferring common that has acted as a resistance at round 0.6330 (see Fig 1).
Coupled with an impending bearish crossover situation being flashed out in the present day, 3 February by the day by day MACD pattern indicator beneath its centreline means that the medium-term downtrend of the AUD/USD in place since its 30 September 2024 swing excessive of 0.6943 stays intact.
Watch the 0.6330 key medium-term pivotal resistance and a break with a day by day shut beneath 0.6120 key near-term help exposes the subsequent medium-term helps of 0.6030/5990 and 0.5870/5810.
On the flip facet, a clearance above 0.6330 invalidates the bearish state of affairs for the subsequent medium-term resistance to return in at 0.6440, and above it sees the long-term pivotal resistance of 0.6540/6620 (additionally the 200-day transferring common).
USD/CAD Hit Overbought Situation however No Clear Indicators of Bearish Reversal
Fig 2: USD/CAD medium-term pattern as of 4 Feb 2025 (Supply: TradingView)
The value actions of the USD/CAD gapped up in the present day 3 February and proper now, it’s testing its long-term secular vary resistance of 1.4690 which has been in place since 20 January 2016.
The day by day RSI momentum indicator has reached its overbought area however has not flashed out any bearish divergence situation which means that the USD/CAD could stage a minor pull at this juncture earlier than resuming its impulsive upmove sequence inside its present medium-term uptrend in place since 25 September 2024 swing low of 1.3420 (see Fig 2).
Watch the 1.4300 key medium-term pivotal help (additionally the 50-day transferring common) to carry any potential minor pull-backs and a day by day shut above the 1.4690 key near-term resistance sees the subsequent medium-term resistance coming in at 1.5020/5110 (additionally the higher boundary of the long-term secular ascending channel from June 2021 low).
Nevertheless, a breakdown beneath 1.4300 invalidates the bullish state of affairs on the USD/CAD for a possible corrective decline sequence to unfold inside its main uptrend part which exposes the subsequent medium-term help at 1.3890 (additionally the 200-day transferring common in step one).
