EURUSD, USDJPY, AUDUSD

German elections --> EURUSD

The euro jumped to a one-month high, and stock futures charged on Monday after Germany's conservatives won the national election as expected, with investors awaiting further results to see whether much-needed fiscal reform was likely.

The center-right Christian Democratic Union (CDU), led by Friedrich Merz, has won approximately 30% of the vote. Second place went to the extreme right-wing party Alternative for Germany (AfD), which received a record 20% of the vote.

The following phase, coalition discussions, will likely be lengthy and intricate. Due to the low frequency of outright majorities in German elections, a coalition administration is likely to be required. Although conventional parties have rejected the idea of establishing a coalition with the AfD, the CDU is expected to pursue coalitions with other groups.

The emergence of the far right in this election raises serious concerns about its potential impact on Germany and the EU. In the years to come, Germany's foreign and domestic policy will be influenced by the new government's formation.

EURUSD is battling with the 1.0500 round number once again, remaining within the two-month trading range of 1.0220-1.0530. Slightly higher, the 100-day simple moving average (SMA) also lies with the next important resistance region coming from 1.0630 to 1.0680. Alternatively, a drop below the 1.0400 handle would open the door for a retest of the lower boundary of the consolidation at 1.0220.

US Core PCE index --> USDJPY

In the US, expectations for two rate decreases in 2025 were dashed when the headline CPI rate edged up to 3.0% in January.However, investors anticipated that the PCE measure of inflation, to which the Fed gives greater weight, would not show as strong of an increase as the CPI readings, which helped keep market reactions from being as dismal as anticipated. Estimates show that core PCE would fall from 2.8% to 2.6% in January, while headline PCE fell to 2.5%.

USDJPY has declined considerably towards a fresh, almost three-month low of 148.83, losing more than 6% after the peak to 158.86. Immediate support for traders could come from the 148.60 barrier before slipping to the 146.50-147.15 zone. The 20- and 200-day simple moving averages (SMAs) are currently posting a death cross, mirroring the descending move in the market. 

Australia CPI --> AUDUSD

Australia will also announce the monthly CPI readings on Wednesday, which may give some hints after the RBA's hawkish rate cut on February 18. The annual inflation rate fell to 2.4% in Q4 2024 from 2.8% in Q3, less than the market consensus of 2.5%, which was the lowest reading since Q1 2021. However, forecasts indicate a slight increase in the monthly CPI to 2.6% in January from the previous 2.5%.

AUDUSD climbed to a new two-and-a-half-month high of 0.6407 on Friday but failed to remain near its fresh peak and reversed to the downside. The pair is developing above the short-term sideways channel of 0.6130-0.6335, indicating the bullish scenario. To the