USDCAD, USDJPY, GBPUSD

Trump announces steel and aluminum tariffs --> USDCAD

President Donald Trump has recently declared that the United States will implement a 25% tariff on all imports of steel and aluminum, effective Monday. This initiative encompasses imports originating from Canada and Mexico. Trump also promised to reveal additional import tariffs later this week.

USDCAD has lost more than 3% after the pullback from the almost 22-year high of 1.4792, dropping down to the 38.2% Fibonacci retracement level of the up leg from 1.3440 to 1.4792 at 1.4270. Today, the pair opened with a gap to the upside and is currently trying to recoup some of this ground, holding within the short-term simple moving averages (SMAs). A downside move could see traders testing the 1.4195 support level. However, the RSI and the stochastic oscillators indicate an upside move.

US CPI --> USDJPY

The US CPI figures will be released on Wednesday, followed by the producer price data on Thursday. Moreover, retail sales data for January will serve as a supplementary indicator for expectations regarding the Federal Reserve policy, as robust retail expenditure may mitigate any increase in expectations for interest rate reductions.

The headline CPI experienced a slight increase, reaching 2.9% year-on-year in December, whereas the core rate exhibited a decline, settling at 3.2%. As per the Cleveland Federal Reserve's Inflation Nowcasting model, it is projected that the headline Consumer Price Index (CPI) has decreased to 2.85% in January, while the core rate is expected to have declined to 3.13%.

USDJPY experienced a strong negative tendency over the past two weeks, sending the market toward a new two-month low at 150.90, standing beneath the flat 200-day SMA. However, in Friday’s session, the pair posted a bullish doji candle, indicating the start of a morning star pattern, which is a reversal signal indicating a change in the current trend. A move above the 200-day SMA could confirm this action, sending the pair up to 153.65 and the potential bearish cross within the 20- and 50-day SMAs at 154.85. The momentum oscillators are endorsing this bullish scenario. 

UK GDP --> GBPUSD

The Bank of England recently reduced its benchmark lending rate by 25 basis points, adopting a cautious approach to future cuts due to concerns over wage growth and inflation stemming from the Labour government's budget. Despite this, the BoE is worried about the sluggish economic growth since last summer, with Q3 2024 GDP showing only a slight increase. Investors now anticipate a contraction in the first estimate of Q4 growth, due on Thursday.

GBPUSD remains above the long-term downtrend line but failed several times to surpass the 50-day SMA at 1.2485. A successful attempt above the latter could drive the pair until the 1.2560-1.2605 resistance area, with the momentum oscillators confirming a potential upside move. However, a decline beneath the downtrend line could open the way for the price to hit the 1.2250 support and the 15-month low of 1.2100.