 Hi, my name is Leon Rowe, currency trader and trading coach at Trading180.com and welcome to this week's supply and demand forex and gold fundamental and technical analysis for the week starting the 14th of February, Valentine's Day. If you are celebrating Valentine's Day, I hope you have a good one with your significant other. And don't forget to like, subscribe and share with your fellow colleagues. If you find the content that I provide useful, really, what separates Trading180's approach to probably the vast majority of other trading analysis is that we actually do combine fundamental and technical analysis to really make the best trading decisions. And just quickly before I get into the analysis, if you're new, don't really understand fundamental analysis or there are many misconceptions about fundamental analysis. What you're ultimately doing, what we're ultimately doing is trying to measure currencies exchange rate by studying and comparing economic business cycles, so GDP, interest rates and inflation cycles. Those are the main three components as to what drives currency value. So what we're doing is I guess the misconception quickly is that you're going to go to something, a news aggregate site like Forex Factory and then look to see if something is up or down. You look at the most important news and then you say, oh, that news came out better than expected, so I'm going to buy. Or that news came out worse than expected, that's a sell. If trading was that easy, we'd all be multi-trillionaires. But obviously it's not. What fundamental analysis really is, is understanding divergences, divergences in monetary policy, divergences in things like GDP and growth. Because if there's a country, for example, that is increasing or growing, is in the expansion or the boom phase of the economic cycle, and there's another country that is, for example, going into the contraction, recession, bust or slump phase of the economic cycle, the business cycle, then what do you want to do? Do you want to be a buyer of growth? Of course you do and you want to be a seller of contraction. That's what you want. You want to buy and you want to sell in the same way that if you've got a country or central bank that is hiking rates and a country, a central bank that is cutting rates or quantitative easing, where do you want to be? You want to be in the central bank that is hiking rates or is in the hiking rate cycle and not in the country or the central bank that is going to be cutting interest rates or going into QE. So it's about finding divergences, as many divergences as to what makes a country and the currency strong or weak and that is what is known as fundamental analysis, not the typically banded around forex factory economic data that traders generally cite as fundamental analysis. Anyways, getting on to this week's week ahead before we get into the technicals. The Federal Reserve, European Central Bank and Reserve Bank of Australia will be releasing policy meeting minutes while central banks in Indonesia, Turkey meet to set interest rates. This is always going to be very important. The policy meetings are basically just forward guidance. So the central banks are going to be talking about what their policies are going forward and what they're looking at, what they're concerned with, etc. Flash PMIs for the US, UK, Eurozone, Japan, Australia will give an insight about the state of the global economy. Again, economics GDP. Other important releases include US retail sales and industrial output, Canada and UK inflation data. That would be quite important and retail trade Japan in Eurozone, fourth quarter GDP. So the Eurozone is the one that I'm really focused on at the moment. I think the Eurozone may be a bit of a sell if the GDP comes out as a miss and negative and potential double dip recession and Australia employment figures. So that's also important. So we've got a busy, very busy week this week. Investors will also be monitoring any signs of progress on the US fiscal stimulus. And we'll get into some US fundamentals, the major fundamentals, as well as we look at price charts. So we're going to start off as we always do on the Dow Jones dollar index. And the Dow Jones dollar index is a measure of dollar strength against the basket of currencies like the Euro, the yen and the pound. And we just use the dollar index to keep an eye on it just to, again, measure as confluence really to understand that if, for example, we've come down into a bit of a demand zone here, and we could be seeing a bit more upside. Technically, then what we want to do is go to dollar crosses and look for buy trades with this technical level as confluence. So we're always driven really by the fundamentals. Fundamentals are really the things that kind of determine whether we should be buying or selling. And if we look at some of the positive news that's been coming out with the US as of late charting the global economy, US growth forecasts upgraded. So economists are ratcheting up their projections for US growth this year as Congress moves closer to another large financial support package while the recovery in much of Europe is expected to be more moderate. There you go, some divergence there. As the growth in Europe is supposed to be moderate, whereas the economy in the US has been upgraded. So there's divergence there. There's divergence. Again, US major upgrade, US outlook brightens on expectations for trillion plus more in fiscal relief. So the projection at the fiscal stimulus is going to help would be 4.9 percent GDP growth, would be strongest since 1984. Wouldn't that be some positive sentiment? And again, you've got unemployment potentially going down as well. And employment is also a nice indicator as to what the economy is doing. High employment means or low unemployment means the economy is doing really well. In the recession, you've got very high unemployment. So you're getting divergences potentially there between the US or the US growth. And we've also got, not just the economists saying it, but HSBC are talking about, or the headline is HSB forecast limited US dollar weakness in 2021. So dollar weakness, that's been the trade for the past six months. And some of the traders in my private group have done very well. We've been short the US dollar since last year, August ever since Jackson Hole. And if you want to go back to my YouTube channels around that time, you'll see my fundamental analysis talking about the Jackson Hole and why we were getting short based off of the federal inflation average target FA or federal average inflation target theme. So we were getting short and you've seen obviously with the dollar index, you've seen basically what's happened since last year, August, right? We've just been on this downtrend anyways. And that's driven by the fundamentals, not any kind of Elliot wave or pin bar or a level of resistance, right? But it says in this article very interesting, but it says, but if anything HSBC says that the increased spending being sought by Joe Biden could in fact help the US economy outperform the rest of the world, which is dollar positive outcome. So there are also there's a theme coming in with regards to potential dollar strength, not saying it's going to happen this week. Nobody knows the exact timing of it, but there is a trade there to be had. Now, looking at the, actually, we'll get on to that a bit later. So we've got dollar positive news coming out this week. So with that being said, potential for a dollar buy, if you start to see obviously positive price action supporting that, then what you want to do is go to the dollar crosses and look for some buy trades on there. If you're looking still for sell trades, because I am probably in the medium to long term, you know, more bearish on the dollar, then looking for short trades really or confluences at supply. That nice supply zone there would be decent for a potential short trade. Moving on to the dollar yen and the dollar yen reacted this week off of this supply zone. So you had nice reaction there. Bit of a pullback. You've had one, two, three, four, five, six, seven, you know, bullish closes into a level. Whenever you see something like that into a level, that's not sustainable when you pretty much were seeing a bit of a pullback right there. So if there was an opportunity to get short, if you were, if you thought that the Japanese yen was the currency to buy. For me, we're in, we've got more risk on sentiment being driven by the vaccine rollout. So in that situation, the Japanese yen is not really a buy in a risk off situation. So risk off, yeah, where there's a lot of uncertainty and fear the Japanese yen will generally tend to strengthen, but in a risk on environment, yeah, it's usually higher yielding currencies like the dollar, like commodity currencies that will do, you know, do better. So we risk on sentiment in the market. Yes, we've got a rare and a risk off environment, but the market is more focused on what's happening or what may potentially happen in the next few months, you know, three to six months rather than what's going on now. And with the vaccine rollout, you've, you've, you're in really kind of risk on sentiment mode, hence the reason why you're seeing a weakening yen and a stronger or one of the reasons anyway, stronger potential potentially dollar who knows what's going to happen to price in the short term. But if this continues, then you can pretty much, you know, probabilities that the US will be the currency to buy in this exchange rate. This will look like an absolute bargain. So with that being said, where do we get, you know, if you want to get long, you've really got to look for proof of value surprises to really kind of come up a bit higher, wait for a pullback into that demand zone and then look for any kind of long trades. If you're looking, you know, if prices do come down a bit further, then this is just seen as a potential bargain because if prices do come down to this 1037 free zone then and we do still have risk on, then it means that the financial institutions were definitely buying for cheaper and then looking for, you know, take profit on some potential upside in the demand zone. If we do have, you know, some risk off sentiment come into the market, then this area here is going to be the area to look for sell trades. This 10540 level to the downside, if you think that the Japanese yen should strengthen over the US dollar and again, probably more being driven by risk off sentiment as well. When you're looking at selling the Japanese yen or buying the Japanese yen, I should say at supply, look for, you know, there to be some sort of risk off narrative as well. So if the stock market starts to, you know, sell off commodity, start to sell off as well and there are, you know, real fears in the media, then that's when you look for kind of, you know, short trades, looking for short trades, you know, generally when we're overall in a risk or we've got risk on sentiment, isn't necessarily the best thing to do. So that's where we are with the dollar yen, dollar Swiss prices nearly touched the that supply zone, but didn't quite do it this week. But what we do have is a bit more supply here, put some supply right there one second, put that there supply and again, same thing, same analysis. If you're looking to be, you know, buy the dollar again, we just didn't quite come down into that demand zone. But if we do get a decent pullback into that demand zone, that'd be nice for a buy trade. If you're looking at sell trades, then you're looking at again, anything within that zone. This is proof of value proof that there is supply here. But again, the question is why you want to be a buyer of the Swiss franc in a risk, the risk on sentiment with global growth. The Swiss franc for me, there's been a lot of money printing, a lot of intervention, the Swiss national bank, the SMB actually want a devalued currency, they want a weaker currency. And if you look at what's been happening again over the past, you know, you know, year or so, you've seen this massive downtrend. So I think potentially the dollar is a decent buy against the Swiss franc, again, not financial advice, just basically what I'm looking at. If I get any kind of pullbacks, then that's going to be really nice, a really nice buying opportunity, looking at the dollar CAD, dollar CAD, again, commodity currencies doing well. I think the dollar CAD may have limited downside. And if you are looking to be a buyer of the Canadian dollar against the US dollar, you really want to wait for some sort of pullback, right, into, you know, you don't want to be a buyer at, at, at heights, right, or you don't want to be shorting at the low. So where we are now, we've made a lower low. So there's another supply zone there. So if you're looking for any kind of short trades and buying the Canadian dollar, that's going to be the first area to me. That's not necessarily the best area though, because we've touched that area a few times, I would say probably up at the highs, it's 129130 area is what I'm looking for. If I was looking to get short from a long trade perspective, I think this zone is really nice for a potential upside. But again, understanding where the Canadian dollar is in comparison to the US dollar, I think there are a lot more easier trades out there than just buying the dollar against the Canadian dollar. Moving on to the New Zealand dollar, US dollar. And again, we've, after this massive uptrend, we're now starting to see a range. And so from a buying perspective, you think that the New Zealand dollar should continue to strengthen against the US dollar, you probably want to wait for prices to come down to this, probably 0.71, 3 level. If you're looking for any kind of sell trades and you think the dollar may actually get stronger against New Zealand dollar and New Zealand dollar might weaken, then you're looking at this nice area of supply up top. Fundamentally, I'm not really too keen on this currency pair. Again, there are easier trades, there are bigger divergences than trading the US dollar versus the New Zealand dollar, both currencies potentially New Zealand dollars, you know, quite a strong currency and a risk on environment. And so if the US dollar is going to strengthen, you really want to start to look for currencies, the easier trade is looking for currencies, where you're getting a stronger divergence. Whereas if you've got two strong currencies trading against each other, what are you going to get? You're going to get sideways markets, right? If you get divergences, you're probably going to have a trend to the upside or a trend to the downside. That's pretty much how it works. Anyways, those are the areas to look for pound dollar, pound dollar, really kind of messy chart at the moment, but we do have some fresh demand right there. I'm going to delete this area here. I am quite interested in this 135 level, if you can come back down to here, we didn't do it. But this demand zone, I do like it as proof of value. We've seen massive upside, what's that? Maybe around about from the low 135 to 138, about 300 pips to the upside. So this is obviously seen as a bargain. So if you do get a pullback into this zone, I think this area here is decent. Also as well, combining some support and resistance within that zone, I think there is definitely something there. Second, so you've got again, resistance, resistance, bit of support there, and then you've got some recent support there. So decent for a potential buy trade within this area here. There are projections for the actual pound dollar exchange rate to actually go up to the 142s. So any kind of pullbacks would actually be really nice, lots of pips to the upside if that does continue. And talking about the pound matter of fact, from a divergence perspective, the UK economy surged in December, capping worst year since 1709. So the fourth quarter gains avert immediate risk of another recession. So the UK economy grew at double the pace expected in the fourth quarter, capping a year that delivered the worst slump since 1709. So positive news out of the UK and growth again. So you're thinking about, alright, do you want to be a buyer of the dollar or a buyer of the pound, where's the divergence there? They're both pretty much growing. So if you understand, again, being driven more fundamentally than technically, what you really should do if anything in the short term is probably ignore the pound dollar because it's less clear where the divergence is. You've got two strong currencies going up against each other, potentially two growing currencies. So when it comes to GDP. So with that being said, you can probably expect, again, more choppy price action potentially, potentially who knows. But we could see obviously a bit more of an uptrend. The UK is leading the way when it comes to the vaccine rollout. So they are actually seen surprisingly as the country or the economy that may want to actually get themselves out of a recession sooner rather than later. But the US is definitely catching up and if not may surpass. So a bit of a difficult one fundamentally. But technically, I do like that for a buy for a sell trade. I would wait for probably proof of value. So I'd wait for really supply to really come into the market and then look for any kind of pullback into that supply zone before getting short. So moving on to the euro dollar and again in contrast with, for example, the pound and the US, the euro zone, I should say, says economic recovery delayed vaccine rollout crucial. So Euro area GDP grow forecast 2021 cut to 3.8 from 4.2. And again, if we go back to what we were talking about with the US charting the global economy, the US growth forecast upgraded. So there's a divergence there, right? There's a divergence one potentially being downgraded, the other being upgraded. So the European economy will cover more slowly this year as the coronavirus keeps a tight grip on the region with the outlook resting resting largely on vaccination campaign that has so far stumbled. So yes, everyone is growing and every country is growing, but it's a dog with the least fleas, right? So who's going to grow more than the others? Yeah, where everyone's in a bad situation, but who's the best or the worst? So at the moment, the tide, you can see the shift potentially in turnarounds, I guess, with the dollar and Europe, at least in the potential short term. So if again, fourth quarter GDP for the euro comes out this week, and it comes out, you know, worse than expected, or there's a negative growth, then that is going to be a very nice short trade right there. If it comes out much better than expected and there is growth, then you're probably going to expect prices to go higher. So we are at an inflection point, nobody knows what's going to happen. You know, this is the reason why we manage risk, but looking at, you know, short trades, I think the dollar sentiment, positive dollar sentiment may start to come back in, you know, and this could be a decent shorting opportunity. If not, then you're looking at, again, maybe selling opportunities, maybe into this fresh area of supply, or even at this area, which I think is a really nice zone to get short up here. If you're looking to buy the euro on a pullback, then we do have, in fact, a demand zone here, and you're looking for basically just to pull back into this 120, 30 level before looking at getting long. But again, that's pretty dependent upon what happens with fourth quarter GDP, euro yen, and the euro yen has pretty much come up to this area. We did have supply zone, which reacted there, and then we've got another reaction here. And again, so we're at a decent area to look for short trades if the euro zone economy has been struggling. That would be a really nice trade, regardless of, I guess, the currency has been traded against the Japanese yen. But I do think that the euro should want to sell off with disappointing news. If we're looking at buying the euro, then we've just made some higher highs here. So we've got that area there is the first zone to look for any kind of long trades. If you get a pullback this week, and then there's some positive news around the euro, then that is really nice for a buy trade. The best area for me anyway, would be down if prices can come down to this one, two, five, 40 level around here. That would be a really nice area because that would be the bottom of a range between between a high and the low where prices are contained between. This is obviously seen as expensive. This is seen as an absolute bargain. Why? Because prices went to the upside. And if prices can come back down here, and then the fundamentals are still the same or risk sentiment is still the same, then that is a really nice buy area. So moving on to the Australian dollar, US dollar. And I did get a question regarding why the Australian dollar has been trending higher recently. I can't remember the exact question, but talking about the US economy, looking at the data, it looks like it's obviously better than the Australian economy. First things first, the Australian economy has handled COVID better than lots of other countries, including the US. So the US only now is starting to get a grip on the COVID outbreak, only now. Secondly, you've got the Australian dollar as a commodity currency, meaning that in a risk on sentiment and a risk on the environment, what you've seen in commodities, for example, like copper, iron ore, you've seen massive, massive, massive rally. And that helps also the Australian dollar to grow as well because their commodity currency is linked. So this is the reason why you're seeing this play out as it is. Now what we could see as the US dollar starts to maybe strengthen and starts to look like a strengthening now, this is where we could see a decent, shorting opportunity because so far the dollar has been weak, but now we're seeing some positive economic news potentially come out of the US. Also as well, GDP data for the Australian dollar, the data that you're looking at on something like trading economics is actually third quarter data. Their fourth quarter data actually comes out quite late, whereas the data you're seeing for the US is actually Q4. So with fourth quarter data coming out, there is a bit of a lag between the comparison, but for now you can take advantage of that because there's potential short-term sentiment when it comes to the dollar and this could roll over. But again, there are easier trades out there. Why are you choosing to trade two strong currencies when you should be looking for divergences? Divergences are where the easier money is made. If you're trying to trade a currency that you've got two strong currencies or two weak currencies together, not to say that they're not an opportunity there, but there's less divergences. There's less reason to actually say why one would strengthen or weaken than another. So what you want to do, and everyone calls themselves trend traders, but then they don't know what causes trends. This is what will cause a trend. This is why currencies and bonds and stocks, this is the reason, exactly the reason why they trend because of the fundamentals and the risk sentiment behind it. So again, looking at this, for me, there are easier trades out there. Overall, I think the Australian dollar and the forecast have really kind of called for a stronger Australian dollar in the longer term, medium term, but in a shorter term, you could probably see a bit of a pullback as the sentiment for the US dollar gets stronger. And if that's the case, but you want to be a buyer of the Australian dollar in the medium to long term, this is actually would be considered what a discount, right? You don't want to be a buyer of the Australian dollar at a high. You want to be a buyer of the Australian dollar if you are looking to buy Australian dollar at a low. So that's where you want to look for prices. If prices do come down to those zones. Moving on to the Australian dollar yen and Australian dollar yen. Again, in a risk on, you know, environment or risk with risk on sentiment. I've been saying this and I keep saying it, you're not going to want to buy the Japanese yen, no matter what. There's no technical analysis that's going to stand in the way of fundamentals and the sentiment. And in a risk on environment, yeah, in a risk on environment, the Australian, the Australian dollar will always win hands down, even if you get a couple of days of a pullback here. And even if prices, you know, didn't react to for that supply zone. I'm saying that it couldn't. But the point is that you want to trade with the path of least resistance. The path of least resistance is buying the commodity currency during growth. So many traders who are looking for short trades here simply because there's a supply zone there doesn't, the market doesn't care. The market doesn't care about, you know, your, you know, your supply zone or your resistance zone or your technical pattern. What the market cares about is value. Yeah. And the value is the Australian dollar going higher. Yeah. The Australian dollar is a bargain. So that being said, and I said that last week and I've been saying that for as long as you guys have been watching me do these weekly videos, we can eliminate those bad trades and look for potential pullbacks into demand. Yeah. And if that doesn't work out, then it's fine. You're looking for a deeper pullback because you've got a lot more upside potential. If prices do come back, we're still in a risk on him, you know, environment, the vaccine rollout, the Australian dollar, the economy is booming, commodities are going higher, et cetera, et cetera. That's where the money is. It's not in trying to, you know, trying to just use technical analysis alone. We've got to filter our trades and it might, it might even mean that you got to take less trades, but quality over quantity. This is what, you know, we, we're looking at a trading 180. And finally, gold. So looking at gold and some fundamentals on gold matter of fact, talking about inflation risk is rising and here's how to protect your investment portfolio. So buying gold is just one of the available options if talking of rising prices has you worried. We're still yet to see inflation really kind of hit the market with all this money printing going on and devaluation of currencies and QE and stimulus inflation is pretty much, if we understand again, what should happen is a sure thing. The only thing is, is that when is it going to, you know, come into the market, right? When is it going to, you know, appear? When is in high inflation going to appear? So with, when it comes to looking at gold, if that is a trade idea that you are looking at then gold is still going to be a buy. Yeah. And also as well, gold will stay strong says new crest mining CEO. So these are, you know, the experts, right? They, they, they're the ones that work in the industry. Then they're on Bloomberg. They're not in the habit or the, you know, they're not, they're not trying to mislead you in a sense that the people that watch Bloomberg and their subscribers and, you know, people who have real big money, this guy is not going to ruin his reputation. Yeah. To try and go on Bloomberg and try and say things that aren't true. Yeah. It might happen. Obviously, once in a while, and these guys can be wrong. Yeah. But he's not, if he's going on Bloomberg and expressing his opinion, then it's usually something that he has conviction in, right? He doesn't want to put his name out there. So if he's saying that gold will stay strong, chances are the probabilities are it should stay strong. It may be in the short term, medium term, et cetera. So looking at actually gold and where we are, maybe just looking at pullbacks, yeah, into, you know, lower demand zones will be the play, right? If you don't believe that and you don't believe him, you don't take what he says on board. Do you think that, you know, the, the gold should, you know, want to still continue selling off and just look for supply zones, right? But let's see what happens here. I think if gold does come down to this 17, 80, 17, 70 level, I think that is a really, really nice buy because it was a bargain around here. Hence, you saw prices go to the upside. And if prices again start to, you know, if prices do come down to here, that may be seen as a really nice bargain price and prices could, you know, go to the upside. The question I guess I get or will get, or people tend to say as well, if the dollar is going higher, then gold should go lower, not necessarily, not necessarily. There are factors that do drive gold and the dollar in the same, oh, can, I should say, correlations don't always stand 100%. And if inflation starts to come back, then gold will definitely, regardless of what, you know, the US dollar, if the US dollar is going higher, but again, inflation is going towards their 2% target and maybe even beyond that, gold is still going to be a potential buy, yeah, because of again, the devaluation of, of the, of the, of the US dollars. So there are times where you'll have a, and that in fact, I'll do is I'll go to the US dollar, what you'll see over the past, what, since August, if you're looking at August, all right, you've seen pretty much gold do this right? And since, and if you go back to the dollar, yeah, since August, dollar index, yeah, what have we seen since, since August? Yeah, so there are correlations, there are correlations that do, you know, tend to work out over the medium to long term, of course, but in maybe some short term correlations, they can decouple, doesn't mean that you can't have a rising gold and also a rising dollar, because it can happen. So with that being said, that brings us to the end of the analysis. Again, if you enjoyed this, please like, subscribe and share, definitely like, helps YouTube algorithm and gets the quality content out there. Guys, have a great week, have a great day. If you're so direct in Valentine's Day, and take care, speak to you until the next video.