 Hi, my name's Leon Roe currency trader and trading coach at trading 180.com and welcome to this week's Applied Demand Forex and Gold fundamental and technical analysis. Hope you had a great trading week and Let's get into the week ahead. So week ahead short synopsis from Trading Economics is in the US earnings report You've got the Michigan consumer confidence and the trade balance date will take the spotlight. Also, the focus will be on central bank means in Australia and inflation data in Germany as well That's pretty much the pairs that we're looking at. Finally the UK Will be posting their fourth quarter growth figures in Canada the unemployment. Oops unemployment rate so that's really What to look at for the week ahead and let's get into some some more detailed analysis about what happened During the past week lots to go over with the dollar and Yeah, starting off on the dollar index, which is basically just a measure of dollar strength against other currencies like the Euro the pound and the yen so dollar had pretty bullish price action on Friday over the past couple of days due to really non-farm payroll numbers Coming out with a massive surprise the US payroll surprise with surge as jobless rate hits 53 year low So employers added 517,000 jobs in January above all estimates and the report raises doubt about a looming with session says economists and so Ultimately the number is a great number and Again, it raises doubts on the looming with session. Why is that important is because fundamentally? Currencies are driven by three main things which are the economy Inflation as well as monetary policy like interest rates now in the group on the day About 12 o'clock midday before the actual data came out Robert who is in the prime members group was asking about any insights into non-farm payrolls and how it goes How it might go And our job isn't necessarily to try to predict what the number is going to be As far as you know when it comes to fundamental analysis It's more about what it really means over the medium to long term, right? And so what I said was if jobs come to that stronger it means inflation may be sticky because Inflation and unemployment are inversely correlated higher unemployment means Inflation coming down according to the Philips curve if inflation is seen as coming down, right? Which is basically lower employment and higher unemployment. Yeah, because they're inversely correlated inflation comes down then Unemployment goes higher then the Fed are less likely to hike rates Hike rate rates, okay, and and end their hiking cycle sooner But the opposite actually happens. So in fact, there was lower unemployment and higher employment, right? Which meant that the Fed are more likely to I wouldn't say the several the hike rates, but they're not looking to End their hiking cycle sooner and that's basically what is driving the the dollar Ultimately though the dollar will be coming down Over the medium to long term and I say will not necessarily to use absolutes, but it's more likely that the dollar will Will come down there are various reasons for that But I think in the short term the dollar really is pulling back and it was really due one from a technical and Technical perspective anyway, we had this you know this major drop when you look at you know the rally that it went on from last year This is basically just a pullback and we were looking for you know the dollar to kind of pull back significantly now Is this is a sustained rally? I don't think so. I'm still my bias is still too short on the on the dollar And we'll see what will happen with that, but City Bank, this is one just one of the many banks that we analyze in the in the group We we look for the confluence with the banks they break down fundamentals as well They're not looking at really, you know, they look at technicals too, but they're they're their forecasts are driven by fundamental analysis They say that if for the dollar there are a number of factors which may drive the dollar lower through 2023 first is the is that the US is expected to enter into a recession At a time where Europe may be recovering in China expected to have exited from their zero Covid policies so the dollar performance is likely to be much more subdued and mostly negative in a US only Recession second when global leading indicators X us excluding the US turn higher there is meaningful dollar depreciation over the following 12 months There is likely to be greater volatility in rates and FX over the current quarter that sees the DXY in 800 to 108 range Right, and it says for the second half. However, the DXY may be back to the 95 96 is so Ultimately what you're looking at if you're looking at 108 we could see a decent pullback Depending on, you know the numbers Depending on obviously how that plays out probably somewhere around here would be the absolute highs hundred and seven ninety-nines See how that supply zone the top of that supply zone pretty much lines up at the 108 We could see a pullback to this area Maybe ready to go back the range is all we know is to be an auction. I'm not saying that prices are going to go All the up here No idea, but if it does I'm still looking to short the dollar right at certain areas So for me, I Still think one data point does not make an absolute turn in buying the dollar with a medium to long term So my this is just basically looking for me anyway looking for pullbacks of of course not financial advice. So That's where I am just looking for pullbacks But if you are looking at buying the dollar right then you'll have to really look for a pullback into a you know Demand zone which would be somewhere around there now. So let's delete this That's where the demand zone is daily demand So you're looking for a pullback into this the 101's and then you're looking at you know move to the upside But for me, I'm looking at some short trade confluences anyway, not necessarily trade in a dollar index so Yeah, good news for the for the dollar basically what they needed, but I don't think it's changing anything in terms of Monetary policy maybe an extra high core or so the Fed might price in the market is pricing in but again That would be priced in and then you know probably entering into some sort of range or auction and so If you want to get access to You know the the Citibank Analysis as well as many other bank analysis the Enrollment for trading 180 the private group and the discord group Opens tomorrow if you're watching this on Sunday 6th of February and Not only will you get access to many bank analysis? But you'll also get access to the fundamental analysis spreadsheet as well where I give you my bias Weekly bias on whether I am long or short or neutral on a currency pair based on fundamental analysis and And yeah, so if you do want to join and you've been waiting for a while It is coming up and it will only be open for about about five days So it's gonna close and maybe the the 10th. I think it's a Friday of February And then I'll be closed for maybe another few months or so as I like to keep the group Concentrated as I find that's the best way to to really get, you know, the most out of or you guys can get the most out of of the group Anyways going back to the technicals So moving on to the dollar yen and again the dollar yen. I'm looking for a pullback Ultimately, hopefully we can get something as high as here the 1 3 4 1 3 5's Or maybe the 1 3 7's to look for some more short trades Reason being is because the Japanese yen they're looking to change their monetary policy To start That's really hiking rates, but in act monetary policy that will Appreciate their currency is what I'll say and you their yield curve control and so yeah dollar pullback Just basically makes it Combined a dollar for or sell the dollar for cheaper or buy the buy the yen against dollar for for cheaper So that's where I am Looking for if you're looking for pullbacks on the dollar again back down into that demand zone before looking at any kind of long trades Moving on to the dollar Swiss and again, you're gonna see any dollar pairs pretty much for now start to I Guess sell off if you're looking at the the quote currency, you know the dollar Obviously being the base currency on this one. And so we're just seeing you know buys And so again if you're looking to buy the Swiss Frank which I'm actually not looking to buy the Swiss Frank at all I'm looking to trade this pair. You know, you're you're pretty much Looking for I would say sell trades at least around about 94 cent area. You've got a couple more Supply zones above there as well Just do that as one Yeah, it's probably one zone But again the Swiss Frank not really a buyer my book if I'm gonna do anything I'm gonna probably buy the dollar over there over the Swiss Frank. So Again with that being said probably looking at this area here as a demand zone now and And Looking for a pullback again and just look for in today entries That would be it Dollar cad and dollar cad Again the dollar rallying for now and not really a pair that I'm interested in at all Cad not doing so well, but I think they will when once oil starts to really look to take off But any pullbacks on the on the US dollar you're looking at and you know, pretty much that's the trade you're looking at Any sell trades anything up above this one three five One point three five two area is decent for a sell or you're looking at probably just above that the one three sevens looking at that as a As a sell trade but again, I'm not really interested in this pair at all New Zealand yen New Zealand yen and crazy New Zealand dollar. So Yeah, so we're looking at now a bit of a major pullback Into this area I do like the commodity currencies against the dollar buying the commodity currencies, but That would be probably the the Australian dollar not the New Zealand dollar or the Canadian dollar But the Australian dollar has the most to benefit for against the US dollar If you want to buy the New Zealand dollar, of course, obviously now at the bottom of this demand zone is decent or A pullback into the put it the one Traded zero point six to round number would be decent as you can see it's been used as all Support and resistance in the past as well. So supply and demand zones are just past support and resistance Say the other way around support and resistance is really just past supply and demand zones. And so What we use support resistance for is just confluence within these these demand zones and Yeah, so you've got that There and I guess if you're looking for a bit more of a pullback probably yeah, maybe the 61's Around here as well. It would be decent for a potential buy if you're looking at buying the the New Zealand dollar if you're looking at selling the New Zealand dollar and buying the The US dollar then I think a pullback just above this Into that supply zone the 65 40s to above to 65 80s would be the best area to look for some cell trades and then you've got a bit of a fresh air before you get to the next supply zone Looking at the pounds now. I was bearish on the pound. I've been bearish on the pound for a while now I was actually looking to get involved if I'm looking to buy the dollar against any currency It would have been against the pound And that would have been it looking for Bit of a move above the market before getting short, but it just didn't happen. So You know due to obviously the non-farm payroll news prices have gone through that demand zone And now we're getting a bit more of a pullback. I do think though I really want to be if I want to be short on the uh, like I said the pound I'm looking at that area there and I'll run for me. I'm gonna get looking for Cell trades and buy the dollar Although I'm bearish on the dollar I'm more bearish on the pounds the pound Fundamentally the UK faces the bleakest outlook in generations as more Britain stop working So bleak outlook leaves UK facing worse 20 years since 1938 potential growth now less than half the pre-COVID average. So UK economy is not looking great at all and Many of the guys in in in the group in the discord group notice and They're short on the pound and some of the guys have been doing really well, especially on that that pound yen trade So So, yeah, basically just looking for pullbacks into this area and that that'd be my you know personal bias There is obviously the milestones. You do want to be a buyer at a pound Then you're looking I probably say the bottom end of that the 119s would be the probably the better area It's again. You have a bit of confluence with some support and resistance in that area It's obvious Right there So that would be the first area but again not really looking to buy that pound at all And what does Citibank say Citibank are saying that on growth the UK lags with the slowest recovery To pre-pandemic levels of real GDP inbound mergers and acquisitions also remains weaker Then the global trend which likely represents a loss of confidence in the you in the future of the UK's business model in a Post-Brexit world the sole main upside risk to the pound Comes from global risk on via US soft landing combining with Europe and China bottoming Yeah, so the pound is Sensitive to risk on so If there is you know if the markets do turn risk on that'd be the one kind of saving grace for the pound But I don't you know, even if you're buying from a risk on perspective, you know Do you really want to buy the pound when you can buy, you know, Europe are doing better You can buy the Canadian, you know economy who are doing better the New Zealand economy who's doing better the Australian economy who's doing better, right? Why would you buy the pound? So I think they're the worst The worst of the worst right and so for me I think that the long term or the meet at least the medium term You know is to the short side and so any pullbacks for me. I'm looking at getting Short on this currency pair again, there are long opportunities if you want to take those Euro dollars so waiting for this pullback money for ages. I mean for a decent pullback anyway and You know prices come down to this demand zone again, I'm not too keen on this demand zone I think the better price is going to be down into the one of sixes 105 So I think if prices come down here that is going to be a nice opportunity right now I still think we're quite quite high although, you know, we've passed We've kind of closed below that monthly moving fair value and so Decent potentially for a pullback But I think maybe some they might be a bit more momentum if we want to call it momentum But repricing of the of the dollar You know against the euro and we could wash it we could but I do want to see it come down to this area here It can be company if it comes down to the one of sixes 105s. I think that is going to be said nice for a potential buy the The European Central Bank is still hawkish So the ECB plan for next big hikes makes the guard the last hawk standing right so half a point Rate pledge for March cements Eurozone aggression and the Fed Bank of England and others are dialing down their rate Hikes start so while there, you know, the ECB is still very hawkish. Obviously the Fed Are dialing it down. Although again due to non-farm payrolls, you know on Friday The Fed could add an extra hike on onto their onto their projections And but like all central banks, you know, most banks See ECB slowing interest rate hikes after March all central banks are pretty much going to start to slow They're hiking cycle inflation is coming down And it says most economy economists with the European Central Bank will slow the pace of its interest rate hikes Following another half point increase in March or after March, you know, basically the basis point hike Which is expected then they're probably gonna start maybe doing 25 basis points, etc. Etc. Now The ECB deposit rate is set to rise AB and Amarrow Morgan Stanley Nordia ING Greenberg So Berenberg and commas Bank They're all pretty much You know expecting these these are their forecasts And they all expect their the ECB deposit rate to rise, right? But then start to potentially look to slow down, right? So you've got the 3.8s from Socio is it so society general? You've got Goldman Sachs credit sweet city bank Rabbo Bank Generally and uni Unique credit it probably expects maybe a higher rate of 3.5 percent And there's some banks that actually just expect a 3% right, but let's see. Let's see what happens And there's a rundown Again, these types of articles if you're not part of Bloomberg or you know subscribe to Bloomberg You will get this and this this type of article in the group And I know Bloomberg you do have to pay but if you're in the group, you don't right as far as it comes with the subscription anyways Why this I post these this these types of articles and all these articles in the group and so So yeah, ECB still the hawkish, right hawkish out of Essential banks, so I do still expect some more upside and I think you know prices may come down to go higher By an opportunity there. I mean there is a by an opportunity right now if you want But for me, I'm probably gonna maybe steer clear and this is a really good reason to to get long or really good setup which I Think it's decent around there. I have to look down into the intro day anyways Yeah, so that's that Aussie dollar again a nice little pullback For me, I do want to get involved in this in this trade The 69 round number is decent. I think the 68s. I think they're gonna be even better When you consider You know fair value at least from this absolute low to this absolute high The best thing you know to to look for really is looking at buying value right because if this is expensive now for That exchange rate and this is was an absolute bargain for the exchange rate then fair value in between 50% so any pullbacks, you know, you're buying for cheaper and cheaper, right? So Would expect some somewhere around this fair value to start to look to hold and if it goes even cheaper That's even better bargain To the upslide, but let's see what happens. I do really like this 65 area in fact As a as a buy There's a great technical setup there Many of the guys will know that as a as a level CPR around there in the private group But again, if you're looking at buying the dollar, right? So we did come up to this obviously the supply zone and it did react from there creating now another supply Here Supply Yep, so any pullbacks if you will be a buyer of the US dollar Into here be decent for a sell trade Ozzie Yen again Ozzie Yen Really just pulling back after we've made, you know, some new highs. I'm not really again interested in trading this pair Lots of conflict in terms of, you know, fundamentally, it's not as clear Not every pair is is tradable or gonna be clear from a fundamental and this sentiment perspective and when it's not, you know You just stay out right you just stay neutral hence the reason why on my bias when it's clear, right? I go long when it's not so clear. I just go just stay neutral, right? And try and trade the the best currency pairs And the clearest divergences, but anyways Looking at You know pullbacks if you want to be a you know, long on the Australian dollar Then you're looking at a pullback into that 8950 area if you're looking at short trades Then you're looking at a pullback into that supply zone or slightly higher into the 93s Not really much to say about this to be fair as I said, I'm not really interested in taking that trade and gold so gold Pulling back dollar strengthening gold pulling back Now if anyone has been wanting to buy gold, this is the opportunity, right? And I'm saying that this is the exact level that you've got to buy not talk But the opportunity to buy on pullbacks. Yeah is what you know, you're looking for so Ultimately, I don't look at this as a you know scary, you know bearish candles and that now you should be starting to You know sell gold right Personally if you believe that the dollar is going to Is going to Sorry one second. Yeah, if you say if you believe that, you know The dollar is still going to weaken throughout the rest of the year Then this is just a pullback into demand zones, right? No one knows which area It's definitely going to turn around nobody knows hence the reason why we manage our risk But look at this as a there's a pullback opportunity to buy gold for cheaper, right? Anyone who's buying up here expensive areas now are a bit underwater Smart money was probably doing some bit of selling after this, you know, it's massive move to the upside When you do have moves, you know like this that kind of don't really pull back for For a while, right? I want to talk about pullback. I'm talking about everything moves back to fair value at some point Everything does right eventually so if you see this move to the upside from here, right prices haven't pulled back to 50 percent of The of the range right so it's pulled back a little bit But not to 50% and so if you're looking at a decent area to look for buy trade If that's expensive right up here, and that is a bargain price then ultimately the 1788 again represent fair value So the further we come down the more of a bargain it becomes anything beyond fair value becomes You know cheap and absolute bargain price providing that of course the fundamentals Are still in play price, right and does not equal value, right? It's not equal value not to talk right prices can be obviously manipulated Etc. In the short term prices are driven by liquidity right liquidity hunts and Market makers etc. I'm positioning whereas over the medium to long term. That's when you start to see You know the value of an asset continue to either go to the upside or to the downside So this is just looking like a pullback for me if you're of the opinion that the the dollar is going to weaken towards the end of Of the year over the next, you know, three to six months. Anyways If you are looking to sell of course Gold then a pullback into this supply zone would be you know, where you're looking at getting short Anyways guys, that is it for this week Take care and if you are interested in joining the mentoring group I look forward to working with you be prepared to work, you know, quite hard This is not going to be one of those easy PZ technical analysis, you know, you can learn in one day type You know mentoring sessions and I say sessions, but you know mentoring courses not tool This is a there's a lot to learn in here. So be prepared to work otherwise. You're just wasting your time Because remember you're up against some of the smartest or if not the smartest people in the world And if you don't, you know, and they're always out working you so if you're not gonna work hard Then you know, and that's the minimum requirement and you pretty much won't even stand a chance. Anyways Take care guys and until the next video speak soon all the best