 Hi, my name's Liam Rowe currency trader and trading coach at trading 180 comm welcome to this week's supply and demand for us and gold fundamental and technical analysis for the week ahead starting the 26th of February and I hope that you had a great trading week and if you find the videos that I produce every weekend useful, please don't forget to like subscribe and share with your trading friends so Getting into the week ahead and in the upcoming week investors will be keeping a close eye on PCE price indexes and the PCE price index is the Federal Reserve's preferred measure of inflation personal income and spending data alongside speeches by various Federal Reserve officials additionally pivotal metrics such as the ISM manufacturer in PMI the second estimate of GDP growth rate Durable goods orders CB consumer sentiment and new impending home sales will be under scrutiny Internationally the tension will be drawn to inflation rates in Japan and that's going to be an important measure because that will really kind of decide Whether the Bank of Japan will Hikrates sooner or later as they are really the only bank that are looking to hikrates actually New Zealand Have had a bit of a change as well New Zealand could potentially be hiking rates this year, but pretty much every other G10 Central Bank is looking to cut rates this year Moving on. Sorry Australia and the Euro area GDP growth rates of Switzerland and Canada will also be in focus furthermore Manufacturing PMI's for pivotal countries such as China, Switzerland and Canada will offer insights into the health of their respective Industrial sectors Lastly market school awaits the interest rate decision from New Zealand Central Bank and unemployment rates for Germany Japan and the Euro area So lots going on this week that should and could move Prices so before we get into the week's analysis. I'm starting off on some trade analysis and my trade of the with the Canadian dollar yen and This is the the trade set up on the CAD yen and it was really based on a daily Time-frame stop hunt now the entry wasn't necessarily on the daily time frame But the level was really clear and I don't really talk about stop hunts on this channel Very often or if at all, you know, we had to talk about supply and demand but With stop hunts really it's about understanding That the institutions are buying beyond levels or selling beyond levels That the typical retail trader wouldn't necessarily look to buy or sell and it's about understanding liquidity hunts, etc, right so they typically tend to show themselves in alignment with the fundamentals as well, so My bias on this really was because the Canadian dollar this week didn't have That not great news. I think it was It was the inflation rate that was it inflation rate came down Below expected right and so with inflation coming down it potentially would have put The Bank of Canada in a situation where they could potentially hike sooner. I said cut sooner rather than later and so I thought that the The the Canadian dollar was kind of capped to the upside in terms of its appreciation I didn't think it would move up too much further And also as well next week as we've just kind of covered that there is inflation rate year on year Is expected to come out for Japan and if that does come in higher than forecast then that should push The Bank of Japan to want to hike sooner and so Hopefully this is going to happen, of course, nobody knows. I don't know what's gonna happen with inflation if it comes out You know lower than expected or as expected then You know, I'll just come out of the trade if it prices go against me before it does but at the moment, I'm actually in profit in one position I took three positions on here and This was the actual setup that I posted in the private members Area on Tuesday, so I said the cat looks like a nice daily stop on everyone and again, it was based on cad inflation lower cad likely to weaken so That was the Calendar and on the day that it happened. So This is what I had I had posted and also as well There I did have Another chart somewhere with regards to an intraday stop hunt, but again, that's more for the the members But from a from a daily stop on perspective This was what I was looking at and so just zoom in a bit more I had entered into three positions. So just breaking this down a bit So my first entry was at one ten ninety eight The second entry on a pullback was at the one eleven Three zero and then the final entry was actually at the one eleven Fifty-eight so around there So my initial market order was was here and then as prices pulled back I get in for a Better price of course cheaper price and also as well better risk of war, right? So you can see here on a 50% pullback You know, I've got a better risk award You can see the risk versus the reward if I'm right about this trade and also as well if he came back to like the 95% Pullback then I get an even better risk award, right? There's my risk and the reward to the downside now For those that have been following me for any length of time What I typically do is take off at least a position if I can get to like a one to one And so what happened on the? Friday was that prices Thursday triggered me into my final position and then I Managed to get a one-to-one my stop loss by the way was 25 pips above the the high and that's the same thing for all three positions So I'm anticipating hopefully that the Japanese yen Will be we'll start to high-crate sooner. They become, you know, hawkish and we sorry We'll talk about this a bit later as well in the In the video, but this was my idea to try and get ahead of the news on a stophunt and typically stophunts that happen Before major news events are actually a really good sign that potentially the market could be obviously buying the yen And clearing everybody else out and drawing even traders going to go long I break out traders, etc. Before actually rolling over. So let's see what happens here. So I've made profit on this this trade here the final Pending order sell so that's in the bank and now I have two Trades open which if prices go in my direction, I can swing trade, you know down to To various levels depending on obviously how how hawkish the Bank of Japan become if they don't become hawkish and let's say for example, you know Monday night comes along and The data doesn't necessarily support hiking sooner. Then I'll just you know get out of the trade And then look for another entry to hire because as I said, I think that the Bank of Japan should really be the outside of the New Zealand order should really be the only Currency in the central bank that are hiking rates. And so Yeah, that's really it so Waiting for this trade to Become profitable not profitable just yet, but hopefully it does but worst-case scenario. I'll just lose You know two positions, but made one so it's a it's a small loss rather than a full stop out So that's really the the analysis and the trade breakdown for this Trade and I'll keep you updated next week as to what happens or you can just keep monitoring this chart And then just know that if it goes higher I would have taken either a full loss or a partial loss depending or if it keeps going to the downside that you know That I'm swing trading this and you can follow along anyways on your own charts so getting into the analysis for the week and looking at the Dollar index equally weighted dollar index and if you don't know what the equally weighted dollar index is It basically Is another way of measuring dollar strength against the Euro the pound the yen cad Australian dollar New Zealand dollar and the Swiss franc and what I do is I'll put a link in the top right-hand side as well as Down in a description box below On on really how to add this to your chart the calculation and why I use the Equally weighted dollar index rather than something like the DXY or the USDX anyways My bias for the dollar is still long so we've come down into this demand zone and One of the reasons why I am Continuing to remain long for now Of course the data needs to support the narrative of the data changes and the data that I'm looking for to change really is going to be inflation I think if facing comes in lower than then forecasted then the market will price in rate cut sooner which will Cause the dollar to to weaken but for now it looks like bond traders brace for another US sell-off and unwind bullish bets and It's really important actually to keep an eye on what bond traders are doing because bonds bond prices bond yields and currencies are highly correlated so Not to get into it too much, but the basics of this is really Understanding that bond prices, right and bond yields move in Inversely, right so bond prices go up. Yeah This is a price goes up then bond yields should Fall and vice versa, right? So bond prices go down yield should go up and So what this article is really saying is that bond traders are bracing for the risk of a renewed sell-off So they're talking about bond prices. So bond prices Yeah Bracing for the risk of a renewed set of driving a surge of trading options targeting higher yields so bond prices coming down selling off right trading options targeting higher yields, right and Promoting investors to unwind long treasury positions by the most in nearly two years and Again, this is driven really by The fact that you know positioning comes as the bond market was hit by a fresh round of losses this year In terms of you know price this year after sticky inflation and still strong growth Drove traders to dial back estimates for how deeply the Federal Reserve will lower interest rates this year. So Also as well understand that bond yields. Yeah bond yields and and Inflation, yeah a closely linked as well. So yields Yeah, inflation and As well as interest rates are typically correlated Yeah, so they all move in that direction Up all all, you know, if for example interest rates are being held then yields will typically, you know stay at a certain price as well now so if you understand that yields are Remaining, you know within a certain range and not selling off and probably, you know going slightly higher Then it means that inflation is likely to remain sticky Which then means that interest rates are likely to remain Higher for longer, right and that's really the the logic around that and the reason why bond traders You know are unwinding their bets in terms of, you know, the bond prices. So that is Confluence and a combination of understanding how bonds and interest rates and forex are really kind of interlinked and so That's a great confidence to have When understanding why you should or maybe you want to be a buyer or seller because bond traders will put their money Where their mouth is and they will you know unwind positions or add to positions Depending on what they think is going to be happening with interest rates and inflation Also as well economists lower recession Forecast 40% on US job growth Expectations so economy has seen expanding 2.1 this year Sorry 2.1% this year in Bloomberg survey and forecasters mark down the session of 40% the lowest since 2022 so there was a lot of talk about the US going into a recession and now That's being priced out as well. So that is typically positive for a Currency and so although I'm not saying that price is going to go to the moon, right? The point is that nobody knows what's going to happen in the short term But if these things continue to play out any pullback should be looked at as buying opportunities Whether, you know, the dollar goes, you know But is it long this week or maybe a long next week or over the next few days But the more prices pulled back is the more Cheaper you can buy the dollar as long as the fundamentals are still supporting a dollar by when prices, you know go down. So Or pulled back so for me my bias is still to go long on The dollar but that could obviously change if inflation measures do come out lower than expected and also as well Looking at the the CME Fed watch tool the The dollar at the moment in March you have the probabilities or a rate rate hold no change For the next meeting is 96% in May change it to May No change is 73% and So the next time what the market is pricing in a rate cut Currently for June so at the moment no change is 33.1% and an ease by June is at 66.9% And so if this changes if for example inflation data comes out You know over the next month or so and it points to inflation coming in lower Then you're going to see the no change in fact change And coming lower and then the ease the probability of an eating ease will actually increase So and then that will be reflected in dollar price in terms of You know the dollar coming in lower but as long as the probabilities remain that the The dollar will hold rates for longer than any pullbacks really should be buying opportunities Of course, this isn't financial advice. It's just I could just tell you what my theory is and how I'm trading The markets and applying the fundamentals. So that's really Where it is and if anyone's been following me for any length of time Especially from you know the beginning of the year you'll notice and you go back through my videos That is that I've been long on the dollar and look at what's happened over the past You know two months. So, you know the fundamentals do play out as long as the data does support the fundamentals so That's where I am Dollar yen and so the dollar yen The yen didn't necessarily have you know, great data over the past week or two There was a surprise recession But the Bank of Japan still appears to be on track To high crates despite the recession shock. So I've got here Governor Raiders said the Bank of Japan will continue to carefully pass data to judge whether a gradual Economic recovery will continue in a signal that the economy's surprise slide into recession hasn't derailed its plans To end the negative rate policy in coming months And so he says we will continue to carefully analyze economic data and information to gauge whether a gradual recovery Continues in the economy and the virtual cycle between wages and inflation will strengthen Ueda said Friday in response to a question by a lawmaker and he says Japan slipped to a recession into a recession in The final quarter of last year a government report showed Thursday that prompted some Some market participants to push back their bets on the timing to an end of the sub zero rates So sub zero rates and the rate hike is coming. It just depends on the timing of These rates and so the longer the yen and the Bank of Japan take to high crates is The more you're going to see a weakness in the yen, right? And so that's the reason why you're seeing The dollar increases strength for one reason why is because obviously dollars doing better than expected But also as well the yen at the moment isn't doing fantastic, but Bank of Japan could look past The the recession and still look to high crates And so if they do I think it would catch a lot of traders off guard and this is the reason why I Am going short here because I'm anticipating that hopefully the You know, there is a data that supports a short or a long yen Which would be a Short cad yen trade as the yen is the quote currency, right? But just looking at this from a technical analysis perspective If you are looking at buying the dollar against the yen, then you'd have to really wait for a pullback into a demand zone Like around here or there and then look for a move to the upside If you are looking for any short trades, I think now is a decent time or slightly higher And maybe even a stop hunt potentially above The one five twos would be a decent Trade as well if you know how to trade stop hunts moving and moving to the dollar cad and the dollar cad Again the Canadian dollar not necessarily doing great But and it does look like the dollar and the US dollar and the Canadian dollar will be cutting rates at the same time Which is June is being priced in and so again not too interested in this currency at the moment although the the Canadian dollar could start to actually Cut rates slightly sooner. There is a possibility of that But I think the majority of analysts are thinking that both are gonna cut in June But if you do want to be a buyer of the of the US dollar over the Canadian dollar Then wait for a pullback into that demand zone if you're looking for a Buy of the Canadian dollar over the US dollar, let's say some data comes out that supports Maybe a dollar selling then really you're waiting for that area there and that supply zone to look for a sell trade Pound dollar so pound dollar the pound has actually been quite strong a lot of traders have Were kind of shortening and I was talking about this last week about the expectation I guess for the the pound to kind of maybe sell off a little bit, but I said last week that the markets seem to be looking past the recession and this Article here, which says the pound bulls stand near ground unfazed by UK dip into the session Basically kind of goes into it and the main reason why is because It says here that they point to economic green shoots and an inflation rate Double the Bank of England's target bolstering the case for interest rates to be held higher for longer so against this backdrop they argue sterling will reverse its current weakness and the The the pound is Expected to recover quite quickly and and the data is showing that so it says here that the UK PMI survey show The economy growing with optimism at two and a two-year high And so Britain's private sector firms are at their most optimistic in two years After signs that the economy quickly bounce back from a recession at the start of 2024 So the market it looks like is looking past the recession as It doesn't look like it's going to be a long and deep recession The Bank of England governor said it looks to be shallow and quick and so If it is and they basically return to growth then the pound looks like a Buy and this is the reason why you're seeing actually the pound start to go higher Whereas traders will be stressed, you know kind of scratching their heads and saying oh well The UK is in a recession. Let's bet on a recession and there's a lot of short trades. Guess what their liquidity and Their short trade liquidity will be going to be above the market and the market likes to take out a lot of liquidity now against the dollar I'm not necessarily saying that you should be a buyer of the pound against the dollar not at all but Ultimately, I think the pound is a buy but just not against the the US dollar But if you do want to be a buyer and a trader of this pair, you do have some options You do have currently right now in this supply zone I would probably prefer a trade somewhere up here if I was looking to trade this currency pair or wait for Prices to move down below The one two fives if I was looking for a buy trade on this currency pair and buying sorry Let me say that again. I'm looking to buy the pound I'm looking for a move back down into the one two fives and below to look for long trades And I'm looking to buy the dollar then I'm looking for sell trades at supply preferably around these areas here So but again, not really a pair that I'm looking to trade as I think both currencies are Pretty even but if anything these slight edge may actually be to the the pound because they are looking to hike also a cut rates a bit later than the Federal Reserve are Pound yen so pound yen again the pounds strengthening the Yen not strengthening just yet probably waiting for some data to come out the inflation data this week And if it does come out then you definitely got a short trade on your hands but for now it does look like the British pound is showing off the recession and looking Back the nearest high or reference point that you can look towards Looking for a sell would be 2015 but if I'm looking for this type of trade and looking for a short trade I'd have to be convinced that there's at least some supply here and then wait for a pullback Before going short. So that's really the play if I was looking for any kind of short trades But for long trades, it's literally just a pullback into a demand zone before Especially that demand zone does look nice nice technical area for looking at some long trades But overall I would put my money more on the Yen over the medium to long term but in a short term It's a bit tricky unless we do get some data that supports the Bank of Japan hiking sooner Euro dollar so Euro dollar Did kind of break through this supply zone part of the reason for that was that the The euro and the market is pricing out great cuts in April There was a bit of Indecision in terms of the market Pricing in rate cuts and it was whether it's going to be April or June And it says here that ECB officials tried to buy more time for decision rate cuts and policy makers want more confidence Inflation headed towards 2% and the guard highlights importance of first quarter wage bargaining. So it does look like they are Looking to potentially wait a bit longer before Cutting rates and so it says here the latest decision in wages gives hope that we are on track This central bank has said the Yanis Stura and S I think that's how you pronounce his name But we won't have enough information to decide on rate cuts before the end of the second quarter so June and so the longer it takes for them to cut rates is the The the higher or the more the currency will appreciate and so prices have come back up to the 108 around there 108 80s now Again, if you're looking for short trades on this then that's really We're looking for short trades right now in terms of buying the dollar and selling the euro I am actually still have a short bias on the euro, but I think potentially in the short term There might be a slightly bit more upside while the market prices out rate cuts in April And then potentially we could see further shorts, but I would imagine that the Euro dollar would enter into an auction or something would call it a range Most people do call it a range and what I mean is that you probably likely to see The market or prices enter into some sort of auction where you have that is the low that is the high and the market stays In between this Area here. Yeah, it goes because you have two central banks looking to potentially Cut rates in June. And so when you have two central banks that are cutting At the same time. Yeah, then what should happen is you should have an Auction or a ranging market when you have one central bank that is hiking, for example or cutting rates Then that's when you have a trend when you have a bit more of a divergence So you have two central banks cutting I'm literally hiking but cutting or hiking at the same time Then this is the kind of price action that you would likely see whether prices auction from here Auction from here who knows but this is what I would likely expect to happen with prices on a daily timeframe chart. So I Would still, you know preference the the dollar so any pullbacks into Supply zones Would be for me sell opportunities although For me, I'm waiting for a bit more downside potential Prices start to move up to the 109 maybe above the 109's maybe even up to the 110's I think that's where I really want to be a seller of this currency pair Euro Yen and I'm actually in this trade as well Euro Yen short Around here Again based on the fact that the Euro Well more more of the fact that the Yen Hopefully do decide to hike sooner, of course And let's see what happens here. So There is an opportunity to short here, but if prices do go higher then I was you know trying enter into another trade in hopes that the the Bank of Japan will look to hike because Ultimately, even if I lose, you know a trade or two here If I'm right about this trade and the downside potential is going to be, you know Five ten fifteen to one type trade So I don't mind taking a couple of losses in order to see my trade idea play out And so I'm in this now. Let's see what happens on Monday Monday evening if it does then you know go my direction and brilliant if not then I'll just wait for a Move and also as well for those of you, you know, it's trade stop hunts. There is a nice Level up at the top here. If you are looking to buy the euro over the Over the Yen then you really want to wait for at least some sort of demand zone The nearest demand zone will be down here And you've got the confluence of a level of support and resistance within that level as well So that will be and look quite nice in terms of you know a buy if you think that the Euro-strengthened against the yen looking at the euro pound and the euro pound I want to be a buyer really of the pound over against the euro Didn't manage to get an entry there wasn't I was saying to the members in the members area I want to be short here, but things just didn't line up exactly as I wanted it But if prices do come up a bit higher I think this area here is going to be a very nice Short trade because I think that the pound hopefully and the Bank of England should hike rates later Sorry, he's in high grades should cut rates later than the euro, right? And so if they do that does turn out to be correct then really the the pound should strengthen over the Over the euro and so that's my bias But if you do want to be a buyer of the euro then you're looking for pullbacks into This demand zone before looking at going long So that's what you're looking for Living to buy at these low areas here, but for now, I don't really want to be a buyer of the euro against the pound Aussie dollar and the Aussie dollar Australian dollar has had some strength They are one of the last central banks to look to To cut rates and so that is supporting the Australian dollar what is capping the Australian dollar is really China's Economic contraction But I think overall the Australian dollar is a buy again, not necessarily against the US dollar and less Of course, there is some disappointing news coming out of the US, but ultimately whether you want to be a buyer or seller I Just look for you know these supply zones. So right now if you want to be a buyer of the The dollar then you're looking for short trades here, right? And if you're looking for But to be a buyer of the Australian dollar, then you're looking at buying at demand. So, um, yeah, those are your choices I'm not necessarily Interested in this just yet, but I do think that once the US dollar starts to cut rates I think the Australian dollar will benefit We one of the currencies that benefits the most and then we also have gold so Gold making some highs at the moment even though the dollar is actually, you know It's strong, but then saying that daughter pulled back this week So you have, you know, the dollar coming down over the past, you know, three or five six seven days So going to gold it makes sense that gold is going, you know to the upside but ultimately if the If the dollar continues to strengthen over the next month or two Then you're likely to see something like this happen. If not, if there are some surprise weakness Inflation coming down disinflation coming down then gold should make its way higher So any pullbacks into a demand zone will be decent for a long trade on gold but keep an eye on the Dollar index at levels and also as well, of course the fundamentals and so That's it for this week. I hope you enjoyed the analysis and I hope it was helpful. So I hope you have a great trading week. Take care all the best