 Hi, my name's Leon Rowe, currency trader and trading coach at Trading180.com Welcome to this week's supply and demand for us and gold fundamental and technical analysis for the week starting January beat 22nd and I hope you had a great trading week last week and looking forward to this week and Before we get started, please don't forget to like subscribe and share my content with the YouTube world or wherever you're really watching this from as it helps Support the channel and gets the quality content out to those that potentially may need it and Thank you for all of your likes and comments. I appreciate all of them So getting into the week ahead so it will be an important week in the US with investors closely monitoring the advanced estimates of Q4 GDP growth rate PCE price index and personal income and spending Additionally attention will be directed to durable goods orders manufacturing and services PMI's and New and pending home sales so lots going on in the United States when it comes to data supporting At least some GDP either grow for all contraction as well as PCE prices index which is Inflation based so on the global stage interest rate decisions will be made in the Euro area Japan and Canada also Manufacturing and services PMI will be closely watched in Australia Japan the Euro area and the UK and furthermore Germany will release the LFO business climate and GFK consumer confidence indices while Australia will present the NAB business confidence. So again lots going on in terms of data this week so getting into the charts and Starting off on the dollar index and this is a equally weighted dollar index And for those of you who are not really sure or maybe watching for the first time You know why and how to use the Equally weighted dollar index. I do have a video here. That was produced five days ago It says for a strategy using the equally weighted index to identify the best for X trade setups and pairs And also it was well, you have the calculation for pretty much all of the equally weighted currency indexes and so Yeah, I basically just go over why I use them why the DXY is probably a bit more outdated and also as well an Insight how to apply it to your trade and so you can choose really the best levels and so looking at the equally weighted Dollar index and we have come up into this area of supply Now my bias actually is to is more leaning towards Buying the the dollar at the moment But because we're up at this supply zone this expensive area I'm gonna have to really wait for a pullback into a level of demand here for some confluence and so When we look at this from a technical analysis perspective, like I said We're just really for more confluence and understanding where you are from an expensive or cheap area The dollar is really at an expensive area. It was expensive back in December Therefore prices went to the downside We've reached this expensive area again and the question is is will it be, you know expensive depending on what happens with the data this this week now really all roads kind of lead to the interest rates or the expectation of interest rate cuts and The market has really kind of priced in the first rate cuts for March and Now they're actually pricing out those cuts right and so cuts if you don't know typically devalue a currency and We've had Fed officials basically come out and say that the data doesn't show it's time for a rate cut yet And I've been saying this for a while In fact, I mean if you've been watching my weekly videos that I kind of disagreed with the fact that they may cut in March, of course anything was possible. I thought it was Unlikely and it says here that Dali says it's premature to think cuts are around the corner and feds Bostick and Goolsbee emphasised data in Data's role in thinking of course the data needs to support rate cuts So what the Fed are really want to see is not only inflation coming down to their 2% target, but they also want to see Economic data rights and they want to see a real kind of contraction in the economy now I do think overall that they will cut we are in the cutting cycle of the Of the economic cycle in terms of You know the contraction phase and the rate cutting cycle But I think that's probably maybe gonna happen more towards April-May rather than rather than March and so what you're also seeing as well when we look at the Fed watch tool If you look at what's going on in March And so we've you know, you've got January 24th up here We've got March there and if you look at the probabilities the probabilities of a no change is now 52% and in ease is 47% and Just about about a week ago, right there was actually a 19% chance of a hold and now we're looking at a 52% chance of a hold and what's that's pretty much done is Is that the market has got ahead of itself in pricing in the devaluation of the the dollar and so And so now with the data not really supporting a rates cut For the dollar the markets had to price out the the rate cuts And so that is really what has strengthened the dollar over the past Well since the beginning really of the year, right? We've seen the dollar really kind of rise as the The market has priced out rate cuts. So when the market is pricing in rate cuts This is what we saw, right and then now we haven't seen the data really support those rates Cuts yet. And so the market is now pricing out those rate cuts. So I Do think there's an opportunity to continue to buy the dollar But again if the data starts supporting rate cuts sooner, right? So if there's some bad news or worse than expected news for the dollar this week in terms of GDP and Some other data that contribute to the GDP then in fact, you're likely to see the dollar start to decline in in value a bit more Rather than if this may be being more of a pullback It's probably maybe more of a sustained move as the market then start will start to price in and increase the Probabilities of a great cut, right? So keep an eye on the Fed watch tool So that's where we are with the dollar overall Looking at the dollar yen and the dollar yen again with the dollar being quite strong and appreciating based off of Rate cut expectations or the or the pushback in rate cut expectations. We've seen obviously the dollar start to Move higher now with the yen. It's a slight different story where the Bank of Japan are actually looking for inflation to to increase and so And away from their 2% targets So it says here that Japan's slowing inflation supports case for Bank of Japan to wait longer And so services prices continue to rise up fast this clip in 30 years and slight and electricity prices Deepen cost of lodging so overall Japan's inflation is slowing and so if Japan's inflation is slowing and it's not necessarily going You know trending away from their 2% target in terms of trending higher then The Bank of Japan are likely to hold rates for longer rather than hike And so what that's doing is is that is basically putting pressure on the Japanese yen in terms of its Pricing in of rate hikes, which basically means that it should get weaker, which is the reason why you're seeing You know one hand that the US dollar Appreciate because of rate the expectation of rate cuts being pushed further out But also as well You have the expectation of rate hikes from the from the Bank of Japan Also being pushed further out, which is weakening the yen And so ultimately you can look for short trades right now or you can look for pullbacks into demand zone before getting long and looking to buy the the the US Dollar and by the way as well if you're maybe a bit struggling to kind of understand what I'm talking about in terms of leading and lagging rates cuts and hikes if you go down to my videos on my YouTube channel if you scroll across there's a Video that I've created called Forex fundamentals trading webinar use leading and lagging interest rates to predict big trends And this is the one right so that's what you're looking for and really that will explain Interest rates in terms of Leading and lagging and who's cutting first who's cutting last or who's hiking first and who's hiking last and that would basically have a major Effect on we'll know in that We'll put you in You know Give you the knowledge really to understand why currencies are strengthening and or Devaluing over the medium to long term in a short term typically it's about you know positioning But that's a great video to watch and so this is the reason why you're seeing prices do what they do What they've done and maybe continues to do what they're going to do in the near future So at the moment it looks like the dollar really is the one to buy so any pullbacks should be buying opportunities until really the data supports the narrative of either a Yen hike or a dollar cut sooner And the dollar CAD This week again I was saying this week that last week in last week's video that I was probably more longer the The the US dollar than I would be the Canadian dollar although we are getting a bit of a pullback on the On the Canadian dollar as the Bank of Canada actually are May come out and be a bit more hawkish as they had inflation data come out that was supportive of more of a hold rather than a Cut sooner so I do think overall though that the dollar the US dollar should be the one to buy out of the two And so any pullbacks are buying opportunities if you do want to be a buyer of the Canadian dollar Then you've got this level here, which would be you know technically the one three sixes Quite decent. You also have a level of Support as well in that zone that is turned resistance. So that's some extra confidence within that area. So That's really where you're looking at. I think from a demand zone perspective. I think that 1336 To one three three fives are decent for a potential Long-term if you if you drag that back as well, you can see that that has got some decent confidence within that area So Yeah, looking all right technically, but my bias would be more to buy the US dollar over the Canadian dollar pound dollar the pound Has gone through some decent news this this week and then say last week and The Yeah, there was some but there was some really disappointing news in terms of Retail sales and so UK retail sales drop raising odds of mild recession in 2023 So December decline was steepest since lockdown three years ago and results feed case for Bank of England to cut rates and so yeah intro basically a Retail sales came out and came in the lowest it's been since really, you know, January 2021 and so Retail sales obviously have an effect on the economy and spending and what retailers are really kind of taking in so from that perspective if the Pound in the UK were to enter into really a recession You should see the pound actually start to to weaken and so Let's see what happens there also as well. You do have a supply zone. So if you are looking to Take this trade in terms of short trade Then you're looking for really kind of pullbacks into that supply zone before looking at short trade or if you're looking for long trades I would say a move down into maybe the one two sixes down to one two five fifties one two fives before looking at Getting long but ultimately This power this pairs a bit of a trickier paired to trade It's not necessarily clear cut, but my bias would probably be more the game to kind of lean towards potentially the dollar in the short term, but if the pound can hold out in terms of the Rate cuts coming later then the Federal Reserve Then I think the pound is probably going to be still supported on on bias Pound yen and the pound yen has come up to a decent level Really kind of like a market high. We haven't been this high for quite a while Well over a year and so if you are looking at some short trades meaning that you want to take advantage of maybe some sort of pound weakness potential weakness based off of The the fact that they may enter into a recession then or marvel session at least Then this is actually a really nice level to look for some shorts We are at market highs. Just be mindful that This level looks like it could be stop-hunted There was already a stop-hunt above here, but the the Japanese yen at the moment I think because it's quite weak. This is probably a bit more susceptible to potential Stop-hunts above the level it could be but hopefully not if you are in this trade If you're looking for just a pullback on the the pound then this area in terms of Demand is decent. You also have a some recent support and resistance in this area as well as some technical Confluence so nice in that zone for a potential buy on the pound yen or right now in terms of a short trade and they be taking the advantage of The pound weakness and also as well. I think the Bank of Japan. I think if not this week Maybe the Actually at the end of the month. I think it is Actually, no is this week. Japan will be Announcing their interest rates and what's going on So that could actually they're hawkish then they could act this cat should be a really nice trade to the downside power trade dollar euro dollar and Euro dollar this week we've had Supply here from the beginning late last year We haven't really had a major trade setup. There was a bit of a stop-hunt around these these lows here but Yeah, I think my bias would be more to look for short trades within that this supply zone at the moment now the euro Just like every other central bank You've the the ECB are basically pushing back against the market's expectations for rate cuts and And so it says here policy makers including Christine Lagarde this week explicitly embraced the idea of a summer Rate cut as traders ignored pushbacks from her and her colleagues against their bets that monetary easing will kick off in the spring so the market are pricing in rate cuts around April and Christine Lagarde is pretty much pushing back on that and saying no it's unlikely that it's like it's like to be More June right more summertime and so again, I think the euro will be More of a buy If for example the fed start to cut first right and the dollar start to cut first if that is seen by the markets Then you're gonna likely see at least a pullback up into You know, maybe past these are up to maybe the one eleven's and possibly the one twelve now the Situation with their economy the euro economy isn't looking great. In fact the US is much better in terms of Where they are in the economic cycle, so it's my belief at least until the the next maybe month or so that Hopefully we probably may see some more downside But I think once the Federal Reserve do stop to look to cut rates They cut rates before the ECB and also as well if the ECB do dodge a recession in terms of you know The eurozone economy dodges a recession then in fact you're likely to see the euro. I think strengthen Because that will Basically give the confidence for the European Central Bank to actually hold for at least a bit longer But if they go into a recession sooner and if the recession is seen as a deeper recession then I mean I see further weakness for the euro in at least in the short term So let's see what happens here that but the path of these resistance for now I think is still continued to the downside at least in the short time Euro yen Euro yen again if you want to be a buyer of the euro probably at the moment the yen might be Best bet until obviously we get Data supporting buying the yen, but um, but yeah, I think any any Long trades in terms of buying a euro. You're looking at probably that zone there Which does align with You've got level of support and resistance and you've got resistance from a daily resistance then support So any pullbacks into this zone is going to be really nice technically as a technical buy But once the yen if the yen do start to look to high crates Then as they are the only central bank to high crates if prices do come up to these Supply highs then Ultimately, this is going to be a really nice area to look for yen buyers and euro yen shorts Towards the rest of the year, but again I think the yen at the moment they need that, you know inflation to release, you know The patient numbers to kind of kick in And start to move away from their 2% target in terms of you know towards the 34% So let's see what happens there. So those are the options euro pound My bias again I'm saying over the past a few weeks that my bias would be more to buy the pound over the the euro You're seeing that kind of play out on the chart. So you've got supply zone You're looking at really pullbacks. I think and again both Countries aren't doing well in terms of they're both looking at facing, you know stagnation and and the recession but in terms of The market pricing in, you know, the rate cuts It looks like the pound maybe slightly later than the euro And if that is the case then the pound should be more supported Against the euro, which would mean that the path of these resistance should still continue to be to the downside So any pullbacks into that supply zone will be quite nice also as well, you do have a level of Some support here that turns into now Resistance anywhere around that price on there just above it It's going to be, you know, really nice for a potential technical setup to the short side if you want to get involved in that The Aussie dollar Aussie dollar not necessarily a pair that I'm looking at at the moment But I know many traders do look at this pair So we've got a level of demand So if you look into buy the Australian dollar, which at the moment I do think the Australian dollar is still looking like a potential buy Although they didn't have necessarily the best news of there was some employment news that came out Which wasn't which wasn't great, but again looking at where they are in terms of their interest rate Cutting cycle They are one of the later central banks to start to cut rates So that should continue to support the Australian dollar overall Which then means that there could be potential buying opportunity at some point I don't necessarily think it's now I think once the US dollar do go into their rate cutting cycle Then the Australian dollar is likely to be a buy But for now I do think that the this pair is a bit more tricky to trade So not necessarily a pair that I would look for but technically You do have a really nice zone on here or again You've got not only demand, but you've got a level of support and resistance in there So I do think this is nice the fresher area of demand this level has been touched once twice already three times Of course could bounce from here But I do think that if it goes down to be on the 65 round number and just below that I think that should be quite nice for a For a buy trade in terms of the technical buy trade But again need to see that the dollars really start to have some some disappointing news in terms of their economy and If the market really starts to price in rate cuts sooner Then that should actually still support the Australian dollar What you're looking for just some pullbacks into supply and looking for a short trade in terms of buying the US dollar and finally gold Gold this week in terms of supply and demand. We've had in fact a nice demand zone there The bit of a stop on matter of fact at this area So a bit of but it was a stop hunt, but whether that stop hunt follows through now is is something else It's a tricky trade to take at the moment simply because the dollar is continuing to defy the odds in terms of a rate cut in March and so There could be some more weakness in terms of You know dollar strength and gold weakness, but ultimately in the rate cutting cycle And once the dollar does start cutting interest rates, then what should happen is The gold should start to increase in value as the dollar decreases in value, right? And so any pullbacks into, you know, these demand zones I think are going to be nice buying opportunities for gold as we get later into the year if you are looking at Selling gold then your supply zone is going to be starting at the 2050s around there before looking at Short trades on gold So short trades on gold will be buying the dollar, but if you're looking to buy gold, then you're looking at At least the Federal Reserve to really look to start Cutting rates and once that starts to happen is zoom out We should then start to make some new potential new highs and higher highs in terms of you know The the economic cycle where we're in the contraction and potential Recession phase so that's it for this week. I hope you have a great trading week and speak to you soon Take care