Following Donald Trump’s inauguration, the global currency markets exhibited a notable response, particularly with the U.S. dollar. Early trading reflected a slight retreat as the dollar shifted away from its recent highs, experiencing a correction that has left it hovering around critical support levels. Despite this minor setback, there remains a lack of definitive signals indicating a robust downward trend. Most major currency pairs have continued to consolidate within their established ranges, suggesting traders are poised, waiting for further cues from the new administration.
USD/JPY: Key Levels to Watch
The USD/JPY currency pair has emerged as a focal point of analysis in light of its repeated testing of the 155.00–154.80 zone. The fact that sellers have struggled to maintain prices below 155.00 for a sustained period could suggest bullish sentiment, potentially leading to a reexamination of the recent peaks in the 157.00–157.80 range. Current technical indicators imply that the pair is experiencing a sideways trend, particularly as it approaches the upper limit of a five-day price corridor. Market watchers should note that if the price rebounds from the 156.70 mark, it may decline toward the support zone of 155.20–155.00. Conversely, a breakout above 157.00 could lead to a new yearly high, potentially reaching 158.90.
Upcoming events that could impact USD/JPY include the release of Initial Jobless Claims from the U.S. at 16:30 (GMT+2) and a pivotal speech by President Trump at 19:00 (GMT+2). Additionally, the impending Monetary Policy Report from the Bank of Japan and its interest rate decision scheduled for the following day at 05:30 and 06:00 (GMT+2) respectively, are expected to add volatility to this currency pair.
USD/CAD: A Delicate Balance
In tandem, the USD/CAD pair is witnessing a similar pattern characterized by range trading, which includes false breakouts. On Monday, the pair tested the January low of 1.4280, yet did not manage to establish a significant downward trend or close below that critical level. This ongoing testing of boundaries suggests that traders are keenly observing how the price behaves within the four-week range of 1.4300–1.4500. The market’s direction will depend heavily on the outcome of prices in the near future and particularly how they relate to the observed range of 1.4420–1.4450.
Important data points set to influence the USD/CAD pair include Canadian retail sales figures at 16:30 (GMT+2) and updates on U.S. crude oil inventories at the same time. As these events unfold, they will likely play a crucial role in shaping market sentiment and price action for this currency pair.
As the financial markets navigate the transformative political landscape brought on by Donald Trump’s inauguration, attention remains fixed on how these dynamics will affect global currencies. Given the current technical conditions of pairs like USD/JPY and USD/CAD, traders are placed in a strategic position, balancing risk with potential rewards. Market participants should stay attuned to upcoming economic releases and political statements, as they could serve as significant drivers of future price movements. The sentiment around these developments will be vital as investors inch closer to making informed trading decisions, leveraging opportunities amid a fluid market environment.