LOOK AHEAD: US Macro Week Ahead: Building To Friday's NFP/Retail Sales Double

• RES 4: 1.3929 High Jan 16 and a reversal trigger     
• RES 3: 1.3879 High Jan 20
• RES 2: 1.3831 50-day EMA 
• RES 1: 1.3643/1.3787 Low Dec 26 / 20-day EMA
• PRICE: 1.3576 @ 17:19 GMT Jan 28
• SUP 1: 1.3536 Low Jan 28
• SUP 2: 1.3473 Low Oct 2 ‘24
• SUP 3: 1.3400 50.0% retracement of the 2021 - 2025 uptrend 
• SUP 4: 1.3359 Low Jan 31 2024     

A sharp sell-off in USDCAD yesterday reinforces the bearish cycle and highlights an acceleration of the downleg. The pair has breached 1.3643, the Dec 26 low. Sights are on 1.3473 next, the Oct 2 ‘24 low. Note that 1.3540, the Jun 16 ‘25 low, has been pierced. A clear break would strengthen the downtrend. The trend is oversold, a corrective bounce would allow this condition to unwind. Resistance to watch is 1.3787, the 20-day EMA.     

• Following yesterday’s late turbulence for the US dollar, prompting an aggressive slide for the USD index to near 4-year lows, the greenback is trading on a more stable footing on Wednesday. With that said, the USD is off its best levels following an FOMC decision and press conference that has done very little to move the needle.
• The more stable backdrop for the dollar today was assisted by Tsy Secretary Bessent reiterating the US’ strong dollar policy, while the reduced odds of Rick Rieder being announced the new Fed Chair may have also provided support. Despite this more stable session for the greenback against G10 peers, spot gold continues to extend gains, reaching $5340/oz as we approach the APAC crossover.
• The Swiss franc has underperformed, allowing USDCHF (+1.08%) to edge back towards 0.77, while EURUSD sits 0.8% in the red following the pull lower from 1.2081 cycle highs on Tuesday. Late comments from Germany’s Merz on the concerning EURUSD moves briefly prompted a move to session lows at 1.1896.
• Bessent’s explicit reference to not intervening in USDJPY saw the pair rise over 1% and briefly pierce the 154 handle, however, spot has subsequently slipped back towards 153.40 following the Fed presser.
• USDJPY still remains around 3.8% below the January highs after the swift dynamic shift following the Bank of Japan last week. The pair remains in the grip of a technical bear cycle, and sights are on 151.98 next, a Fibonacci retracement point. Initial firm resistance to watch remains much higher up at 156.01, the 50-day EMA. A recovery would allow an oversold position to unwind.
• Swedish GDP and the Riksbank decision are due Thursday, followed by US weekly jobless claims and trade balance figures which highlight the data calendar tomorrow.

• The combination of the FOMC decision and Powell’s press conference has seen implied rates 0.5-1bp higher for meetings out to July but even less of a move further out.
• FF cumulative cuts from 3.64% effective: 3.5bp Mar, 7bp Apr, 19bp Jun, 26bp Jul, 36bp Sep, 41.5bp Oct and 46bp Dec.
• The 46bp of cuts to end-2026 remains at the hawkish end of recent months but is still more dovish than the sole 25bp cut implied by the median dot at the Dec SEP across a heavily divided committee. The market essentially sees the additional 25bp cut penciled in for 2027 being pulled forward into 2026.
• SOFR futures rallied modestly during the Q&A but only to reverse a small hawkish reaction that slowly built after initially very limited moves on the decision announcement.
• The terminal implied yield of 3.245% (SFRZ6) holds a 2.5bp increase seen on the day. It reverses yesterday’s drop that saw additional support from weak consumer confidence, sticking close to last week’s 3.285% highest close since July.
• Still to come today after the close, earnings from key names including Meta, Microsoft and Tesla.