Weekly technical outlook – USD/JPY, GBP/USD, USD/CAD [Video]

Trump's inauguration – USD/CAD

Surrounded by the business elite, Trump promised a “new day of American strength and prosperity, dignity and pride”, while also pledging, during a rally on Sunday, to deliver a flurry of executive actions from day one. Just a few hours before his inauguration address, headlines stated that US president will not proceed with import tariffs during his first days in the office after a 14-hour black-out in Tik Tok was reversed. This signaled that his approach may be more measured than expected - at least at the beginning.

The encouraging tariff news came as a relief to commodity-dependent currencies such as the Canadian dollar, with USDCAD slumping to a one-month low of 1.4259 and beneath its important 20-day exponential moving average (EMA) in the aftermath. Traders will look whether the bears can successfully violate the short-term sideways trajectory below 1.4300-1.4330 by the end of the day.

Canadian CPI data might influence USDCAD’s performance on Tuesday as well. Forecasts point to a slowdown to 1.8% y/y - the second cooldown since the resurgence to 2.0% in October. If the figures arrive weaker than expected, confirming a 25-bps rate cut next week, the bears could lose momentum, particularly if the pair returns above its 20-day EMA at 1.4360. In this case, the focus could shift back to the 1.4465 ceiling.

BoJ policy meeting – USD/JPY

The Bank of Japan’s policy meeting and national CPI figures could be the next important event on the calendar on Friday, and investors are confident that interest rates could rise by 25bps to 0.5% - the highest in 17 years - keeping in mind that this is the first hike since July 2024. After months of indecisiveness and uncertainty, BoJ policymakers have recently hinted at imminent action, and they may proceed unless Friday's CPI figures suggest otherwise. In any case, the central bank could still use FX intervention to rescue the battered yen.

USDJPY came under selling pressure after breaking below its 20-day exponential moving average (EMA) and the 156.65 floor last week, which is currently acting as resistance. Nevertheless, the pair remains supported above 154.30, and only a step below this base could trigger a fast decline.

UK employment and flash PMIs – GBP/USD

In the UK, employment figures for November are set to be released on Tuesday, with analysts expecting a notable slowdown in jobs growth to 35k, a steady unemployment rate of 4.3%, and a resurgence in wage growth to 5.6%. Yet, the jobs data could be considered outdated, as January’s S&P Global business PMI figures could provide fresh insights on Friday. Forecasts point to a mild pullback.

GBP/USD ran as high as 1.2325 following today's tariff headlines, though it has yet to exit the bearish zone. With the technical indicators flagging oversold conditions, the pair could gain more traction. Still, unless there is a huge bounce above 1.2550 which is currently quite far off, downside risks will not disappear. Alternatively, a negative correction below 1.2100 could initially pause near the psychological level of 1.2000. If not, the pair could sink toward 1.1800.