Updates: Week Ending Jan 31, 2025

The past week has been quite a rollercoaster. Leading up to February 1st, President Donald Trump threatened all key trading partners with tariffs as part of his "America First" policy.

Will this have the desired impact? That's debatable, as all major trading partners feel alienated, with 25% tariffs set to be imposed on Canada and Mexico, along with 10% on China.

The Pairs in Play summarized in last week's post did not pan out as expected. However, I managed to capture a small win on USD/JPY and gained valuable learnings from my losing trades.

Trade Recap

Last week, I anticipated that the US dollar would depreciate against the other major currencies. In the screenshot of my last post, I showed that EUR/USD was in the process of breaking out to the upside.

At the start of the week, however, this currency pair quickly reversed and trended lower. This price action was reflected across all the other major currency pairs as well, except for USD/JPY.

EUR/USD Daily

I was quite surprised to see this currency pair reverse so quickly. Since October of 2024, this pair had been in a downtrend and the trendline finally broke on January 20, 2025. Historically, this pattern indicates a high high probability for price to trend to the upside.

That said, it's understandable that this breakout signal did not hold up. Traders had a difficult time developing a directional bias for the US dollar given Trump's threats and the actual implementation of tariffs.

I took quite a few trades over the past week, and there are a few that I would like to highlight. The first set of trades was on the AUD/SGD pair.

AUD/SGD Daily

On the daily timeframe, price breached a key "support" level. This indicated to me that there was further opportunity for price to move to the downside. On the hourly timeframe, I plotted my ranges, entered a short position, and then attempted to scale this position.

AUD/SGD H1

This was a painful loss because I initially had a profit. However, there were a few lessons learned:

• If the price action becomes choppy and momentum doesn't pick up in the direction of your analysis, exit the trade, even if it's at a small loss
• Avoid scaling in too quickly - it might be better to scale in only when  price forms a lower range
• Consider lowering your take profit-target to 1xATR because you can't make money if you don't close in the profit

These lessons also applied to my EUR/NZD trade.

EUR/NZD Daily

This pair was in a weak uptrend so I decided to place a trade in the direction of this trend. Similarly, the hourly timeframe will show that I scaled in too quickly.

EUR/NZD 1-Hour

The most notable lesson learned from this trade was to exit given the choppiness of the range.

On the other hand, I managed to capture a small win on USD/JPY. On the daily timeframe, I noticed that this pair was showing signs of pushing lower.

USD/JPY Daily

This was a counter-trend signal as price was in an uptrend, and had breached the trendline on January 13, 2025.

USD/JPY 1-Hour

The 1-hour timeframe shows that I did not enter this trade too quickly. I waited until another fair value range formed on this timeframe.

Since the price started to move against me, I closed this overall position with a small profit. One thing that I will consider doing differently is setting my take-profit at 1xATR. It's better to capture the cash flow rather than risk having the price move against you.

Pairs-in-Play (PiP)

I predict that there will be increased volatility next week, particularly with the USD/CAD pair. I expect the Canadian dollar to continue weakening against the US dollar, especially as tariffs take effect on February 1.

USD/CAD Daily

If the support level holds, then this pair is in-line to follow the long run uptrend. AUD/NZD is another pair that currently has my attention.

AUD/NZD Daily

This pair breached below both the trendline and the horizontal neckline. If the price continues to trade below the horizontal neckline, I believe there is high probability of further downside price movement.