Sun Jun 21 GBPAUD Fundamental Value Band is 1.894 and 1.903

TRADE PLAN

• Strategy: Utilizing our fundamental analysis showing a neutral-to-positive fundamental score of +6 to capture the medium-term currency_pair_7w_direction pointing to the upside, while managing a short-term currency_pair_7d_direction that favors the downside under a low currency_conviction of 3 out of 10 and a currency_fundamental_strength_7w_forecast of GBP +1 and AUD -4.

• Buy Zone: 1.8750 to 1.8900

• Take Profit Zone: 1.8985 to 1.9030

• Stop-Loss: 1.8550 (exactly 200 pips away from the 1.8750 entry level)

• Abort Conditions: A highly aggressive Australian CPI print on June 24 above 4.3 percent, a severe UK political crisis that weakens gilt yields, or iron ore prices rising back above 110 dollars per tonne.

LONG TRADE UPDATE

• Action: Based on our fundamental analysis yielding a neutral-to-positive fundamental score of +6, we are looking to capitalize on the medium-term currency_pair_7w_direction pointing to the upside, despite the short-term currency_pair_7d_direction showing downside risks.

• Execution details: Given the currency_fundamental_strength_7w_forecast of GBP +1 and AUD -4 and our low currency_conviction of 3 out of 10, we will build long positions slowly within our buy zone.

• Abort Conditions: Abort the long trade immediately if the daily candle closes firmly below 1.8700, or if RBA rate hike expectations escalate rapidly ahead of the August meeting.

SHORT TRADE UPDATE

• Action: Under our fundamental analysis with a neutral-to-positive fundamental score of +6, we stand aside on short positions as the currency_pair_7w_direction points to the upside, making shorting highly risky.

• Rationale: The short-term currency_pair_7d_direction downside risk is highly speculative under our currency_conviction of 3 out of 10, and selling at the bottom against a currency_fundamental_strength_7w_forecast of GBP +1 and AUD -4 offers poor expectancy.

• Abort Conditions: Abort any short trade ideas as the bulk commodity crash and weak Australian economic data structurally support the upside for GBPAUD.

Fri Jun 19 GBPAUD Fundamental Value Band is 1.940 and 1.948

GBPAUD is a Possible Buy as Signals Point to Undervalued

GBP/AUD has been through some choppy trading lately. The pair slipped from recent highs near 1.9100 down to 1.8925, which looks like a straightforward seven-day direction pullback. Step back to the seven-week view, though, and the bias stays firmly bullish. A Total Fundamental Score of +33 backs that call, even if conviction remains moderate for now. The main driver is the widening policy divergence between the Bank of England and the Reserve Bank of Australia.

Looking ahead, that same fundamental divergence in currency strength should keep pushing the pair higher. With solid conviction on the currency side, the seven-week direction appears ready to reassert itself and target 1.940 on the upside. The seven-day move should resolve higher too, helped by those regional headwinds that continue to weigh on the Australian dollar.

A string of upcoming releases could stir decent volatility and hand us a clean entry zone. The S&P Global UK Flash PMIs drop on June 23 and should give a timely gauge of service sector resilience. Then on July 1 comes the scheduled 13% increase in the domestic energy price cap, which ought to keep UK consumer prices sticky.

For Australia, the monthly consumer price index prints on June 24 and the labor force survey follows on the 25th. Both should offer clearer evidence of cooling growth. Softer Australian inflation or unemployment climbing above 4.5% would validate the Reserve Bank of Australia’s pause. A hot UK core CPI on July 15 would reinforce the Bank of England’s hawkish hold. Taken together, these events line up with our positive seven-day and seven-week directions, backed by solid conviction. The volatility around them should create an attractive buy zone before the Bank of England’s rate decision on July 30.

TRADE PLAN

• Directional Bias: Supported by our comprehensive fundamental analysis, the intermediate outlook points to the upside over both the seven-day and seven-week horizons.

• Fundamental Drivers: GBP fundamental strength is forecasted at plus four with a conviction of four, while AUD is forecasted at minus four with a conviction of three.

• Buy Zone: 1.8880 to 1.8950, capitalizing on the pair’s current undervalued status below our lower band.

• Take Profit Zone: 1.9400 to 1.9480, targeting the fair value centerpoint and the structural upper value band.

• Stop-Loss: 1.8725, set exactly 200 pips away from our tactical entry at 1.8925 to shield our capital from short-term market noise.

• Abort Conditions:

  • A surprise dovish shift in Bank of England communication or rate projections.

  • An unexpected spike in Australian CPI on June 24 that forces the RBA to resume interest rate hikes.

  • A sudden, robust recovery in benchmark iron ore prices above 115 USD a tonne.

  • A clean daily candle close below the technical support level of 1.8700.

Sun Jun 7, 2026 GBP/USD Fundamental Value Band is 1.330 and 1.333

Fundamental analysis confirms UK stagflation fears, while the US remains exceptionally resilient. GBP/USD is projected to continue its downside journey throughout the coming days and weeks, with expectations being a break below 1.33.

On June 10, 2026, the US inflation rate release stands as a major volatility catalyst. A hotter-than-expected print will aggressively reinforce the US Dollar’s fundamental strength and confident conviction, driving a sharp leg down in GBP/USD.

Furthermore, the June 17 FOMC interest rate decision under new Fed Chair Kevin Warsh represents a crucial pivot point. Any formal shift toward rate hikes will solidify the greenback’s interest rate engine.

On the sterling side, the June 18 Bank of England interest rate decision and June 12 UK GDP release will test the market’s tolerance for stagflation.

Recommendation: Hold short positions and revise the take profit to target 1.314.

Abort Conditions: Exit shorts immediately if a geopolitical resolution reopens the Strait of Hormuz, if the Fed unexpectedly discusses interest rate cuts, or if the Bank of England executes an aggressive, hawkish rate hike.

Update on Sun May 31

GBPUSD Fundamental Value Band is 1.339 and 1.343 Points to Overbought

Over recent weeks, GBP/USD has sailed through choppy waters, retreating from May highs of 1.3634 to 1.3310.

Looking ahead, the currency pair points to the downside with a confident conviction. As the United States Dollar captures safe-haven winds under Chairman Kevin Warsh, the overvalued sterling is expected to drift lower, breaking through the daily central pivot toward the lower fundamental band of 1.339.

The upcoming weekly calendar is packed with tier 1 catalysts that make GBP/USD a highly tradeable pair, offering prime entry windows as sentiment shifts. In the coming days, the UK mortgage approvals and credit data on June 2 could highlight domestic spending constraints, keeping sterling on a defensive course.

However, the true market-moving storms will originate across the Atlantic. The United States ISM Services PMI and ADP private payrolls on June 3, followed by initial jobless claims on June 4, will test the resilience of the greenback. The main event is Friday’s United States Non-Farm Payrolls on June 5, where a strong jobs print is expected to aggressively boost safe-haven flows and solidify the dollar’s yield advantage.

• Abort if a geopolitical ceasefire in the Middle East is officially signed, which would trigger a rapid short-covering storm as the United States Dollar’s risk premium evaporates.

Tue May 26 Update

GBP/USD Fundamental Value Band has climbed to 1.330 and 1.334.

The GBP/USD has faced choppy waters, sliding during recent weeks to touch multi-month lows near 1.330. The currency pair is projected to maintain a downside direction over coming days, and weeks, reflecting the Bank of England’s split monetary stance and a cooling UK economy.

The UK CBI Distributive Trades survey on May 26 is expected to contract deeply at minus 60 percent, while the US Core PCE Price Index release on May 28 could surprise to the upside, compounding greenback dominance under hawkish Fed Chair Kevin Warsh.

The main risk to this bearish outlook is a sudden de-escalation of Middle East tensions, which would deflate the safe-haven premium currently supporting the USD. Another risk is an unexpected hawkish shift in the Bank of England’s split rate guidance, potentially triggered by persistent service inflation. However,, these events are more likely to offer temporary relief rallies.

TRADE PLAN UPDATE

• Take Profit Zone: 1.3300 to 1.3340, targeting the established fundamental fair value band.

• Abort Conditions: A complete reopening of the Strait of Hormuz, or an unexpected rate hike from the Bank of England.

Tue May 19 GBP/USD Fundamental Value Band is between 1.290 and 1.295

GBP/USD is a Clear Sell as Fundamentals Signal Extreme Overvaluation

The British Pound has spent the past 7 weeks drifting lower, taking on heavy water as imported stagflation batters the domestic hull. Despite briefly catching a tailwind past 1.3600 earlier in May, the pair was swiftly dragged back down toward 1.3415 by a resurging, yield-backed US Dollar.

Looking ahead, the macroeconomic currents are unmistakably dragging the GBP/USD lower over the upcoming 7 weeks. The Bank of England is trapped in a stagflationary straitjacket, cornered between crushing domestic demand and letting imported inflation run rampant. Conversely, the US Dollar is fortified by surging Treasury yields and safe-haven flows triggered by the Strait of Hormuz blockade. The fundamental yield divergence is a relentless undertow that will pull capital away from the Pound and into the Greenback. Any short-term bullish ripples should be viewed as discounted entry points to align with the dominant, institutional-backed downward tide.

The immediate navigational hazard is tomorrow’s critical UK CPI inflation release. A scorching hot inflation print could trigger a knee-jerk hawkish repricing, temporarily lifting the Pound on false hopes of a BoE rescue. Professional operators should view these sentiment-driven, counter-trend rallies into structural supply zones as prime opportunities to deploy short positions. However, trading these choppy waters requires ironclad risk management. The primary risk to this bearish outlook is a sudden de-escalation in the Middle East—such as a diplomatic breakthrough between the US and Iran—which would rapidly drain the geopolitical premium from the US Dollar and cause a violent short-covering rally. Additionally, commercial dealers hold a robust net-long position of 40.4 percent in GBP futures, providing a hidden buoyancy tank that makes an immediate, catastrophic collapse less likely. Monitor these events closely to ensure your capital is not swept away.

Trade Plan

• Entry Zone (Sell): 1.3450 to 1.3500 (scaling in on sentiment-driven, counter-trend rallies).

• Take Profit / Buy Zone: 1.2900 to 1.2950 (buying back to cover the short within our calculated Fair Value Band).

• Stop-Loss: 1.3650 (placed a strict 200 pips away from the 1.3450 entry, safely above recent May peaks).

• Abort Conditions: Abandon the trade if a verified diplomatic resolution opens the Strait of Hormuz, or if the Bank of England enacts an aggressive 50 basis point rate hike.

Abort the trade as soon as possible as market conditions have become less predictable. 130 pips captured.

Sun May 03

CAD/JPY is a Strong Buy as Signals Point to Undervalued

In recent weeks, CAD has navigated turbulent geopolitical waters effortlessly, catching a massive tailwind from surging global oil prices. Conversely, JPY has taken on heavy water, burdened structurally by its reliance on imported energy. CAD/JPY currently trades near 115.480, lagging significantly behind its true fundamental valuation.

Looking ahead, CAD/JPY is highly likely to sail to the upside over the upcoming weeks. The Bank of Canada maintains a hawkish tilt with rates at 2.25 percent, while the Bank of Japan remains hesitant at 0.75 percent. This structural yield divergence, combined with CAD oil-driven export revenues, creates a powerful current lifting the pair. As long as the Strait of Hormuz blockade keeps Brent crude elevated, CAD will remain a sturdy vessel. These combined forces should push the pair toward the 118.000 to 119.000 price levels.

The primary risk on the horizon is a sudden intervention squall from the Japanese Ministry of Finance, as USD/JPY hovers near the critical 155 to 160 mark. While official market intervention to prop up JPY would cause a sharp, temporary drop in CAD/JPY, professional operators should view this as a strategic advantage. Such a pullback would wash out weak retail longs, providing a heavily discounted entry point to buy CAD/JPY before overarching macroeconomic currents resume. Traders must monitor the geopolitical radar closely; a sudden, verifiable ceasefire in the Middle East would rapidly drain the oil premium, shifting the winds and potentially invalidating this bullish thesis. Until then, institutional flows and CFTC COT data—which show speculators holding a 39 percent net short position against JPY—strongly favor buying dips in this highly confident structural setup. Preparing for this volatility ensures capital is deployed efficiently when the storm temporarily breaks.

Trade Plan

• Wait for a potential intervention-driven pullback to wash out weak hands, targeting a discounted buy zone near 114.3.

• Set a take-profit zone near the Fundamental Value Band centerpoint, specifically targeting the 118.8 region.

• Place a hard stop-loss exactly 200 pips below your chosen entry execution price to protect against catastrophic trend reversals.

• Abort the trade immediately if a verifiable Middle East ceasefire is announced, as this would instantly collapse the energy premium.

• Abort if the Bank of Canada unexpectedly signals immediate rate cuts due to shifting domestic economic data.

This trade plan outlines a strategic short position for the NZD/USD, capitalizing on widening interest rate differentials and contrasting economic fundamentals. With New Zealand facing commodity headwinds and domestic pessimism, the USD remains structurally dominant, offering a high-probability downside trajectory for the currency pair over the coming weeks.

FUNDAMENTALS DICTATE KIWI WEAKNESS: Over previous months, NZD/USD collapsed from 0.61 to 0.57 as the RBNZ cut rates to 2.25 percent. During the past few weeks, Middle East tensions drove safe-haven USD buying, while a 3.4 percent dairy commodity drop, plunging equities, and rising bond yields pressured stocks amid risk-off financial news.

STRUCTURAL DEFICITS CEMENT DOWNTREND: The highly convincing downside scenario for targets the 0.55 level. New Zealand’s softening dairy commodities and a dovish 2.25 percent RBNZ rate sharply contrast with the Federal Reserve holding at 3.50 to 3.75 percent amid sticky 3.3 percent United States inflation. Anticipated robust United States retail sales and soft New Zealand consumer price index data will exacerbate this divergence. Unless geopolitical truces suppress safe-haven USD demand, rising United States bond yields, pressured global equities, and weak stocks guarantee sustained downside pressure, pushing the pair lower as the Federal Reserve maintains rate supremacy.

Trade Plan

STRATEGIC SHORT EXECUTION STRATEGY: The most profitable scenario is initiating a short position on the NZD/USD, holding the trade through the upcoming United States retail sales and New Zealand consumer price index releases over the next few weeks. This strategy capitalizes on the fundamental divergence between a fragile New Zealand economy and a resilient United States landscape featuring sticky 3.3 percent inflation. Traders should execute shorts on minor relief rallies, anticipating that hawkish Federal Reserve expectations will overpower brief geopolitical de-escalations. The trade remains valid provided the RBNZ maintains its dovish posture, United States bond yields stay elevated, and dairy commodities remain depressed.

• Execute short position entries near 0.5800.

• Place stop loss 200 pips from the entry.

• Target 0.5520.

Monitor critical abort conditions, specifically a massive upside surprise in New Zealand inflation or a catastrophic miss in United States economic data forcing a Federal Reserve rate cut. Additionally, a sudden recovery in global dairy prices or shifting geopolitical truces would invalidate the bearish thesis, requiring immediate trade termination.

Trade reached it stop loss unfortunatley. This happened as the Swiss National Bank delivering a violently dovish shock during its March 19, 2026, monetary policy assessment. Although the central bank held its policy rate at 0.00 percent, Chairman Martin Schlegel explicitly threatened aggressive foreign exchange interventions to combat the recent 2.50 percent trade-weighted appreciation of the CHF. Furthermore, Schlegel shocked institutional markets by refusing to rule out a return to negative interest rates, instantly removing the currency’s safe-haven floor and causing massive intraday depreciation across all CHF crosses.

Tuesday 17 March 2026 | Historic Surge

Over previous months, the CHF/JPY exchange rate surged with massive upside volatility, climbing from 185.00 to above 203.00. The CHF benefited immensely from European geopolitical anxieties and tariff fears, while the JPY collapsed under severe political chaos and a devastating 100 USD oil shock.

Unrelenting Upside Momentum Forecast

During the coming weeks, continued upside movement for the CHF/JPY is highly convincing. The fundamental macroeconomic divergence remains absolute. The Japanese economy is currently suffocating under surging Brent crude oil prices stemming from the Strait of Hormuz blockade, completely neutralizing the Bank of Japan interest rate hike to 0.75 percent. Conversely, global capital continues to aggressively target Switzerland as the ultimate safe-haven sanctuary amidst Middle Eastern warfare. With the Swiss National Bank and Bank of Japan both widely anticipated to hold rates steady on March 19, the CHF will likely push higher toward the 205.00 level.

Trade Plan

Strategic Bullish Execution

The most profitable scenario involves executing a buy position on the CHF/JPY pair, and holding. This capitalizes on the massive structural vulnerability of the JPY to imported energy inflation, contrasted against relentless CHF safe-haven inflows. Conditions require the Bank of Japan to hold rates and avoid immediate foreign exchange intervention, while the Swiss National Bank maintains its zero-rate policy without excessively aggressive currency manipulation. The primary abort reason would be a sudden, sustained de-escalation in Middle Eastern conflicts that rapidly normalizes global energy logistics and crude oil prices.

• Entry level executing a market buy order at 201.90.

• Stop loss positioned strictly 200 pips away at 199.90.

• Take profit targeted at the 204.50 macroeconomic resistance level.

To conclude, this bullish CHF/JPY trade plan relies on persistent global energy market distress. You must rigorously monitor the March 19 central bank decisions. A shock Bank of Japan rate hike or direct Swiss National Bank foreign exchange market intervention serves as an absolute abort condition for this strategy.

Keep holding this trade to fully capture the yield-driven macro shift. Initiated at the 0.769, the long position capitalizes on widening transatlantic interest rate differentials favoring the USD. Because none of the designated abort conditions—including a USD economic miss or a spot gold resurgence—triggered, the bullish structure remains intact.

Sunday, 15 February 2026

YIELD SUPREMACY AND THE COLLAPSE OF THE DEBASEMENT TRADE

The USD/CHF is transitioning from a safe-haven proxy to a yield-driven asset. The collapse of gold prices and the hawkish “Warsh Effect” in the United States have created a highly convincing bullish setup. With the Swiss economy mired in deflation and the United States adding 130,000 jobs in January, the divergence in central bank policy is extreme. We anticipate a sustained rally toward 0.8000 as global capital chases the superior nominal returns of the United States Dollar over the zero-yielding Swiss Franc.

Regime Shift From Safe-Haven Parity to Interest Rate Divergence

The trajectory of the USD/CHF over the previous seven months was defined by a rigid consolidation between 0.79 and 0.81, driven by a stalemate between Swiss deflation and United States exceptionalism. This equilibrium shattered in late January 2026 as the pair capitulated to lows of 0.76, pressured by a historic “debasement trade” where global capital fled to gold and the Franc. However, the previous seven weeks witnessed a violent reversal; the flash crash in precious metals on February 13, combined with the nomination of hawk Kevin Warsh as Federal Reserve Chair, forced a massive short-covering rally, driving the pair back toward 0.7717 (https://money.com/gold-prices-today-january-30-2026/).

The Warsh Effect and The Widening Transatlantic Yield Gap

The sentiment for the USD/CHF is highly convincing bullish for both the upcoming seven days and seven weeks, anchored by an undeniable yield advantage. The immediate catalyst is the United States Q4 GDP Advance Estimate due on February 20, 2026; a forecast beat of 3.5 percent would confirm the “no landing” thesis and accelerate inflows into the USD (https://tradingeconomics.com/calendar?article=29338&g=top&importance=2&startdate=2026-02-13). Looking further ahead, the March 17-18 FOMC meeting is expected to solidify a “higher for longer” stance under the shadow of the incoming Warsh regime, contrasting sharply with the Swiss National Bank’s March 19 assessment where rates are almost certain to remain at 0.00 percent due to negative inflation prints of minus 0.1 percent (https://tradingeconomics.com/switzerland/inflation-cpi). This divergence creates a mechanical carry-trade environment that overwhelmingly favors the USD.

THE TRADE PLAN: THE MACRO CARRY RESURGENCE

The Opportunity: Long Position Targeting Structural Mean Reversion

The opportunity lies in exploiting the re-establishment of the USD/CHF carry trade following the collapse of the gold-backed “debasement” narrative. With 1.4 trillion USD wiped off precious metals in minutes on February 13, capital is rotating aggressively back into high-yielding fiat currencies. We are looking to buy the USD/CHF as it reclaims the 0.7700 handle, betting that the pair will mean-revert to the 0.8000-0.8100 consolidation zone that defined late 2025. This trade is supported by the Swiss National Bank’s inability to hike rates amidst deflation and the Federal Reserve’s renewed hawkish mandate, which ensures the interest rate differential remains the primary driver of valuation (https://www.snb.ch/en).

• Entry Level: 0.768

• Stop Loss: 0.748

• Take Profit: 0.795

Abort Conditions

• A weak United States GDP print (below 2.0 percent) on February 20, reigniting recession fears.

• A rapid recovery in Spot Gold prices above 5,200 USD, signaling a return of the debasement trade.

• Any political derailment of the Kevin Warsh Federal Reserve nomination, which would remove the current hawkish premium on the USD.

• Swiss CPI unexpectedly spiking above 1.0 percent, forcing a hawkish re-pricing of the Swiss National Bank.

The pair lost ground this week and collapsed below 1.88 and triggered the Take Profit at 1.875, securing +503 pips.

Sunday, February 15 2026

With the pair closing the week near 1.93, the trade is positioned to exploit the widening policy gap between the hawkish Reserve Bank of Australia, now at 3.85 percent, and the wavering Bank of England.

Continue to hold for the 1.8750 target. UK inflation data this Wednesday expected to confirm economic stagnation, pressuring the bank of England to cut rates. Conversely, strong Australian labor numbers on Thursday would reinforce the Aussie yield advantage, driving the pair lower.

Friday, 13 February 2026

The GBP/AUD is in a definitive downtrend driven by a reversal in interest rate superiority. The Reserve Bank of Australia’s hike to 3.85 percent contrasts sharply with the Bank of England’s dovish 5-4 hold at 3.75 percent, creating a yield advantage for the Aussie. With UK growth stagnant at 0.1 percent and Australian unemployment low at 4.1 percent, fundamentals support further downside (https://tradingeconomics.com/united-kingdom/gdp-growth). Traders should look to sell rallies targeting 1.875, provided UK inflation data does not surprise to the upside.

HAWKISH RBA PIVOT CLASHES WITH FRACTURING BANK OF ENGLAND CONSENSUS

The GBP/AUD exchange rate has been fundamentally pressured to the downside over the previous seven months, accelerating significantly in the last seven weeks as the pair collapsed from highs near 2.09 in August 2025 to recent lows around 1.91. This bearish trajectory was solidified by a stark divergence in monetary policy; while the United Kingdom economy stagnated with 0.1 percent GDP growth in the fourth quarter of 2025, the Reserve Bank of Australia raised its cash rate target to 3.85 percent on February 3, 2026 (https://tradingeconomics.com/australia/interest-rate). Conversely, the Bank of England’s decision to hold rates at 3.75 percent revealed a critical fissure, with a 5-4 vote split indicating four members actively sought a cut, effectively signaling an easing bias that undermined Sterling’s yield appeal against the AUD’s new premium.

YIELD SPREAD EXPANSION TO TARGET 1.86 AS INFLATION DATA LOOMS

The currency pair is expected to remain fundamentally pressured to the downside during the upcoming seven days and seven weeks, driven by the crystallization of a negative yield spread for the United Kingdom relative to Australia. With the RBA now sitting at 3.85 percent and the BoE widely expected to cut from 3.75 percent following their dovish split vote, the “carry trade” dynamic has flipped in favor of the Australian Dollar. Market sentiment is heavily skewed toward further GBP weakness ahead of the UK Inflation Rate release on Wednesday, February 18; a soft print would cement expectations for a March cut. Furthermore, Australian labor resilience, with unemployment at 4.1 percent, supports the RBA’s restrictive stance (https://tradingeconomics.com/australia/unemployment-rate). Consequently, rallies toward 1.93 are viewed as liquidity events for sellers targeting the 1.8684 technical support level, as the macro-divergence narrative dominates flows.

THE TRADE PLAN: SHORT GBP/AUD (RANK 9/10)

The Opportunity presents a high-probability scenario to capitalize on the widening monetary policy divergence between the Reserve Bank of Australia and the Bank of England. With the RBA actively hiking to 3.85 percent to combat sticky inflation and the BoE signaling an imminent cut via a 5-4 split vote, the fundamental backdrop favors a continued depreciation of the GBP/AUD. The trade seeks to enter short positions on minor technical retracements that alleviate oversold intraday conditions, positioning for a breakdown toward the major support levels identified near 1.86. This setup leverages the “yield crossover” event where Australian base rates have eclipsed those of the UK, creating a structural headwind for the pair that is compounded by resilient iron ore prices holding above 100 USD per tonne.

Trade Parameters

• Entry Level: Above 1.9250

• Stop Loss: 1.9450

• Take Profit: 1.8750.

Abort Conditions

• UK Inflation Surprise: A substantial upside surprise in the UK CPI data on February 18 (e.g., Core CPI rising above 3.4 percent) which would force the BoE to abandon its easing bias.

• RBA Dovish Shift: Any unscheduled communication from the RBA suggesting the recent rate hike was a “one-off” or policy mistake.

• Commodity Collapse: A sharp decline in Iron Ore prices below 90 USD per tonne, which would weaken the AUD correlation.

• Technical Reclamation: A daily close back above 1.9450 would invalidate the immediate bearish trend structure.

The rate hike by the RBA gave the AUD a boost and pushed price beyond the target. Trade closed with a profit of +330 pips.

Sunday, 25 January 2026

Buy the dip on AUDJPY at 106.10 to ride the RBA’s hawkish stance against a frozen BoJ. Watch for a hot CPI print to drive the pair to 109.00, but bail out if Japan intervenes.

STRATEGIC LONG ENTRY AT 106.10 TARGETING RBA DIVERGENCE (SUCCESS RANK: 9/10)

We are looking at a prime setup here with a 9 out of 10 success probability. The strategy is to buy the AUDJPY pair on a dip to 106.10 just before the January 28 inflation data drops. Why? Because the Reserve Bank of Australia is practically the “Last Hawk Standing,” facing sticky 3.4 percent inflation and a massive 65,200 jobs surge. Contrast that with a paralyzed Bank of Japan stuck at 0.75 percent rates, and you have a massive yield gap working in your favor. This divergence creates a powerful tailwind for a long position that we want to capitalize on.

TACTICAL EXECUTION PLAN: PRE-CPI ACCUMULATION AND TARGETS

Be patient and wait for a liquidity pullback rather than chasing the high prices.

• Entry Level: 106.10

• Conditions: Iron ore holds 100 USD.

• Take Profit: 108.40, extended target 109.40

• Stop Loss: 105.10

CRITICAL RISK VECTORS: CPI MISS AND INTERVENTION PROTOCOLS

You have to watch your back on this trade because the risks are binary and could hit quickly.

• CPI Miss: If the Australian trimmed mean inflation prints below 0.7 percent, you must abort immediately as the rate hike thesis collapses.

• Intervention Risk: Keep a close eye on USDJPY; if it hits 160.00, Japanese officials might intervene, crushing the cross-pair.

• Commodity Collapse: If Chinese iron ore demand falters and prices slide under 100 USD per tonne, the Aussie loses its support.

The AUD/NZD pair offers you the best “policy divergence” trade currently available in the G10 market. We are positioning a buy the dip, which is backed by a hawkish RBA potentially hiking rates to 3.85 percent, against a New Zealand Dollar that is being weighed down by an RBNZ that has cut rates to 2.25 percent to fight a recession.

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The short term volatility gives opportunity to reset risk, look to take profits early (if price falls towards entry) and then re-buy from a lower position in preparation for the longer term rally this pair is expected to take.

The fundamental picture got a little cloudy in the last 48 hours; on Wednesday, the Australian monthly CPI cooled to 3.4 percent, and Thursday’s trade surplus came in lighter than expected at 2.94 billion AUD. These figures dampened the “guaranteed” February rate hike bets for the Reserve Bank of Australia, triggering some profit-taking from the recent high of 0.6733.

However, the big picture remains solidly in your favor because the Federal Reserve is pivoting to cuts while the RBA remains uncomfortable with inflation sitting well above its target band. The main event arrives today with the US Non-Farm Payrolls report. Markets are nervously expecting a print below 100,000 jobs. If we see that kind of weakness, it will confirm that the US labor market is cracking, which should crush US yields and send the AUDUSD higher.

Strategic Long Opportunity Targeting RBA Hawkishness

I’m aiming to catch a structural breakout of the AUD/USD as it moves higher. The stars are aligning here thanks to a mix of structure, fiscal flows, and widening monetary divergence. The RBA remains the “last hawk standing,” potentially lifting rates to 3.85% come February. This creates a stark contrast with the Federal Reserve, where a softening labor market makes a dovish pivot look increasingly likely.

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A TALE OF TWO HEMISPHERES: THE GREAT DIVERGENCE

The core driver for this trade is a profound and accelerating policy divergence that has become starkly clear over the past seven weeks. The Reserve Bank of Australia executed a “hawkish pivot,” fueled by a surprise inflation acceleration to 3.2 percent and a blockbuster October jobs report. In stark contrast, New Zealand is mired in a “dovish capitulation,” with a confirmed recession and a 50-basis-point rate cut cementing an aggressive easing stance. This tactical play is to pre-position for Australia’s pivotal Wage Price Index on November 19.

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The Euro and the US Dollar are locked in a tense standoff, with the foreign exchange market now a battleground between central bank policy divergence and a profound data crisis in Washington. A record-long government shutdown has plunged the US economy into a “data fog,” forcing the Federal Reserve to navigate by the dim light of plunging consumer sentiment and dire private-sector job reports. This has fueled aggressive bets on a December rate cut. Meanwhile, the European Central Bank stands firm, creating a stark policy divergence. This report deconstructs this high-stakes environment, analyzing the fundamental drivers and key technical levels that will define the Euro to US Dollar exchange rate in the critical week ahead.

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