This Week's Market Strategy - February 4, 2025 (Tuesday)

Last Monday, news broke of DeepSeek, a Chinese company, developing inexpensive generative AI, which sent shockwaves through NVIDIA, with the stock plummeting 17% that day. Following this report, USD/JPY fell sharply from the mid-156 yen range to the late 153 yen range. The next day, NVIDIA recovered about 9%, and USD/JPY rebounded sharply to the late 155 yen range, with volatile price movements. Thursday's FOMC decided to leave the Fed Funds Rate unchanged as previously expected, causing USD/JPY to test the lower 153 yen range again, but it was supported once more. Over the weekend and into the new week, the market continued to be volatile due to Trump tariffs, testing lows near 154 yen before rebounding to the mid-155 yen range. USD/JPY holds firmly at 154 yen, and we expect another upward move this week. A decline to the 200-day moving average of 152.85 yen seems unlikely. Buy recommendation if it drops to the early 154 yen range. Stop loss below 150 yen.

WTI crude oil futures remain under pressure near 72 dollars as the 25% tariffs imposed on Mexico and Canada have been postponed until March, while OPEC+ confirmed gradual production increases. WTI crude oil is expected to continue declining. Short sell at 74 dollars, stop loss above 80 dollars. Take profit in the 68 dollar range.

Gold prices have declined to around 2,780 dollars as U.S. tariff measures and concerns about a global trade war have boosted demand for the U.S. dollar as a safe asset, outweighing safe-haven demand for gold. However, prices have rebounded to new all-time highs and are now trading near 2,850 dollars. From a long-term perspective, buying is recommended if gold breaks below 2,750 dollars.