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Canada's Finance Minister Dominic LeBlanc stated late Thursday that the country will delay its second wave of retaliatory tariffs on $125 billion in US products until April 2. However, there was no sign that Canada will remove the existing $30 billion tariffs, per Reuters. 

US President Donald Trump issued an executive order earlier in the day exempting goods from both Canada and Mexico under a North American trade agreement for a month from the 25% tariffs that he slapped earlier this week.

Separately, Canada sets in place plans to toll US trucks heading in to Alaska from British Columbia, indicating that Canadians will not let up until the tariffs are taken off the table. 

Market reaction 

At the time of writing, the USD/CAD pair is trading 0.12% lower on the day to trade at 1.4290. 

Bank of England Monetary Policy Committee member Catherine Mann said late Thursday that gradual interest-rate moves no longer send clear signals to volatile financial markets and larger shifts are now needed to “cut through” the noise for the good of the economy, per Bloomberg. 

Key quotes

Monetary policy must navigate through choppy financial markets, shock-ridden economies, and sticky expectations. 

Larger cuts, such as the one I voted for in the latest meeting, cuts through this turbulence, with the objective to more effectively communicate the stance of policy and influence the economy.

Incoming data on wage and price developments and one-year ahead expected trajectories are not yet target-consistent. 

I have emphasized the need to hold a restrictive Bank Rate for longer to discipline this upward bias – and I still believe this. 

The need to remain restrictive is particularly important.

The founding premise for a gradualist approach to monetary policy is no longer valid. 

Market reaction 

At the time of writing, the GBP/USD is trading 0.07% higher on the day to trade at 1.2887.   

• GBP/USD saw little movement compared to recent price action on Thursday.
• Momentum is faltering after a sharp correction in rate cut expectations.
• Investors are hunkering down ahead of key US NFP jobs data figures on Friday.

GBP/USD faltered on Thursday, ending a stellar three-day run that saw the Pound Sterling gain 2.57% bottom-to-top against the Greenback from the start of the week. A sharp readjustment to central bank rate cut expectations means Cable will see a far thinner interest rate differential than previously anticipated, prompting a harsh rebalancing in currency markets.

Forex Today: The US Nonfarm Payrolls are coming!

Rate markets are now pricing in fewer than 50 bps in rate cuts from the Bank of England (BoE) in 2025, a sharp drawdown in rate cut expectations as central banks continue to grapple with sticky inflation. Despite a general weakening in the UK’s domestic economy which would normally prompt a rate response from the BoE, still-high inflation metrics have tied policymakers’ hands.

US President Donald Trump delivered yet another pivot on his tariff plans, announcing a temporary reprieve on tariffs for all products included in the USMCA agreement that he personally negotiated during his first term. Despite the continued walkback from the Trump administration on its own tariff threats, markets were unable to find enough risk appetite to tilt markets back into the high side.

US Nonfarm Payrolls (NFP) will take on renewed significance on Friday as investors begin to watch economic data in earnest. Although the US economy is in an overall healthy place, cracks are beginning to show in the labor market. A Fresh round of inflation pressures, largely attributed to tariff concerns, is also hobbling growth expectations.

GBP/USD price forecast

GBP/USD hit a speed bump at the 1.2900 handle, freezing the near-term bull run in its tracks and squeezing intraday bids into a tight consolidation candlestick. The Cable cleared the 200-day EMA near 1.2685 with ease, but bullish momentum is taking a breather.

Technical oscillators are still pinned in overbought territory, limiting bullish potential. However, an ongoing pattern of higher lows is baked into the chart as price action grinds higher from the technical bottom at 1.2100 in mid-January.

GBP/USD daily chart

• Silver holds near $32.50, with buyers unable to push past key resistance.
• Next upside targets: $33.00, February 20 high of $33.20, and cycle high of $33.39.
• A break below $32.00 could expose $31.50 and the 100-day SMA at $31.21.

Silver price consolidates, snapping three days of gains, trading near the $32.50 area, with buyers failing to prolong their advance to challenge the last cycle high of $33.39. At the time of writing, XAG/USD is virtually unchanged as the Friday’s Asian session begins.

XAG/USD Price Forecast: Technical outlook

Silver (XAG/USD) remains sideways near $32.50 with neither buyers nor the sellers unable to decisively push the grey’s metal quote upwards or downwards. The Relative Strength Index (RSI) shows that momentum remains flat, yet buyers have the upper hand.

That said the XAG/USD first resistance would be $33.00, followed by key levels such as the February 20 high of $33.20 and the February 14 cycle high of $33.39. Conversely, if XAG/USd falls beneath $32.00, the next support would be the $31.50, ahead of the 100-day Simple Moving Average (SMA) at $31.21. Further weakness could expose $31.00, with additional support at the 200-day SMA near $30.48.

XAG/USD Price Chart – Daily

• USD/CAD weakens to around 1.4300 in Thursday’s late American session. 
• Trump delayed the tariffs until April 2 for goods covered by the USMCA.
• The US Initial Jobless Claims fell below consensus to 221K last week.

The USD/CAD pair extends the decline to near 1.4300 during the late American session on Thursday. The weakening of the US Dollar (USD) is fuelled by concerns over the US economy and some renewed hopes that US President Donald Trump could delay some planned tariffs. All eyes will be on the US February Nonfarm Payrolls (NFP) report, which is due later on Friday. 

Trump exempted Mexican and Canadian goods covered by the North American trade agreement known as USMCA from his 25% tariffs, providing significant relief to the United States' two main trading partners. This, in turn, provides some support to the Canadian Dollar (CAD) and creates a headwind for USD/CAD. 

"The narrative has shifted on tariffs, which are now viewed as a hindrance to economic growth," said Eugene Epstein, head of trading and structured products, North America, at Moneycorp in New Jersey.

US economic data on Thursday was mixed, providing more evidence of a looming slowdown. US Initial Jobless Claims for the week ending March 1 dropped to 221K, compared to 242K in the previous week, according to the US Department of Labor (DOL) on Thursday. This figure came in below the market consensus of 235K. Continuing Jobless Claims for the week ending February 22 went up by 42K to reach 1.897M versus 1.855M (revised from 1.862M)

The US NFP report for February will be the highlight on Friday. Economists predict that 160,000 jobs will be added and the unemployment rate will hold steady at 4.0%. Average Hourly Earnings are expected to rise by 0.3% compared to the previous month. In case of the stronger-than-expected outcome, this could boost the Greenback against the CAD in the near term. 

• USD/CHF extends decline below 0.9000, hitting a yearly low.
• RSI signals bearish momentum, with further downside if 0.8800 is breached.
• Next support at 0.8738; upside capped at 0.8900 and 100-day SMA at 0.8924.

The Swiss Franc (CHF) posted solid gains versus the Greenback (USD) on Thursday, despite mixed data showing that the US economy continues to deteriorate. The USD/CHF trades at 0.8835, down over 0.79% late during the North American session.

USD/CHF Price Forecast: Technical outlook

The USD/CHF has been extending its decline below 0.9000 since Monday and fell to a yearly low of 0.8824, shy of testing the 200-day Simple Moving Average (SMA) at 0.8818, which, if cleared, could’ve opened the way to testing 0.8800.

The Relative Strength Index (RSI) shows that bears gather momentum, remaining with enough room before turning oversold. Therefore, if USD/CHF clears the 200-day SMA, further downside lies ahead.

A breach of the 0.8800 mark will expose the December low of 0.8738. On the other hand, if USD/CHF rises above 0.8900, buyers could regain some composure and test the next key resistance at 0.8924, the 100-day SMA, followed by the 0.9000 mark.

USD/CHF Price Chart – Daily

US President Donald Trump hit markets with yet another structural pivot on his tariff agenda, announcing some temporary exemptions for certain sectors, as well as getting his 25% tariffs against Mexico and Canada muddled up with his separate "reciprocal tariff" strategy that is currently slated to come into effect in April. While giving comments to reporters at the White House, President Trump meandered back and forth through several topics.

Details on reciprocal tariffs remain almost entirely absent, other than the Trump administration's insistence that they are definitely happening next month. Donald Trump's haphazard policy approach on whether or not he's imposing tariffs on some of the US' closest trading allies, but then announcing after-the-fact delays or extensions, is leaving many market participants confused about who is actually paying what.

Key highlights

• AUD/JPY fell after a two-day winning streak, trading near the 93.60 zone ahead of the Asian session.
• While selling pressure resumed, the MACD indicates a decline in bearish momentum, leaving the short-term outlook uncertain.

The AUD/JPY pair retreated on Thursday ahead of the Asian session, giving up gains from the previous two sessions as sellers regained control. The pair moved lower toward the 93.60 region, reflecting renewed downside pressure, although technical indicators suggest the bearish bias could be losing steam.

The Relative Strength Index (RSI) remains in negative territory and is declining, confirming the downward movement. However, the Moving Average Convergence Divergence (MACD) indicator is printing decreasing red bars, hinting at fading selling pressure. This suggests that while bears remain active, the momentum could be softening, making the short-term outlook uncertain.

Looking at key levels, immediate support emerges near 93.50, with a break below this mark opening the door for a deeper decline toward 93.00. On the flip side, initial resistance is found at 94.00, followed by the 20-day Simple Moving Average (SMA) around 94.30, which could cap any recovery attempts.

AUD/JPY daily chart

• Australian Dollar retreats as the US Dollar stabilizes, with investors reassessing risk appetite.
• Australia’s GDP data exceeded expectations, but trade policy concerns overshadowed gains, pressuring AUD.
• The Australian Dollar faces renewed selling interest amid trade tensions and uncertainty over US economic policy.
• Technical indicators suggest bearish pressure is building, with AUD/USD slipping toward key support levels.

The Australian Dollar (AUD) is retreating on Thursday against the US Dollar (USD) after three consecutive days of gains. The AUD/USD pair faces selling pressure as risk sentiment weakens and the US Dollar stabilizes. Despite stronger-than-expected GDP data from Australia, concerns over trade policy shifts and global economic uncertainty weighed on the Aussie, leading to a pullback in the pair.

Daily digest market movers: Australian Dollar pressured as USD stabilizes

• The Australian Dollar erased part of its daily gains, despite robust fourth-quarter GDP data showing 0.6% quarterly growth and a 1.3% yearly expansion. Strong public and private sector spending supported the economy, but broader risk-off sentiment limited the AUD upside.
• The Reserve Bank of Australia (RBA) continues to expect economic growth to moderate toward 2% by 2025. While its cautious stance has previously supported AUD strength, investors remain wary of potential policy adjustments in response to inflation and labor market trends.
• Escalating trade tensions weighed on the Australian Dollar, with new US tariffs affecting key trading partners. Tariffs on Canadian, Mexican, and Chinese goods raised concerns over weakening global demand. Given China’s role as Australia’s top trading partner, signs of reduced Chinese economic activity could further pressure the Aussie.
• Friday’s US Nonfarm Payroll report remains a crucial market driver, as labor data will influence expectations regarding the Federal Reserve’s next policy move.

AUD/USD Technical Analysis: Bears take control near key support

The Australian Dollar lost momentum on Thursday, slipping toward the 0.6330 region as selling pressure increased. The AUD/USD pair struggles to sustain gains above its 20-day Simple Moving Average (SMA), signaling a shift in momentum toward the downside.

The Moving Average Convergence Divergence (MACD) indicator continues to print decreasing red histogram bars, suggesting a steady bearish pressure. Meanwhile, the Relative Strength Index (RSI) remains in positive territory at 58 but is beginning to flatten, suggesting fading upside momentum.

Key support emerges around the 0.6300 level, where buyers may attempt to stabilize the pair. Below this, further declines could push AUD/USD toward the 0.6270 region. On the upside, immediate resistance now stands near 0.6360, with a break above this level required for any meaningful recovery.

Federal Reserve (Fed) Governing Board Member Christopher Waller noted on Thursday that recent data has made it more difficult to argue in favor of additional rate cuts heading into the tail end of the first quarter.

Key highlights

• The Canadian Dollar cycled near key moving averages on Thursday.
• Market participants are chewing on unclear tariff policy from the Trump administration.
• Canadian jobs data and US NFP net payrolls numbers are due on Friday.

The Canadian Dollar (CAD) explored the high end on Thursday as market confidence in the US Dollar (USD) waivered in the face of ongoing tariff ambiguity from Unites States (US) President Donald Trump. The Loonie pared early gains, but still remains up on the day against the Greenback, keeping USD/CAD hung up on the 50-day Exponential Moving Average (EMA) at the 1.4300 handle.

Canada’s Ivey Purchasing Managers Index (PMI) came in stronger than expected, climbing to a seven-month high in February. On the US side, Challenger Job Cuts rose to multi-year highs, sparking some trepidation ahead of Friday’s US Nonfarm Payrolls (NFP) net jobs additions report.

Daily digest market movers: Canadian Dollar recovers some ground on Thursday

• The Canadian Dollar briefly gained seven-tenths of one percent against the Greenback, before falling back to a more moderate 0.2%.
• Seasonally-adjusted Canadian Ivey PMI figures rose to 55.3 in February, a seven-month high. The headline figure beat the forecast of 50.9, and rose strongly from January’s 47.1.
• Market confidence in Canadian economic activity may be misplaced, as US trade tariffs still pose a threat to growth, despite the Trump administration’s wavering tariff policies.
• President Donald Trump granted a 30-day extension on import tariffs for the US automotive industry, and Trump staffers are announcing that further exemptions and extensions will be on the way, declawing their own trade policies.
• Despite the Trump team’s regular pivoting on its own tariff implementation, markets are growing increasingly tired of the headline froth.

Canadian Dollar price forecast

The Canadian Dollar’s (CAD) Thursday push was enough to force the Loonie higher against the Greenback, but not by much. USD/CAD dropped into the 50-day EMA at the 1.4300 major price handle, a common congestion point for the Loonie-Dollar pairing in recent months.

Momentum is still on the middling side, with frequent dips into multi-year lows for the Canadian Dollar. Until key fundamentals like trade tariffs, or a more solidified economic outlook develop a clearer picture, USD/CAD can be expected to continue muddling through in a rough range.

USD/CAD daily chart

• Gold consolidates ahead of key US Nonfarm Payrolls report.
• XAU/USD remains above $2,900 but struggles as US 10-year yield hits 4.286%.
• Trade tensions escalate as Canada and China retaliate against Trump’s tariffs.
• Atlanta Fed GDPNow model revises Q1 2025 forecast to -2.4%, up from -2.8%.

Gold halted its three-day rally due to investors booking profits ahead of the crucial US Nonfarm Payrolls report. The rise of US Treasury bond yields also made holding the non-yielding metal less appealing. At the time of writing, the XAU/USD trades at $2,918, virtually unchanged.

The yellow metal consolidated above the $2,900 figure, capped by the earlier rise of the US 10-year Treasury bond yield to a one-week high, before paring those gains to stand at 4.286%.

Uncertainty surrounds the financial markets, spurred by controversial trade policies proposed by the President of the United States (US), Donald Trump. Tariffs imposed on US allies and adversaries triggered retaliation by Canada and China. Meanwhile, Mexico got a one-month delay of tariffs until April 2, after Trump and Mexico’s President Claudia Sheinbaum discussed additional improvements in fentanyl and illegal migration.

Data in the US was mixed on Thursday. The Challenger jobs report showed that layoffs rose sharply to levels not seen since the last two recessions. Meanwhile, the number of Americans filing for unemployment benefits dipped beneath projections, tempering recession fears sparked by Challenger, Gray, and Christmas data.

Following the data, the Atlanta Fed GDPNow Model projects the Gross Domestic Product (GDP) for Q1 2025 at -2.4%, up from the -2.8% contraction estimated on Wednesday.

Bullion traders will be eyeing Friday's release of February’s Nonfarm Payrolls figures, with analysts projecting 160K jobs added to the workforce.

Daily digest market movers: Gold price consolidates amid mixed US data

• US real yields, as measured by the US 10-year Treasury Inflation-Protected Securities (TIPS) yield, which correlates inversely to Gold prices, are flat at 1.946%, a headwind for XAU/USD prices.
• US Initial Jobless Claims for the week ending March 1 rose to 221K but remained below the 235K forecast and the previous week's 242K.
• Challenger Job Cuts in February surged from 49.8K to 172K, largely due to DOGE-related actions. Data from Challenger, Gray & Christmas revealed that the federal government was responsible for 62,242 of these layoffs.
• Money market traders had priced in 74 basis points of easing in 2025, up from 72 bps on Wednesday, via data from the Prime Market Terminal.

Source: Prime Market Terminal

XAU/USD technical outlook: Gold price holds firm above $2,900

Gold price consolidates for the second straight day, printing two Doji candles, indicating that neither buyers nor sellers are in charge. Momentum, as depicted by the Relative Strength Index (RSI), shows buyers losing some steam, yet the RSI is in bullish territory.

That said, the path of least resistance is skewed to the upside. XAU/USD's next resistance would be $2,950, followed by the record high at $2,954. A breach of the latter can expose the $3,000 mark.

On the other hand, a daily close below $2,900 could risk the uptrend and open the door for a “healthy” pullback. Gold’s first support would be the February 28 low of $2,832, followed by the $2,800 figure.

The downtrend in the US Dollar gathered extra steam on Wednesday, fuelled by concerns over the US economy and some renewed hopes that the Trump administration could delay some planned tariffs.

Here is what you need to know on Friday, March 7:

The US Dollar Index (DXY) retreated further and breached the 104.00 support, hitting fresh multi-month lows. The release of the Nonfarm Payrolls will take centre stage along with the Unemployment Rate. In addition, the Fed’s Powell, Kugler, Bostic, Bowman, and Williams are all due to speak.

EUR/USD rose further and reached new 2025 peaks around the 1.0850 zone following the weaker Greenback and the ECB’s rate cut. Another estimate of Q4 GDP Growth Rate in the euro area is due followed by quarterly Employment Change prints and Germany’s Factory Orders. Additionally, the ECB’s Lagarde and Buch are expected to speak.

GBP/USD clocked new four-month highs north of 1.2900 the figure, although it eventually ended the day barely changing from Wednesday’s close. The Halifax House Price Index, and the BBA Mortgage Rate will be released, seconded by speeches by the BoE’s Mann.

USD/JPY dropped for the second straight day, this time slipping back to the 147.30 region, an area last traded in early October. Next on tap on the Japanese docket will be the Average Cash Earnings, Current Account, Bank Lending, the preliminary Coincident Index and the Leading Economic Index, as well as the Eco Watchers Survey, all due on March 10.

AUD/USD picked up further pace and reached multi-day highs near 0.6360, although running out of some impulse afterwards. The Westpac Consumer Confidence Index will be the next release on the Australian calendar on March 11.

WTI prices alternated gains with losses above the $66.00 mark per barrel amid OPEC+ plans, uncertainty around US tariffs and increasing US crude oil supplies.

Prices of Gold barely moved on Thursday, keeping the trade just above the $2,920 level per troy ounce amid some profit taking mood and rising US 10-year yields. Silver prices extended their march north to the $32.70 zone, or two-week tops.

• DXY weakens further amid rising job cuts and trade deficit concerns.
• Challenger Job Cuts report shows layoffs surged over 100% in February.
• ECB cuts rates by 25 basis points, revising inflation outlook upward.
• US Jobless Claims and trade balance data highlight economic strains.

The US Dollar Index (DXY) is extending its losing streak on Thursday as fresh labor market and trade data put additional pressure on the Greenback. Job cuts surged dramatically, while weekly jobless claims showed a mixed picture of the labor market.

Meanwhile, the European Central Bank (ECB) delivered a widely anticipated rate cut, with President Christine Lagarde emphasizing the need for heightened vigilance in uncertain economic conditions.

Daily digest market movers: US Dollar down after an additional round of soft labor data, ECB

• The latest Challenger Job Cuts report for February revealed a sharp rise in layoffs, more than doubling compared to January.
• Continuing Jobless Claims climbed to nearly 1.90 million, signaling challenges in the employment market despite Initial Jobless Claims dropping to 221,000.
• The European Central Bank lowered its deposit rate by 25 basis points to 2.50 percent, aligning with market forecasts and keeping policy on a steady path.
• The ECB raised its inflation outlook for 2025, fueling concerns that persistent price pressures could complicate future policy decisions.
• Christine Lagarde emphasized the importance of a data-driven approach, stressing that the ECB must remain flexible in an increasingly volatile economic environment.
• Regarding Fed expectations, the CME FedWatch Tool now shows a growing probability of a Federal Reserve rate cut in June, with expectations surpassing 85 percent.

DXY technical outlook: Bearish trend accelerates

The US Dollar Index (DXY) remains under pressure, breaking below key support levels. The 20-day and 100-day Simple Moving Averages (SMA) are nearing a bearish crossover, reinforcing negative momentum. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) continue to tilt bearish, suggesting further downside risks. If DXY fails to find support near 103.00, the next key level to watch is 102.50, which could mark the continuation of the current selloff.

• The Dow Jones shed around 575 points on Thursday, as trade war fears resume.
• The more the Trump administration tries to soothe tariff fears, the worse things get.
• Market sentiment is still churning despite announced tariff delays and upbeat jobs data.

The Dow Jones Industrial Average turned tail and ran on Thursday, in tandem with the rest of the US equity indexes. United States (US) President Donald Trump continues to waffle on his own trade war rhetoric, exploring tariff exemptions and extensions on a sector-by-sector basis. However, the lack of clarity and consistency in policy that tends to get announced off-the-cuff via social media posting is beginning to weigh on market sentiment.

The Trump administration is continuing to pivot on its own tariff threats, granting a 30-day reprieve for the US automotive industry, which remains heavily reliant on foreign trade to produce its vehicles. Other industries, sectors, and businesses are up for making a case for why they should receive an exemption, at least for a little while, and the ongoing uncertainty around President Trump’s trade war rhetoric is sinking investor risk appetite.

US Nonfarm Payrolls (NFP) net job gains numbers for February are due on Friday, and Thursday’s Challenger Job Cuts number is providing little reason for traders to hope for a decent NFP print this week. Challenger firings reached their highest level since August of 2020 in February, climbing to 172K net terminations in key industries, strongly implying that a general slowdown is gathering speed.

Dow Jones news

Nearly the entire Dow Jones equity board is falling back on Thursday, with all but three listed securities trading into the red. Verizon Communications still managed to find some gains, climbing 1.2% to cross above $43 per share. Nvidia (NVDA) fell back once again, falling nearly 5% and dipping below $112 per share as the AI trade continues to fizzle out.

Dow Jones price forecast

Thursday is turning into a lunchbag letdown for bullish hopefuls, shredding the midweek rebound that has vanished as quickly as it disappeared. The Dow Jones is trading back into the 42,500 handle, with a near-term technical floor priced in at the 42,400 level.

The Dow Jones is poised to make contact with the 200-day Exponential Moving Average (EMA) near the 42,000 key figure, but only if selling pressure is able to push bids down another 500 points, a move that would likely require a shift in fundamentals... or a bad employment data print.

Dow Jones daily chart

• Trump delays reciprocal tariffs on Mexico until April 2 after talks with Sheinbaum.
• USD/MXN briefly falls as tariff relief boosts MXN before rebounding above 20.30.
• Traders eye Mexico’s inflation data and US Nonfarm Payrolls for further direction.

The Mexican Peso (MXN) appreciated against the US Dollar (USD) on Thursday after United States (US) President Donald Trump said that Mexico would be exempt from paying tariffs on anything falling within the United States-Mexico-Canada Agreement (USMCA). The USD/MXN is trading at 20.30, down 0.45%.

Recently, Mexico’s President Claudia Sheinbaum called Trump and agreed on a delay of one month, until April 2, when reciprocal tariffs will begin. Trump posted on its social network “Our relationship has been a very good one, and we are working hard, together, on the Border, both in terms of stopping Illegal Aliens from entering the United States and, likewise, stopping Fentanyl.”

As the news broke, the USD/MXN pair retreated to a daily low of 20.21, beneath the 100-day Simple Moving Average (SMA) of 20.33. Since then, buyers have pushed the exchange rate above 20.30.

Traders are also eyeing the release of Mexico’s inflation figures for February. The Consumer Price Index (CPI) and Core CPI are expected to drop monthly. However, according to a Reuters poll, both readings will pick up yearly.

Meanwhile, US jobs data was mixed, with the number of people filing unemployment claims dipping compared to the previous reading, revealed the Department of Labor. The Challenger jobs report showed layoffs rose to levels not seen since the last two recessions due to mass federal government job cuts.

Ahead of this week, traders will watch the release of February Nonfarm Payrolls, which are expected to rise above January’s figures.

Daily digest market movers: Mexican Peso advances on positive trade news

• Mexico’s CPI for February is projected to dip by 0.27% MoM, down from 0.29%. In the twelve months to February, it would likely rise by 3.77%, up from 3.59%. Core CPI for the same period is projected to rise 0.46% MoM from 0.41%. Over one year, core prices are projected to drop from 3.66% to 3.62%.
• Banco de Mexico's (Banxico) private economists' survey showed that headline inflation is forecast to end at 3.71%, while core CPI is expected to finish at 3.75%. The USD/MXN exchange rate is projected to end at 20.85 in 2025, slightly lower than the 20.90 projection in the previous survey. However, for 2026, they anticipate a sharper depreciation of the Peso, well beyond the 21.30 level expected in January’s poll.
• US Initial Jobless Claims for the week ending March 1 increased by 221K, below estimates of 235K and last week’s 242K.
• Challenger Job Cuts in February soared from 49.795K to 172.017K, blamed on DOGE actions. Challenger, Gray & Christmas revealed that the government accounted for the bulk of the layoffs, for 62,242 job cuts by the federal government.
• Hence, money market traders had priced in 74 basis points of easing in 2025, up from Wednesday's 72 bps, via data from the Chicago Board of Trade (CBOT).
• Trade disputes between the US and Mexico remain front and center. If countries could come to an agreement, it could pave the way for a recovery of the Mexican currency. Otherwise, further USD/MXN upside is seen, as US tariffs could trigger a recession in Mexico.

USD/MXN technical outlook: Mexican Peso surges as USD/MXN drops below 20.40

USD/MXN continues to trade sideways, but sellers seem to have the upper hand. If the exotic pair prints a daily close below the 100-day SMA, a re-test of the 20.00 psychological figure is on the cards. A breach of the latter would expose the 200-day SMA at 19.54.

Otherwise, if USD/MXN climbs past the 100-day SMA, the next resistance would be 20.50. If surpassed, the next key resistance levels would be the March 4 peak at 20.99 and the year-to-date (YTD) peak of 21.28.

Today the ECB decided to cut the policy rate by 25bp, so the deposit rate now yields 2.50%. The most important part of the decision was its assessment of the restrictiveness of its monetary policy stance. The ECB now sees monetary policy as 'becoming meaningfully less restrictive', which means it assesses that the current rate level is closer to the terminal rate than previously, Danske Bank's analysts Piet Haines Christiansen and Rune Thyge Johansen report. 

Disinflation remains on track and the economy faces challenges

"Given the strong uncertainty, Lagarde clearly guided that the data-dependent approach is probably higher than ever, thus there was no guidance or commitment to an April cut. Today's decision was a consensus, with none opposing, but Holzmann abstained."

"The staff projections lowered the growth forecast for 2025 to 0.9% y/y (down from 1.1%) and 2026 to 1.2% y/y (down from 1.4%). Inflation was revised higher in 2025 to 2.3% from 2.1% due to energy prices, but as futures have since declined, we do not interpret that as a hawkish signal, also reflected by the core inflation forecast being revised down to 2.2% from 2.3%."

"Markets have repriced the ECB expectations in recent days, not least following the change to the German fiscal position and spending package. Currently there are almost two additional cuts from the ECB until year-end priced, which is about one cut less than earlier this week."  

• EUR/USD advanced after the European session, trading above the 200-day SMA near the 1.0830 region as bullish momentum continued.
• The pair has gained nearly 5% this week, breaking key resistance and signaling a potential continuation of the uptrend.
• Key resistance emerges near 1.0900, while support now aligns at the 200-day SMA around 1.0830.

EUR/USD extended its rally on Thursday, climbing past the 200-day Simple Moving Average (SMA) after the European session, signaling strong bullish momentum. The pair has now added close to 5% this week, reinforcing buyers' control as technical indicators remain in favor of further gains.

The Relative Strength Index (RSI) remains in overbought territory but is only mildly rising, suggesting that while the pair retains bullish momentum, profit-taking or a temporary pullback could emerge. Meanwhile, the Moving Average Convergence Divergence (MACD) continues to print rising green bars, confirming the ongoing upside bias.

Now that EUR/USD has decisively moved above the 200-day SMA, the next key resistance is seen around the 1.0900 region. A sustained break above this level could open the door for further gains toward 1.0950. On the downside, the 200-day SMA, now acting as immediate support, sits around 1.0830, with additional buying interest likely near 1.0750.

EUR/USD daily chart

While the magnitude of the move was surprising, there is no doubt about the cause of the explosion in the goods trade surplus in January, NBC's Jocelyn Paquet reports. 

Canadian companies front-load their shipments to the US to avoid any levies

"Faced with the likely imposition of tariffs by Washington, Canadian companies massively front-loaded their shipments to the United States to avoid any levies. And given recent developments, who can blame them? The same desire was likely behind the rise in imports (as some of our U.S. trading partners likely feared retaliation from Ottawa), although the movement there was much less pronounced."

"Exports to our southern neighbor rose by 7.5%, pushing the trade surplus with our largest trading partner to a new all-time high of C$14.4 billion. Given its cause, this increase is very likely to be fully reversed in the future, but it may nonetheless attract the attention of the new Trump administration, which is particularly averse to trade deficits."

"In terms of GDP growth in Canada, the impact of the explosion in the trade surplus is not entirely clear. A surge in exports such as the one seen in the first month of the year will undoubtedly have a positive impact on growth, but this could be partially offset by a decline in inventories. We will have to wait and see, but chances are that Q1 growth could be much stronger than expected. Of course, this would reflect temporary factors rather than a real improvement in the underlying economy."

• GBP/USD trades at 1.2885, down 0.06%, after failing to sustain momentum above 1.2900.
• US labor market shows resilience, with jobless claims lower than expected at 221K.
• BoE cautious on rate cuts, while UK construction sector contracts to May 2020 levels.
• Traders eye US Nonfarm Payrolls data, expected to rise by 160K in February.

The rally in the Pound Sterling stalled after sustaining three straight days of gains. It remains firmly below 1.2900 after hitting a year-to-date (YTD) peak of 1.2923. At the time of writing, the GBP/USD trades at 1.2885 and registers minuscule losses of 0.06%.

Sterling holds near YTD peak but struggles for further gains

Market mood remains negative amid a trade war spurred by the United States, which imposed tariffs on imports from Canada, Mexico, and China. Even though three of the largest US automakers experienced a one-month delay in tariffs on automobile imports from Mexico and Canada, investors are flocking toward safe-haven assets.

The US Department of Labor revealed that the labor market remains in good shape after releasing the Initial Jobless Claims for the week ending March 1. Claims rose by 221K, below estimates of 235K and last week’s 242K.

On Wednesday, the Federal Reserve (Fed) revealed in its Beige Book that economic activity rose slightly, employment nudged higher, and prices increased. However, US President Trump's trade policies keep businesses and households uncertain.

Other data showed the US trade deficits widened in January as companies front-loaded ahead of tariffs.

Across the pond, Bank of England (BoE) officials stated they would be very careful when easing policy, as they remain concerned of a possible reacceleration of inflation. In the meantime, S&P Global Construction PMI contracted in February, hitting its weakest level since May 2020.

Ahead this week, GBP/USD traders are eyeing the release of US Nonfarm Payrolls for February, which are expected to rise by 160K, up from 143K in January.

GBP/USD Price Forecast: Technical outlook

Technically speaking, the GBP/USD should continue to aim higher after clearing the 200-day Simple Moving Average (SMA) at 1.2786 and surpassing the latest cycle high at 1.2811, the December 6 high. If the pair closes on a daily basis above 1.2900, a move towards 1.3000 is on the cards.

Otherwise, sellers could push the exchange rate to 1.2811, the latest resistance-turned-support, before challenging 1.2800.

• Silver price falls to near $32.40 as US President Trump relaxes tariffs on automobiles from Canada and Mexico for a month.
• Higher US bond yields have contributed to some correction in the Silver price.
• Investors await the US NFP data, which will influence the Fed’s monetary policy outlook.

Silver Price (XAG/USD) corrects from the weekly high of $32.70 and drops to near $32.40 in North American trading hours on Thursday. The white metal drops as fears of an intense global trade war have eased as the White House confirmed that United States (US) President Donald Trump will provide a one-month relaxation of tariffs on automobiles imported from Canada and Mexico.

On Tuesday, proposed 25% tariffs on Canada and Mexico from President Donald Trump went into effect.

"We spoke with the big three auto dealers and are going to give a one-month exemption on any autos coming through USMCA, Leavitt said and added, “Trump is open to hearing about additional tariff exemptions.”

Historically, heightened geopolitical tensions improve the appeal of precious metals, such as Silver.

Meanwhile, an increase in US bond yields after surprisingly upbeat US ISM Services PMI data for February has also weighed on the Silver price. 10-year US Treasury yields gain to near 4.29%. Higher yields on interest-bearing assets increase the opportunity cost of holding investments in non-yielding assets, such as Silver.

Going forward, investors will focus on the US Nonfarm Payrolls (NFP) data for February, which will be released on Friday. The official employment data will influence market speculation for the Federal Reserve’s (Fed) monetary policy outlook.

Silver technical analysis

Silver price strives to hold the key resistance of $32.40 plotted from the December 12 high. The asset trades above the 20-day Exponential Moving Average (EMA), which trades around $31.85, suggesting that the near-term trend is bullish.

The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting a sideways trend.

Looking down, the upward-sloping trendline from the August 8 low of $26.45 will act as key support for the Silver price around $30.00. While, the February 14 high of $33.40 will be the key barrier.

Silver daily chart

• EUR/JPY discovers temporary support near 159.20 after the ECB’s dovish interest rate decision.
• The ECB reduced its Deposit Facility rate by 25 bps to 2.5%, as expected.
• Surging Japanese bond yields have strengthened the Japanese Yen.

The EUR/JPY pair finds temporary support after sliding more than 0.75% intraday to near 159.20 in Thursday’s North American session. The asset discovers little demand as the European Central Bank (ECB) has reduced its Deposit Facility rate by 25 basis points (bps) to 2.5%. This is the fifth interest rate cut by the ECB in a row.

The ECB was already expected to ease its monetary policy further as inflation in the Eurozone is on track to return sustainably to the desired rate of 2% this year. Some ECB officials are also seeing risks of inflation undershooting the central bank’s target of 2% due to weak demand from domestic and overseas markets.

In the last two trading sessions, the Euro (EUR) outperformed its major peers as Germany’s likely next chancellor, Frederich Merz, and the Social Democratic Party (SDP) agreed to create a 500 billion Euro (EUR) infrastructure fund and stretch borrowing limit on Tuesday. Investors expect such reforms could prompt inflationary pressures and stimulate the economy.

Meanwhile, the Japanese Yen (JPY) outperforms across the board as 10-year Japan Government bond (JGB) yields post a fresh 15-year year high, with traders becoming increasingly confident that the Bank of Japan (BoJ) will raise interest rates again this year. 10-year JGB yields rise to near 1.55%.

On Wednesday, BoJ Deputy Governor Shinichi Uchida said that the central bank will adjust its monetary policy further if the economy and inflation continue to perform in line with expectations.

•  Initial Jobless Claims fell below consensus to 221K.
• Continuing Jobless Claims rose to 1.897M.

US citizens filing new applications for unemployment insurance decreased to 221K for the week ending March 1, as reported by the US Department of Labor (DOL) on Thursday. This print missed initial estimates and was lower than the previous week's unrevised tally of 242K.

The report also highlighted a seasonally adjusted insured unemployment rate of 1.2%, while the four-week moving average rose by 250 to 224.250K from the prior week’s unrevised average.

Moreover, Continuing Jobless Claims went up by 42K to reach 1.897M for the week ending February 22.

Market reaction

The Greenback maintains its bearish attitude in place in the low 104.00s when tracked by the US Dollar Index (DXY), extending further its pronounced weekly retracement.

Pound Sterling (GBP) briefly nudged above 1.29 for the first time since November. Domestic news is very thin on the ground this morning, Scotiabank's Chief FX Strategist Shaun Osborne notes. 

GBP may have peaked above 1.29 for now

"The GBP’s firm performance this week largely reflects the broader sell-off in the USD rather than any local developments. Sterling continues to lose ground versus the EUR, with cross extending through the upper 0.83s to test the 200-day MA (0.8387). EUR outperformance may extend towards 0.85 in the near term." 

"Intraday trading patterns suggest the pound has peaked in the short run at least. The 6-hour chart reflects a bearish outside range session developed in Asian trading as the GBP peaked in the low 1.29 zone. Solidly bullish trend momentum on the short– and medium-term oscillators should mean firm support on dips to the 1.2775/1.2825 range, however."

The Canadian Dollar (CAD) is marginally weaker. Canada got a further, temporary concession from the US border tariff regime yesterday, with the White House announcing a one-month reprieve for the auto sector, Scotiabank's Chief FX Strategist Shaun Osborne notes, Scotiabank's Chief FX Strategist Shaun Osborne notes. 

Tariff concessions provide no support

"That followed a meeting between the president and US automakers at the White House where it seems quite likely that the Big Three spelled out what 25% tariffs wo0uld do to the auto sector—and the broader US economy. Very roughly, assuming a 0% tariff on Canadian autos/parts exports to the US for the next month, 10% for energy and 25% on everything else, the effective tariff regime Canada is facing - for now - looks to be around 14%. Weighted by export share, it's perhaps more like 17%."

"That tariff rate may change as steel & aluminum tariffs and reciprocal tariffs are added while—hopefully—border tariffs are removed on in the next few weeks but if we assume (as I have) that the CAD's recent losses reflected the anticipation of a tariff regime in the 10-15% range, there may be very little, if any, significant benefit for the CAD from the auto concessions. Canada reports trade data at 8.30ET." 

"Spot is tracking a little higher on the day so far. Short-term technical patterns lean USD-bearish after the USD’s sharp fall Tuesday and spot’s push under support at 1.4370 yesterday (now near-by resistance). The push under support may auger for additional losses towards 1.4200/50 but there is not a lot of appetite to push the USD significantly lower. Momentum signals are mixed, suggesting that any move down is likely to be choppy and uneven. A push back through the upper 1.43s may see the USD regain 1.4425/50."

The USD is mixed to weaker overall on the session amid a broader slump in market sentiment. Bonds remain under pressure globally, with European markets remaining weak, while global equities are mostly lower; Asian markets were broadly positive but European bourses are softer as the local bond sell-off extends while US equity futures are down a little more significantly on growth worries and concerns that the AI/tech boom is deflating, Scotiabank's Chief FX Strategist Shaun Osborne notes. 

USD mixed on the day

"The JPY and CHF are relative outperformers on the session, with the NOK and SEK also firmer. The EUR extended gains to a little over 1.08 ahead of today’s ECB policy decision before consolidating. USD sentiment looks increasingly fragile as investors perceive a weakening in the 'US exceptionalism' argument that has been a key pillar for the USD’s strength in recent years." 

"Yield differentials are less supportive in the short run and contrasting growth prospects, driven by DOGE efforts and trade war concerns in the US versus a significant expansion of fiscal firepower in Europe, are a longer-term negative for an overvalued USD. Yesterday’s US data round was mixed. The Fed’s Beige Book noted slightly firmer activity and employment through mid-January, with wages and prices up moderately." 

"ISM Services data was firmer than expected but there might have been a heads-up warning for Friday’s jobs data from the weaker than expected ADP report. Despite weak tracking with NFP, private sector hiring was well below forecasts in February and a soft payrolls report will certainly add to softer growth concerns. The US reports trade data for January at 8.30ET; preliminary data reflected a significant widening in the deficit as importers tried to get ahead of tariffs."

The ECB policy decision this morning is less about the expected 25bps cut—it’s fully priced in—than how the policy outlook is communicated, Scotiabank's Chief FX Strategist Shaun Osborne notes. 

Market focus is on the rate outlook

"The significant boost to fiscal policy from the German government this week and the likelihood of generally looser fiscal policy across the Eurozone as Europe arms up has put a big question mark over how much further rates are likely to fall in the coming months. Policymakers were already starting to hint that rates were approaching neutral. Significantly looser fiscal policy may see policy err on the side of more restrictive, if only slightly so, in the coming months." 

"Note that swaps anticipate a little less easing from the ECB over the balance of the year, with the policy rate expected to base around 2.00%. Note that narrower EZ/US spreads continue to suggest spot is still quite significantly undervalued, despite this week’s surge. Our fair value estimate sits at 1.0962 today." 

"The EUR’s powerful rally may be stalling around the 1.08 point—1.0804 represents the 61.8% Fibonacci retracement of the 1.12/1.01 decline seen in the past few months. Intraday trading patterns strongly suggest a short-term peak at least. But corrective losses may only extend to the low 1.07 area—support is 1.0720/25—given the bullish position of short– and medium-term trend oscillators. Above 1.0805, spot gains should extend to 1.0970/75."

• The US Dollar is facing its worst week in over one year.  
• Traders pull their money out of the Greenback and into domestic currencies.
• The US Dollar Index faces devastation and devalues over 3% so far this week. 

The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, is facing a pivotal change in its trading regime this week. The index trades near 104.00 at the time of writing on Thursday. Several banks and traders are reporting that big clients are repatriating their foreign investments denominated in US Dollars back into their domestic currencies. This might mean such volumes will not come back anytime soon, the FT reports. 

The repatriation comes after weakening US economic data which has worried markets about the possibility of  Trump’s tariffs having an impact on domestic inflation and has brought back firm recession fears this week. Clearly, United States (US) President Donald Trump’s approach is starting to have some negative fallout. 

Meanwhile, the focus will now shift to Europe where a high-stakes European meeting is taking place this Thursday. EU leaders will discuss the spending bill on defense after Trump made clear the US will no longer be playing an active part in NATO. US support to Ukraine has been rolled back by now as well. The European Central Bank (ECB) is set to release its monetary policy statement and interest rate decision later this Thursday. 

Daily digest market movers: ECB to make its move

• The US Challenger Job Cuts were due for February. A very negative number with a surge by more than 100% to 172,017 head counts compared to 49,795 last month. 
• At 13:15 GMT, the European Central Bank (ECB) will release its monetary policy decision. Expectations are for an interest rate cut by 25 basis points (bps) from 2.75% to 2.50% on its benchmark deposit rate.
• At 13:30 GMT,  the US weekly Jobless Claims and US Trade Balance data for January will be released:
  • Initial claims for the week ending on February 28 are expected to come in at 235,000, lower than last week’s print of 242,000. Continuing Claims for the week ending on February 21 should tick up to 1.880 million, from the previous 1.862 million. 
  • The US Goods Trade Balance for January should see a narrowing deficit to $127.4 billion, coming from a $153.3 billion wider deficit in December.
• At 13:45 GMT, ECB Chairman Christine Lagarde will speak and give comments on the latest monetary policy decision.
• Equities are struggling again after the German Dax hit a new all-time high in the early European trading session. European equities and US futures are reversing and turning negative at the time of writing. 
• The CME Fedwatch Tool projects a 79,6% chance of an interest rate cut in the June meeting, with only a 20.4% chance to keep interest rates at the current range of 4.25%-4.50% in June. 
• The US 10-year yield trades around 4.230%, off its near five-month low of 4.10% printed on Tuesday.

US Dollar Index Technical Analysis: Not coming back

The US Dollar Index (DXY) is bleeding this week, and the reason for the outflows is worrisome. Several trading desks report that many European pension funds, hedge funds, and other big institutions are repatriating their US Dollar-denominated assets back to their domestic currencies. That means a substantial volume parked for years under the US Dollar has now been moved and does not seem to be coming back anytime soon as long these recession fears will still take place. 

On the upside,  the first upside target is to recover the 200-day Simple Moving Average (SMA) at 105.04. Once that level has been recovered, several near-term resistances are lined up, with 105.53 and 105.89 identified as two heavy pivotal levels before breaking back above 106.00.

On the downside, 104.00 has seen selling pressure but tries to hold for now. Further down, 103.00 could be considered as a bearish target in case US yields roll off again, with even 101.90 not unthinkable if markets further capitulate on their long-term US Dollar holdings. 

US Dollar Index: Daily Chart

• USD/CAD rises to near 1.4360 even though the US Dollar slides to four-month low.
• US President Trump is set to reprieve tariffs on automobiles from Canada and Mexico.
• Investors await the employment data for February from both the US and Canada.

The USD/CAD pair moves higher to near 1.4360 in Thursday’s European session despite the US Dollar (USD) extends its downside, suggesting significant weakness in the Canadian Dollar (CAD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slides to a four-month low near 104.00.

The Greenback faces selling pressure as investors expect the tariff agenda of United States (US) President Donald Trump won’t be favorable for the economy in the near term. The impact of higher tariffs is expected to be borne by US importers, which will eventually passed on to end consumers. Such a scenario would reduce the purchasing power of households, resulting in a slowdown in the overall demand structure.

Meanwhile, the Canadian Dollar underperforms has President Trump imposed 25% tariffs on Canada and Mexico on March 4. However, the White House reported on Wednesday that tariffs have been reprieved from automobiles after consulting with three big carmakers.

Market participants expect Trump tariffs to impact Canadian economic growth significantly, knowing that Canada is one of the leading trading partners of the US.

Going forward, investors will focus on the US and Canada employment data for February, which will be released on Friday. The Canadian economy is expected to have added fewer new workers while the US economy is projected to have witnessed a strong labor demand.

CHF was among the big losers yesterday with EUR/CHF rising 1.5% during yesterday's session, Danske Bank's FX analyst Kirstine Kundby-Nielsen reports.

Global developments taking center stage

"While Swiss inflation surprised slightly to the topside, this failed to aid the Swiss Franc. Headline inflation came in at 0.3% y/y (cons: 0.2%, prior: 0.4%) and core at 0.9% y/y (cons: 0.7%, prior: 0.9%). This leaves inflation set to meet the SNB's expectation of 0.3% y/y in Q1."

"Domestic inflation continues to edge lower aided by a decline in the reference interest rate for rents, which should keep the SNB on track to deliver a 25bp cut at the next meeting on March 20. Markets scaled slightly back on pricing, pricing 21bp for the meeting and 33bp for the remainder of the year."

"For EUR/CHF however, domestic Swiss data releases seem to be of the least concern with global developments taking center stage. Key for the cross will be whether the recent EUR optimism fueled by a significant change in approach to fiscal policy and debt rules in Germany, will continue and whether risk-appetite holds up."

EUR/USD has risen sharply this week, breaking well above 1.07 for the first time since the US election, with EUR optimism continuing in yesterday's session. This move has been fuelled by what appears to be a regime shift in euro area - particularly German - fiscal policy, with large-scale investments in infrastructure and, most notably, defence spending , Danske Bank's FX analyst Kirstine Kundby-Nielsen reports.

Further momentum to the EUR/USD rally

"We believe that the combination of factors from both Europe and the US points to further near-term upside risk for EUR/USD, especially if US data continues to disappoint."

"Yesterday's ADP jobs report and ISM services data somewhat diverged, with the former printing on the weak side, while the latter surprised to the upside, showing broad-based strength across the subindexes. Today, the focus shifts to the ECB meeting, though we expect limited market impact."

"Looking ahead, markets will be closely watching tomorrow's US February jobs report, where we anticipate a downside surprise, forecasting a payrolls print of 120k versus the consensus estimate of 160k. If realized, this could add further momentum to the EUR/USD rally."

Comex copper futures surged more than 5% yesterday after US President Donald Trump proposed a 25% tariff on copper imports, ING’s commodity analysts Warren Patterson and Ewa Manthey note.

COMEX copper pushes LME copper prices higher

"The move in COMEX copper also pushed LME copper prices higher. The COMEX/LME arb widened back towards $1,000/t on the back of the news. Last week, Trump instructed the US Commerce Department to mull potential copper import tariffs. The market anticipated a relatively long investigation before tariffs are implemented. The latest indications are that the copper tariff could be enforced sooner."

"China’s National Development and Reform Commission pledged to enforce production cuts in the country’s steel and oil industry. The aim would be to improve industry profitability and reduce pollution. China’s steel production remains above 1bn tonnes despite Beijing’s efforts to reduce capacity. Industry estimates suggest that cuts of around 50mt could be implemented."

US Dollar (USD) could decline gradually vs Chinese Yuan (CNH); it does not appear to have enough momentum to break below 7.2260. In the longer run, downward pressure remains intact; should USD break below 7.2260, the next level to watch is 7.2000, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Downward pressure remains intact

24-HOUR VIEW: "After the sharp drop in USD two days ago, we highlighted the following yesterday: 'The decline appears excessive, but with no signs of stabilisation just yet, further weakness is not ruled out. However, given the deeply oversold conditions, any decline is likely part of a lower range of 7.2400/7.2800.” Instead of trading in a range, USD fell to a low of 7.2330. Downward momentum has increased, albeit not much. Today, provided that USD remains below 7.2780 (minor resistance is at 7.2660), it could decline gradually. However, it does not appear to have enough momentum to break below 7.2260."

1-3 WEEKS VIEW: "We highlighted yesterday (05 Mar, spot at 7.2650) that USD 'could remain under pressure,' and we pointed out that 'there is a pair of strong supports at 7.2400 and 7.2260.' USD then fell to a low of 7.2330. The downward pressure remains intact, and should USD break below and hold below 7.2260, the next level to watch is 7.2000. To maintain the downward pressure, USD must not remain below 7.2880 (‘strong resistance’ level was at 7.2980 yesterday)."

European natural gas prices traded in a volatile manner yesterday, ING’s commodity analysts Warren Patterson and Ewa Manthey notes.

Resumption in Russian pipeline gas is possible under a peace deal

"Ultimately, prices closed lower with TTF settling 4.5% lower on the day. Positioning data shows that investment funds reduced their position in TTF by 56.5TWh to a net long of 174.8TWh, the smallest since July. It hardly helped that the European Commission delayed the release of a plan to phase out Russian fossil fuels."

"Some read this as a sign that a partial resumption in Russian pipeline gas is possible under a peace deal. In addition, the EU will allow some flexibility in storage targets, although member states should still aim to have storage 90% full by 1 November."

US Dollar (USD) could edge lower vs Japanese Yen (JPY), but any weakness is viewed as a lower 148.00/150.00 range. In the longer run, failure to hold below 148.50 suggests USD could enter a period of indecision, trading in a 148.00/151.50 range for now, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Below 148.00, USD/JPY can see a sharp decline

24-HOUR VIEW: "After choppy price action two days ago, we indicated yesterday that 'the outlook is unclear,' and we held the view that USD 'could trade between 148.80 and 150.70.' USD then traded in a 148.38/150.18 range, closing at 148.88 (-0.61%). The price action has resulted in a slight increase in downward momentum. Today, there is room for USD to edge lower, but we view any weakness as part of a lower 148.00/150.00 range. We do not expect USD to break clearly below 148.00."

1-3 WEEKS VIEW: "Our update from yesterday (05 Mar, spot at 149.85) remains valid. As highlighted, the recent failure to hold below 148.50 suggests USD 'could enter a period of indecision, trading in 148.00/151.50 for now.' Looking ahead, should USD break decisively below 148.00, it could potentially trigger a sharp decline."

Sentiment remains negative in the oil market, with ICE Brent falling close to 2.5% yesterday. It settled below US$70/bbl after briefly trading to its lowest level in three years. Rising OPEC supply and prospects for further increases, combined with ever-present tariff uncertainty, pushed the market lower, ING’s commodity analysts Warren Patterson and Ewa Manthey notes.

A bigger pullback in activity near term

"Recent price weakness makes it difficult for US producers to 'drill, baby, drill'. While prompt WTI is trading below $67/bbl, forward values are even weaker. The calendar 2026 price is trading around $63/bbl, reducing incentives for producers to increase drilling activity. If anything, we’re likely to see a bigger pullback in activity. Producers need, on average, a $64/bbl price level to drill a new well profitably, according to the Dallas Federal Reserve Energy Survey."

"Weekly US inventory data was also fairly bearish. Yesterday, the US Energy Information Administration (EIA) reported that US crude oil inventories increased by 3.61m barrels over the last week. That’s a marked increase from the 1.5m-barrel decline the American Petroleum Institute (API) reported the previous day. Also, crude oil stocks at Cushing rose by 1.12m barrels."

"This leaves stocks at the WTI delivery hub at the highest level since November. Lower refinery rates contributed to the build, with utilisation rates falling by 0.6pp, and crude inputs dropping by 346k b/d week on week. Among refined products, gasoline and distillate inventories fell by 1.43m barrels and 1.32m barrels, respectively."

New Zealand Dollar (NZD) could rise further vs US Dollar (USD); overbought conditions suggest the major resistance at 0.5775 is out of reach for now. In the longer run, current price movements are likely part of a recovery phase that could reach 0.5775, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Overbought conditions suggest the major resistance at 0.5775 is out of reach

24-HOUR VIEW: "We noted 'a slight increase in momentum' yesterday, and we expected NZD to 'trade in a higher range of 0.5625/0.5670.' Instead of trading in a range, NZD surged to 0.5731. Although the increase in momentum indicates NZD could rise further, overbought conditions suggest the major resistance at 0.5775 is out of reach for now (there is another resistance at 0.5750). To keep the momentum going, NZD must hold above 0.5675 (minor support at 0.5700)."

1-3 WEEKS VIEW: "We have held a NZD negative view since late last week. Yesterday, 05 Mar, when NZD was at 0.5650, we highlighted that 'slowing momentum indicates that the chance of NZD reaching 0.5565 is slim.' We pointed out, 'a breach of 0.5670 would suggest that NZD has moved into a range trading phase.' NZD not only broke above 0.5670, but it also surged to 0.5731, gaining 1.06% for the day (closing at 0.5726). Instead of range trading, the sharp increase in momentum suggests that the current price movements are likely part of a recovery phase that could reach 0.5775. The recovery will remain intact as long as the ‘strong support’ level, now at 0.5640, is not breached."

Official budget deficit set at 4% of GDP for 2025, versus 3% in 2024, signalling fiscal expansion. Our gauge of broad deficit is 9.0% of GDP, 1.9ppt higher than the implemented broad deficit in 2024. However, budget was under-implemented by c.1% of GDP in 2023 and 2024, implying risks for 2025. Implementation is likely to improve on widened use of LGSB proceeds to include home purchases, Standard Chartered's economist report.

Implementation remains key

"Premier Li Qiang proposed a 5% growth target and a budget deficit of 4% of GDP for 2025 at the National People’s Congress on 5 March. Our calculation, based on the official budget numbers and widely accepted fiscal accounting rules, points to a broad deficit of 9.0% of GDP (Figures 1, 2 and 3). Following the same methodology, we estimate the 2024 budgeted and actual deficit at 8.2% and 7.1% of GDP, respectively, implying the budget was under-implemented by around 1% of GDP."

"Specifically, the revenue-spending gap under the broad budget amounts to CNY 12.7tn, compared with the official deficit of CNY 5.7tn (which will be financed by general central and local government bonds). Other financing sources include ultra-long-term special China government bonds (ULT-CGSBs, CNY 1.3tn), local government special bonds (LGSBs, CNY 3.6tn out of the total quota of CNY 4.4tn), and the fiscal stabilisation fund, the carryover fund from previous years and transfers from state capital budgets (totalling CNY 2.1tn)."

"If the 2025 budget is fully implemented, broad revenue would grow 0.2% and spending would grow 8.1%. The fiscal impulse is equivalent to 1.9% of GDP, which could potentially lift growth by 0.9ppt, based on our assumptions on fiscal multipliers. However, we have seen a pattern of under-implementation since 2019. We expect smaller slippage in 2025 due to the widened use of LGSBs, with the fiscal impulse boosting growth by an estimated 0.5-0.7ppt, likely insufficient to fully offset the US tariff impact."

• NZD/USD refreshes weekly high near 0.5750 as the New Zealand Dollar strengthens after Chinese officials left the door for additional monetary stimulus.
• PBOC Pan Gongsheng indicated that more interest rate cuts are on the table.
• Easing Trump tariff fears have diminished the risk premium of the US Dollar.

The NZD/USD pair posts a fresh weekly high to near 0.5750 in Thursday’s European session. The Kiwi pair exhibits strength as Chinese officials have promised to provide additional stimulus over fiscal spending announced in the government’s annual work report released on Wednesday.

China’s Finance Minister Lan Foan said that the government has left doors open for more stimulus if officials see the economy failing to meet the Gross Domestic Product (GDP) target of 5%. Additionally, People’s Bank of China Governor Pan Gongsheng reiterated a dovish stance on interest rates. We will cut interest rates and Reserve Requirement Ratio (RRR) “at an appropriate time”, Gongsheng said.

On Wednesday, the Chinese government guided a proactive fiscal policy approach and announced that the government will issue 1.3 trillion Chinese yuan (CNY) in ultra-long special T bonds in 2025.

The scenario of an Improvement in China’s economic outlook accelerates the appeal of the New Zealand Dollar (NZD), knowing that the Kiwi economy relies heavily on exports to China.

Meanwhile, a significant weakness in the US Dollar (USD) has meaningfully contributed to strength in the Kiwi pair. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slumps to near 104.00, the lowest level seen in four months.

The US Dollar weakens as investors expect United States (US) President Donald Trump’s tariff agenda won’t be much more disruptive than what they had anticipated earlier. On Wednesday, the White House reported that the President will provide a one-month exemption from 25% tariffs on automobiles from Canada and Mexico, which were imposed on Tuesday.

Going forward, investors will focus on the US Nonfarm Payrolls (NFP) data for February, which will be published on Friday.

The central bank of Turkey will cut rates again by 250bp to 42.50% today, in line with market expectations. Monday's inflation confirmed the disinflationary trend with some downside surprise in February, ING's FX analyst Frantisek Taborsky notes.

USD/TRY to reach 38.10 by mid-year and 40.20 by the end of this year

"Overall, both food and non-food groups were drivers of the lower-than-expected inflation after a large upside surprise in January. The downtrend in annual inflation has also continued. In a move aligning with disinflation efforts, the Ministry of Treasury and Finance reversed the hospital copayment hike, contributing to a benign reading last month." 

"While there are pricing pressures due to the recovery in domestic demand, leading producers to pass cost increases to consumers, disinflation is expected to continue as the CBT has signalled it will maintain its tight stance despite the start of interest rate cuts, ongoing real TRY appreciation, and improvement in services inflation. We expect inflation to fall below 30% by the end of 2025. This backdrop is supportive for the CBT to continue with rate cuts, ending this year with 29.0% in our forecast."

"TRY continues to trend real appreciation and provides a fat carry despite the start of the CBT cutting cycle last December. Despite further rate cuts this year, TRY remains our favourite carry trade in the EM space. We expect USD/TRY to reach 38.10 by mid-year and 40.20 by the end of this year."

Sweden reported stronger-than-expected inflation figures for February this morning. CPIF accelerated more than consensus from 2.2% to 2.9%, with the core measure rising to 3.0% against a 2.7% consensu, ING's FX analyst Francesco Pesole notes.

EUR/SEK to trade only temporarily below 11.0

"The data reinforces the view that the Riksbank may stay on pause at the next meeting and helped EUR/SEK move deeper below 11.00 after breaking crucial resistance overnight. This move is in line with our expectations. We expect EUR/SEK to trade only temporarily below 11.0 as our model now shows almost 3% undervaluation – an indication that a lot of the positives are in the krona’s price."

"Our forecast for the remainder of the year still has EUR/SEK above 11.00 (mostly in the 11.0-11.30 range) as we expect US tariffs to temper with the strong European sentiment to which SEK has a higher beta than the euro itself, and there is also a possibility of some geopolitical risk being priced back in after a largely expected Ukraine-Russia peace deal."

• Eurozone annual Retail Sales rose 1.5% in January.
• Retail Sales in the old continent came in at -0.3% MoM in January.

Eurozone’s Retail Sales rose 1.5% in the year through January after a revised 2.2% growth in December, the official data released by Eurostat showed on Thursday. The data missed the market expectations of 1.9%.

On a monthly basis, Retail Sales in the old continent declined by 0.3% in the same period versus December’s 0% revision while coming in below the expected 0.1% increase.

FX implications

The Eurozone data stalls the renewed upside in the Euro. When writing, the EUR/USD pair is trading 0.09% higher on the day at 1.0798.

• The Pound Sterling trades firmly near 1.2900 against the US Dollar as investors see US President Trump tariffs less fearful.
• Trump is poised to provide a one-month exemption for tariffs on automobiles from Canada and Mexico.
• BoE officials have guided a gradual policy-easing approach.

The Pound Sterling (GBP) clings to gains near 1.2900 against the US Dollar (USD) in European trading hours on Thursday. The GBP/USD pair exhibits strength as the risk premium of the US Dollar has diminished significantly, with investors expecting the United States (US) President Donald Trump’s tariff agenda to be less fearful than what they had projected earlier.

Markets currently see Trump’s tariffs more as a tactic to have a dominant position while negotiating deals with US  trading partners. On Wednesday, White House Press Secretary Karoline Leavitt said that the US President will exempt automobiles from 25% tariffs imported from Canada and Mexico for a month, which he imposed on Tuesday. 

"We spoke with the big three auto dealers and are going to give a one-month exemption on any autos coming through USMCA,” Leavitt said and added, “Trump is open to hearing about additional tariff exemptions.” Also,  the US President is considering providing the exemption on some agricultural products too, Agriculture Secretary Brooke Rollins told Bloomberg.

Going forward, the US Dollar will be influenced by the US Nonfarm Payrolls (NFP) data for February, which will be released this Friday. The labor market data will influence market speculation about the Federal Reserve’s (Fed) monetary policy outlook. Investors expect the economy to have added 160K jobs, higher than 143K in January. However, the US ADP reported on Wednesday that the private sector added 77K fresh workers in February, significantly lower than estimates of 140K and the former release of 186K.

Daily digest market movers: Pound Sterling trades with caution while BoE guides gradual interest rate cut approach

• The Pound Sterling trades cautiously against its peers on Thursday despite Bank of England (BoE) officials reiterating a “gradual and cautious” policy easing approach while testifying before Parliament’s treasury department on Wednesday.
• BoE Monetary Policy Committee (MPC) member Megan Greene advocated for a “gradual path” for “removing monetary policy restrictiveness” as the inflation persistence is less likely to fade on its own accord. BoE Chief Economist Huw Pill argued that there is more work to do to “squeeze out” underlying inflation.
• BoE Governor Andrew Bailey said more about the consequences of US President Donald Trump-led trade war on the global economy. However, he warned that the hike in employers’ contribution to National Insurance (NI) announced by Chancellor of the Exchequer Rachel Reeves in the Autumn Budget will increase job costs by 2%, lifting inflation by 0.1%-0.2%.
• Meanwhile, traders have fully priced in two more 25 basis points (bps) interest rate cuts by the BoE this year. The BoE also reduced its key borrowing rates by quarter-to-a-percent in the February policy meeting to 4.5%.

Technical Analysis: Pound Sterling clings to gains near 1.2900

The Pound Sterling rises to the 61.8% Fibonacci retracement plotted from the late September high to mid-January low and tops near 1.2930 on Thursday. The long-term outlook of the GBP/USD pair has turned bullish as it holds above the 200-day Exponential Moving Average (EMA), which is around 1.2680.

The 14-day Relative Strength Index (RSI) climbs above 60.00, suggesting a strong bullish momentum.

Looking down, the 50% Fibo retracement at 1.2767 and the 38.2% Fibo retracement at 1.2608 will act as key support zones for the pair. On the upside, the psychological 1.3000 level will act as a key resistance zone.

Citing two parliamentary sources, Reuters reported on Thursday that Germany's lower house of parliament will start discussing boosting in defence and infrastructure spending as well as sweeping changes to state borrowing rules from March 13.

The Bundestag (German parliament) lower house will vote on the debt brake reforms on March 18, the sources added.

Market reaction

At the press time, EUR/USD wavers around 1.0800 on these above headlines, adding 0.10% on the day.

Australian Dollar (AUD) is expected to continue to strengthen vs US Dollar (USD), but it does seem to have enough momentum to reach 0.6410 for now. In the longer run, rapid increase in momentum suggests AUD could recover, potentially reaching 0.6410, UOB Group's FX analysts Quek Ser Leang and Peter Chia note. 

Enough momentum to reach 0.6410 for now

24-HOUR VIEW: "While we expected AUD to 'strengthen further' yesterday, we were of the view that 'any advance is likely part of a higher range of 0.6230/0.6285.' However, AUD broke decisively above 0.6285 and soared to 0.6343. Today, we continue to expect AUD strength. However, at this stage, it does not seem to have enough momentum to reach 0.6410. There is another resistance at 0.6370. On the downside, any pullback is likely to hold above 0.6270 (minor support is at 0.6300)." 

1-3 WEEKS VIEW: "After holding a negative view since late last week, we cautioned yesterday (05 Mar, spot at 0.6260) that 'momentum is slowing, and the likelihood of further declines is diminishing.' We stated, 'a breach of 0.6285 would indicate stabilisation.' We did not expect AUD to soar to 0.6343. The strong advance has resulted in a rapid increase in momentum. From here, we expect AUD to recover, potentially reaching 0.6410. To sustain the buildup in momentum, AUD must remain above 0.6235."

Yesterday, the FX market reacted to unprecedented moves in European rates. German yields spiked 30bp after the German fiscal announcement, the largest intraday move in 25 years. The implications for the dollar are not secondary. Even more surprising than the huge bund move was the total disconnect with US yields. Treasuries barely budged yesterday: another signal that markets are sinking their teeth on the repricing of US exceptionalism relative to Europe, ING's FX analyst Francesco Pesole notes.

DXY to stabilize in 104-105

"The US has granted a USMCA exemption to autos, which have heavy cross-border supply chains with Canada and Mexico and has been identified as potentially the most vulnerable sector to the fresh 25% duties. Meanwhile, Canada’s retaliation continues to appear more aggressive than Mexico’s, reinforcing our perception that Mexico is closer to a deal to potentially pause tariffs than Canada, which could lead to MXN outperforming CAD."

"In this sense, US data is more relevant than protectionism news this week. The whisper number for tomorrow’s US payrolls is now close to 120k (consensus: 160k) following a soft ADP print (77k vs 140k consensus) yesterday. The ISM services actually bucked the trend of recent data disappointment yesterday, coming in stronger than expected at 53.5, with prices paid accelerating. But any positives for the dollar were likely offset by more negative expectations ahead of payrolls."

"Today, the US calendar is lighter, aside from the release of January’s trade deficit, which is expected to have widened further and could trigger a more hawkish response on tariffs by the US administration. We would resist the temptation to call for an immediate rebound in the dollar just yet given the upcoming payrolls risk event. But US longs have largely been obliterated so far in March, and our view is that the dollar move is overblown. The reality of prolonged US tariffs and their impact on Europe argues for a USD rebound in the coming weeks, but for now a stabilisation in 104-105 in DXY may be the best dollar bull can hope for."

• Gold orbits around $2,900 as tariff tensions start to ease a bit. 
• The delay of automaker US tariffs on Mexico and Canada has led to a shift in Treasury yields.
• Traders are betting on multiple Fed rate cuts while US economic data is deteriorating.

Gold’s price (XAU/USD) is consolidating for a second day in a row around $2,900 on Thursday while keeping an eye on the all-time high at $2,956. Although there might be some easing for Canada and Mexico with a delay on car import tariffs into the United States (US), the reciprocal tariffs are still due to kick in as of April. This still supports safe haven inflow which is beneficial for the precious metal. 

Meanwhile, the focus shifts this Thursday to Europe, where the European Central Bank (ECB) will deliver its interest rate decision, with market expectations for a 25 basis points (bps) rate cut. A high-stakes European meeting is set to take place as well, where EU leaders will decide on the defense spending package and the possibility of providing more aid to Ukraine. 

Another seismic shift can be seen this week in bonds, where traders are now pricing in multiple interest rate cuts by the Federal Reserve (Fed) for 2025. The reason is the deteriorating US economic data, which looks to confirm the idea that exceptionalism has come to an end and sparks recession fears. 

Daily digest market movers: A delay is not indefinite

• The delay of automaker US tariffs on Mexico and Canada has led to a shift in Treasury yields, with investors expecting the Fed to cut interest rates multiple times this year, which could benefit Gold, Bloomberg reports. 
• Another precious metal, Copper,  jumped by more than 5% in Wednesday’s New York session. Prices are leaping further above other global benchmarks, as US President Donald Trump suggested imports of this commodity could be subject to a 25% tariff, Reuters reports.
• Mali has stopped issuing permits for small-scale Gold mining to foreign nationals after several deadly incidents. Interim President Assimi Goita has “instructed the government to strengthen measures to avoid human and environmental tragedies,” Minister of Security and Civil Protection General Daoud Aly Mohamedinne said on Wednesday, Bloomberg reports. 

Technical Analysis: Tailwind to be priced in

More bets on interest rate cuts by the Federal Reserve are another tailwind for Gold while markets undergo seismic shifts. When all analysts and economists were predicting just one or no rate cut from the Fed, in just three trading days that narrative has now shifted to possibly more than at least two rate cuts this year. 

While Gold trades near $2,905 at the time of writing, the daily Pivot Point at $2,914 and the daily R1 resistance at $2,934 are the key levels to watch for on Thursday. In case Gold sees more inflows, the daily R2 resistance at $2,950 will possibly be the final cap ahead of the all-time high of $2,956 reached on February 24. 

On the downside, the S1 support at $2,899 acts as a double support with the $2,900 psychological big figure. That will be the vital support for this Thursday. If Bullion bulls want to avoid another leg lower, that level must hold. Further down, the daily S2 support at $2,879 should be able to catch any additional downside pressure.

XAU/USD: Daily Chart

USD/JPY traded rangebound. Pair was last at 147.88, OCBC's FX analysts Frances Cheung and Christopher Wong note. 

Bias remains to sell rallies

"Daily momentum is flat while RSI rose. Cautious of short term rebound risks but retain bias remains to sell rallies. Resistance at 150.50, 151.50 (38.2% fibo retracement of Sep low to Jan high). Support at 148.80 before 147 (61.8% fibo). Trump tariff threats (on reciprocal tariffs) and dividend seasonality trends may pose intermittent upside pressure for USD/JPY." 

"Sell rallies preferred, as growing Fed-BoJ policy divergence should continue to anchor the broad direction of travel of USDJPY to the downside."

Pound Sterling (GBP) appears to have enough momentum to rise further vs US Dollar (USD); the levels to monitor are 1.2930 and 1.2975. In the longer run, outlook for GBP remains positive; the next technical target is at 1.2975, UOB Group's FX analysts Quek Ser Leang and Peter Chia note. 

Outlook for GBP remains positive

24-HOUR VIEW: "Yesterday, when GBP was at 1.2790, we highlighted that 'while the rapid rise appears set to continue, the next major resistance at 1.2900 is likely out of reach today.' Our view of GBP strength was incorrect, even though it managed to touch 1.2901 in the late NY session. Although deeply overbought, GBP appears to have enough momentum to rise further. The levels to monitor are 1.2930 and 1.2975. Conversely, on the downside, the levels to watch are 1.2840 and 1.2800." 

1-3 WEEKS VIEW: "Yesterday (06 Mar, spot at 1.2790), we pointed out, 'risk for GBP remains clearly on the upside, and the level to monitor is 1.2900.' We also pointed out that 'the ‘strong support’ at 1.2680 will likely remain intact for the next couple of days.' GBP subsequent rose to a high of 1.2901. We continue to hold a positive outlook in GBP. The next technical target is at 1.2975. On the downside, the ‘strong support’ level has moved higher to 1.2760."

Silver prices (XAG/USD) fell on Thursday, according to FXStreet data. Silver trades at $32.48 per troy ounce, down 0.65% from the $32.69 it cost on Wednesday.

Silver prices have increased by 12.41% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 89.38 on Thursday, broadly unchanged from 89.39 on Wednesday.

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US Dollar (USD) fell sharply. The narrative of US exceptionalism continues to fade as markets are increasingly focused on how Trump policies are hurting the US economy. Dollar Index (DXY) was last seen at 104.10 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note. 

Pace of decline is likely to moderate

"Overnight, Trump administration confirmed a 1-month delay for automakers from newly imposed tariffs on Mexico and Canada. USD moves so far have also somewhat mirrored the USD decline seen in 2017 post Trump 1.0."

"DXY broke below 200 DMA. Daily momentum turned bearish but RSI fell to near oversold conditions. Pace of decline is likely to moderate while we also do not rule out intra-day bounce. Resistance at 105/105.20 (50% fibo, 200 DMA), 106.35 (38.2% fibo retracement of Oct low to Jan high). Support at 104 (61.8% fibo), 103.40 and 102.50 (76.4% fibo)." 

"On US data, today brings initial jobless claims before payrolls report tomorrow. Softer US data may continue to add to USD woes. Later on Fri night, Powell will give a speech at the Chicago Booth’s US monetary policy forum. There will also be a Q&A session. It may be worth keeping a look out on any touchpoints he may have on US economic outlook or Fed policy, given the recent narrative on US facing stagflation risks."

Euro (EUR) rise above 1.0825 vs US Dollar (USD), but it remains to be seen if it can maintain a foothold above this level. EUR could reach 1.0825; it is uncertain for now if it can reach the next technical target at 1.0945 during this phase of rally, UOB Group's FX analysts Quek Ser Leang and Peter Chia note. 

Above 1.0825, EUR can also target 1.0945 

24-HOUR VIEW: "The next key resistance at 1.0945 is unlikely to come into view. We highlighted yesterday, that 'strong upward momentum shows no signs of slowing.' We added, 'it is unclear if there is enough momentum for EUR to break above the next resistance level at 1.0665 today.' The manner with which EUR subsequently took off and streaked to a high of 1.0796 was unexpected. While EUR could rise above 1.0825 today, it remains to be seen if it can maintain a foothold above this level. The next key resistance lies significantly higher at 1.0945, which is unlikely to come into view today. On the downside, support levels at 1.0745 and 1.0700." 

1-3 WEEKS VIEW: "When EUR was at 1.0625 yesterday, 05 Mar, we highlighted that 'the impulsive rally suggests EUR is likely to break 1.0665, and the next technical target lies at 1.0730.' Little did we know, EUR would skyrocket and surge above both levels so quickly, as it reached a high of 1.0796. Note that EUR gained an astounding 4.00% over the past three days, the biggest 3-day rise in almost a decade. From here, the next two key technical targets to monitor are 1.0825 and 1.0945. The former appears to be within reach, but it is uncertain for now if EUR can reach 1.0945 during this phase of rally. The ‘strong support’ level has moved higher to 1.0640 from 1.0480 yesterday."

EUR bulls continued to catch markets offguard, rising by over 400pips in 4 days this week. A rare display of responsiveness and concerted willingness of European leaders agreeing to spend on defence is giving EUR a fresh boost. EU is proposing EUR150bn in loans to boost defence spending and is also planning to activate a mechanism that allow countries to use their national budgets to spend an additional EUR650bn on defence over 4 years without triggering budgetary penalties. EUR was last trading at 1.08 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note. 

Pace of rise may moderate

"Chancellor-inwaiting Friedrich Merz also indicated that Germany would amend the constitution to exempt defence and security outlays from limits on fiscal spending to do 'whatever it takes' to defend the country. He added that the main center parties had also agreed to launch a €500 billion ($528 billion) infrastructure fund to invest in priorities such as transportation, energy grids and housing. This is about 11- 12% of German GDP and is planned to be disbursed over 10 years. Alongside the planned defence spending bills, there can be potential upside risk to German growth. "

"Today, EU leaders are meeting for a special summit to discuss continued support for Ukraine and European defence. We keep a look out if EU leaders continue to show political determination. Near term, the looming risk of US tariffs on Europe and upcoming ECB meeting (Thu) are some of the 2-way risks to watch for the EUR. Markets are likely to scrutinise the ECB meeting for signs of any slowdown in ECB easing cycle. Any hint of that should add to EUR recovery given that markets are still pricing about 70bps of cuts this year." 

"On tariffs, it is still uncertain when the 25% tariff on European auto and other products will be effective. Confirmation of the tariffs may see EUR dip but the pullback may not translate into a larger decline. Instead, it could be seen as a chance to buy dips, considering the emergence of new positive factors: a potential Ukraine peace deal, expectations of defence spending, a chance that ECB easing may slow, Germans attempting to form a coalition government fast and likely to increase spending/ support growth, etc. Daily momentum is bullish but RSI enters into overbought conditions. Pace of rise may moderate. We look for dips to buy into. Support at 1.07, 1.0575. Resistance at 1.0820 (61.8% fibo), 1.0970 (76.4% fibo)."

• WTI price declines as bearish market sentiment persisted amid concerns over OPEC+’s decision to raise output.
• The OPEC+’s production increase of 138,000 barrels per day marks its first rise since 2022.
• The latest EIA report showed US crude Oil stockpiles grew by 3.614 million barrels for the week ending February 28.

West Texas Intermediate (WTI) crude Oil price extends its losing streak for the fifth successive day, trading around $66.00 per barrel during European trading hours on Thursday. However, crude Oil found some support following comments from a US official suggesting that President Donald Trump may consider removing the 10% tariff on Canadian energy imports that comply with trade agreements.

The Oil price faces challenges as market sentiment remained bearish amid concerns over OPEC+’s decision to increase output. The alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC), Russia, and other partners, confirmed its plan to boost production in April. This move follows renewed pressure from President Trump on OPEC and Saudi Arabia to lower Oil prices. According to Reuters calculations, the production increase amounts to 138,000 barrels per day, marking the first rise from OPEC+ since 2022.

Market strategist Yeap Jun Rong of IG told Reuters, "The sharp dip in Oil prices below the key $70.00 level may prompt a slight breather in today's session, as technical conditions attempt to stabilize from oversold territory." However, he noted that "recovery momentum remains fragile, with unfavorable supply-demand dynamics weighing on bullish sentiment."

Meanwhile, data from the US Energy Information Administration (EIA) showed that crude inventories rose more than expected, reinforcing concerns about oversupply. The weekly report showed that US crude Oil stockpiles rose by 3.614 million barrels for the week ending February 28, reversing the previous week’s decline of 2.332 million barrels. This buildup exceeded market expectations, which had projected a decrease of 290,000 barrels.

Germany’s new government announcement that it will loosen fiscal rules and deploy EUR 900bn in fiscal spending has generated a seismic shift in European markets. Yesterday’s 40bp selloff in bunds was largely matched by other EU sovereigns on the view that deficits will increase, inflation may rise, and growth can improve. Those moves should not be reversed. Beyond that, the risks are probably skewed to the 3% handle in 10-year bunds, ING's FX analyst Francesco Pesole notes.

An extension to 1.10 in the rally is improbable

"EUR/USD is trading at 1.08 and following a 3%+ rally in the past two sessions. Interestingly, that level is embedding a relatively contained amount of risk premium (i.e. short-term valuation): around 1.2% in our calculations. That is because the key rates-FX transmission channel – the 2-year swap rate differential – has tightened significantly too. That means markets are repricing the ECB curve higher while repricing the Fed curve lower – a dramatic and highly unusual divergence. The EUR:USD two-year swap rate gap is at -145bp (it was -175bp a week ago) and – along with the move in equities and other parts of the yield curve – now returns a short-term fair value for EUR/USD at 1.067. With these considerations in mind, we are reluctant to call for the peak in EUR/USD just yet."

"The ECB’s widely-expected decision to cut rates by 25bp today should not be influenced by recent market swings. The communication in the statement and during the press conference will however take both fiscal and market developments into greater account. We thought the main question today would be whether the ECB lifts the reference to monetary policy being “restrictive” after taking rates to 2.5% today. We originally thought it wouldn’t, but the notion that fiscal spending is finally coming through could be giving Governing Council hawks some stronger backing."

"An extension to 1.10 in the rally would be inconsistent with the prospect of US tariffs on the EU and rate differentials, and our model still shows at least a 1-1.5% correction is in store for EUR/USD in the short term. For today and tomorrow, volatility and major risk events argue against actively picking the peak in EUR/USD."

People's Bank of China (PBOC) Governor Pan Gongsheng said on Thursday that the central bank “will cut interest rates and Reserve Requirement Ratio (RRR) at an appropriate time.”

Additional quotes

Market reaction

The Chinese-proxy, the Australian Dollar (AUD) has erased gains against the US Dollar (USD), leaving AUD/USD modestly flat near 0.6335, as of writing.

West Texas Intermediate (WTI) Oil price advances on Thursday, early in the European session. WTI trades at $66.41 per barrel, up from Wednesday’s close at $66.22. Brent Oil Exchange Rate (Brent crude) is also up, advancing from the $69.33 price posted on Wednesday, and trading at $69.50.

Disclaimer: West Texas Intermediate (WTI) and Brent oil prices mentioned above are based on FXStreet data feed for Contracts for Differences (CFDs).

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• The US Dollar Index keeps slipping as risk sentiment improves, thanks to President Trump’s latest tariff move.
• The White House just gave automakers in Mexico and Canada a one-month pass on the new 25% import tariffs. 
• US job data disappointed—February’s ADP Employment Change showed just 77K new jobs, way below the 140K forecast.

The US Dollar Index (DXY), which measures the US Dollar (USD) against six major currencies, is trading around 104.00 during the European hours on Thursday. The DXY extends its losing streak for a fourth consecutive day amid improved risk sentiment, driven by another shift in US President Donald Trump’s tariff strategy.

On Wednesday, the White House announced a temporary one-month exemption for automakers in Mexico and Canada from the newly imposed 25% import tariffs. Additionally, Trump is considering excluding certain agricultural products from tariffs on both countries, according to a Bloomberg reporter on X.

President Trump also stated in a post on social media that he is working with House Republicans on a continuing resolution to fund the government through September, as reported by Reuters.

The Federal Reserve’s (Fed) March Beige Book carries added significance as concerns grow over the economic impact of Trump’s trade policies. Signs of strain are emerging within the US economy even before the full implementation of these measures.

The Greenback remains under pressure amid fears of slowing US economic momentum. The US ADP Employment Change for February reported just 77K new jobs, significantly missing the 140K forecast and falling well below January’s 186K figure. Moreover, the US ISM Manufacturing PMI came in at 50.3, slightly under the 50.5 forecast and down from January’s 50.9.

Traders are now focused on Friday’s US Nonfarm Payrolls (NFP) report, which is expected to show a modest rebound in job growth, with projections indicating an increase to 160K in February, up from January’s 143K.

• EUR/USD remains firm near 1.0800 ahead of the ECB’s interest rate decision at 13:15 GMT.
• The ECB is almost certain to cut its Deposit Facility rate by 25 bps to 2.5%.
• US President Trump provides one month of tariff relaxation on automobiles from Canada and Mexico.

EUR/USD demonstrates strength around 1.0800 in Thursday’s European session ahead of the European Central Bank’s (ECB) monetary policy decision, which will be announced at 13:15 GMT.

The ECB is widely anticipated to reduce its Deposit Facility Rate by 25 basis points (bps) for the fifth time in a row, pushing it lower to 2.5%. The Main Refinancing Operations Rate is also expected to be slashed by 25 bps to 2.65%. Therefore, investors will pay close attention to the monetary policy statement and ECB President Christine Lagarde’s press conference after the interest rate decision to get fresh cues on the monetary policy and the inflation outlook.

Lately, traders have pared bets supporting the ECB to cut interest rates two times by the summer as Germany’s likely next chancellor, Frederich Merz, and the Social Democratic Party (SDP) agreed to create a 500 billion Euro (EUR) infrastructure fund and stretch borrowing limit on Tuesday. Investors expect such reforms could escalate inflation and stimulate economic growth in the German economy, the locomotive of the Eurozone.

Market participants will focus on Christine Lagarde’s commentary on the consequences of potential tariffs from the United States (US). Experts believe that Trump’s tariffs could weigh on the shared continent’s economic outlook, which is already fractured due to weak demand from domestic and overseas markets.

Investors are uncertain over the degree of tariffs to be proposed by US President Donald Trump on products made in the Eurozone. Germany is a major exporter of cars to the US. The US charges a 2.5% levy on the import of German cars, while the Eurozone takes 10% duty. Till now, Trump has threatened to impose 25% levies on foreign automobiles and introduce reciprocal tariffs soon. Investors seek whether the US will impose 10% or 25% tariffs on German cars.

Daily digest market movers: EUR/USD gains as US Dollar weakens on trade jitters

• Sheer strength in the EUR/USD pair is also driven by the significant US Dollar weakness (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extends its losing streak for the fourth trading day and slides to near 104.00, the lowest level seen in four months.
• Investors expect the trade war led by US President Trump won’t be as disruptive as they had previously anticipated, resulting in a decline in the US Dollar’s risk premium.
• On Wednesday, commentaries from the White House Press Secretary Karoline Leavitt indicated that Donald Trump is allowing a one-month exemption of 25% tariffs on automobiles coming from Mexico and Canada), which he imposed on Tuesday. Also, Trump is considering providing an exemption for some agricultural products. 
• After Trump’s relaxation on automobiles from Canada and Mexico, Meanwhile, soft US private employment data has also contributed to weakness in the US Dollar. The ADP reported on Wednesday that the US private sector added 77K fresh workers, lower than estimates of 140K and the former release of 186K. Soft labor demand in the US private sector is expected to prompt Fed dovish bets, which have already increased lately. According to the CME FedWatch tool, the probability of the Fed cutting interest rates in the June meeting has increased to 76% from 70% a week ago.
• For more clues on the current employment status, investors will focus on the US Nonfarm Payrolls (NFP) data for February, which will be published on Friday.

Technical Analysis: EUR/USD climbs to near 1.0800

EUR/USD surges to near 1.0800 after a decisive breakout above the December 6 high of 1.0630 on Wednesday. The long-term outlook of the major currency pair strengthens as it holds above the 200-day Exponential Moving Average (EMA), which trades around 1.0640.

The 14-day Relative Strength Index (RSI) jumps above 60.00, indicating a strong bullish momentum.

Looking down, the January 27 high of 1.0533 will act as the major support zone for the pair. Conversely, the November 6 high of 1.0937 will be the key barrier for the Euro bulls.

• The European Central Bank is on track to deliver another 25 bps interest rate cut on Thursday.
• The focus remains on the ECB's updated economic forecasts and President Christine Lagarde’s words.
• The EUR/USD pair braces for intense volatility on the ECB policy announcements.

The European Central Bank (ECB) will announce its March interest rate decision on Thursday at 13:15 GMT. The central bank is set for its sixth-rate reduction since June 2024. Updated staff economic projections will be published at this meeting. 

ECB President Christine Lagarde will hold a press confe    rence at 13:45 GMT. At this conference, she will deliver the prepared statement on monetary policy and take questions from the media.

The Euro (EUR) remains poised for a big reaction to the ECB announcements against the US Dollar (USD).

What to expect from the European Central Bank interest rate decision?

The ECB is on track to deliver another 25 basis points (bps) cut following its March policy meeting, reducing the benchmark rate on deposit facility from 2.75% to 2.5%.

The decision to cut the rate is undebatable, as the Euro area’s weak economic prospects remain a leading cause for concern for ECB policymakers. The old continent’s disinflation path remains intact, allowing the ECB some room to continue its easing trajectory.  

Data released by Eurostat on Monday showed that the Eurozone Harmonized Index of Consumer Prices (HICP) rose 2.4% year-over-year (YoY) in February after recording a 2.5% growth in January. The market forecast was for a 2.3% acceleration in the reported period. Meanwhile, the core HICP advanced 2.6% YoY in February, compared with a 2.7% increase in January, meeting the 2.6% expectations.

However, the Bank’s hints on its next move on interest rates will grab the eyeballs amid looming United States (US) President Donald Trump’s reciprocal tariffs on the European Union (EU), which could significantly impact the bloc’s inflation and economic outlooks. Trump threatened to impose 25% tariffs on imports from the EU last week, claiming that the economic and political bloc was formed “to screw” the US.

Therefore, the language in the policy statement and the updated economic forecasts will be closely scrutinized to gauge the timing and the scope of the ECB’s future rate cuts. According to the latest Reuters poll, “the ECB will take another 50 bps off the deposit rate next quarter and then hold steady through at least 2026.” “Markets have fully priced in an end-December rate of 2.00%,” the survey showed.

The markets continue pricing further rate cuts even as top policymakers shared conflicting messages. ECB board member and a vocal policy hawk Isabel Schnabel said in a Financial Times (FT) interview last month: “We are getting closer to the point where we may have to pause or halt our rate cuts.”

“I’m not saying that we’re there yet. But we have to start the discussion,” she added.

On the other hand, her colleague and the head of the Italian central bank, Fabio Panetta, noted: "The available indicators seem to suggest that the predominant risk remains inflation falling below 2% over the medium term.”

Meanwhile, the accounts of the January ECB meeting published on February 27 showed: “Members concurred that the disinflationary process was well on track. But there was some evidence suggesting a shift in the balance of risks to the upside since December."

The accounts added that some policymakers argued for "greater caution" regarding the size and pace of further rate cuts as policy rates were approaching the neutral level.

Previewing the ECB meeting, TD Securities analysts said: “With just five weeks since their last meeting, there's little to move the dial, and a 25bps cut is broadly expected. Projections should see minimal changes, and while language around ‘restrictive’ policy may be changed slightly, we doubt there's a full removal of that statement.”

“April/June will be the far more interesting meetings and highly dependent on tariffs,” the analysts added.

How could the ECB meeting impact EUR/USD?

The EUR/USD pair remains unstoppable in the run-up to the ECB event risk. The pair extends the recovery from two-week lows of 1.0360 as the Euro jumps on Germany’s proposed debt break reforms. Will the major sustain the recovery momentum on the ECB rate-call?

The ECB is expected to stick to its prudence on the policy outlook, reiterating that it is not on any pre-determined path on interest rates. However, if the Bank makes any material change to its “restrictive” policy language, markets could perceive it as a hawkish shift and add to the renewed EUR/USD upside. The pair is set to extend the recovery toward 1.0700 in such a scenario.

However, the main currency pair could come under intense selling pressure if there is no change in the language or tone of the policy statement. The Euro could suffer if ECB President Lagarde explicitly endorses future rate cuts, expressing concerns over a weak economic outlook.

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for EUR/USD:

“The EUR/USD recovery remains unabated heading into the ECB showdown. However, The Relative Strength Index (RSI) sits within the overbought region on the daily chart, warranting caution for Euro buyers. If a correction unfolds, the immediate support of the 200-day Simple Moving Average (SMA) at 1.0723 will be tested. Acceptance under that level will put the 1.0600 round level at risk. The last line of defense for EUR/USD buyers is the 100-day SMA at 1.0507.”

“Should Euro buyers defy the bearish technical indicators, the door will likely open for a test of the 1.0900 level. Further up, the November 2024 high of 1.0937 will be on their radars.”

• GBP/JPY faces downward pressure amid growing hawkish expectations for the BoJ’s policy stance. 
• Japan’s 10-year government bond yield surpassed 1.5%, reaching its highest level in over 15 years. 
• The Pound Sterling may recover as Bank of England officials strike a cautious tone.

GBP/JPY holds losses after registering gains in the previous four successive days, trading around 191.60 during the early European hours on Thursday. The decline comes as the Japanese Yen (JPY) strengthens in response to a hawkish outlook from the Bank of Japan (BoJ) on its monetary policy.

Japan’s 10-year government bond yield surged past 1.5% on Thursday, marking its highest level in over 15 years. This rise was influenced by a broader rally in European bond yields, following Germany’s announcement of a €500 billion infrastructure fund and plans to reform borrowing rules. These measures are expected to bolster growth in Germany, driving investor sentiment.

Bank of Japan Deputy Governor Shinichi Uchida reaffirmed this week that the central bank would consider further interest rate hikes if economic conditions meet expectations. Uchida emphasized that Japan is at the initial stages of exiting its prolonged monetary easing policy, signaling a potential shift towards a more restrictive stance.

On Thursday, Japan’s Vice Finance Minister for International Affairs, Atsushi Mimura, addressed concerns over rising global protectionism, including tariff measures. Mimura stressed the need to find a balanced approach to mitigating the negative effects of globalization while preventing an outright slide into protectionist policies.

The GBP/JPY cross could regain its ground following cautious remarks from Bank of England (BoE) officials. BoE Governor Andrew Bailey, testifying before the Treasury Select Committee on Wednesday, stated, “We do expect a pick-up in inflation, but it will be nothing like a few years ago. I think it's less likely we will get second-round inflation effects due to a weakening economy.”

Meanwhile, BoE policymaker Megan Greene, also speaking before the Treasury Committee, emphasized a cautious and gradual approach to easing monetary restrictions. Greene noted, “It's likely inflation persistence will fade on its own accord,” while reiterating that monetary policy will likely need to remain restrictive.

BoE Chief Economist Huw Pill also addressed lawmakers in Parliament, stating, “We do need to remain vigilant to new shocks that might hurt the path back to 2% inflation. Evidence points against more rapid cuts in bank rates for me.”

Commenting on the 2025 Gross Domestic Product (GDP) target, the head of the National Development and Reform Commission (NDRC), China’s state planner, said on Thursday, I am “fully confident of achieving the growth target.”

Additional quotes

Market reaction

At the press time, AUD/USD is holds mild gains to trade near 0.6340.

• EUR/GBP climbs to around 0.8380 in Thursday’s early European session. 
• The ECB is widely expected to cut the interest rates, bringing the bank's benchmark deposit rate to 2.5% on Thursday. 
• BoE’s Ramsden said the central bank should keep a “careful and gradual” approach to monetary policy amid uncertainty. 

The EUR/GBP cross trades in positive territory for the fourth consecutive day around 0.8380 during the early European session on Thursday. The easing fear of trade tariff plans from US President Donald Trump provides some support to the Euro (EUR). The European Central Bank (ECB) interest rate decision will take center stage later on Thursday. 

The US announced the launch of tariffs on major trading partners, which are expected to cause a slowdown in global sectors, including automotive, but the duties might yet be pared back. Traders will closely monitor the developments surrounding further tariff plans. Any signs of escalating trade tensions could exert some selling pressure on the shared currency. 

The ECB is expected to cut interest rates at its March meeting on Thursday. Markets have priced in a quarter-point rate cut from the ECB on Thursday and another half-point in cuts by the end of the year. Analysts at Rabobank said the EUR’s upside was “in part due to expectations that room for further ECB rate cuts will be more confined,” with the reforms and higher spending bringing the “promise of an uplift in economic growth.”

The Bank of England (BoE) governor Andrew Bailey thinks a renewed bout of inflation is nothing to worry about. Meanwhile, BoE Deputy Governor Dave Ramsden said that the UK central bank should keep a “careful and gradual” approach to the monetary policy amid uncertainty over the labor market and global trade. The bets of a gradual monetary expansion approach are supported by elevated United Kingdom (UK) wage growth, which could keep inflationary pressures persistently higher.

FX option expiries for Mar 6 NY cut at 10:00 Eastern Time via DTCC can be found below.

EUR/USD: EUR amounts

• 1.0550 1.7b
• 1.0600 1.1b
• 1.0650 910m
• 1.0660 914m
• 1.0845 1b
• 1.0850 2b

USD/JPY: USD amounts                                 

• 148.00 786m
• 149.00 740m

USD/CHF: USD amounts     

• 0..8670 450m
• 0.8770 514m

AUD/USD: AUD amounts

• 0.6240 527m

USD/CAD: USD amounts       

• 1.4155 1.2b
• 1.4350 862m
• 1.4400 1.1b
• 1.4500 650m
• 1.4525 804m
• 1.4550 1.1b

• USD/CHF attracts buyers for the second straight day, though it lacks bullish conviction.
• A positive risk tone is seen undermining the safe-haven CHF and lending some support.
• Fed rate cut bets keep the USD bulls on the defensive and cap the upside for the major.

The USD/CHF pair builds on the previous day's modest bounce from the vicinity of mid-0.8800s, or the lowest since December 12, and gains some follow-through positive traction for the second straight day on Thursday. Spot prices climb back above the 0.8900 mark during the Asian session, though any meaningful appreciating move seems elusive amid the bearish sentiment surrounding the US Dollar (USD).

The USD Index (DXY), which tracks the Greenback against a basket of currencies, dives to a four-month low amid bets that the Federal Reserve (Fed) would cut interest rates multiple times this year. The expectations were further fueled by the disappointing release of the US ADP report on Wednesday, which showed that private-sector employers added only 77K jobs in February. This comes on top of worries that US President Donald Trump's trade tariffs might trigger a sharp slowdown in the US economy and continue to weigh on the buck.

That said, a goodish rebound in the US Treasury bond yields helps limit any further USD losses. Apart from this, a positive tone around the equity markets is seen undermining the safe-haven Swiss Franc (CHF) and lending some support to the USD/CHF pair. However, it will still be prudent to wait for strong follow-through buying before confirming that spot prices have formed a near-term bottom and positioning for further gains. Traders might also opt to wait on the sidelines ahead of the release of the US Nonfarm Payrolls (NFP) report on Friday.

Here is what you need to know on Thursday, March 6:

Following another volatile trading day, financial markets remain relatively quiet early Thursday as investors await the European Central Bank's (ECB) monetary policy announcements. Ahead of Friday's highly-anticipated February employment report, the US economic calendar will feature weekly Initial Jobless Claims and Unit Labor Costs data for the fourth quarter.

The US Dollar (USD) continued to weaken against its major rivals on Thursday despite the upbeat ISM Services PMI report. US President Donald Trump has decided to grant the US automative industry a one-month exemption from this week's stiff 25% tariffs imposed on Canada and Mexico. Additionally, Bloomberg reported that Trump is also considering exempting certain agricultural products from tariffs. These developments allowed risk flows to return and Wall Street's main indexes gained more than 1% on the day. Meanwhile, the USD Index fell over 1% and touched its weakest level since early November. In the European morning on Thursday, the index moves sideways above 104.00.

USD/CAD fell for the second consecutive day on Wednesday as the Canadian Dollar gathered strength and continued to push lower toward 1.4300 during the Asian trading hours on Thursday. Similarly, USD/MXN declined about 1% on Wednesday before settling near 20.4000. 

The ECB is widely anticipated to lower key rates by 25 basis points (bps) after the March policy meeting. Following the release of the policy statement and revised macroeconomic projections, ECB President Christine Lagarde will speak on the policy outlook and respond to questions in a press conference starting at 13:45 GMT. EUR/USD extended its impressive rally into a third consecutive day on Wednesday and continued to push higher early Thursday. The pair was last seen trading at its highest level in four months slightly above 1.0800. Eurostat will release January Retail Sales data during the European trading hours.

GBP/USD trades in a tight range at around 1.2900 after closing decisively higher on Wednesday. The pair is already up about 2.5% this week. 

The data from Australia showed early Thursday that Exports increased by 1.3% on a monthly basis in January, while Imports declined by 0.3%. After rising more than 1% on Wednesday, AUD/USD stays in a consolidation phase at around 0.6350.

Following Tuesday's recovery attempt, USD/JPY turned south and lost 0.6% on Wednesday. The pair holds steady above 149.00 in the European morning on Thursday. 

The improving risk mood made it difficult for XAU/USD to benefit from the selling pressure surrounding the USD on Wednesday. After closing the day virtually unchanged, Gold continues to move sideways near $2,920 early Thursday.

• UR/JPY gains momentum to near 161.15 in Thursday’s early European session.
• The concerns over tariff risks on Japan might contribute to the JPY.
• The ECB is anticipated to cut interest rates at the March meeting on Thursday.

The EUR/JPY cross extends the rally to around 161.15 during the early European session. The Japanese Yen (JPY) weakens against the Euro (EUR) amid the risk-on mood after US President Donald Trump will delay Canada and Mexico tariffs on autos for one month.

The White House announced a one-month delay for US automakers to comply with the US-Mexico-Canada Agreement from the tariffs imposed on Mexico and Canada. White House spokesperson Karoline Leavitt also said that Trump was “open” to extra tariff exemptions beyond the pause on auto levies. This, in turn, boost investors' appetite for riskier assets and drags the safe-haven currency like the Japanese Yen lower.

The growing concerns over tariff risks in Japan might contribute to the JPY’s downside. US President Donald Trump said that Japan and China are keeping their currencies down, signaling that he may impose fresh tariffs on imports if this does not stop.

However, the upside for the cross might be limited amid rising speculation of further hike from the Bank of Japan (BoJ). The BoJ is widely anticipated to continue hiking this year, supported by improving economic conditions, rising prices, and stronger wage growth, which align with the Japanese central bank’s policy normalization efforts.

On the Euro front, the European Central Bank (ECB) is expected to cut interest rates for the second time this year at its March meeting on Thursday. The markets are now fully priced in a quarter-point rate cut for the March meeting, taking the ECB’s key rate to 2.5% . A further reduction to 2% by the end of the year was also priced in.

• USD/CAD may test its initial support at the 50-day EMA of 1.4306. 
• The 14-day Relative Strength Index is slightly below 50, signaling a bearish outlook. 
• Immediate resistance is seen at the nine-day EMA of 1.4371.

USD/CAD continues its losing streak for the third consecutive day, trading around 1.4330 during Thursday’s Asian session. Technical analysis on the daily chart suggests the pair remains within a descending channel pattern, reinforcing a bearish outlook.

The 14-day Relative Strength Index (RSI) sits just below 50, indicating a bearish sentiment. A continued decline could further validate the downside bias. Additionally, the USD/CAD pair remains below the nine-day Exponential Moving Average (EMA), signaling weaker short-term price momentum.

The initial support is located at the 50-day EMA of 1.4306, closely aligned with the psychological level of 1.4300. A decisive break below this key support zone could accelerate bearish momentum, potentially driving the USD/CAD pair toward the three-month low of 1.4151, last seen on February 14.

On the upside, the USD/CAD pair faces immediate resistance at the nine-day EMA of 1.4371, followed by the upper boundary of the descending channel near 1.4530. A breakout above this channel could weaken the bearish outlook, potentially opening the door for a rally toward 1.4793—the highest level since March 2003, recorded on February 3.

USD/CAD: Daily Chart

• Silver drifts lower on Thursday and snaps a three-day winning streak to over a one-week high.
• The technical setup favors bulls and supports prospects for the emergence of some dip-buying. 
• A convincing break and acceptance below the 100-day EMA would negate the positive outlook.

Silver (XAG/USD) attracts some sellers during the Asian session on Thursday and erodes a part of its weekly gains registered over the past three days. The white metal currently trades above mid-$32.00s, down 0.35% for the day, though the near-term bias seems tilted in favor of bullish traders and supports prospects for a further appreciating move.

From a technical perspective, the XAG/USD showed some resilience below the 100-day Exponential Moving Average (EMA) last Friday. Moreover, oscillators on the daily chart have again started gaining positive traction on the daily chart and validate the near-term constructive outlook for the commodity. Hence, a subsequent strength towards the $33.00 mark, en route to the February monthly swing high, around the $33.40 area, looks like a distinct possibility. 

The next relevant hurdle is pegged near the $33.60-$33.70 region, above which the XAG/USD could aim to reclaim the $34.00 round figure and climb further towards the $34.50-$34.55 zone. The momentum could extend further towards the highest level since October 2012, closer to the $35.00 psychological mark touched in October 2024. 

On the flip side, the $32.30-$32.25 horizontal resistance breakpoint now seems to protect the immediate downside ahead of the $32.00 mark. This is followed by the $31.80 support, below which the XAG/USD could fall to the $31.25-$31.20 region before dropping to the 100-day EMA, currently pegged near the $31.10-$31.00 area. Some follow-through selling below last week's swing low, around the $30.80 area, would shift the bias in favor of bearish traders.

Silver daily chart

Gold prices fell in India on Thursday, according to data compiled by FXStreet.

The price for Gold stood at 8,165.30 Indian Rupees (INR) per gram, down compared with the INR 8,178.09 it cost on Wednesday.

The price for Gold decreased to INR 95,238.45 per tola from INR 95,387.63 per tola a day earlier.

Daily Digest Market Movers: Gold price bulls seem uncommitted amid positive risk tone

• US President Donald Trump's new 25% tariffs on most imports from Mexico and Canada took effect on Tuesday, along with the doubling of duties on Chinese goods to 20%. 

• Canada announced retaliatory tariffs against more than $100 billion worth of US products, while China slapped tariffs of up to 15% on various US agricultural exports.

• In his first address to the US Congress, Trump said that further tariffs, including "reciprocal tariffs" would follow on April 2, raising the risk of an all-out trade war.

• Investors remain worried that Trump's tariffs could slow the US economic growth and force the Federal Reserve to cut interest rates multiple times by the end of this year. 

• The bets were lifted by the Automatic Data Processing (ADP) report, which showed that US private sector employment grew by just 77K in February, vs 140K expected.

• Meanwhile, the economic activity in the US service sector continued to expand at an accelerating pace in February, though it did little to inspire the US Dollar bulls. 

• The USD Index (DXY) drops to its lowest level since December 2024 and further acts as a tailwind for the Gold price during the Asian session on Thursday. 

• The White House announced a one-month delay for US automakers to comply with the US–Mexico–Canada Agreement regarding the tariffs imposed on Mexico and Canada. 

• This, in turn, boosts investors' appetite for riskier assets, which is holding back traders from placing aggressive bullish bets around the safe-haven XAU/USD pair. 

• Investors now look to the usual Weekly Initial Jobless Claims data from the US for some impetus, though the focus remains on the US Nonfarm Payrolls on Friday. 

FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.

(An automation tool was used in creating this post.)

• EUR/USD remains steady as investors await the European Central Bank's interest rate decision on Thursday.
• The ECB is anticipated to cut rates by another 25 basis points, lowering the Main Refinancing Operations Rate to 2.65%.
• The US Dollar struggles after disappointing US private payroll data heightened concerns over slowing US economic growth.

EUR/USD remains steady after registering gains for the last three consecutive sessions, hovering around 1.0790 during Thursday’s Asian trading hours. However, the Euro may face headwinds as the European Central Bank (ECB) is widely expected to implement another 25 basis point rate cut later in the day. This move would bring the Main Refinancing Operations Rate down to 2.65% and lower the Deposit Facility Rate to 2.5%.

In Germany, the CDU/CSU and SPD, following their election victory, have agreed to ease the country’s strict borrowing regulations. The decision aims to support defense spending above 1% of GDP and includes plans to establish a €500 billion off-budget fund to finance infrastructure projects over the next ten years.

The EUR/USD pair benefits from improved risk sentiment, as investors assess the likelihood of tariff relief for Canada and Mexico. On Wednesday, the White House announced that President Trump would temporarily exempt automakers in these countries from newly imposed 25% tariffs for one month. Additionally, Bloomberg reports suggest that he may consider excluding certain agricultural products from these tariffs.

Despite the EUR/USD’s current strength, geopolitical risks remain a limiting factor. Late Wednesday, a Chinese foreign ministry spokesperson asserted that China is ready to engage in "any type" of war in response to Trump’s escalating trade tariffs, according to BBC.

Meanwhile, the Federal Reserve’s (Fed) March Beige Book carries heightened significance amid growing concerns about the economic repercussions of Trump’s trade policies. Even before the full enforcement of these measures, signs of strain within the US economy are beginning to surface.

• Gold price holds steady near a one-week high, lacks bullish conviction.
• Trade war fears, Fed rate cut bets, and a bearish USD support the XAU/USD pair.
• A positive risk tone caps the commodity ahead of the US NFP report on Friday.

Gold price (XAU/USD) trades with a positive bias during the Asian session on Thursday and remains close to a one-week high touched on the previous day, though it lacks follow-through buying. Investors remain concerned about US President Donald Trump's tariff measures, which continue to act as a tailwind for the safe-haven bullion. Furthermore, the possibility of an earlier-than-expected interest rate cut by the Federal Reserve (Fed) and the bearish sentiment surrounding the US Dollar (USD) turn out to be other factors lending support to the non-yielding yellow metal.

However, a generally positive tone around the equity markets keeps a lid on any further gains for the Gold price. Traders also seem reluctant and opt to wait for the release of the closely-watched US monthly employment details – popularly known as the Nonfarm Payrolls (NFP) report – on Friday before placing fresh directional bets. Nevertheless, the fundamental backdrop and the recent price action suggest that the path of least resistance for the XAU/USD pair remains to the upside. Hence, any corrective slide might still be seen as a buying opportunity and remain limited. 

Daily Digest Market Movers: Gold price bulls seem uncommitted amid positive risk tone

• US President Donald Trump's new 25% tariffs on most imports from Mexico and Canada took effect on Tuesday, along with the doubling of duties on Chinese goods to 20%. 
• Canada announced retaliatory tariffs against more than $100 billion worth of US products, while China slapped tariffs of up to 15% on various US agricultural exports.
• In his first address to the US Congress, Trump said that further tariffs, including "reciprocal tariffs" would follow on April 2, raising the risk of an all-out trade war.
• Investors remain worried that Trump's tariffs could slow the US economic growth and force the Federal Reserve to cut interest rates multiple times by the end of this year. 
• The bets were lifted by the Automatic Data Processing (ADP) report, which showed that US private sector employment grew by just 77K in February, vs 140K expected.
• Meanwhile, the economic activity in the US service sector continued to expand at an accelerating pace in February, though it did little to inspire the US Dollar bulls. 
• The USD Index (DXY) drops to its lowest level since December 2024 and further acts as a tailwind for the Gold price during the Asian session on Thursday. 
• The White House announced a one-month delay for US automakers to comply with the US–Mexico–Canada Agreement regarding the tariffs imposed on Mexico and Canada. 
• This, in turn, boosts investors' appetite for riskier assets, which is holding back traders from placing aggressive bullish bets around the safe-haven XAU/USD pair. 
• Investors now look to the usual Weekly Initial Jobless Claims data from the US for some impetus, though the focus remains on the US Nonfarm Payrolls on Friday. 

Gold price needs to move beyond the $2,934 resistance for bulls to retain short-term control

From a technical perspective, momentum beyond the $2,934 immediate hurdle has the potential to lift the Gold price back towards the all-time peak, around the $2,956 area touched in February. Some follow-through buying would be seen as a fresh trigger for bullish traders and pave the way for an extension of a multi-month-old uptrend witnessed amid positive oscillators on the daily chart. 

Meanwhile, the lack of follow-through buying warrants some caution before positioning for any further gains. That said, any corrective slide might still be seen as a buying opportunity near the $2,900 mark and remain limited. Some follow-through selling, however, could pave the way for deeper losses towards the $2,884-2,883 intermediate support en route to the $2,860-2,858 horizontal support.

• GBP/USD may extend its gains as improved risk sentiment could support the pair.
• The US Dollar weakened after disappointing US private payroll data heightened concerns over slowing US economic growth.
• BoE Governor Bailey called on the US to resolve its global economic concerns through dialogue rather than imposing import tariffs.

GBP/USD edges lower after registering gains for the last three consecutive days, trading around 1.2890 during the Asian hours on Thursday. The US Dollar remains under pressure following weaker-than-expected US private payroll data, raising concerns about slowing economic momentum in the United States (US). Additionally, improved risk sentiment puts downward pressure on the Greenback, driven by another shift in US President Donald Trump’s tariff strategy.

The ADP Employment Change report for February showed just 77K new jobs, significantly below the 140K forecast and well under March’s 186K reading. Market participants are now focused on Friday’s US Nonfarm Payrolls (NFP) report, which is expected to indicate a moderate recovery in job growth. Forecasts suggest net job additions will rise to 160K in February, up from January’s 143K.

On Wednesday, the White House announced that Trump is temporarily exempting automakers from newly imposed 25% tariffs on Mexico and Canada for one month. Additionally, reports from Bloomberg suggest he is also considering excluding certain agricultural products from tariffs on these countries.

In the United Kingdom (UK), Bank of England (BoE) Governor Andrew Bailey urged the United States on Wednesday to address its concerns about the global economy through dialogue rather than resorting to import tariffs, which were imposed this week by US President Donald Trump, according to Reuters.

Meanwhile, while testifying before the Treasury Committee in parliament, BoE policymaker Megan Greene emphasized the importance of a cautious and gradual approach to easing monetary restrictions. Greene stated, "It's likely inflation persistence will fade on its own accord," while reiterating that monetary policy will likely need to remain restrictive.

• The Indian Rupee loses ground during Thursday’s Asian session. 
• The weaker US Dollar and likely RBI intervention support the INR. 
• Investors await the US Initial Jobless Claims and Fedspeak later on Thursday. 

The Indian Rupee (INR) weakens on Thursday, snapping the three-day winning streak. Concerns on the US economy weigh on the US Dollar (USD) and provide some support to the local currency. Additionally, the likely intervention by the Reserve Bank of India (RBI) could help limit the INR’s losses. 

On the other hand, the expectation that the RBI will cut its interest rates further  is likely to exert downward pressure on the INR. India’s capital flows have remained negative for the fifth consecutive month. Persistent outflows by foreign institutional investors might contribute to the Indian Rupee's downside. 

Investors will keep an eye on the US Initial Jobless Claims, which is due later on Thursday. The US Federal Reserve (Fed) officials are scheduled to speak on the same day, including Patrick Harker, Thomas Barkin and Christopher Waller. On Friday, the US February Nonfarm Payrolls (NFP) will be closely watched.  

Indian Rupee softens amid sustained foreign institutional investors fund outflows 

• RBI said on Wednesday it will infuse $21 billion in Rupee liquidity into the banking system in a bid to ease lending conditions and boost economic growth.
• India’s HSBC Composite PMI eased to 58.8 in February vs. 60.6 prior. Meanwhile, the Services PMI declined to 59 from 61.1 in the previous reading, beating the estimation of 57.3.
• "Job creation and charge inflation remained strong during February. Looking ahead, business sentiment remains broadly positive but did slightly slip last month to its lowest level since August 2024,” said Pranjul Bhandari, chief India economist at HSBC.
• Trump is considering exempting certain agricultural products from tariffs imposed on Canada and Mexico, a Bloomberg reporter said on X late Wednesday.
• The White House said on Wednesday that Trump is exempting automakers from newly imposed tariffs on Mexico and Canada for one month. 
• Private sector employment in the US grew by 77K in February, compared to the previous reading of 186K (revised from 183K), according to the Automatic Data Processing (ADP) on Wednesday. This figure came in weaker than initial estimates of 140K. 

USD/INR‘s longer-term bullishness to be tested by bearish closing marubozu in the shorter term

The Indian Rupee trades softer on the day. The positive view of the USD/INR pair remains in play, with the price holding above the key 100-day Exponential Moving Average (EMA) on the daily chart. Nonetheless, further consolidation cannot be ruled out as the 14-day Relative Strength Index (RSI) hovers around the midline near 50.0, suggesting neutral momentum in the near term. 

The immediate resistance level for USD/INR emerges at 87.53, the high of February 28. Any follow-through buying above this level could set their sights on an all-time high near 88.00, en route to 88.50. 

On the flip side, the first downside target to watch is 86.48, the low of February 21. Extended losses could see a drop to 86.14, the low of January 27, followed by 85.60, the low of January 6. 

• NZD/USD extends its winning streak due to improved risk sentiment.
• White House announced that automakers will be temporarily exempt from newly imposed tariffs on Mexico and Canada for one month.
• China’s spokesperson stated that China is prepared to fight "any type" of war in response to escalating trade tariffs.

NZD/USD continues its upward momentum for the fourth consecutive session, trading around 0.5730 during Asian hours on Thursday. The pair benefits from a subdued US Dollar (USD) amid improved risk sentiment, driven by another shift in US President Donald Trump’s tariff strategy.

On Wednesday, the White House announced that Trump is temporarily exempting automakers from newly imposed tariffs on Mexico and Canada for one month. Additionally, reports from Bloomberg suggest he is also considering excluding certain agricultural products from tariffs on these countries.

The US Dollar Index (DXY), which measures the USD against six major currencies, is hovering around 104.30 at the time of writing. The Greenback remains under pressure following weaker-than-expected US private payroll data, raising concerns about slowing economic momentum in the United States (US).

The ADP Employment Change report for February showed just 77K new jobs, significantly below the 140K forecast and well under March’s 186K reading. Market participants are now focused on Friday’s US Nonfarm Payrolls (NFP) report, which is expected to indicate a moderate recovery in job growth. Forecasts suggest net job additions will rise to 160K in February, up from January’s 143K.

However, further upside for NZD/USD could be limited by lingering geopolitical concerns. A Chinese foreign ministry spokesperson stated late Wednesday that China is prepared to fight "any type" of war in response to Trump’s escalating trade tariffs, according to the BBC. Given China’s status as New Zealand’s largest trading partner, such tensions could weigh on the New Zealand Dollar (NZD).

Traders are also closely monitoring domestic economic developments following the unexpected resignation of Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr, who stepped down with three years remaining in his term without citing a reason. Orr’s departure leaves the central bank without a permanent leader amid the country’s worst economic downturn in three decades.

• The Japanese Yen is undermined by a combination of factors, though it lacks bearish conviction. 
• A positive risk tone, tariff jitters, and rebounding US bond yields exert upward pressure on USD/JPY.
• BoJ rate hike bets and the narrowing US-Japan rate differential should continue to underpin the JPY. 

The Japanese Yen (JPY) drifted lower during the Asian session on Thursday, though it remains close to a multi-month top touched against its American counterpart earlier this week. Concerns that US President Donald Trump could impose fresh tariffs on Japan, along with a goodish rebound in the US Treasury bond yields and generally positive risk tone, undermine the safe-haven JPY. However, the growing acceptance that the Bank of Japan (BoJ) will hike interest rates further might hold back the JPY bears from placing aggressive bets. 

Meanwhile, hawkish BoJ expectations continue to push the Japanese government bond (JGB) yields higher. In contrast, the US Treasury bond yields remain close to the lowest levels of the year amid bets that Trump's trade tariffs could trigger a sharp slowdown in US economic growth and force the Federal Reserve (Fed) to cut interest rates multiple times in 2025. The resultant narrowing of the US-Japan yield differential should further contribute to limiting any further JPY depreciation and cap the USD/JPY pair amid a bearish US Dollar (USD). 

Japanese Yen bulls retain control amid rising bets for more rate hikes by BoJ

• US President Donald Trump alleged that Japan and China are guiding their currencies lower, and hinted that he could impose fresh tariffs on imports if this is not halted. 
• The White House announced a one-month delay for US automakers to comply with the US–Mexico– Canada Agreement from the tariffs imposed on Mexico and Canada. 
• This helps ease fears of a trade war and boosts investors' appetite for riskier assets, which, in turn, undermines the safe-haven Japanese Yen during the Asian session. 
• Investors continue to bet on additional rate hikes by the Bank of Japan, pushing the yield on the 10-year Japanese government bond to its highest level since June 2009.
• BoJ Deputy Governor Shinichi Uchida said on Wednesday that the central bank will adjust its policy further if the outlook for economic activity and prices is realized.
• The US Treasury bond yields have been falling for six consecutive weeks amid concerns that Trump's trade barriers could slow economic growth in the long run.
• Moreover, Automatic Data Processing (ADP) reported that private sector employment in the US grew by just 77K in February, falling short of the 140K expected.
• This comes on top of a deterioration in US consumer confidence to a 15-month low and lifted bets that the Federal Reserve will restart cutting interest rates in June.
• The US Dollar bulls seem rather unimpressed by data showing that the economic activity in the US service sector continued to expand at an accelerating pace in February. 
• The DXY prolongs its weekly downtrend for the fourth successive day and drops to the lowest level since November 6, which, in turn, should cap the USD/JPY pair. 
• Traders now look to the usual Weekly Initial Jobless Claims data from the US for some impetus, though the focus remains on the US Nonfarm Payrolls on Friday. 

USD/JPY seems vulnerable to retesting multi-month low, around the 148.00 mark

From a technical perspective, the USD/JPY pair has been oscillating in a familiar range over the past two weeks or so. Against the backdrop of the recent sharp fall from the vicinity of the 159.00 mark, or the year-to-date peak touched in January, this might still be categorized as a bearish consolidation phase. Moreover, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone. This, in turn, suggests that the path of least resistance for spot prices remains to the downside and supports prospects for deeper losses. 

Hence, a slide back below the 148.40 intermediate support, en route to the 148.00 neighborhood, or a multi-month low touched on Tuesday, looks like a distinct possibility. Some follow-through selling will be seen as a fresh trigger for bearish traders and make the USD/JPY pair vulnerable to accelerate the downfall towards the 147.35 region en route to the 147.00 round figure.

On the flip side, the 149.45-149.50 zone now seems to act as an immediate hurdle ahead of the 149.75 area and the 150.00 psychological mark. Sustained strength beyond the latter might trigger a short-covering rally and lift the USD/JPY pair to the next relevant hurdle near the 150.55-150.60 region. Any further move, however, could be seen as a selling opportunity near the 151.00 round figure and remain capped near the weekly high, around the 151.30 area.

• WTI price remains under selling pressure around $66.45 in Thursday’s early Asian session.
• Crude oil stockpiles in the US rose by 3.614 million barrels last week, according to the EIA.
• Fear that Trump’s trade war will slow economic activity and cut crude demand undermines the WTI price. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $66.45 during the early Asian session on Thursday. The WTI price tumbles to its lowest since December 2021 as  US crude oil stockpiles the US rose far more than expected. 

Crude Oil inventories climbed last week. The Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the United States for the week ending February 28 rose by 3.614 million barrels, compared to a fall of 2.332 million barrels in the previous week. The market consensus estimated that stocks would decrease by 290,000 barrels. 

The OPEC+ announcement to maintain their production increase plan from April weighs on the WTI price. OPEC+, the Organization of the Petroleum Exporting Countries and allies including Russia, decided to increase output for the first time since 2022 

Furthermore, Oil traders are concerned that the tariffs on Canadian, Mexican, and Chinese goods that went into effect yesterday could slow growth, creating headwinds for WTI price. 

Trump confirmed that tariffs on Canada and Mexico would go into effect on Tuesday. The measures Trump had previously reaffirmed the new March date after having initially set it for April. However, Trump is exempting automakers from newly imposed tariffs on Mexico and Canada for one month. 

• The Australian Dollar holds steady after the release of key domestic economic data. 
• Australia’s trade surplus increased to 5,620M in January, exceeding the forecast of 5,500M and improving from the previous 4,924M. 
• The US Dollar remains subdued as risk sentiment improves following President Trump’s tariff strategy shift.

The Australian Dollar (AUD) holds ground for the fourth consecutive day on Thursday. However, the AUD/USD pair gains ground as the US Dollar (USD) remains subdued amid improved risk sentiment, following another shift in US President Donald Trump’s tariff strategy.

The White House announced on Wednesday that President Trump is temporarily exempting automakers from newly imposed tariffs on Mexico and Canada for one month. Additionally, Trump is considering excluding certain agricultural products from tariffs on Canada and Mexico, according to a Bloomberg reporter on X late Wednesday.

Australia’s trade surplus rose to 5,620 million in January, surpassing the expected 5,500 million and improving from the previous 4,924 million (revised from 5,085 million). Exports climbed 1.3% month-over-month from the prior month, reaching an 11-month high driven by non-monetary gold. Meanwhile, imports declined by 0.3% MoM, following a sharp 5.9% increase in the previous month, according to the Australian Bureau of Statistics.

Building permits in Australia surged 6.3% month-on-month in January, significantly accelerating from an upwardly revised 1.7% growth in December. This marks the second consecutive month of expansion and the fastest pace since last July.

Meanwhile, geopolitical tensions remain a concern. A spokesperson for the Chinese foreign ministry stated late Wednesday that China is prepared to fight "any type" of war in response to President Trump’s escalating trade tariffs, per BBC. This could weigh on the Australian Dollar, given China’s status as Australia’s largest trade partner.

Australian Dollar appreciates as US Dollar struggles amid US growth concerns

• The US Dollar Index (DXY), which measures the USD against six major currencies, trades around 104.30 at the time of writing. The Greenback faced downward pressure amid concerns over slowing US economic momentum.
• The US ADP Employment Change for February reported just 77K new jobs, falling significantly short of the 140K forecast and well below March’s 186K figure. Traders are now closely watching Friday’s US Nonfarm Payrolls (NFP) report, which is expected to show a modest rebound in job growth. Projections suggest net job additions will rise to 160K in February, up from January’s subdued 143K.
• The Federal Reserve’s (Fed) Beige Book for March carries added significance as concerns grow over the economic impact of President Trump’s trade policies. Signs of strain are emerging within the US economy, even before the full implementation of his trade measures.
• US Commerce Secretary Howard Lutnick stated in a televised interview on Fox News that President Trump may reconsider his tariff policy less than 48 hours after its implementation. Lutnick indicated that if the USMCA rules are followed, Trump is considering offering relief. President Trump's 25% tariffs on goods from Canada and Mexico took effect on Tuesday, alongside a doubling of duties on Chinese imports to 20%.
• US ISM Manufacturing PMI came in at 50.3, slightly below the 50.5 forecast and down from January’s 50.9. In contrast, S&P Global’s final Manufacturing PMI for February surpassed expectations at 52.7, improving from its preliminary reading.
• Australia's Gross Domestic Product (GDP) expanded by 0.6% quarter-over-quarter in Q4 2024, surpassing the 0.3% growth in Q3 and exceeding market expectations of 0.5%. On an annual basis, GDP grew by 1.3% in Q4, up from 0.8% in the previous quarter.
• The Judo Bank Composite Purchasing Managers’ Index (PMI) declined to 50.6 in February from 51.1 in January, marking the fifth consecutive month of growth in business activity, albeit at a slower pace. The Services PMI also eased to 50.8 from 51.2, reflecting continued expansion for the thirteenth straight month, though at a moderated rate.
• Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser highlighted that global trade uncertainty is at a 50-year high. Hauser warned that uncertainty stemming from US President Donald Trump's tariffs could prompt businesses and households to delay planning and investment, potentially weighing on economic growth.
• China’s Services Purchasing Managers’ Index (PMI) unexpectedly rose to 51.4 in February from 51.0 in January, exceeding market expectations of 50.8.
• Chinese authorities announced early Wednesday that they are setting a target of approximately 5% economic growth for 2025, with a 2% goal for the Consumer Price Index (CPI). Additionally, China plans to implement a proactive fiscal policy while ensuring stability in both the real estate and stock markets.

Australian Dollar holds position above 0.6300, nine-day EMA support

AUD/USD is trading near 0.6330 on Thursday, with technical analysis of the daily chart showing an upward movement within a newly formed ascending channel pattern, indicating a bullish bias. The 14-day Relative Strength Index (RSI) remains above 50, further supporting the bullish outlook.

On the upside, the first resistance is around the upper boundary of the ascending channel at 0.6380, followed by the three-month high of 0.6408, recorded on February 21.

The immediate support is at the 50-day Exponential Moving Average (EMA) of 0.6310, followed by the nine-day EMA at 0.6296. Additional support is found at the lower boundary of the ascending channel at 0.6270. A break below this level could lead to further declines toward the four-week low of 0.6187, recorded on March 5.

AUD/USD: Daily Chart

Petróleos Mexicanos (Pemex), Mexico’s state-owned oil company, stated on Thursday that it will not give discounts on its crude oil to US buyers because of tariffs. 

Pemex is in talks with potential buyers in Asia and Europe, as it seeks alternative markets for its crude after US President Donald Trump imposed  25% tariffs on goods from Mexico and Canada. 

Atsushi Mimura, Japan’s Vice Finance Minister for International Affairs and top foreign exchange diplomat, said on Thursday that the officials are seeing an increase in protectionism, such as tariffs. 

Mimura further stated that he needs to seek the middle ground way of addressing the negative aspects of globalization while avoiding sliding into protectionism 

Market reaction 

At the time of press, the USD/JPY pair was up 0.23% on the day at 149.21.  

The People’s Bank of China (PBOC) set the USD/CNY central rate for the trading session ahead on Thursday at 7.1692 as compared to the previous day's fix of 7.1714 and 7.2386 Reuters estimates.

US President Donald Trump stated on Wednesday he was working with Republicans in the House of Representatives on a continuing resolution to fund the government until September, per Reuters.

"... I am working with the GREAT House Republicans on a Continuing Resolution to fund the Government until September to give us some needed time to work on our Agenda," Trump said in a post on social media.

Market reaction 

At the time of writing, the US Dollar Index (DXY) is trading 0.03% lower on the day to trade at 104.30.

US President Donald Trump stated on Wednesday he was working with Republicans in the House of Representatives on a continuing resolution to fund the government until September, per Reuters.

"... I am working with the GREAT House Republicans on a Continuing Resolution to fund the Government until September to give us some needed time to work on our Agenda," Trump said in a post on social media.

Market reaction 

At the time of writing, the US Dollar Index (DXY) is trading 0.03% lower on the day to trade at 104.30.

Australia’s trade surplus increased to 5,620M MoM in January versus 5,500M expected and 4,924M (revised from 5,085M) in the previous reading, according to the latest foreign trade data published by the Australian Bureau of Statistics on Thursday.

Further details reveal that Australia's Exports rose by 1.3% MoM in January from 1.2% (revised from 1.1%) seen a month earlier. Meanwhile, Imports declined by 0.3% MoM in January, compared to 5.9% seen in December.  

Market reaction to Australia’s Trade Balance

At the press time, the AUD/USD pair is down 0.08% on the day to trade at 0.6335.

Australia’s trade surplus increased to 5,620M MoM in January versus 5,500M expected and 4,924M (revised from 5,085M) in the previous reading, according to the latest foreign trade data published by the Australian Bureau of Statistics on Thursday.

Further details reveal that Australia's Exports rose by 1.3% MoM in January from 1.2% (revised from 1.1%) seen a month earlier. Meanwhile, Imports declined by 0.3% MoM in January, compared to 5.9% seen in December.  

Market reaction to Australia’s Trade Balance

At the press time, the AUD/USD pair is down 0.08% on the day to trade at 0.6335.