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• EUR/USD gained 0.7% on Thursday, bolstered by investor confidence.
• New tariff threats turn out to be more of the same: unclear and hypothetical.
• European data surprises nobody, US PPI inflation pressure eases slightly.

EUR/USD caught a bid on Thursday, climbing seven-tenths of one percent and vaulting back over the 1.0400 handle. A general weakening in the Greenback bolstered Fiber flows off the back of not-as-bad-as-expected US Producer Price Index (PPI) inflation figures. Continued wavering by the Trump administration on ongoing tariff threats has investors assuming a trade war isn’t going to happen.

Forex Today: Markets now look at tariffs and US fundamentals

European economic data came in exactly as expected on Thursday, giving traders nothing meaningful to chew on. Still, although broadly above forecasts, US PPI figures helped ease investor concerns about a resurgence in inflation pressures. Core PPI inflation for the year ended in January came in at 3.6% YoY, well above the forecast 3.3% but a tick below the revised figure of 3.7%, which initially printed at 3.5%.

US Retail Sales are all that remains in the barrel for the remainder of the week’s key data. Markets will be hoping for another firm print, with the monthly Retail Sales figure forecast to come in at a slight contraction of -0.1% compared to the previous 0.4%.

US President Donald Trump unveiled his latest strategy for boosting tax revenues amidst significant administrative tax cuts. The concept of "reciprocal tariffs"—imposing fees on countries that charge tariffs on American goods—is set to develop in the following months, with US Commerce Secretary Howard Lutnick designated to finalize the details.

The timeline for additional tariff threats remains unclear, and investors are treating these new tariff threats as unlikely to materialize, reminiscent of Trump’s proposed "day one tariffs," as well as tariffs concerning Canada, Mexico, and specific imports like automobiles, microchips, and pharmaceuticals. Overall, while there are various ideas about implementing strict import taxes on US consumers and businesses to punish foreign businesses and countries, there has been limited real advancement, leading investors to speculate that this trend will persist.

EUR/USD price forecast

EUR/USD stepped into a third straight bullish day on Thursday, crossing the 1.0400 handle once again and climbing over the 50-day Exponential Moving Average (EMA) near 1.0425. Fiber has kicked into a near-term bullish tilt, but price action still remains on the low end of the last swing high into 1.0525 in mid-January.

EUR/USD daily chart

US President Donald Trump's trade adviser, Peter Navarro, said late Thursday that German auto tariffs are grossly unfair. 

Key quotes

Market reaction 

At the time of writing, the US dollar Index (DXY) is trading unchanged on the day to trade at 107.05. 

• USD/CAD softens to around 1.4195 in Thursday’s late American session.
• Trump revealed a new tariff plan. 
• The potential for a long trade war and uncertainty could weigh on the CAD. 

The USD/CAD pair edges lower to a two-month low near 1.4195 during the late American session on Thursday, pressured by a decline in US bond yields and the weaker US Dollar (USD). Traders will keep an eye on the US Retail Sales for January, which are due later on Thursday. 

On Thursday, US President Donald Trump signed a presidential memorandum laying out his plan to impose “reciprocal tariffs” on every country that charges duties on U.S. imports. The reciprocal tariffs join the 10% tariff that went into effect last week on top of other tariffs on Chinese goods and 25% tariffs on steel and aluminum that Trump announced on Monday.

"Today's move lower in U.S. yields has weakened the USD across the board, thereby allowing CAD to post gains," said George Davis, chief technical strategist at RBC Capital Markets.

On the other hand, the potential for a long trade war with the United States and the uncertainty could exert some selling pressure on the Loonie. The Bank of Canada (BoC) released a summary of its deliberations on Wednesday, saying that the threat of tariffs had increased uncertainty and would weigh on business confidence and consumer sentiment. “This also supported the case for a lower policy rate,” said the report. 

• GBP/USD rose nearly a full percent on Thursday.
• UK GDP came in firmer than expected, and US PPI figures firmed post-revision.
• US Retail Sales still in the pipe for Friday, but tariff threats have again eased.

GBP/USD rallied on Thursday, climbing over nine-tenths of one percent and tapping the 1.2560 region after economic data came in broadly better-than-expected on both sides of the Atlantic. UK Gross Domestic Product (GDP) beat median market forecasts, and US Producer Price Index (PPI) inflation figures assuaged investor concerns after an uptick in consumer-level inflation this week.

US President Donald Trump: Plan for reciprocal tariffs in the works

US President Donald Trump made a big reveal of his latest idea for drumming up tax revenues in the face of steep administrative tax cuts. “Reciprocal tariffs”, plans to levy fees against countries who have tariffs on US goods, are set to take shape over the coming months, with US Commerce Secretary Howard Lutnick tapped to work out the details.

The timeline on further tariff threats remains elusive, and investors are pricing the fresh tariff threats in as something that is not going to happen, much like President Trump’s “day one tariffs”, and tariffs on Canada and Mexico, and specific tariffs on automobiles, microchips, and pharmaceuticals. Taken in totality, there are a lot of concepts of a plan to impose stiff import taxes on US consumers and businesses, but very little real progress, and investors are betting that the trend will continue.

Forex Today: Markets now look at tariffs and US fundamentals

UK Q4 GDP clocked in at 1.4% YoY, well above the forecast 1.1%, and rising even further from the previous period’s revised 1.0%. QoQ GDP also beat the street, rising to 0.1% versus the forecast -0.1% contraction.

On the US side, PPI business-level inflation came in above expectations, but sharp revisions to previous figures gave investors the opportunity to interpret the latest batch of price data as showing easing inflation pressures. Core PPI inflation for the year ended in January came in at 3.6% YoY, well above the forecast 3.3% but a tick below the revised figure of 3.7%, which initially printed at 3.5%.

US Retail Sales are all that remains in the barrel for the remainder of the week’s key data. Markets will be hoping for another firm print, with the monthly Retail Sales figure forecast to come in at a slight contraction of -0.1% compared to the previous 0.4%.

GBP/USD price forecast

After weeks of bullish effort, GBP/USD is finally back above the 50-day Exponential Moving Average (EMA) near the 1.2500 handle. There is still plenty of room to the downside that bulls can fall after several weeks of congestion, but the next immediate technical barrier to the upside sits at the 200-day EMA parked just below 1.2700.

GBP/USD daily chart

• NZD/JPY slides to 86.65 on Thursday, marking a continued retreat from recent highs.
• The pair struggles to regain ground after facing rejection at the 20-day SMA, highlighting weak bullish attempts.
• With fading momentum and declining RSI, further losses may be in store unless buyers regain control.

The NZD/JPY pair took another step lower on Thursday, slipping to 86.65 as selling pressure intensified. Despite brief attempts to reclaim lost ground, the rejection at the 20-day Simple Moving Average (SMA) around 87.20 exposed the pair to further downside risks, signaling that bulls lack the conviction to shift the momentum in their favor.

Technical signals suggest that sellers remain in control. The Relative Strength Index (RSI) is dropping sharply at 45, pointing to waning buying interest, while the Moving Average Convergence Divergence (MACD) histogram is printing decreasing red bars, signaling persistent bearish momentum. The inability to break the 20-day SMA resistance reinforces the view that sellers still dominate the market.

Looking ahead, traders will watch the 86.40 support level closely. A break below this could accelerate losses toward 86.00, where buyers may attempt to stabilize the decline. On the upside, regaining the 87.00 handle would be the first step for bulls to regain traction, though a decisive push above the 20-day SMA remains essential to alter the current bearish outlook.

NZD/JPY daily chart

• Silver climbs to $32.37, nearing February 7 high of $32.64.
• US Dollar Index drops 0.85% as Trump pushes reciprocal tariffs.
• Hot PPI data, strong labor market fuel inflation concerns.

Silver's price advanced for the second consecutive day, registering gains of over 0.48%. It trades at $32.37 a troy ounce and is about to test the key resistance level at $32.64, the February 7 swing high.

XAG/USD eyes key resistance as DXY plunges to two-week low

Tariffs are the name of the game and the most important driver during the North American session. US President Donald Trump ordered advisors to devise ‘reciprocal’ tariffs against US trade partners.

After the headlines crossed the screens, the Greenback depreciated sharply against a basket of six currencies known as the US Dollar Index (DXY). The DXY plummets over 0.85%, down at 107.04, near two-week lows.

In the meantime, the US Producer Price Index (PPI) for January rose by 0.4% month-over-month (MoM), surpassing the anticipated 0.3% and showing a slight decline from December's 0.5%. Year-over-year (YoY), the PPI held steady at 3.5%, exceeding expectations.

At the same time, core PPI, which excludes volatile food and energy prices, also reported an increase, with monthly figures climbing by the expected 0.3%. Over the twelve months to January, the core PPI rose by 3.6%, 0.3 percentage points above the forecasted 3.3%.

Other data showed the labor market remains strong after Initial Jobless Claims for the week ending February 8 dropped to 213K, below the projected 215K and down from the prior week's 220K.

XAG/USD Price Forecast: Technical outlook

From a technical standpoint, Silver is upwardly biased but about to face stir resistance at $32.64. The Relative Strength Index (RSI) shows that buyers are gathering some steam, and if they clear the previously mentioned resistance level, the next ceiling level would be $33.00.

A breach of the latter will expose the October 31 peak at $33.89, followed by the October 29 high at $3454.

Conversely, if Silver falls beneath $32.00, the first key support would be the 100-day Simple Moving Average (SMA) at $31.12.

• NZD/USD edges up to 0.5650 on Thursday, but upside traction remains weak.
• The pair continues to trade sideways above the 20-day SMA, failing to establish a clear trend.
• While technical indicators show mixed signals, recent price action suggests the market is awaiting a catalyst for a decisive move.

The NZD/USD pair saw a mild increase on Thursday, rising to 0.5650 as buyers attempted to push the price higher. However, the move lacked conviction, with the pair struggling to gain traction above its 20-day Simple Moving Average (SMA). This level has acted as a critical pivot point in recent sessions, and a decisive break above it remains elusive.

Technical indicators paint a mixed picture. The Relative Strength Index (RSI) has climbed to 53, signaling some improvement in buying interest. However, the Moving Average Convergence Divergence (MACD) histogram prints flat green bars, suggesting that bullish momentum has yet to take hold. Notably, despite the recent attempt at gains, price volatility has decreased, which could indicate that traders are waiting for fresh macroeconomic data or a shift in market sentiment before making their next move.

If buyers manage to sustain a move above 0.5650, further gains could be on the horizon, with the next resistance zone around 0.5680-0.5700. On the downside, failure to hold above the 20-day SMA may lead to renewed selling pressure, exposing the pair to declines toward the 0.5620 and 0.5600 support areas. 

NZD/USD daily chart

• Aussie nears 0.6300 amid softer US Dollar.
• Risk sentiment fluctuates as potential reciprocal tariffs loom between China and the US.
• The USD failed to capitalize on strong PPI data.

The Australian Dollar (AUD) gains ground against the US Dollar (USD) on Thursday. Despite these gains, the risk-sensitive AUD faces headwinds from fears of a potential global trade war, as United States (US) President Donald Trump announced he will impose reciprocal tariffs on every country that charges duties on US imports.

Daily digest market movers: Aussie holds firm after upbeat US PPI and tempered tariff concerns

• The tariffs may begin to be imposed within weeks as Trump’s trade and economic team study bilateral tariff and trade relationships.
• The US Dollar Index (DXY) remains under pressure as traders balance headwinds and tailwinds, including a prospective Ukraine-Russia peace deal, the United States Producer Price Index (PPI) data, and reciprocal tariffs to be imposed.
• A knee-jerk US Dollar rally ensued after stronger-than-expected PPI figures, but the currency reversed course once President Trump and President Vladimir Putin agreed to start peace talks with Ukraine.
• Recent labor figures support moderate optimism: United States Jobless Claims for the week ending February 7 came in at 213,000, below consensus, and Continuing Claims fell to 1.850 million from 1.886 million.
• The monthly headline PPI for January ticked up to 0.4%, surpassing the 0.3% estimate but lower than December’s revised 0.5%. Core PPI came in at 0.3% as expected.
• On the trade front, Trump reiterated his threat of a 100% tariff on BRICS countries and raised issues about unchanged tariffs for many nations. He also criticized the European Union’s trade relationship with the United States, fueling geopolitical uncertainties.

AUD/USD technical outlook: Momentum builds as pair stays above 20-day Simple Moving Average

The Relative Strength Index (RSI) stands at 57, in positive territory and rising sharply, indicating growing buyer conviction. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator prints flat green bars, reflecting a modest but stable uptrend.

By holding firmly above its 20-day Simple Moving Average, the Aussie displays potential for further gains, though lingering tariff threats and shifting risk sentiment could quickly alter the current outlook.

• Gold climbs to near record high amid USD weakness and trade fears
• US Dollar Index drops 0.61%, fueling bullion’s rally.
• Central banks' Gold purchases surge 54% YoY, adding upside pressure.

Gold climbed during the North American session on Thursday following the release of the Producer Price Index (PPI), which was mildly higher than expected. United States (US) President Donald Trump's threats of tariffs increased the appeal of the yellow metal, which trades at $2,925 shy of cracking the record high of $2,942 hit on February 11.

At the time of writing, US President Donald Trump had signed the reciprocal tariff order and said: “Whatever they charge us, we will charge them.” He added that there would be no tariffs if products are manufactured or built in the US and added that, alongside steel and aluminum, tariffs on autos are coming soon.

Bullion prices climbed on the news headlines due to the overall Greenback’s weakness across the board. The US Dollar Index (DXY), which measures the performance of the buck against a basket of six currencies, drops 0.61% down to 107.32.

US Treasury bond yields are also plunging, although the latest US inflation report on the producer’s side showed the disinflation process has stalled. The positive note in the US economic docket is that the jobs market is still strong after the number of Americans filling for unemployment benefits dipped last week, revealed the US Department of Labor.

Given the uncertainty surrounding US trade policies and a possible reacceleration of inflation, XAU/USD could test higher prices in the short term. In addition, as revealed on February 11, increased demand from central banks could exert upward pressure on Bullion prices.

The World Gold Council (WGC) revealed that central banks purchased over 1,000 tons of gold for the third consecutive year in 2024. Following Trump's electoral victory, purchases by central banks surged by more than 54% year-over-year to 333 tons, according to WGC data.

Daily digest market movers: Gold rallies as US Treasury bond yields plummet

• The US 10-year Treasury bond yield tanks ten basis points (bps), and is down at 4.519%.
• US real yields, which correlate inversely to Bullion prices, plunge eight basis points to 2.072%, a tailwind for XAU/USD.
• The January US Producer Price Index (PPI) registered a 0.4% MoM increase, surpassing forecasts of 0.3% and showing a slight decrease from the previous month's 0.5%. Over the past twelve months, the PPI climbed by 3.5%, exceeding expectations and rising from December's 3.3% figure.
• Core PPI, which excludes volatile food and energy prices, rose by 0.3% MoM as anticipated and experienced an increase of 3.6% YoY, higher than the expected 3.3%.
• Furthermore, Initial Jobless Claims for the week ending February 8 dropped to 213K, below the forecast of 215K but improving from the previous week's total of 220K.
• The latest US inflation reports altered the Fed’s stance from easing policy to holding rates unchanged as the disinflation process stalled. Fed Chair Jerome Powell said on Wednesday, "We are close but not there on inflation," and emphasized the need to "keep policy restrictive for now."
• Money market fed funds rate futures are pricing 38.5 basis points of easing by the Federal Reserve in 2025.

XAU/USD technical outlook: Gold price jumps towards the all-time high

Gold price rally is accelerating as of the writing, following Trump’s signing an executive order for reciprocal tariffs. As investors turn nervous, the non-yielding metal continues to climb after clearing the February 12 peak of $2,909.

After turning flat, the Relative Strength Index (RSI) aims higher, indicating that bulls are moving in. With that said, XAU/USD's next key resistance level would be an all-time high at $2,942. A breach of the latter will expose $2,950, followed by the $3,000 milestone for the golden metal.

Conversely, if XAU/USD drops below $2,900, the first support would be the psychological $2,850 mark. Once surpassed, the October 31 cycle high turned support at $2,790 is up next, followed by January 27’s swing low of $2,730.

The US Dollar accelerated its downtrend and hit two-week lows amid further evidence that the US inflation remained sticky in January and despite steady concerns over a global trade war.

Here is what you need to know on Friday, February 14:

The US Dollar Index (DXY) traded well on the defensive, slipping back to the 107.20 region, or two-week lows amid declining US yields across the curve. Retail Sales will take centre stage on Friday, seconded by Industrial and Manufacturing Production, Business Inventories, and Export/Import Prices.

EUR/USD rose further north of the 1.0400 hurdle to reach two-week peaks near the 1.0450 level backed by the sharp sell-off in the US Dollar. Wholesale Prices in Germany come next ahead of the EMU’s advanced Employment Change and another estimate of the Q4 GDP Growth Rate in the broader euro area. In addition, the European Commission will release its Winter Forecasts.

GBP/USD kept the bullish stance unchanged, flirting with multi-week tops near 1.2550 following the marked improvement in the risk-linked assets.

USD/JPY met some renewed selling pressure and retreated from Wednesday’s multi-day peaks in the 154.80 area. The weekly Foreign Bond Investment figures are due.

AUD/USD eroded Wednesday’s pullback and managed to surpass the key resistance level at 0.6300 the figure on the back of the bearish tone in the Greenback.

WTI prices remained on the back foot and briefly dipped to two-month lows near the key $70.00 mark per barrel in response to potential ceasefire talks in the Russia-Ukraine war.

Gold prices added to Wednesday’s rebound and reclaimed the area beyond the $2,900 mark per ounce troy. Silver prices added to Wednesday’s uptick, hitting weekly peaks further north of the $32.00 mark per ounce.

US President hit the wires on Thursday, revealing details of his concepts of a plan for reciprocal tariffs against all major trading partners of the US who impose tariffs and also non-tariffs on goods imported from the US. According to President Trump, the US administration will also be considering countries that charge a VAT on foreign goods as a form of tariff. Specific details about the reciprocal tariff proposal remain slim, and Commerce Secretary Howard Lutnick has been tapped to actually flesh out the details moving forward. President Trump also highlighted the need to address "non-monetary tariffs", an economic concept that does not exist.

Key highlights

• The Canadian Dollar rose around 0.3% on Thursday.
• General market sentiment has improved, pushing down the Greenback.
• Canadian data remains light, but a softer USD is propping up the Loonie.

The Canadian Dollar (CAD) caught a fresh bid on Thursday on the back of a weakening US Dollar (USD). Market flows are drifting away from the safe haven Greenback, providing support for the otherwise unremarkable Loonie and pushing the USD/CAD pair back down toward the 1.4200 handle.

Canada remains overwhelmingly underrepresented on the economic data docket this week, but a spat of US inflation figures is giving investors plenty to chew on. US Producer Price Index (PPI) figures came in above expectations, but a sharp upside revision to previous figures means inflation pressures are still coming down, at least in theory.

Daily digest market movers: Canadian Dollar drifts higher as traders await latest Trump tariffs

• The Canadian Dollar drifted around one-third of one percent higher against the Greenback on Thursday.
• US PPI inflation came in above forecasts, but steep revisions to older data means inflation isn’t as big of a problem as markets feared on Wednesday when US Consumer Price Index (CPI) inflation lurched back into the high side.
• Market bets of a Federal Reserve (Fed) rate cut have been walked forward to July or September, from the early week’s initial bets of no moves until December.
• US Retail Sales still loom ahead on Friday.
• US President Donald Trump is expected to unveil his latest “reciprocal tariff” proposals later on Thursday, but the implementation date is already getting pushed further down the road, with a soft date set for April.
• Repeated kicks of the Trump administration’s own can on tariffs has investors largely ignoring continued trade war gesticulations from President Trump.

Canadian Dollar price forecast

A steady grind higher for the Canadian Dollar as market sentiment continues to improve across the board means the US Dollar is taking a back seat, sending the USD/CAD down into fresh multi-week lows. Price action is grinding its way back to the 1.4200 handle after the Loonie tumbled to multi-decade lows recently, and a technical congestion pattern is beginning to break down as volatility kicks the walls down on USD/CAD.

The pair has drifted back into the low side of the 50-day Exponential Moving Average (EMA) near 1.4290 for the first time since October, but momentum is set to remain constrained as the 200-day EMA lies in wait just south of the 1.4000 handle.

USD/CAD daily chart

• Mexican Peso climbs, but the Fed-Banxico rate gap threatens its appreciation.
• US Producer Prices rise, delaying Fed rate-cut expectations to September.
• USD/MXN dips as US Dollar Index slides 0.55%, but policy divergence looms.

The Mexican Peso (MXN) gained modestly against the US Dollar (USD) on Thursday as further inflation data shows that prices in the United States (US) remain above the Federal Reserve’s (Fed) 2% target. Additionally, expectations about US President Donald Trump's signing of a reciprocal tariffs executive order late in the day have boosted the Greenback, trimming some losses against the emerging market currency. USD/MXN trades at 20.50, down 0.04%.

The latest round of US inflation data showed that prices paid by producers rose in January after the release of the Consumer Price Index (CPI) a day ago. Meanwhile, expectations that the Federal Reserve would cut rates lie at 35 basis points (bps), with traders delaying the first cut to September from June.

In the meantime, the US Bureau of Labor Statistics (BLS) showed that the labor market remains strong—the number of Americans filing for unemployment benefits diminished during the week ending February 8.

Despite this, the USD/MXN pair extended its losses due to the relief that US President Trump could sign reciprocal tariffs near 18:00 GMT, though they’re not expected to become effective until April 1.

Another reason for the sudden USD/MXN downside is that the buck is tumbling over 0.55%, as depicted by the US Dollar Index (DXY), down from 107.91 to 107.37.

Nevertheless, traders should be aware of the monetary policy divergence between Banco de Mexico (Banxico) and the Fed, which suggests that the interest rate differential would reduce substantially, favoring the latter. Therefore, USD/MXN could resume its uptrend in the near term.

Daily digest market movers: Mexican Peso advances as the Greenback gets battered

• Mexico’s economic docket remains absent, yet deterioration in the automobile industry and worse-than-expected Industrial Production figures hint the economy is in worse shape than expected.
• This and US President Donald Trump's trade rhetoric on Mexico would be headwinds for the Mexican currency.
• The US Producer Price Index (PPI) in January came at 0.4% MoM, exceeding forecasts of 0.3%, down from 0.5%. In the twelve months to the last month, PPI rose 3.5% above estimates and up from the 3.3 print in December.
• The Core PPI increased 0.3% MoM as expected and was up by 3.6% YoY, above estimates of 3.3%.
• Initial Jobless Claims for the week ending February 8 rose by 213K, below estimates of 215K, and the February 1 reading of 220K.
• The Fed adopted a cautious stance following the red-hot CPI and PPI January readings. As the disinflation process deteriorated, officials turned slightly neutral led by Fed Chair Powell who said on Wednesday “We are close but not there on inflation,” adding, “We want to keep policy restrictive for now.”
• Trade disputes between the US and Mexico remain in the boiler room. Although the countries found common ground previously, USD/MXN traders should know that there is a 30-day pause and that tensions could arise toward the end of February.

USD/MXN technical outlook: Mexican Peso holds firm near 20.50

The USD/XN pair consolidates near the 50-day Simple Moving Average (SMA) at around 20.50, with no clear bias during the last seven days. The distance between the 50 and 100-day SMAs has reduced sharply, indicating the bullish trend that began in April 2024 is losing steam after peaking at a multi-year high at 21.29.

If buyers want to regain control, they must clear key resistance levels like the January 17 high at 20.90, the 21.00 figure, and the year-to-date (YTD) at 21.29. Conversely, if USD/MXN drops below the 50-day SMA and clears the 100-day SMA at 20.23, it paves the way for challenging the 20.00 mark. On further weakness, key support levels are eyed at 19.50 and the 200-day SMA at 19.33.

• The US Dollar Index plummeted on Thursday, failing to hold gains after Wednesday's inflation-driven rally.
• Stronger-than-expected Producer Price Index data initially supported the Greenback but was offset by geopolitical headlines.
• President Trump and Russian President Putin agreed to begin peace talks with Ukraine, reducing market risk aversion.
• Jobless claims data came in slightly better than expected, reinforcing resilience in the US labor market.

The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of currencies, struggles to hold onto gains following Wednesday’s inflation data. Traders are quick to dismiss the latest Producer Price Index (PPI) figures, shifting their focus to geopolitical developments.

A potential peace agreement between Russia and Ukraine and the latest US jobless claims data add to the market’s uncertainty, leaving the DXY below 107.30.

Daily digest market movers: US Dollar fails to capitalize on strong PPI data

• The PPI for January increased by 0.4%, exceeding the expected 0.3%, but came down from a revised 0.5% prior.
• Core PPI matched expectations at 0.3%, but December’s figure was revised higher to 0.4%, signaling persistent price pressure.
• Initial Jobless Claims fell to 213,000 for the week ending February 7, slightly below the forecast of 215,000.
• Continuing Jobless Claims dropped to 1.850 million, below the projected 1.880 million, highlighting labor market resilience.
• A surprise geopolitical development saw President Trump and President Putin agreeing to begin peace negotiations with Ukraine, which sparked a wave of optimism.
• On the Federal Reserve’s side, its stance remains cautious with officials set to provide further guidance on the monetary policy outlook.
• The Federal Sentiment Index remains unchanged but is still in hawkish territory, signaling policymakers’ reluctance to ease prematurely.

DXY technical outlook: Index loses grip of 20-day moving average as bearish pressure mounts

The US Dollar Index struggles to hold above the 20-day Simple Moving Average (SMA), signaling weakness after failing to sustain Wednesday’s gains. The Relative Strength Index (RSI) remains below 50, pointing to persistent bearish momentum, while the Moving Average Convergence Divergence (MACD) continues to show a negative trend.

Immediate resistance stands at 108.50 with support near 107.80. A break below this level could accelerate declines toward the psychological 107.00 mark.

• The Dow Jones lifted slightly on Thursday, testing near 44,500.
• Equities are cautiously optimistic after PPI numbers softened inflation blow.
• Markets await the latest iteration of US President Donald Trump’s tariff threats.

The Dow Jones Industrial Average (DJIA) found a little bit of room on the high side on Thursday, rising around 120 points and testing the 44,500 level. Equities were jarred by some steep upside revisions in Producer Price Index (PPI) inflation figures, but the overall print hit a decidedly softer tone than this week’s Consumer Price Index (CPI) inflation figures. A spike in inflation fears has subsided, and rate markets are now pricing in revisions to when the Federal Reserve (Fed) is expected to deliver its next rate cut.

United States (US) President Donald Trump is expected to deliver his latest batch of tariff threats during the back half of the US market session. President Trump is slated to reveal details of his planned “reciprocal tariffs” on any country that has their own tariffs on US goods, but according to reporting from Washington DC, the can is getting preemptively kicked down the road with reciprocal tariffs not expected to come into effect for some months. Markets are getting used to brushing off trade war threats from Donald Trump, and this represents the fourth consecutive time that the Trump administration’s threats of imposing steep import taxes on foreign goods have been announced and then delayed.

Core US PPI inflation clocked in at 3.6% YoY in January, well above the forecast of 3.3%. The previous period also saw a sharp revision higher to 3.7% from 3.5%, but the overall tick lower post-revision helped to assuage market fears of a resurgence of widespread inflation pressures. According to the CME’s FedWatch tool, rate markets are now pricing in better-then-even odds that the Fed will deliver at least a 25 bps rate trim in September compared to Wednesday’s forecast of December.

Dow Jones news

Despite the Dow’s tepid average on Thursday, the overall equity board is holding a healthy stance with around two-thirds of the DJIA’s listed securities testing higher on the day. Nvidia (NVDA) rallied 3.3% to $135 per share on stronger-than-expected microchip demand, giving the overall tech sector a leg up. Goldman Sachs (GS) led the bottom end of the board, falling a scant 0.8% to $644 per share.

Dow Jones price forecast

44,500 is becoming familiar territory for the Dow Jones. The mega-cap index has been churning within a choppy range between 45,000 and 44,000 since mid-January with bidders unable to find a foothold into fresh record highs, but short pressure is still unable to knock the DJIA lower.

Price action is still leaning in favor of buyers with bids churning north of the 50-day Exponential Moving Average (EMA) near 43,850. The gap between intraday prices and the long-run 200-day EMA near 41,800 has closed in recent weeks, but the Dow Jones is still trending well above its long-term average, outpacing the 200-day EMA since November of 2023. The Dow Jones has closed higher for all but three of the last 14 consecutive months.

Dow Jones daily chart

• EUR/USD rises to 1.0385 on Thursday, confirming a breakout above the 20-day SMA.
• A sustained move above 1.0400 could further strengthen bullish sentiment, while the 20-day SMA now acts as support.

EUR/USD continued its recovery on Thursday, inching up to 1.0385 and reinforcing its breakout above the 20-day Simple Moving Average (SMA). After several failed attempts to sustain gains earlier in the week, the pair now appears to have made a decisive move, shifting the short-term bias in favor of buyers.

Technical readings highlight growing bullish momentum. The Relative Strength Index (RSI) has risen sharply to 56, indicating increasing buying pressure, while the Moving Average Convergence Divergence (MACD) histogram prints rising green bars, suggesting continued strength in the upside push. If this trend persists, bulls may look to extend gains further.

From a structural perspective, 1.0450 emerges as the next key resistance level, and a break above this could open the door toward 1.0500. On the downside, the 20-day SMA,now acting as support,will be closely monitored, with any drop below 1.0350 potentially questioning the sustainability of the recent bullish move.

EUR/USD daily chart

• UK GDP surprises with 0.1% growth, defying recession fears.
• US PPI inflation exceeds expectations, reinforcing Fed’s cautious stance on rate cuts.
• GBP/USD holds gains, but technical outlook still favors downside below 1.2473.

The Pound Sterling registered solid gains versus the Greenback on Thursday after GDP figures in the UK surprisingly beat estimates. Meanwhile, inflation in the US rose, and US job data shows that the labor market remains strong. The GBP/USD trades at 1.2510, up 0.53%.

Sterling gains but BoE’s and Fed divergence caps upside potential

Data saved the British Pound after the Q4 2024 preliminary reading showed the economy grew 0.1% QoQ, exceeding estimates for a -0.1 % contraction. On a yearly basis, GDP increased by 1.5%, which is above forecasts and the previous reading of 1%.

In the US, the US Bureau of Labor Statistics (BLS) revealed that the Producer Price Index (PPI) came at 0.4% MoM in January, above estimates of 0.3%, down from 0.5%. In year-over-year (YoY) data, the PPI remained unchanged at 3.5% but exceeded forecasts.

Core figures also came slightly hot, with monthly figures rising 0.3% as estimated. In the twelve months to January, the Core PPI increased by 3.6%, three-tenths above the 3.3% projection.

Other data showed that Initial Jobless Claims for the week ending February 8 rose by 213K, below estimates of 215K, and the February 1 reading of 220K.

Given the backdrop, the GBP/USD is trading in the green, though divergence amongst central banks favors further downside. After UK’s GDP data, markets fully priced in the next cut in June and expect 55 basis points of easing by the Bank of England (BoE) towards the end of 2025.

Nevertheless, the BoE’s Chief Economist Hue Pill said that he expects further rate cuts but urges caution as the disinflation process is not complete.

Meanwhile, the Fed adopted a cautious stance after the latest readings of inflation indicated the disinflation process stalled after five straight months of price increases. On Wednesday, the Fed Chair Jerome Powell said, “We are close but not there on inflation,” adding, “We want to keep policy restrictive for now.”

GBP/USD Price Forecast: Technical outlook

The GBP/USD downtrend remains intact as depicted by the daily chart. But if buyers reclaim the February 5 high of 1.2549, the bias shifts to neutral as the pair had achieved a higher-high, an indication of a trend shift. Further upside lies at 1.2600, and buyers may challenge the 100-day Simple Moving Average (SMA) at 1.2700.

Conversely, if GBP/USD drops below the 50-day SMA at 1.2473, sellers could push prices toward the 1.2400 mark.

Crude oil markets continue to sell off, with the prospects of a Russia-Ukraine deal further sapping energy supply risk premia over the last sessions, TDS' Senior Commodity Strategist Daniel Ghali notes.

Crude oil markets continue to sell off

"Our gauge of energy supply risk has now completely reversed its previous rise associated with Biden's farewell sanctions on Russia, but our read suggests that concerns surrounding OPEC+ spare capacity and expectations of a surplus are trumping the geopolitical effects thus far."

"We only see a very narrow path for significantly higher oil prices to remain sustainable, but most paths point to a broadly range-bound context for oil prices this year. For the time being, CTA selling activity in Brent crude is exacerbating the recent decline, with algos set to sell up to -20% of their max size this session."

"Unfortunately for the bulls, while nascent signs of algo selling exhaustion are emerging on the horizon, we're not quite there yet — our simulations still point to scenarios that can lead to further selling activity from this cohort."

• USD/JPY dives to near 153.40 amid significant strength in the Japanese Yen.
• Investors remain on their toes as US Trump reiterates reciprocal tariff threats.
• The Fed stated that a restrictive policy stance is favorable if progress in the disinflation trend stalls.

The USD/JPY pair falls sharply to near 153.40 in Thursday’s North American session from its weekly high of 154.80, which it posed on Wednesday. The asset weakens as second-level safe-haven assets, such as the Japanese Yen (JPY) and the Swiss Franc (CHF), perform strongly across the board.

The safe-haven bid of the JPY and the CHF strengthens amid worries that the imposition of reciprocal tariffs by United States (US) President Donald Trump will lead to a global trade war. Trump reiterated reciprocal tariff threats in early North American trading hours through a post on Truth Social.

"Three great weeks, perhaps the best ever, but today is the big one: reciprocal tariffs!!! Make America great again!!!," Trump said.

Contrary to strength in the JPY and the CHF, the US Dollar (USD) faces selling pressure on optimism over a truce between Russia and Ukraine. Donald Trump announced on Wednesday that leaders of both nations had agreed to peace talks.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, has recovered some of its morning losses but is still down 0.15% to near 107.80.

Meanwhile, the outlook for the US Dollar remains firm as hot US Consumer Price Index (CPI) and Producer Price Index (PPI) reports for January have boosted expectations that the Federal Reserve (Fed) will keep interest rates in the current range of 4.25%-4.50% for longer.

Fed Chair Jerome Powell said in his two-day testimony before Congress that the central bank can maintain “policy restraint for longer” if the economy remains strong and “inflation does not move toward 2%."

(This story was corrected on February 13 at 14:46 to say that the US Dollar Index (DXY) has recovered some of its morning losses, not some of its morning gains.)

•  Initial Jobless Claims rose below consensus to 213K.
• Continuing Jobless Claims climbed to 1.85M in the week ending February 1.

US citizens filing new applications for unemployment insurance rose to 213K for the week ending February 8, as reported by the US Department of Labor (DoL) on Thursday. This print missed initial estimates and was lower than the previous week's revised tally of 220K (from 219K).

The report also highlighted a seasonally adjusted insured unemployment rate of 1.2%, while the four-week moving average dropped to 216.00K, marking a decrease of 1K from the prior week’s revised average.

Moreover, Continuing Jobless Claims went down by 36K to reach 1.850M for the week ending February 1.

Market reaction

The Greenback maintains its bearish attitude around 107.80 when tracked by the US Dollar Index (DXY), managing to bounce off earlier weekly lows near 107.50.

• Producer inflation in the US rose at a stronger pace than expected in January.
• US Dollar Index stays below 108.00 following the PPI data.

The Producer Price Index (PPI) for final demand in the US rose 3.5% on a yearly basis in January, the data published by the US Bureau of Labor Statistics showed on Thursday. This reading followed the 3.3% increase recorded in December and came in above the market expectation of 3.2%.

The annual core PPI rose 3.6% in the same period, surpassing analysts' estimate of 3.3%. On a monthly basis, the PPI and the core PPI rose 0.4% and 0.3%, respectively.

Market reaction

The US Dollar Index showed no immediate reaction and was last seen losing 0.2% on the day at 107.75.

While yesterday’s release of stronger than expected US CPI inflation pushed back on Fed rate cut hopes and initially boosted the value of the USD, those gains proved to be short-lived, Rabobank's FX analyst Jane Foley notes.

The positive impact of the news on the EUR may not last

"While the USD crosses were choppy in US hours yesterday, the theme in Asian hours was predominately one of USD weakness, with EUR/USD briefly being lifted to a high of 1.0440. Overshadowing the latest development in US inflation was the news from President Trump that negotiations to end the war in Ukraine were to begin 'immediately' after his phone call with Russian President Putin yesterday. We continue to forecast a move to EUR/USD1.00 around the middle of the year"  

"While relief that the war on the Eurozone’s doorstep pushed the safe-haven USD lower and the EUR higher in Asian hours, already that reaction has begin to run out of steam. What is glaringly obvious to European investors is the apparent absence of either Ukrainian or EU politicians in the arrangements that Trump appears to be making towards bringing the conflict to an end."

"This is despite the implication that it might be up to the EU to fund much of the peace keeping mission and re-building efforts. Furthermore, fears that Trump may already have conceded too much to Putin regarding Ukraine in addition to concerns regarding coherence among NATO countries are all on the rise this morning. The implication is that the path to peace is likely to be a messy process for Europe with outcomes that are not all EUR positive."

We lower our 2025 growth forecast to 1.0% (from 1.3%) owing to the slowdown in H2-2024. The UK labour market looks susceptible to further weakening as firms face multiple headwinds. This could exert downward pressure on wage growth, raising the risk of a faster BoE cutting schedule, Standard Chartered's Economists Christopher Graham and Saabir Salad report.

Growth momentum still weak

"The UK economy grew 0.1% q/q in Q4, resulting in full-year growth of 0.9% last year. We still expect slightly stronger growth in 2025 as gradual monetary easing supports the household sector and the government’s pro-growth measures help to boost capital investment. However, given the lack of momentum in H2, as well as our expectation of additional fiscal tightening on the spending front in the coming months, we lower our 2025 growth forecast to 1.0% from 1.3% previously."

"A natural process of rebalancing post-COVID has resulted in a labour market 'broadly in balance', according to the Bank of England (BoE), with vacancies back to pre-COVID levels. However, employment growth has been steadily declining and recent surveys point to pressures on firms stemming from government fiscal policy, including the rise in employer National Insurance Contributions (NICs) announced at last Autumn’s Budget and the upcoming rise in the national minimum wage (both set to come into effect in April)."

"Given weak growth momentum and elevated energy costs, labour demand could come under sustained pressure going forward. The BoE’s reaction function to labour market data is not straightforward, given not only inflation dynamics this year but also data quality issues on the labour market side. However, on balance, we would expect a faster pace of rate cuts from the BoE should labour market metrics show a clear deterioration."

• The US Dollar trades weaker on Thursday against most major peers. 
• Traders gear up for the Producer Price Index (PPI) and weekly jobless claims due later in the day. 
• The US Dollar Index (DXY) drops below 108.00 and ekes out losses for this week. 

The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, has fallen to 107.50 so far on Thursday. The knee-jerk reaction comes after stronger-than-expected US Consumer Price Index (CPI) data for January was released on Wednesday,  which pushed the US Dollar higher. However,  the turnaround came in the US trading session when United States (US) President Donald Trump and Russian President Vladimir Putin agreed over the phone to start peace talks with Ukraine. 

The economic calendar is focusing on US producer figures on Thursday. The January Producer Price Index (PPI) is due. The weekly US Jobless Claims will be released as well.  Traders meanwhile can further digest the two-day testimony from US Federal Reserve (Fed) Chairman Jerome Powell at Capitol Hill. 

Daily digest market movers: Some relief

• US President Trump issued a warning for Hamas and the Gaza region, demanding that Hamas releases all hostages by noon on Saturday or “all hell will break loose”, Reuters reports. 
• The possibility of a start in peace talks between Russia and Ukraine is spurring risk assets and the Euro (EUR) against the US Dollar (USD). This, in turn, triggers a softer US Dollar Index. The Euro accounts for 57.6% of the weight in the DXY.
• At 13:30, nearly all important data for this Thursday will be released:
  • US Jobless Claims for the week ending on February 7 are expected to slide to 215,000, coming from 219,000 in the previous week. Continuing Claims ending January 31 should decline as well to 1.880 million, coming from the previous 1.886 million. 
  • The monthly headline PPI for January is expected to tick up to 0.3%, from 0.2%.
  • The monthly core PPI for January is expected to rise sharply to 0.3%, coming from 0% in December. 
• Equities are in a good mood. European indices outpace US futures, and all major indices and futures are trading in the green. 
• After the stronger-than-expected January CPI reading, the CME FedWatch tool shows a 64.3% chance that interest rates will remain unchanged at current levels in June, compared to 50.3% before the release. This suggests that the Fed would keep rates unchanged for longer to fight against persistent inflation. 
• The US 10-year yield is trading around 4.607%, a touch softer from this week’s high of 4.657%.

US Dollar Index Technical Analysis: Wrong-footed

The US Dollar Index (DXY) is proving the thesis again that when all banks call for a specific direction or target level, the opposite will often materialize. At the start of this year, nearly all major banks predicted parity in EUR/USD as a given. With peace talks between Russia and Ukraine possibly underway and the tensions in Ukraine perhaps ending in 2025, a substantially weaker US Dollar might be a scenario only a few have kept as a possible outcome. 

On the upside, the first barrier at 109.30 (July 14, 2022, high) was briefly surpassed but did not hold last week. Once that level is reclaimed, the next level to hit before advancing further remains at 110.79 (September 7, 2022, high). 

On the downside,  107.35 (October 3, 2023, high) is still acting as strong support after several tests since late January. In case more downside occurs, look for 106.52 (April 16, 2024, high), 106.28  (100-day Simple Moving Average), or even 105.89 (resistance in June 2024) as better support levels. 

US Dollar Index: Daily Chart

In a recently shared social media post, US President Donald Trump pointed to an announcement of reciprocal tariffs.

"Three great weeks, perhaps the best ever, but today is the big one: reciprocal tariffs!!! Make America great again!!!," Trump said on Truth Social.

Market reaction

The US Dollar Index recovered from session lows with the immediate reaction. At the time of press, the index was down 0.15% on the day near 108.00.

LME Copper broke out from a base in the form of an Inverse Head and Shoulders pattern recently and marched towards 9530, BBH's FX analysts report.

Upward momentum us prevalent in Copper

"It successfully defended neckline of the formation near 9290 in last pullback. Daily MACD remains anchored within positive territory highlighting prevalence of upward momentum. Defence of 9290 can lead to persistence in up-move. Beyond 9530, next objectives could be located at target for the pattern near 9780/9830 and September 2024 high of 10150."

• USD/CAD falls below 1.4300 as the market sentiment turns risk-on amid optimism over the Russia-Ukraine truce.
• The outlook of the US Dollar remains firm on expectations that the Fed will hold interest rates for longer.
• Investors expect the BoC to continue reducing interest rates further.

The USD/CAD pair falls below the key level of 1.4300 in Thursday’s European session. The Loonie pair faces selling pressure as the US Dollar (USD) is underperforming its peers amid risk-on market sentiment. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slumps to near 107.50.

Market sentiment turned cheerful as United States (US) President Donald Trump confirmed on Wednesday that both leaders of Russia and Ukraine have agreed to talk about ending a three-year-long war. This scenario has resulted in cooling geopolitical tensions, which has improved demand for risk-perceived assets.

However, the outlook of the US Dollar remains firm as investors brace for reciprocal tariffs from Trump. Also, deepening expectations that the Federal Reserve (Fed) will keep interest rates at their current levels for longer due to accelerating pressures would bring the US Dollar on the front foot.

Donald Trump is poised to announce reciprocal tariffs later in the day. During the election campaign, Trump said that he would implement a policy of “an eye for an eye, a tariff for a tariff, same exact amount.”

Though the Canadian Dollar (CAD) outperforms the US Dollar, it is underperforming other peers on firm expectations that the Bank of Canada (BoC) will continue reducing interest rates. The BoC reduced its key borrowing rates by 25 basis points (bps) to 3% last month. BoC Governor Tiff Macklem stated that economic uncertainty amid Trump tariff fears supports their dovish interest rate decision.

USD/CAD dropped to a two-month low around 1.4255 on broad USD weakness , BBH's FX analysts report.

CPI print, next week to shape the BOC’s next policy rate decision.

"The Bank of Canada (BOC) January 29 meeting Summary of Deliberation highlighted the bank’s concern around trade disputes. Members viewed the impact of prolonged trade uncertainty on business investment and consumer confidence as the main downside risk to the outlook."

"Even if no tariffs were imposed, a long period of uncertainty under the cloud of tariff threats would almost certainly damage business investment in Canada. Members also agreed that it would not be appropriate to provide any guidance on the future path for the policy interest rate in its communications given the high level of uncertainty surrounding the outlook, and the wide range and complexity of potential trade conflict scenarios."

"Markets have trimmed bets of a 25bps BOC policy rate cut in March to 48% vs. 63% on Monday. Canada’s January CPI print, due next week, will play a crucial role in shaping the BOC’s March 12 policy rate decision."

EUR/CHF forms a series of higher peaks and troughs after defending the crucial graphical support of 0.9250/0.9210, Societe Generale's FX analysts report.

An initial pullback is under way

"EUR/CHF has formed a series of higher peaks and troughs after defending the crucial graphical support of 0.9250/0.9210 representing lows of December 2023 / August 2024."

"It has retested the upper limit of the range since last September at 0.9510 and attempted cross above 200-DMA. An initial pullback is under way; recent pivot low at 0.9350 is crucial support. Overcoming 0.9510 can lead to extension in up move towards projections of 0.9560/0.9580 and 0.9670."

AUD/USD is trading just under its year-to-date high of 0.6330, BBH's FX analysts report.

Everything points to additional AUD/USD downside.

"The Melbourne Institute measure of inflation expectations one year out rose to 4.6% in February vs. 4.0% in January, matching its April 2024 high. RBA cash rate futures hardly budged and still imply 87% probability of a 25bps rate cut next week. Indeed, softer inflation pressures in Q4 support the case for the RBA to start easing."

"RBA/Fed policy trend and sluggish Chinese economic activity point to additional AUD/USD downside."

The oil market edged lower with ICE Brent trading below $75/bbl this morning following the reports that US President Donald Trump and Russian President Vladimir Putin agreed to start negotiations to end the war in Ukraine. Meanwhile, the recent numbers from the Energy Information Administration’s (EIA) inventory report were soft for the oil market, ING’s commodity analysts Warren Patterson and Ewa Manthey notes.

Trump and Putin agree to start negotiations on Ukraine

"In its monthly report, OPEC left its global oil demand growth estimate unchanged at 1.45m b/d and 1.43m b/d for 2025 and 2026 respectively. On the supply side, the group revised down non-OPEC+ supply by 0.1m b/d for 2025 which shall help increase the requirement for OPEC crude. The group expects demand for OPEC+ crude to increase from 42.2m b/d in 2024 to 42.6m b/d in 2025 and 42.9 mb/d in 2026."

"The group warned about the uncertainty over the supply-demand balance due to the tariffs from the US. In the short term, the OPEC trimmed output by 121k b/d MoM to 26.67m b/d in January. This decline was largely driven by Nigeria (-29k b/d), the UAE (-37k b/d), Iran (-14k b/d) and Venezuela (-17k b/d). The IEA will be releasing its monthly oil market report later today."

"US weekly inventory numbers from the EIA yesterday show that the US commercial crude oil inventories (excluding SPR) increased by 4.1m barrels over the last week, well above the 2.5m barrels the market expected. However, this was lower than the 9m barrels build reported by API the previous day. The build was larger when factoring in the SPR, with total US crude oil inventories rising by 4.3m barrels. Total US commercial crude oil stocks stand at 428m barrels, the highest since 22 November 2024."

US Dollar (USD) is expected to trade in a range between 7.3000 and 7.3200. In the longer run, outlook remains mixed, but USD is likely to trade in a narrower range of 7.2500/7.3300, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Outlook for USD remains mixed

24-HOUR VIEW: "USD traded in a subdued manner and closed largely unchanged two days ago. Yesterday, we pointed out that 'momentum indicators are mostly flat.' We expected USD to 'trade in a range between 7.3000 and 7.3200.' Our view of range trading was not wrong, even though USD traded in a slightly higher range of 7.3050/7.3249. USD closed largely unchanged at 7.3110 (+0.01%). Momentum indicators remain flat, and we continue to expect USD to trade in a range between 7.3000 and 7.3200."

1-3 WEEKS VIEW: "We highlighted last Friday (07 Feb, spot at 7.2865) that 'while the outlook remains mixed, the decreasing volatility over the past couple of days suggests USD could trade in a narrower range of 7.2500/7.3300.' There is no change in our view."

NZD/USD is firmer on broad USD weakness, BBH's FX analysts report.

NZ-US 2-year bond yield spreads to weigh on NZD/USD

"The Q1 RBNZ survey of inflation expectations leaves plenty of room for the RBNZ to deliver a 50bps cut to 3.75% next week. Firms’ inflation expectations 2, 5 and 10 years out all dipped closer to 2%. NZ-US 2-year bond yield spreads can further weigh on NZD/USD."

US Dollar (USD) is likely to consolidate between 153.30 and 154.85. USD could continue to rise; overbought conditions suggest that any advance may not reach 155.80, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

USD can continue to rise vs the JPY

24-HOUR VIEW: "While we expected USD to 'rise further' yesterday, we highlighted that 'the major resistance at 154.35 is unlikely to come under threat.' USD rose but remained below 154.35 until NY trade, when it surged to 154.79. USD closed on a strong note at 154.41, gaining 1.27%. The rally appears to be overdone, and USD is unlikely to rise much further. Today, USD is more likely to consolidate between 153.30 and 154.85."

1-3 WEEKS VIEW: "We revised our view from negative to neutral yesterday (12 Feb, spot at 152.95), indicating that 'downward pressure has eased.' We added, USD 'is likely to trade in a 151.40/154.35 range for the time being.' The subsequent strong surge that sent USD to a high of 154.79 was surprising. While USD could continue to rise, deeply overbought conditions suggest that any advance may not reach the major resistance at 155.80. On the downside, a breach of 152.50 would indicate that USD is not rising further."

GBP/USD recovered above 1.2500 and fell below that point shortly after that, BBH's FX analysts report.

BOE forecasts real GDP at just 0.1% q/q

"Monthly real GDP grew 0.4% in December (consensus: 0.1%) vs. 0.1% in November largely driven by growth in the service sector. On a quarterly basis, preliminary real GDP unexpectedly rose 0.1% q/q (consensus: -0.1%) vs. 0% in Q3 but the details were unimpressive."

"There was no growth in real household expenditure and gross fixed capital formation fell. Inventory restocking was the main growth driver while net trade the biggest drag."

"Beyond Q4, the Bank of England’s (BOE) macroeconomic projections point to near-term stagflation conditions which is a drag for GBP. For Q1 2025, the BOE forecasts real GDP at just 0.1% q/q and CPI inflation at 2.8% y/y."

Eurozone’s industrial sector activity deteriorate in December, the latest data published by Eurostat showed on Thursday.

Industrial output in the old continent declined 1.1% MoM in December, compared to the estimated decrease of 0.6% and 0.4% in November.

Eurozone Industrial Production dropped at an annual rate of 2% in the same period versus November’s -1.8%. Data beat the market expectations of -3.1%.

EUR/USD reaction to the Eurozone Industrial Production data

Eurozone industrial figures fail to deter Euro buyers, as EUR/USD holds sizeable gains above 1.0400. The pair is up 0.39% on the day at the press time.

Outlook is unclear; New Zealand Dollar (NZD) is likely to trade in a 0.5605/0.5675 range. In the longer run, for the time being, NZD is likely to trade in a range between 0.5595 and 0.5720, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

The outlook for NZD vs. USD is unclear

24-HOUR VIEW: "We expected NZD to 'trade in a 0.5640/0.5675 range' yesterday. Our view was incorrect as NZD traded between 0.5601 and 0.5671, closing at 0.5642 (-0.23%). The outlook is unclear, and NZD is likely to trade in a 0.5605/0.5675 range today."

1-3 WEEKS VIEW: "Our latest narrative was from Tuesday (11 Feb, spot at 0.5640), wherein “for the time being, NZD is likely to trade in a range between 0.5595 and 0.5720.” Our narrative remains unchanged."

Amid heightening speculations of Russia-Ukraine peace talks, the Kremlin came out with a statement on Thursday, noting that “there is a political will on both sides to engage in dialogue and search for a settlement.

Additional quotes

Market reaction

The US Dollar Index (DXY) remains 0.35% lower on the day at 107.63, as of writing, undermined by risk-om market mood.

Here are the thoughts of our UK economist, James Smith, on today's seemingly better-than-expected GDP figures, ING’s FX analysts Chris Turner notes.

EUR/GBP to find support this month in the 0.8300/8350 area

"UK GDP was a bit better than feared in the fourth quarter but the outperformance was solely because of a massive increase in inventories. Remember these are volatile and don’t tell us much/anything about the underlying economic fundamentals. Consumption was flat."

"Business investment fell sharply despite some really good numbers earlier in the year. Net trade was poor. So it’s a lacklustre story which puts pressure on the Treasury to find savings. The OBR, which polices the fiscal rules, has forecast 0.4% in Q4 and therefore it will be revising down its highly optimistic 2% 2025 growth forecast."

"EUR/GBP dropped 20 pips on today's data, but as James says a re-assessment of the data could see sterling hand back its gains. We're negative on sterling into the second quarter and suspect that EUR/GBP will find support this month in the 0.8300/8350 area."

In its monthly oil market report published on Thursday, the International Energy Agency (IEA) raised 2025 global oil demand growth forecast to 1.1 million barrels per day (bpd) from 1.05 million bpd..

Additional takeaways

• EUR/USD climbs above 1.0440 as market sentiment turns favorable for risky assets, with Russia and Ukraine agreeing to start peace negotiations.
• Investors brace for high uncertainty as US Trump is poised to impose reciprocal tariffs.
• The Federal Reserve is expected to keep interest rates steady for longer.

EUR/USD jumps to near 1.0440 in Thursday’s European trading session. The major currency pair strengthens as investors’ risk appetite has increased significantly due to the constructive development of the Russia-Ukraine conflict since both countries agreed to begin peace talks. 

Market sentiment turned cheerful after United States (US) President Donald Trump confirmed that he had a “lengthy and highly productive” conversation with Russian leader Vladimir Putin, who agreed to start peace negotiations with Ukraine.

US Defense Secretary Pete Hegseth stated on Wednesday that Ukraine should stop seeking membership into the NATO alliance and reconsider its goals of reclaiming territory seized by Russia.

A constructive attempt by US President Trump to end the three-year-long bloodshed has strengthened the appeal of risk-sensitive assets, such as the Euro (EUR). The Russia-Ukraine truce would help fix the Eurozone energy crisis and the global supply chain. Such a scenario will be favorable for the Euro. 

Still, investors doubt that the Euro is unlikely to hold onto its recovery move due to weak Eurozone economic performance and firm expectations that the European Central Bank (ECB) will extend the monetary easing cycle as inflationary pressures are on track to return sustainably to 2% target by the year.

Daily digest market movers: EUR/USD moves higher while investors question Euro’s strength

• Market participants worry that the Euro’s recovery could fizzle out as US President Donald Trump is expected to announce reciprocal tariffs before meeting with Indian Prime Minister Narendra Modi on Thursday, CNBC reported.
• Trump is expected to increase the tariffs on imports of European vehicles to 10%  from the current 2.5% levy. The US is the second-largest market for the European Union (EU)  automobile exports after the United Kingdom (UK). Over 20% of total EU auto exports were taken by the US in 2023, according to ACEA.
• The impact of reciprocal tariffs will be negative for the Eurozone economy and would lead to a trade war between Europe and the US. European Commission President Ursula von der Leyen warned on Tuesday that the EU would act to “safeguard its economic interests” and is ready for “proportionate countermeasures.” Her comments came after Trump imposed 25% tariffs on all imports of steel and aluminum and said these tariffs “will not go unanswered”.
• On the monetary policy front, ECB policymaker and Governor of the Croatian National Bank Boris said in an interview with Reuters that market expectations for three more interest rate cuts this year are not "unreasonable". Vujčić added that the ECB could remove the reference to 'restrictive policy' already in the March policy statement and explained that rate cut predictions are based on expectations for a "quick fall in services inflation" in the coming months.
• Meanwhile, the US Dollar (USD) has faced a sharp sell-off after positive headlines on Russia-Ukraine truce talks as investors showed back to safe-haven assets. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, declined to 107.50. 
• However, the outlook for the US Dollar remains firm as the hotter-than-expected  Consumer Price Index (CPI) report for January has provided enough justification to Federal Reserve (Fed) officials to hold interest rates in the current range of 4.25%-4.50% for a longer period.
• Analysts at Macquarie have reinforced their call that the Fed will remain on “long hold in 2025” and no change in the fed funds rate on “January’s hot CPI report.” They initially guided their long-hold call after the release of the strong employment report for January, which was released on February 7.

Technical Analysis: EUR/USD struggles to extend upside above 50-day EMA

EUR/USD extends its winning streak for the third trading day on Thursday. The major currency pair climbs above 1.0400 but continues to face pressure near the 50-day Exponential Moving Average (EMA) around 1.0424.

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

Looking down, the January 13 low of 1.0177 and the round-level support of 1.0100 will act as major support zones for the pair. Conversely, the psychological resistance of 1.0500 will be the key barrier for the Euro bulls.

The People’s Bank of China (PBOC) released their fourth-quarter monetary policy implementation report on Thursday.

Key takeaways

Market reaction

The Chinese proxy, the Australian Dollar (AUD) was last seen changing hands at 0.6264 against the US Dollar (USD), down 0.35% on the day.

• Gold is on the forefront again and resumes its rally mode. 
• Headwinds remain with a possible peace deal for Ukraine and US inflation concerns. 
• Gold is back on its way to test the all-time high at $2,942.

Gold’s price (XAU/USD) soars again and resumes its rally near $2,920 at the time of writing on Thursday, with Bullion traders shrugging off the United States (US) Consumer Price Index (CPI) data for January released on Wednesday. Traders are also ignoring the possibility of a peace deal formation with United States (US) President Donald Trump and Russian President Vladimir Putin, who have spoken on the phone to outline a meeting soon to work out the broad strokes of a peace deal. Despite these quite substantial tail risks, Gold is rallying again, revealing a firm commitment from traders to keep residing in the safe haven asset. 

Meanwhile, traders are digesting Federal Reserve (Fed) Chairman Jerome Powell’s two testimonies at Capitol Hill before lawmakers. The release of January’s Consumer Price Index (CPI) numbers on Wednesday proved that the Fed has the right angle to keep rates steady for longer. US yields surged during the past two days, though with the pickup in Gold buying, the question will be whether US yields can keep rising in tandem with an uptick in Gold, which is a bit contradictory. 

Daily digest market movers: Geopolitics take over

• US President Donald Trump said that Hamas must release all hostages by noon on Saturday or ‘all hell will break loose’, Reuters reports. 
• Ukraine talks are spurring risk assets and the Euro (EUR) against the US Dollar (USD). This, in turn, triggers a softer US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, which is beneficial for Gold. 
• After the hotter-than-expected January CPI reading, the CME FedWatch tool shows a 64.3% chance that interest rates will remain unchanged at current levels in June, compared to 50.3% before the release. This suggests that the Fed would keep rates unchanged for longer to fight against persistent inflation. 

Technical Analysis: Buy the dip, but…

Gold traders have used January’s CPI release as an entry point to buy more stakes in their beloved precious metal. However, a considerable tail risk could deliver quite a harsh and quick correction in Gold: the Ukraine peace talks. Once those peace talks start to take shape and might get support from Ukraine and Europe, a risk-on wave in markets would occur, with safe-haven outflows and Gold being punished.  

The first support level on Thursday is $2,892, which is the Daily Pivot. From there, S1 support should come in at $2,875. The S2 support at $2,847 should act as a safeguard and avoid any further declines to the bigger $2,790 level (October 31, 2024, high).

On the upside, the R1 resistance at $2,920 is the first level that needs to be recovered, followed by the R2 resistance at $2,937. In case the rally continues, the $2,950 big figure will be tested for a break to the upside. Further up, the $3,000 psychological level could be next.

XAU/USD: Daily Chart

Silver prices (XAG/USD) rose on Thursday, according to FXStreet data. Silver trades at $32.25 per troy ounce, up 0.13% from the $32.21 it cost on Wednesday.

Silver prices have increased by 11.62% 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 90.34 on Thursday, up from 90.07 on Wednesday.

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

We maintain our view of a 25bps rate cut by the Reserve Bank of Australia at the 18 February meeting. A tight labour market presents downside risk to our view of 100bps of RBA rate cuts in 2025. Swaps are pricing c.22bps of RBA cuts in February, which should limit AUD weakness due to the cuts. Near-term risk-reward likely favours AUD upside vs USD, especially if Australia is exempt from US tariffs, Standard Chartered's FX and Macro Strategist Nicholas Chia reports.

Near-term risk-reward likely favours AUD upside vs USD

"We maintain our view that the Reserve Bank of Australia (RBA) will kickstart its rate-cutting cycle with a 25bps cut at the 18 February meeting, bringing the cash rate to 4.10%. While underlying inflation – proxied by trimmed mean CPI inflation (Q4: +3.2% y/y) – remains above the RBA’s 2-3% target, we think the central bank will justify the cut by noting that the economic conditions have evolved largely in line with its expectations. Headline Q3-2024 GDP growth (+0.8% y/y) was weaker than the RBA estimated while the labour market was tighter than its expectation, which should assuage its concerns over an abrupt slowdown in economic activity."

"We see a risk that terminal rates end up higher than our forecast for 2025 (3.35%). The labour market has been tight relative to previous RBA tightening cycles: the labour force participation rate reached a record level (67.1%) and the unemployment rate remained sticky at 4% at end-2024, relieving pressure on the central bank to cut rates aggressively (Figure 1). This may also be a consequence of the RBA’s dual mandate of managing the acute policy trade-off between price stability and full employment. We doubt the RBA will offer substantive forward guidance on monetary policy as it requires more clarity on the disinflation process before getting rates back to neutral, which it estimates to be in the region of 3%-4%."

Austalian Dollar (AUD) is expected to trade between 0.6250 and 0.6310. In the longer run, buildup in momentum is fading; a break below 0.6230 would mean that AUD is likely to trade in a range, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Below 0.6230, AUD is likely to trade in a range

24-HOUR VIEW: "Yesterday, we noted 'a tentative buildup in momentum.' We indicated that 'there is a chance for AUD to rise above 0.6310, but it remains to be seen if it can maintain a foothold above this level.' During the NY session, AUD plummeted to 0.6235, soared to 0.6309, and then pulled back to close at 0.6278 (-0.27%). The choppy price action has resulted in a mixed outlook. Today, we expect AUD to trade between 0.6250 and 0.6310."

1-3 WEEKS VIEW: "Last Thursday (06 Feb, spot at 0.6280), we indicated that 'if AUD closes above 0.6310, it could trigger an advance to 0.6355.' AUD did not make any headway on the upside. Two days ago (11 Feb, spot at 0.6270), we highlighted that the recent 'buildup in momentum is fading, and if AUD breaks below 0.6230 (‘strong support’ level), it would mean that AUD is likely to trade in a range.' Yesterday, AUD fell to a low of 0.6235. As long as 0.6230 is not breached, there is still a slim chance for AUD to break clearly above 0.6310."

• Silver price grips gains near $32.30 amid weakness in the US Dollar and uncertainty over Trump’s reciprocal tariffs.
• The US Dollar declines as optimism over Russia-Ukraine peace talks has improved market sentiment.
• Hot US CPI data for January has boosted expectations for the Fed’s “higher for longer” interest rates.

Silver price (XAG/USD) holds onto gains near Wednesday’s high around $32.30 in Thursday’s European session. The white metal remains firm amid uncertainty that United States (US) President Donald Trump will announce reciprocal tariffs on Thursday.

The White House said on Wednesday that US President Donald Trump could announce his reciprocal tariff plan before he meets with Indian Prime Minister Narendra Modi on Thursday.

Such a scenario would deepen fears of a global trade war, which will boost the safe-haven appeal of precious metals, such as Silver.

In the election campaign, Trump said that he would implement a policy of “an eye for an eye, a tariff for a tariff, same exact amount.”

Meanwhile, the market sentiment is risk-on as leaders of Russia and Ukraine have agreed to peace talks after a three-year-long war. The Silver price had a strong rally when Russia and Ukraine entered a war.

Apart from the uncertainty over Trump’s tariffs, the Silver price clings to gains due to weakness in the US Dollar (USD). Risk-on market mood due to Russia-Ukraine peace talks has weighed heavily on the US Dollar, with the US Dollar Index (DXY) declining to near 107.50.

The US Dollar weakens even though the hot US Consumer Price Index (CPI) report for January has boosted expectations that the Federal Reserve (Fed) will keep interest rates in the current range of 4.25%-4.50% for longer. Technically, higher interest rates for longer bodes poorly for the Silver price.

Silver technical analysis

Silver price continues to face pressure near the immediate resistance of $32.50, which is plotted from the December 9 high. The outlook of the white metal remains bullish as it holds above the 50-day Exponential Moving Average (EMA), which trades around $30.95.

The 14-day Relative Strength Index (RSI) falls back inside the 40.00-60.00 range, suggesting that the momentum is not bullish for now. However, the upside bias is intact.

Looking down, the upward-sloping trendline from the August 8 low of $26.45 will be the key support for the Silver price around $29.50. While, the October 31 high of $33.90 will be the key barrier.

Silver daily chart

• NZD/USD could explore the area around the psychological level of 0.5600.
• The 14-day RSI remains below the 50 mark, strengthening the bearish sentiment.
• The immediate barrier appears at the nine-day EMA of 0.5650 level.

The NZD/USD pair continues its decline for the second consecutive day, trading near 0.5640 during European hours on Thursday. Technical analysis of the daily chart indicates a bearish market sentiment, with the pair remaining within a descending channel pattern.

The 14-day Relative Strength Index (RSI) stays below the 50 mark, reinforcing the bearish outlook. Additionally, the NZD/USD pair remains under the nine-day Exponential Moving Average (EMA), signaling weak short-term momentum.

On the downside, the NZD/USD pair could explore the support region around the psychological level of 0.5600. A decisive break below this level could drive the pair toward 0.5516, its lowest point since October 2022, recorded on February 3. Further support lies near the lower boundary of the descending channel at 0.5450.

To the upside, the NZD/USD pair's immediate resistance is at the nine-day EMA of 0.5650, followed by the descending channel’s lower boundary at 0.5670. A breakout above this critical resistance zone could ease the bearish bias, potentially pushing the pair toward its nine-week high of 0.5794, reached on January 24.

NZD/USD: Daily Chart

On a normal day in FX markets, yesterday's much-higher-than-expected US inflation print should have left the US Dollar (USD) stronger across the board and risk assets under pressure. That was the case for a few hours before the headlines hit that Trump had had a 90-minute call with Putin to discuss an end to the fighting in Ukraine. For now, financial markets are overlooking what a shift to US isolationism would mean for European security. In Brussels yesterday, new US Defence Secretary Pete Hesgeth said that US troops would not be part of any peace-keeping force in Ukraine and that such a force would not be protected by NATO's Article 5, ING’s FX analysts Chris Turner notes.

DXY to move towards 107.00/30

"Instead, financial markets are focusing on the benefits of improved confidence in the region and less disruption to global energy supplies. Here crude oil and European natural gas prices came off sharply yesterday – a good news story for global growth and a mild dollar negative. At the same time, there is a little optimism emerging in Chinese asset markets, where local tech stocks are doing a little better post the DeepSeek news and once again expectations are building that Chinese policymakers might have some new support measures to announce when they next meet in early March. This has seen the onshore USD/CNY cross back under 7.30 again."

"The above all sounds positive for global growth expectations and could encourage some paring back of short positions in commodity and EM currencies. What is limiting that correction, however, is the ongoing threat of tariffs. The prospect of 'reciprocal' tariffs is still hanging over FX markets this week and apparently Trump signs his next batch of executive orders at 19CET today. The market will be focusing on whether those tariffs only hit the likes of India, Brazil and Korea – which are among the higher tariff regimes. And also whether these tariffs are again back-dated – providing, for example, a month for the tariffs to be negotiated away."

"Away from geopolitics and tariffs, today's US focus is on the initial jobless claims and PPI. Any upside surprise to PPI – and what it means for the core PCE deflator released on 28 February – is a mild dollar positive. But for now, we slightly favour a move in DXY towards 107.00/30, with outside risk to the 106.35 area."

Pound Sterling (GBP) is expected to trade in a range between 1.2390 and 1.2490. In the longer run, for the time being, GBP is likely to trade in a 1.2310/1.2550 range, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

No increase in either downward or upward momentum

24-HOUR VIEW: "We highlighted yesterday that while GBP is likely to continue to rise, any further advance is expected to face strong resistance at 1.2500.' However, GBP swung between 1.2377 and 1.2483 before closing unchanged at 1.2445. There has been no increase in either downward or upward momentum. Today, we expect GBP to trade in a range between 1.2390 and 1.2490."

1-3 WEEKS VIEW: "Our latest narrative was from last Friday (09 Feb, spot at 1.2440), wherein 'for the time being, GBP is likely to trade in a 1.2310/1.2550 range.' There is no change in our narrative for now."

• USD/CHF extends its losses as the US Dollar continues to lose ground for the third successive session on Thursday.
• Stronger-than-expected US inflation in January has increased the likelihood of the Fed keeping current interest rates for an extended period.
• Swiss CPI dropped to 0.4% YoY in January 2025, its lowest level since April 2021.

USD/CHF depreciates approximately 0.50%, trading around 0.9080 during the European hours on Thursday. The decline of the pair could be attributed to weaker US Dollar (USD). The US Dollar Index (DXY), which measures the USD’s value against six major currencies, extends its losses for the third successive session and trades around 107.70 at the time of writing. Traders await the US Producer Price Index (PPI) inflation due later in the day.

In economic data, the US Bureau of Labor Statistics reported on Wednesday that the Consumer Price Index (CPI) rose 3.0% year-over-year in January, surpassing the expected 2.9%. Core CPI, which excludes food and energy, increased to 3.3% from 3.2%, exceeding the forecast of 3.1%. On a monthly basis, headline inflation accelerated to 0.5% in January from 0.4% in December, while core CPI climbed to 0.4% from 0.2%.

Stronger-than-expected US inflation data has reinforced expectations that the Federal Reserve (Fed) will keep interest rates at 4.25%-4.50% for an extended period. According to the CME FedWatch Tool, the likelihood of a Fed rate cut in June has now dropped to nearly 30%.

Fed Chair Jerome Powell noted that while inflation has moderated, the central bank still has work to do. Speaking on Tuesday, Powell emphasized that the Fed is in no rush to cut interest rates, citing continued strength in the labor market and solid economic growth.

The Swiss Franc (CHF), known as a safe-haven currency, may have strengthened amid rising geopolitical tensions in the Middle East. Israeli Prime Minister Benjamin Netanyahu announced late Tuesday that the ceasefire would end, and Israel would resume “intense fighting” in Gaza if Hamas failed to release “our hostages” by Saturday noon.

On Thursday, Switzerland's Consumer Price Index (CPI) fell to 0.4% year-over-year in January 2025, aligning with market expectations and down from 0.6% in December. This marks the lowest level since April 2021. On a monthly basis, the CPI declined by 0.1%, maintaining the same pace as the previous period.

Despite the jump in short-dated US rates yesterday, EUR/USD has moved smartly higher on the back of the Trump-Putin story. Shortly before those headlines hit, the euro was also rallying on comments from European officials that they were currently negotiating with their US counterparts to try and avoid tariffs, ING’s FX analysts Chris Turner notes.

EUR/USD correction to be a hard slog back to 1.0500/0530

"Progress on peace in Ukraine could be an important positive for European countries should it deliver lower energy prices and encourage broader investment on the back of something like a new Marshall Plan. Meeting customers this week we have been discussing some potential positives for Europe – given current above-average savings rates – if only confidence can improve."

"Yet it is the threat of tariffs that hangs as a dark cloud over a region and it seems unlikely that businesses or consumers will be able to conclude anytime soon that the tariff threat has receded. No doubt speculators are currently paring back euro short positions."

"Yet those positions are not extreme and the sticky US inflation story is keeping rate spreads very wide in the dollar's favour. That is why this EUR/USD correction will likely be a hard slog back to 1.0500/0530 with an outside risk of 1.0575."

Chance for Euro (EUR) to retest the 1.0430 level; it is unlikely to break above the major resistance at 1.0450. In the longer run, outlook remains unclear; price movements are likely to stay within a 1.0250/1.0450 range for now, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Outlook remains unclear

24-HOUR VIEW: "After EUR rose sharply to 1.0380 two days ago, we indicated yesterday that EUR 'is likely to trade with an upward bias.' However, we pointed out that 'it does not appear to have enough momentum to break clearly above 1.0405.' We also pointed out that 'support is at 1.0340; a breach of 1.0315 would indicate that the buildup in momentum has faded.' In NY trade, EUR fell briefly to 1.0315 before reversing sharply, soaring to a high of 1.0429. It then pulled back to close higher by 0.21% at 1.0382. Despite the choppy price action, there has been a slight increase in upward momentum. Today, there is a chance for EUR to retest the 1.0430 level before a more sustained pullback is likely. EUR is unlikely to break above the major resistance at 1.0450. Support levels are at 1.0355 and 1.0330."

1-3 WEEKS VIEW: "Last Wednesday (05 Feb, spot at 1.0375), we highlighted that 'the outlook for EUR is unclear, and it could trade in a broad range of 1.0250/1.0490.' As we tracked the price movements, we indicated on Tuesday (11 Feb, spot at 1.0305) that “the outlook remains unclear, but the price movements are likely to stay within a narrower 1.0250/1.0450 range for now.' Our view remains unchanged."

• The Pound Sterling advances as the UK GDP rose at a robust pace in December and surprisingly expanded in the last quarter.
• BoE's Greene and Pill have guided a gradual and cautious approach to interest rate cuts.
• Investors brace for volatility as US President Trump is poised to announce reciprocal tariffs.

The Pound Sterling (GBP) strengthens in Thursday’s European session due to multiple tailwinds, such as upbeat United Kingdom (UK) data and a cheerful market mood. The UK Office for National Statistics (ONS) reported that the UK Gross Domestic Product (GDP) rose at a faster pace of 1.4% YoY in the last quarter of 2024, compared to estimates of 1.1% and the 1% growth seen in the third quarter, upwardly revised from 0.9%.

Quarterly, the UK economy surprisingly expanded by 0.1% after remaining flat in the July-September period, while it was expected to have contracted at a similar pace.

Month-on-month, the UK economy grew at a robust pace of 0.4% in December, compared to estimates and the former reading of 0.1%.

Though the UK GDP data had been better than expected in December and the last quarter of the previous year, it is unlikely to offer sustainable support to the British currency as the Bank of England (BoE) halved its GDP forecasts for the year to 0.75% in the last week’s monetary policy meeting, where the central bank reduced its borrowing rates by 25 basis points (bps) to 4.5% and guided caution on interest rate cuts.

BoE officials have been guiding a cautious approach to interest rate cuts as they remain concerned about the mild persistence of inflationary pressures. BoE Chief Economist Huw Pill said earlier in the day that the central bank needs to move cautiously on further policy easing, as the battle against inflation is far from over.

"We are able to remove some of the restriction we imposed because of the successful - but not yet complete - process of disinflation,” Pill said, Reuters report. Additionally, he stated that the BoE has to work more to “bring inflation down” and, therefore, we can’t “cut interest rates aggressively”.

On Wednesday, BoE policymaker Megan Greene also favored a “cautious and gradual approach to interest rate cuts” as she believes that inflation persistence will less likely fade on its own, and therefore, the monetary policy will need to “remain restrictive.”

Meanwhile, the UK factory data also remained stronger than expected in December. Month-on-month Industrial Production rose by 0.5%, faster than estimates of 0.2%. The Manufacturing Production grew by 0.7%, while it was expected to decline by 0.1%. In November, both Industrial and Manufacturing Production declined.

Daily digest market movers: Pound Sterling jumps above 1.2500 against USD

• The Pound Sterling climbs to near the psychological resistance of 1.2500 against the US Dollar (USD) in European trading hours on Thursday. The GBP/USD pair strengthens as positive developments in peace talks between Russia and Ukraine have overcome the impact of hotter-than-expected United States (US) Consumer Price Index (CPI) data for January released on Wednesday, which boosted expectations that the Federal Reserve (Fed) will keep interest rates at their current levels for longer.
• US President Donald Trump confirmed on Wednesday that Russian leader Vladimir Putin and Ukrainian President Volodymyr Zelenskiy had expressed a desire for peace in separate phone calls. He also ordered his top officials to begin truce talks, Reuters reports. This scenario has increased investors' risk appetite and diminished demand for safe-haven assets, such as the US Dollar. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, slides to near 107.50.
• The US annual headline inflation accelerated to 3% in January from the estimates and the prior release of 2.9%. The core CPI inflation – which excludes volatile food and energy prices – surprisingly grew at a faster pace of 3.3% than 3.2% in December. Hotter-than-expected inflation data has forced trades to pare bets supporting an interest rate cut by the Fed in the June meeting. According to the CME FedWatch tool, there is a 36% chance that the Fed will cut interest rates in June, down from 50% on Tuesday.
• Going forward, the next trigger for the US Dollar will be President Trump’s decision on reciprocal tariffs, which he is expected to impose on Thursday. The White House said on Wednesday that Trump could announce his reciprocal tariff plan before he meets with Indian Prime Minister Narendra Modi on Thursday, CNBC reported. Trump's announcement of reciprocal tariffs could increase the safe-haven appeal of the US Dollar again.
• On the economic data front, investors will focus on the US Producer Price Index (PPI) data for January, which will be published at 13:30 GMT.

Technical Analysis: Pound Sterling revisits 50-day EMA

The Pound Sterling surges to near 1.2500 against the US Dollar and revisits the 50-day Exponential Moving Average (EMA) in European trading hours on Thursday after an indecisive Wednesday. A daily close above the 50-day EMA would indicate that the near-term trend is not bearish anymore.

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

Looking down, the January 13 low of 1.2100 will act as a key support zone for the pair. On the upside, the December 30 high of 1.2607 will act as key resistance.

• WTI price depreciates following discussions between Trump and Putin to initiate negotiations aimed at ending the Ukraine war.
• The dollar-denominated Oil faces challenges as rising US inflation reinforces odds that the Fed will maintain its hawkish policy stance.
• EIA Crude Oil Stocks Change reported a 4.07 million-barrel increase last week, against an expected 2.8 million-barrel rise.

West Texas Intermediate (WTI) Oil price continues its downward trend for the second straight day, trading around $70.60 per barrel during early European hours on Thursday. The decline comes as market risk sentiment softens following discussions between US President Donald Trump and Russian President Vladimir Putin. The two leaders agreed to initiate negotiations aimed at ending the ongoing war in Ukraine, fueling speculation that a resolution could ease supply concerns from one of the world's largest Oil exporters.

The dollar-denominated crude market also faces pressure from rising US inflation, reinforcing expectations that the Federal Reserve (Fed) will maintain its hawkish policy stance. Higher interest rates for an extended period slow economic activity in the United States, the world's largest Oil consumer, weighing on overall demand.

Additionally, the White House suggested late Wednesday that President Trump might announce his reciprocal tariff plan before meeting Indian Prime Minister Narendra Modi on Thursday, according to CNBC. Trump has recently indicated his intention to impose tariffs on countries that levy import duties on the US, heightening fears of a global trade war and adding to inflationary concerns.

A larger-than-expected buildup in US crude inventories further put downward pressure on Oil prices. Data from the Energy Information Administration (EIA) on Wednesday showed US crude stockpiles increased by 4.07 million barrels for the week ending February 7, surpassing the anticipated 2.8 million-barrel rise.

Meanwhile, OPEC maintained its outlook for strong global oil demand growth in 2025, citing robust air and road travel. The organization, in its latest monthly report, projected world oil demand to increase by 1.45 million barrels per day (bpd) in 2025 and by 1.43 million bpd in 2026, per Business Standard. OPEC does not anticipate that potential trade tariffs will significantly impact economic growth.

West Texas Intermediate (WTI) Oil price falls on Thursday, according to FXStreet data. WTI trades at $70.55 per barrel, down from Wednesday’s close at $71.16. Brent Oil Exchange Rate (Brent crude) is also shedding ground, trading at $74.29 after its previous daily close at $74.89.

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

• GBP/JPY attracts strong follow-through buyers for the third straight day amid a weaker JPY.
• The mostly upbeat UK macro data boosts the cross and contributes to the intraday strength.
• The divergent BoJ-BoE policy outlook might keep a lid on any further appreciating move.

The GBP/JPY cross builds on this week's goodish recovery move from the vicinity of the 187.00 mark, or its lowest level since September 2024, and gains some follow-through positive traction for the fourth straight day on Thursday. Spot prices stick to intraday gains following the release of mostly upbeat UK macro data, though remain below the 193.00 mark through the early European session.

The UK Office for National Statistics reported that the economy unexpectedly grew 0.1% QoQ in the three months to December 2024 after recording zero growth in the previous quarter. Adding to this, the UK GDP expanded 1.4% year-on-year (YoY) in Q4 vs. 1.1% expected and 0.9% growth in Q3. Other data showed that Industrial Production and Manufacturing Production in the UK increased 0.5% and 0.7%, respectively, in December, both surpassing estimates. This, in turn, provides a modest lift to the British Pound (GBP), which, along with a mostly weaker Japanese Yen (JPY), continues to push the GBP/JPY cross higher. 

Investors remain worried about the potential economic fallout from US President Donald Trump's new levies on commodity imports and reciprocal tariffs. Apart from this, a generally positive tone around the equity markets turns out to be a key factor undermining the safe-haven JPY. However, bets that the Bank of Japan (BoJ) will hike interest rates further, bolstered by Japan's strong Producer Price Index (PPI) released earlier today, might hold back the JPY bears from placing aggressive bets. Apart from this, the Bank of England's (BoE) gloomy outlook could keep a lid on any further appreciating move for the GBP/JPY cross. 

In fact, the UK central bank last week halved its 2025 economic growth forecast from 1.5% to 0.75%. Adding to this, BoE Governor Andrew Bailey told reporters that the central bank expects to make further rate cuts this year. Hence, strong follow-through buying is needed to confirm that the GBP/JPY cross has formed a near-term bottom around the 187.00 mark.

• EUR/GBP softens to around 0.8340 in Thursday’s early European session.
• UK GDP rose 0.1% QoQ in Q4 vs. -0.1% expected.
• The German HICP climbed 2.8% YoY in January, as expected. 

The EUR/GBP cross loses momentum to near 0.8340 during the early European session on Thursday. The Pound Sterling (GBP) edges higher after the release of UK growth numbers. The attention will shift to the preliminary reading of the Eurozone Gross Domestic Product (GDP) for the fourth quarter (Q4), which will be published on Friday. 

Data released by the Office for National Statistics (ONS) showed on Thursday that the UK economy expanded 0.1% QoQ in Q4. The reading came in better than the market consensus of a 0.1% decline in the reported period. Meanwhile, the UK GDP grew 1.4% YoY in Q4 versus the 1.1% expected and 0.9% seen in Q3. The GBP trades firm in an immediate reaction to the upbeat UK GDP data.

Bank of England (BoE) Chief Economist Huw Pill said on Thursday that he “urges caution on interest rate cuts” because the long process of wrestling down inflation is not yet complete. Earlier this week, BoE policymaker Catherine Mann said that demand conditions are significantly weaker than before. She had also advocated for a larger interest rate cut in last week’s policy meeting, where the BoE unanimously agreed to lower rates by 25 basis points (bps).

On the Euro front, Destatis on Friday showed that the German Harmonized Index of Consumer Prices (HICP) rose 2.8% YoY in January, compared to the previous reading and the expectations of 2.8%. 

The European Central Bank (ECB) has lowered borrowing costs five times since last June and hinted at more policy easing. Traders expect the ECB to deliver three more interest rate cuts this year amid risks of inflation undershooting the central bank’s target of 2%. The ECB already reduced its Deposit Facility Rate by 25 bps to 2.75% in the January meeting.

Here is what you need to know on Thursday, February 13:

The US Dollar (USD) struggles to find demand early Thursday after having failed to capitalize on January inflation data on Wednesday. The European economic calendar will feature Industrial Production data for December. Later in the day, January Producer Price Index (PPI) data from the US will be watched closely by market participants, who will also be awaiting new headlines surrounding US President Donald Trump's trade policy.

The US Bureau of Labor Statistics announced on Wednesday that the annual Consumer Price Index (CPI) rose by 3% in January, coming in above the market expectation and December's increase of 2.9%. Meanwhile, the core CPI rose by 0.4% on a monthly basis, following the 0.2% rise recorded in the previous month. With the immediate reaction, the USD gathered strength against its rivals. The improving risk mood, however, caused the USD to lose its footing later in the American session. 

President Trump said that he had a "lengthy and highly productive" phone call with Russian President Vladimir Putin to begin negotiations to end the war in Ukraine. In the meantime, Trump refrained from announcing reciprocal tariffs. According to CNBC, Trump could still unveil his reciprocal tariff plan before he meets with Indian Prime Minister Narendra Modi on Thursday. After closing marginally lower on Wednesday, the USD Index continues to push lower and was last seen near 107.50.

The UK's Office for National Statistics reported on Thursday that the Gross Domestic Product (GDP) expanded at an annual rate of 1.4% in the fourth quarter. This reading came in above the market expectation for an expansion of 1.1%. GBP/USD gathers bullish momentum following the upbeat data and trades above 1.2500.

The Bank of Canada's (BoC) Meeting Minutes showed late Wednesday that impending trade tariffs from the United States (US) have become a key risk to policy guidance looking forward. "BoC Governing Council felt that retaliatory measures by Canada and other nations would put upward pressure on inflation," the document read. USD/CAD stays under bearish pressure and trades at its lowest level since mid-December near 1.4250 early Wednesday.

After falling toward 1.0300 with the immediate reaction to US inflation data on Wednesday, EUR/USD regained its traction and ended the day marginally higher. The pair continues to push up toward 1.0450 to begin the European session.

USD/JPY gathered bullish momentum on Wednesday, supported by rising US yields, and gained more than 1% on a daily basis. The pair stages a downward correction toward 154.00 early Thursday.

Gold fell toward $2,860 in the early American session on Wednesday but managed to erase its daily losses. XAU/USD holds its ground on Thursday and rises toward $2,920.

• Quarterly GDP for the UK rose 0.1% in Q4 vs. -0.1% forecast.
• UK GDP arrived at 0.4% MoM in December vs. 0.1% anticipated.
• GBP/USD regains 1.2500 after the UK GDP data.

The UK economy expanded 0.1% QoQ in the three months to December 2024 after showing no growth in the third quarter. The data beat the expected 0.1% decline in the reported period.

The UK GDP increased 1.4% year-on-year (YoY) in Q4 vs. 1.1% expected and a revised 1% recorded in Q3.

The monthly UK GDP arrived at 0.4% in December, compared to a 0.1% increase in November, bettering the expectations of 0.1%.

Meanwhile, the Index of services (December) came in at 0.2% 3M/3M vs. 0% prior.

Other data from the UK showed that Industrial Production and Manufacturing Production grew 0.5% and 0.7%, respectively, over the month in December. Both indicators outpaced the estimates.

The quarterly Total Business Investment declined 3.2% through the September to December quarter.

Market reaction to the UK data

Upbeat UK GDP and industrial figures offered a fresh lift to the Pound Sterling. At the time of press, GBP/USD is trading 0.51% higher on the day at 1.2515.

FX option expiries for Feb 13 NY cut at 10:00 Eastern Time via DTCC can be found below.

EUR/USD: EUR amounts

• 1.0300 1.1b
• 1.0375 1.6b
• 1.0400 1.7b
• 1.0425 787m
• 1.0475 768m
• 1.0500 2.6b

GBP/USD: GBP amounts     

• 1.2200 413m

USD/CAD: USD amounts                                 

• 1.4240 598m
• 1.4300 1.1b
• 1.4375 985m
• 1.4400 457m

European Central Bank (ECB) policymaker Boris Vujčić noted on Thursday that the market is pricing in three more rate cuts this year and added that those expectations are not unreasonable, per Reuters.

He also said that the ECB could remove the reference to 'restrictive policy' already in March policy statement and explained that rate cut predictions are based on expectations for a quick fall in services inflation in the coming months.

Market reaction

These comments don't seem to be having a noticeable impact on the Euro's performance against its rivals. At the time of press, EUR/USD was up 0.55% on the day at 1.0438.

• AUD/JPY holds ground as Australia’s Consumer Inflation Expectations rose to 4.6% in February from 4.0% prior.
• Market caution increased as the White House indicated that President Trump could unveil his reciprocal tariff plan on Thursday.
• Japan's PPI rose 4.2% YoY in January, marking the highest reading since May 2023.

AUD/JPY remains steady after registering gains in the previous three sessions, trading around 97.00 during Asian hours on Thursday. The Australian Dollar (AUD) strengthened against its counterparts following an increase in Australia’s Consumer Inflation Expectations, which rose to 4.6% in February from January’s 4.0%

However, the upside for the AUD/JPY cross may be capped due to mounting concerns over a potential global trade war. Late Wednesday, the White House indicated that US President Donald Trump could unveil his reciprocal tariff plan before meeting Indian Prime Minister Narendra Modi on Thursday, according to CNBC. Trump has recently signaled his intention to impose tariffs on all nations that levy import duties on the United States (US).

Additionally, the Japanese Yen (JPY) gains support following the release of stronger-than-expected Producer Price Index (PPI) data from Japan, reinforcing expectations of further rate hikes by the Bank of Japan (BoJ).

Japan's PPI rose 4.2% year-over-year in January 2025, accelerating from an upwardly revised 3.9% in the previous month and surpassing market expectations of 4.0%. This marks the 47th consecutive month of producer inflation and the highest reading since May 2023. On a monthly basis, producer prices increased by 0.3%, aligning with estimates but easing slightly from December’s 0.4% growth. The data highlights expanding inflationary pressures in Japan, further supported by recent wage growth figures, strengthening the case for additional BoJ rate hikes.

• USD/CHF softens to around 0.9110 in Thursday’s early European session. 
• The US CPI inflation came in hotter than expected in January. 
• The rising Middle East geopolitical tensions could boost the safe-haven flows, supporting the Swiss Franc.

The USD/CHF pair weakens to near 0.9110, snapping the fifth-day winning streak during the early European session on Thursday. The concerns about US President Donald Trump’s trade tariff and weakening of the US Dollar (USD) drag the pair lower. Investors brace for the US weekly Initial Jobless Claims and Producer Price Index (PPI), which are due later on Thursday. 

Fed Chair Jerome Powell on Wednesday emphasized that the central bank is in no rush to cut interest rates during a second congressional hearing this week but said that there has been "great progress" on inflation. The USD weakens as traders took profits and evaluated whether January's inflation report was an anomaly and unlikely to signal a larger trend toward higher prices.

Data released by the US Bureau of Labor Statistics on Wednesday showed that the Consumer Price Index (CPI) rose 3.0% year-on-year in January versus 2.9% prior. This reading came in hotter than the 2.9% expected. The core CPI, which excludes food and energy costs, climbed 3.3% in January, compared to the previous reading of 3.2% and the estimation of 3.1%. On a monthly basis, the headline CPI inflation jumped to 0.5% in January from 0.4% in December, while the core CPI increased to 0.4% in January from 0.2% recorded in December. 

On the Swiss front, the escalating geopolitical tensions in the Middle East could boost the Swiss Franc (CHF), a safe-haven currency. Israel's Prime Minister Benjamin Netanyahu said late Tuesday that the ceasefire will be over and Israel will resume “intense fighting” in Gaza if Hamas doesn’t release “our hostages” by Saturday noon. 

Bank of England (BoE) Chief Economist Huw Pill told Reuters on Thursday that he “urges caution on interest rate cuts.”

Further comments

Market reaction

GBP/USD holds higher ground near 1.2500 following these comments, adding 0.31% on the day.

Japanese Prime Minister (PM) Shigeru Ishiba said Thursday that he “won't comment when asked whether FX was discussed during the meeting with US President Donald Trump.”

He noted that there is “no plan to review the government  - Bank of Japan (BoJ) accord at this point.”

• USD/CAD may test its immediate support at the psychological level of 1.4250.
• The bearish bias may diminish if the pair rises back to the rectangular pattern.
• The pair could approach the primary resistance at the nine-day EMA of 1.4316.

The USD/CAD pair continues its losing streak for the third successive session, trading around 1.4260 during the Asian hours on Thursday. The daily chart's technical analysis suggests potential for bearish bias as the pair breaks below the rectangular pattern.

The USD/CAD pair remains below the nine- and 14-day Exponential Moving Averages (EMAs), underscoring bearish sentiment and indicating weak short-term price action. This positioning reflects ongoing selling interest and suggests further downside risks.

Additionally, the 14-day Relative Strength Index (RSI) remains below the 50 mark, confirming that bearish outlook is prevailing.

On the downside, the USD/CAD pair could find its immediate support at the psychological level of 1.4250. A break below this level could lead the pair to explore the region around the psychological level of 1.4200.

The USD/CAD pair may struggle to re-enter the rectangle. If it manages to do so, the bearish bias could weaken, potentially driving the pair toward the nine-day EMA at 1.4316, followed by the 14-day EMA at 1.4336. A breakout above these levels may strengthen short-term momentum, paving the way for a test of the rectangle's upper boundary at 1.4530.

USD/CAD: Daily Chart

• USD meets with some supply on Thursday and hits a fresh weekly low during the Asian session. 
• Hotter US CPI print tempers Fed rate cut bets and should act as a tailwind for the Greenback. 
• Worries over Trump's trade tariffs should contribute to limiting losses for the safe-haven buck.

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, extends the previous day's retracement slide from over a one-week high and drifts lower through the Asian session on Thursday. The downward trajectory drags the index to a fresh weekly low, around the 107.60 area in the last hour, though the fundamental backdrop warrants caution for bearish traders.

The US Consumer Price Index (CP) released on Wednesday pointed to still stick inflation. Furthermore, Federal Reserve (Fed) Chair Jerome Powell said inflation remains elevated above the 2% target and that the central bank wants to keep monetary policy restrictive. The markets were quick to react and now see just one Fed rate cut by the end of this year. This assisted the yield on the benchmark 10-year US government bond to register its biggest one-day rise since December, which, in turn, should act as a tailwind for the USD.

Apart from this, worries about the potential economic fallout from US President Donald Trump's protectionist policies continue to underpin traditional safe-haven assets and should contribute to limiting the downside for the Greenback. In fact, Trump signed executive orders on Monday to impose 25% tariffs on steel and aluminum imports into the US and also promised broader reciprocal tariffs to match the levies other governments charge on US products. This supports prospects for the emergence of some USD dip-buying. 

Market participants now look forward to Thursday's US economic docket, featuring the release of the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims data later during the North American session. Apart from this, the US bond yields and the broader risk sentiment should provide some impetus to the buck. Nevertheless, the aforementioned fundamental backdrop seems tilted in favor of the USD bulls, suggesting that any subsequent slide might still be seen as a buying opportunity and remain cushioned.

• EUR/JPY extends its upside around 161.00 in Thursday’s Asian session.
• The positive bias of the cross prevails above the 100-period EMA, but the overbought RSI condition might cap its upside. 
• The immediate resistance level emerges at 161.50; the first downside target to watch is 159.62. 

The EUR/JPY cross trades in positive territory for the fourth consecutive day near 161.00 during the Asian session on Thursday. The Japanese Yen (JPY) weakens amid the concern that US President Donald Trump's no-exemption taxes on commodity imports could jeopardize Japan's economic recovery.

According to the 4-hour chart, the constructive outlook of EUR/JPY remains intact as the pair holds above the key 100-period Exponential Moving Averages (EMA). However, the 14-day Relative Strength Index (RSI) stands above the midline near 73.35, indicating the overbought RSI condition. This suggests that further consolidation cannot be ruled out before positioning for any near-term EUR/JPY appreciation.

The upper boundary of the Bollinger Band at 161.50 acts as an immediate resistance level for the pair. A decisive break above this level could see a rally to 162.70, the high of January 28, en route to 163.22, the high of January 22. 

On the flip side, the initial support level is located at 159.62, the 100-period EMA. A breach of this level could expose 158.00, representing the psychological level and the high of February 7. Further south, the contention level to watch is 156.26, the low of February 11.  

EUR/JPY 4-hour chart

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

The price for Gold stood at 8,144.80 Indian Rupees (INR) per gram, up compared with the INR 8,098.21 it cost on Wednesday.

The price for Gold increased to INR 94,999.40 per tola from INR 94,455.98 per tola a day earlier.

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 gains ground ahead of Germany’s Final Harmonized Index of Consumer Prices data due on Thursday.
• The Euro may depreciate amid rising global trade tensions ahead of potential US reciprocal tariffs.
• CME FedWatch Tool suggests the likelihood of a Fed rate cut in June has now dropped to nearly 30%.

The EUR/USD pair continues its upward momentum for the third straight session, hovering around 1.0430 during Asian trading hours on Thursday. Investors await Germany’s Final Harmonized Index of Consumer Prices (HICP) data, set for release later in the day. The headline German HICP inflation is expected to remain steady at 2.8% year-over-year in January.

However, concerns over a potential global trade war are weighing on the risk-sensitive EUR/USD pair. The White House indicated late Wednesday that US President Donald Trump could announce his reciprocal tariff plan before meeting Indian Prime Minister Narendra Modi on Thursday, according to CNBC. Trump has recently signaled his intention to impose tariffs on all countries that levy import duties on the United States.

In economic data, the US Bureau of Labor Statistics reported on Wednesday that the Consumer Price Index (CPI) rose 3.0% year-over-year in January, surpassing the expected 2.9%. Core CPI, which excludes food and energy, increased to 3.3% from 3.2%, exceeding the forecast of 3.1%. On a monthly basis, headline inflation accelerated to 0.5% in January from 0.4% in December, while core CPI climbed to 0.4% from 0.2%.

Stronger-than-expected US inflation data has reinforced expectations that the Federal Reserve (Fed) will keep interest rates at 4.25%-4.50% for an extended period. According to the CME FedWatch Tool, the likelihood of a Fed rate cut in June has now dropped to nearly 30%.

Fed Chair Jerome Powell noted that while inflation has moderated, the central bank still has work to do. Speaking on Tuesday, Powell emphasized that the Fed is in no rush to cut interest rates, citing continued strength in the labor market and solid economic growth.

• Gold price attracts buyers for the second straight day amid a combination of supportive factors.
• Concerns about Trump’s trade tariff and a modest USD weakness underpin the XAU/USD pair.
• Reduced Fed rate cut bets warrant some caution before positioning for a further positive move.

Gold price (XAU/USD) trades with a mild positive bias during the Asian session on Thursday and looks to build on the previous day's goodish bounce from the $2,864 area touched in reaction to hotter US consumer inflation figures. US President Donald Trump's new tariffs on commodity imports sparked fears about a global trade war, which continue to act as a tailwind for the safe-haven bullion. Furthermore, a modest US Dollar (USD) downtick turns out to be another factor underpinning demand for the commodity.

Meanwhile, signs of still sticky inflation in the US suggest that the Federal Reserve (Fed) will stick to its hawkish stance and hold interest rates steady for an extended period. This led to the overnight spike in the US Treasury bond yields, which should limit any meaningful USD losses. Apart from this, a generally positive risk tone might contribute to capping any further gains for the non-yielding Gold price. Traders now look to the release of the US Producer Price Index (PPI) for some impetus later during the North American session. 

Gold price continues to attract haven flows amid global trade war fears

• The initial market reaction to the latest US consumer inflation figures turned out to be short-lived amid worries over US President Donald Trump's trade tariffs, which continue to benefit the safe-haven Gold price.
• Trump signed executive orders on Monday to impose 25% tariffs on steel and aluminum imports into the US and also promised broader reciprocal tariffs to match the levies other governments charge on US products.
• The US Bureau of Labor Statistics reported on Wednesday that the headline US Consumer Price Index rose 0.5% in January – the most since August 2023 – and the yearly rate climbed to 3% from 2.9% in December.
• Meanwhile, the core CPI, which excludes food and energy prices, nudged up by 0.4% on a monthly basis and jumped 3.3% from a year ago compared to 3.1% expected, pointing to underlying inflationary pressures.
• Fed Chair Jerome Powell told US lawmakers that the battle with rising prices wasn't finished yet, which meant that any further interest rate cuts would have to wait until it was clear inflation would return to the 2% target.
• The Atlanta Fed President noted that the labor market is performing incredibly well and the GDP is more resilient than expected, though the latest inflation numbers show careful monitoring is still needed.
• Market participants were quick to react and now see just one Fed rate cut by the end of this year, assisting the yield on the benchmark 10-year US government bond to register its biggest one-day rise since December.
• The US Dollar (USD), however, struggles to attract any meaningful buyers and languishes near the lower end of its weekly range touched on Wednesday, further lending support to the USD-denominated commodity.
• Thursday's US economic docket features the release of the Producer Price Index and the usual Weekly Initial Jobless Claims, which might influence the USD and provide some impetus to the XAU/USD pair. 

Gold price could face stiff resistance at higher levels amid still-overbought daily RSI

From a technical perspective, the daily Relative Strength Index (RSI) remains in the overbought territory and warrants some caution before positioning for any further gains. Bulls are more likely to take a brief pause near the $2,942-2,943 area, or the all-time peak touched on Tuesday, which should now act as an immediate strong barrier for the Gold price. 

On the flip side, weakness back below the $2,900 round figure might expose the overnight swing low, around the $2,864 area. Some follow-through selling could make the Gold price vulnerable to accelerate the corrective pullback towards intermediate support near the $2,834-2,832 region en route to the $2,800 mark.

• GBP/USD gains ground possibly as traders project annual UK GDP to expand in Q4 2024.
• BoE’s Catherine Mann expressed concerns over weakening demand in the United Kingdom.
• January’s inflation in January has reduced the likelihood of a dovish Fed stance for the June policy meeting.

GBP/USD extends its winning streak for the third consecutive day, trading around 1.2460 during Thursday’s Asian session. Traders await the UK’s preliminary Gross Domestic Product (GDP) data due later in the day. Economists expect a contraction in Q4 GDP, though the economy is projected to expand on an annual basis.

The outlook for the British economy remains uncertain, with Bank of England (BoE) Monetary Policy Committee (MPC) member Catherine Mann expressing concerns over weakening demand in the United Kingdom (UK) and the need for accommodative financial conditions.

Earlier this week, Mann told the Financial Times (FT) that demand conditions are significantly weaker than before. She had also advocated for a larger interest rate cut in last week’s policy meeting, where the BoE unanimously agreed to lower rates by 25 basis points (bps).

However, GBP/USD’s upside may be limited as persistent US inflation could strengthen expectations that the Federal Reserve (Fed) will maintain interest rates at 4.25%-4.50% for an extended period. According to the CME FedWatch Tool, the probability of a Fed rate cut in June has dropped to nearly 30% following the latest inflation data.

The US Bureau of Labor Statistics reported on Wednesday that the Consumer Price Index (CPI) rose 3.0% year-over-year in January, exceeding expectations of 2.9%. The core CPI, which excludes food and energy, increased to 3.3% from 3.2%, surpassing the forecast of 3.1%. On a monthly basis, headline inflation jumped to 0.5% in January from 0.4% in December, while core CPI rose to 0.4% from 0.2% over the same period.

• NZD/USD struggles as RBNZ's latest monetary conditions survey reveals a mixed outlook for Q1 2025 across various time frames.
• NZ two-year inflation expectations declined to 2.06% in Q1 from 2.12% in Q4 2024.
• Stronger-than-expected US inflation data has reduced the likelihood of a dovish Fed stance for the June policy meeting.

NZD/USD continues to decline for the second consecutive day, trading around 0.5640 during Thursday’s Asian session. The pair remains under pressure following the release of New Zealand’s (NZ) inflation expectations. The Reserve Bank of New Zealand’s (RBNZ) latest monetary conditions survey presented a mixed outlook for the first quarter of 2025 across different time frames.

NZ two-year inflation expectations, which are closely watched as they reflect the time frame when RBNZ policy actions influence prices, declined to 2.06% in Q1 from 2.12% in Q4 2024. Meanwhile, the average one-year inflation expectation rose to 2.15% in Q1 from 2.05% in the previous quarter.

The New Zealand Dollar (NZD) remains under pressure amid rising speculation of further rate cuts by the RBNZ. The central bank is set to hold its first monetary policy meeting of the year next week, following three rate cuts in 2024 that brought borrowing costs down to 4.25% in response to mild inflation.

In the United States (US), the US Bureau of Labor Statistics reported on Wednesday that the Consumer Price Index (CPI) rose 3.0% year-over-year in January, exceeding expectations of 2.9%. The core CPI, which excludes food and energy, increased to 3.3% from 3.2%, surpassing the forecast of 3.1%. On a monthly basis, headline inflation jumped to 0.5% in January from 0.4% in December, while core CPI rose to 0.4% from 0.2% over the same period.

Stronger-than-expected US inflation data has led traders to scale back expectations of a dovish Federal Reserve (Fed) stance for the June policy meeting. According to the CME FedWatch tool, the probability for the Fed to reduce interest rates in June has eased to almost 30% after the US inflation data release.

• The Japanese Yen strengthened on Thursday in reaction to a stronger PPI print from Japan. 
• Worries about Trump’s trade tariffs and widening US-Japan rate differential cap the JPY.
• Reduced Fed rate cut bets favor the USD bulls and contribute to limiting losses for USD/JPY.

The Japanese Yen (JPY) attracts some buyers following the release of stronger-than-expected Japan's Producer Price Index (PPI) on Thursday, which reaffirms bets that the Bank of Japan (BoJ) will hike rates further. The market reaction, however, turns out to be short-lived amid concerns about the implications of US President Donald Trump’s tariffs on steel and aluminum imports, and impending reciprocal tariffs. This assists the USD/JPY pair to hold above the 154.00 mark during the Asian session and remain close to over a one-week high touched the previous day. 

Meanwhile, Federal Reserve (Fed) Chair Jerome Powell signaled that policymakers aren’t in a rush to push interest rates lower. Moreover, hotter US consumer inflation figures released on Wednesday suggested that the Fed doesn't have much room to cut rates this year. This, in turn, pushed the US Treasury bond yields higher, widening the US-Japan yield differential and capping the upside for the lower-yielding JPY. The US Dollar (USD), however, struggles to lure buyers, which, in turn, might hold back traders from placing fresh bullish bets around the USD/JPY pair. 

Japanese Yen struggles to capitalize on stronger PPI-inspired modest intraday gains

• A preliminary report released this Thursday showed that Japan's Producer Price Index (PPI) rose 0.3% MoM in January and by 4.2% compared to the same time period last year. 
• This points to signs of broadening inflationary pressures in Japan, which, along with the recent wage growth data, backs the case for additional rate hikes by the Bank of Japan. 
• Moreover, BoJ Governor Kazuo Ueda and Deputy Governor Himino recently signaled the possibility of another rate hike if the economy and prices align with the projections. 
• The Japanese Yen bulls seem reluctant amid worries that US President Donald Trump's no-exemption tariffs on commodity imports could endanger Japan's economic stability. 
• The US Bureau of Labor Statistics reported on Wednesday that the headline US Consumer Price Index rose 0.5% in January – the most since August 2023 and higher than estimated.
• The yearly rate climbed to 3% from 2.9% in December, while the core CPI (which excludes food and energy prices) jumped 3.3% from a year ago compared to 3.1% expected. 
• The data underscores still sticky inflation, which, along with Friday's mostly upbeat US employment details, suggests that the Federal Reserve will stick to its hawkish stance.
• Fed Chair Jerome Powell said that the central bank wants to keep monetary policy restrictive for now as inflation, though easing, remains elevated above the 2% target.
• The yield on the benchmark 10-year US government bond registered its biggest one-day rise since December on hot US CPI print, widening the US-Japan rate differential.
• Investors now look forward to the US PPI print, which, along with the US Weekly Initial Jobless Claims, might influence the US Dollar and drive the USD/JPY pair. 

USD/JPY bulls might wait for a move beyond the 50% retracement level near 154.75

From a technical perspective, the overnight breakout through the 152.75 confluence hurdle and the subsequent move beyond the 38.2% Fibonacci retracement level of the January-February decline favor bullish traders. That said, oscillators on the daily chart – though they have recovered from negative territory – are yet to confirm a positive outlook. This makes it prudent to wait for some follow-through buying beyond the 154.75-154.80 region, or the 50% retracement level, before positioning for further gains. The USD/JPY pair might then surpass the 155.00 psychological mark, towards the next relevant hurdle near the 155.45-155.50 region and the 156.00 neighborhood, or the 61.8% Fibo. level.

On the flip side, the 154.00 mark, closely followed by the 153.75-153.70 area, now seems to protect the immediate downside. Some follow-through selling could drag the USD/JPY pair towards the 153.00 round figure, representing the 100-day Simple Moving Average (SMA), en route to the 152.75 confluence. The latter comprises the 200-day SMA and the 23.6% Fibo. level, which, in turn, should now act as a key pivotal point. A convincing break below would expose sub-151.00 levels, or a near two-month low touched last Friday, with some intermediate support near the 151.40 area.

• Silver price drifts higher to $32.25 in Thursday’s Asian session. 
• Rising concerns about trade tension and potential retaliatory measures by Trump support the Silver price. 
• Fed’s Powell emphasized that the central bank is in no rush to cut rates and there has been great progress on inflation.

Silver price (XAG/USD) edges higher to $32.25 during the Asian trading hours on Thursday. Trade war concerns drive the safe-haven demand, supporting the white metal. Traders await the US weekly Initial Jobless Claims and Producer Price Index (PPI), which are due later on Thursday. 

US President Donald Trump on Monday imposed a 25% tariff on all steel and aluminum imports into the United States (US) with no exceptions or exemptions. The White House said late Wednesday that Trump could announce his reciprocal tariff plan on Thursday. 

Trump recently said he planned to slap reciprocal tariffs on “every country” that imposes import duties on the United States. The concerns about the trade war tensions could further support the Silver price. 

Data released on Wednesday showed that the US consumer prices rose more than economists expected in January, raising the possibility that the Federal Reserve (Fed) will hold interest rates higher for longer as it battles to bring down price pressures. Fed Chair Jerome Powell noted the latest inflation data showed that while the US central bank has made substantial progress toward taming inflation, there is still more work to do. The higher for longer Fed rate narrative could lift the Greenback and weigh on the USD-denominated commodity price. 

"The takeaway is no matter what the reason was for the upside surprise, the Fed has been very clear that it won't cut rates until inflation is close to 2%," said Adam Button, chief currency analyst at ForexLive in Toronto.

• The Australian Dollar faces headwinds due to increased risk aversion.
• Australia’s Consumer Inflation Expectations rose to 4.6% in February from 4.0% prior.
• The US Dollar may gain strength as Fed Chair Jerome Powell signaled there is no urgency to cut rates.

The Australian Dollar (AUD) continues to decline against the US Dollar (USD) on Thursday, struggling despite a rise in Australia’s Consumer Inflation Expectations, which increased to 4.6% in February from 4.0% previously.

The AUD/USD pair remains under pressure due to US President Donald Trump’s 25% tariff hike and Federal Reserve Chair Jerome Powell’s signal that the central bank is in no rush to cut interest rates further. Adding to the strain, Trump’s trade adviser, Peter Navarro, criticized Australia on Tuesday, accusing it of "killing the aluminum market" just a day after Trump signed executive orders imposing import tariffs on certain metals. Australia is actively seeking exemptions from these new tariffs, with Trump previously stating he would give "great consideration" to the request due to the trade imbalance between the two nations.

Meanwhile, expectations for a Reserve Bank of Australia (RBA) rate cut are rising. With the central bank currently maintaining a 4.35% cash rate, traders widely anticipate a potential reduction at the February meeting. Market odds now indicate a 95% probability of a cut to 4.10%, as recent data suggests underlying inflation is cooling faster than the RBA had anticipated.

Australian Dollar declines amid rising odds of Fed staying hawkish

• The US Dollar Index (DXY), which measures the US Dollar’s value against six major currencies, maintains its position near 108.00 at the time of writing.
• Traders await US Consumer Price Index (CPI) inflation due on Wednesday. Headline US CPI inflation is expected to hold at 2.9% YoY, while core CPI inflation is forecast to tick down to 3.1% versus the last print of 3.2%.
• In his semi-annual report to Congress, Fed’s Powell said the Fed officials “do not need to be in a hurry" to cut interest rates due to strength in the job market and solid economic growth. He added that US President Donald Trump's tariff policies could put more upward pressure on prices, making it harder for the central bank to lower rates.
• A Reuters poll of economists now suggests the Federal Reserve will delay cutting interest rates until next quarter amid rising inflation concerns. Many who had previously expected a March rate cut have revised their forecasts. The majority of economists surveyed between February 4-10 anticipate at least one rate cut by June, though opinions on the exact timing remain divided.
• The US Dollar receives support as the US Federal Reserve (Fed) is now expected to keep interest rates steady this year, following January’s jobs report released on Friday, which indicated slowing job growth but a lower Unemployment Rate.
• US President Donald Trump decided to expand steel and aluminum tariffs by 25% to include all imports, nullifying trade agreements with key US allies, including Australia. The White House confirmed that all import tax exclusions had been removed and indicated that further action on microchips and vehicles would be considered in the coming weeks.
• Federal Reserve Bank of Cleveland President Beth Hammack stated on Tuesday that keeping interest rates steady for an extended period will likely be appropriate. Hammack emphasized that a patient approach will allow the Fed to assess economic conditions and noted that the central bank is well-positioned to respond to any shifts in the economy, according to Reuters.
• New York Fed President John Williams noted that US growth metrics are overall in a good place, specifically highlighting that US Gross Domestic Product (GDP) growth should hold steady this year and next.
• China’s Consumer Price Index (CPI) grew at an annual rate of 0.5% in January, up from 0.1% in December and exceeding the market forecast of 0.4%. On a monthly basis, CPI inflation rose 0.7% in January, compared to December’s flat reading of 0%, though it fell short of the expected 0.8% increase.

Australian Dollar stays below 0.6300, inching toward nine-day EMA

The AUD/USD pair hovers near 0.6280 on Thursday, maintaining its position above the nine- and 14-day Exponential Moving Averages (EMAs) on the daily chart. This suggests that short-term price momentum is stronger. Additionally, the 14-day Relative Strength Index (RSI) maintains its position above the 50 mark, reinforcing a bullish bias.

The AUD/USD pair may test the psychological level of 0.6300, followed by the eight-week high of 0.6330, last reached on January 24.

The AUD/USD pair could test primary support at the nine-day EMA of 0.6273 level, followed by the 14-day EMA of 0.6266. A decisive break below these levels could weaken the short-term price momentum, potentially pushing the pair toward the psychological level of 0.6200.

AUD/USD: Daily Chart

New Zealand's (NZ) inflation expectations were a mixed bag on a 12-month and a two-year time frame for the first quarter of 2025, the Reserve Bank of New Zealand’s (RBNZ) latest monetary conditions survey showed on Thursday.

Two-year inflation expectations, seen as the time frame when RBNZ policy action will filter through to prices, declined to 2.06% in Q1 from 2.12% seen in Q4 2024.

NZ average one-year inflation expectations increased to 2.15% in Q1 vs. 2.05 % in the fourth quarter of 2024. 

NZD/USD reaction to inflation expectations

At press time, NZD/USD is losing 0.07% on the day to trade near 0.5641.

• The Indian Rupee loses ground in Thursday’s Asian session. 
• Firmer US Dollar and outflows from Indian equities weigh on the INR. 
• Investors will closely watch the Indian PM Modi’s meeting with Trump administration officials and the US PPI data. 

The Indian Rupee (INR) weakens on Thursday, pressured by the renewed US Dollar (USD) demand. Additionally, the maturity of positions in the non-deliverable forwards (NDF) segment and equity sales by overseas investors could drag the INR lower. 

On the other hand, strong intervention from the Reserve Bank of India (RBI) might help limit the local currency’s losses. The fall in crude oil prices after US President Donald Trump called Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy to discuss ending the war in Ukraine might provide some support to the INR as India is the world's third-largest consumer of crude oil. 

India’s Prime Minister Narendra Modi is scheduled to talk with multiple Trump administration officials during his trip to Washington, D.C., including Elon Musk, who leads Trump’s so-called Department of Government Efficiency.

Government officials said that Modi's meeting with Musk is anticipated to include a discussion of Musk's private business ventures, such as the growth of Starlink and Tesla in India. On the US docket, the weekly Initial Jobless Claims and Producer Price Index (PPI) will be released later on Thursday. 

Indian Rupee remains weak amid multiple challenges

• According to Reuters, citing government officials, Modi is prepared to cut India's tariffs in multiple sectors ahead of his meeting with Trump in order to prevent a potential trade war with the United States.
• India’s retail inflation, measured by the Consumer Price Index (CPI) stood at 4.31% in January from 5.22% in December, the Ministry of Statistics & Programme Implementation showed on Monday. This reading came in softer than the market consensus of 4.6%. 
• The US CPI rose 3.0% year-on-year in January versus 2.9% prior, according to the US Bureau of Labor Statistics on Wednesday. This reading came in hotter than the 2.9% expected. 
• The so-called core CPI, which excludes food and energy costs, climbed 3.3% in January, compared to the previous reading of 3.2% and the estimation of 3.1%. 
• On a monthly basis, the headline CPI inflation jumped to 0.5% in January from 0.4% in December, while the core CPI increased to 0.4% in January from 0.2% recorded in December. 
• Traders expected just one quarter-point rate cut this year, down from two reductions before the CPI report. 
• Fed Chair Jerome Powell said the recent inflation data showed that while the central bank has made substantial progress toward taming inflation, there is still more work to do.

USD/INR forms a shooting star candlestick, downward pressure expected in the near term

The Indian Rupee edges lower on the day. Technically, the constructive outlook of the USD/INR pair remains intact, with the price holding above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The path of least resistance is to the upside as the 14-day Relative Strength Index (RSI) stands above the midline near 56.00. 

The 87.00 psychological level acts as the first upside barrier for USD/INR. A decisive break above this level could see a rally to an all-time high near 88.00. Extended gains could pave the way to 88.50. 

On the other hand, the first downside target to watch is 86.35, the low of February. Bearish candlesticks below the mentioned level could push USD/INR back down toward 86.14, the low of January 27. 

The People’s Bank of China (PBOC) set the USD/CNY central rate for the trading session ahead on Thursday at 7.1719 as compared to the previous day's fix of 7.1710 and 7.3000 Reuters estimates.