The EUR/USD pair pared back Monday’s losses, closing the gap and reaching 1.0350 after US President Donald Trump decided to delay the introduction of tariffs on Canada and Mexico.
Possible technical scenarios:
As we can see on the daily chart of EUR/USD, the pair is trading within the range between 1.0220 and 1.0344. If the price manages to exit this range upwards, the next target for growth will be 1.0478. Otherwise, the pair will likely remain in the current corridor and may return to the support level.
Fundamental drivers of volatility:
The US dollar slightly weakened on Tuesday, linked to a decrease in demand for safe-haven currencies. However, continued tensions in US-China trade relations could prompt renewed risk aversion.
This week, market participants are focused on US employment reports (JOLTS, ADP, NFP), as well as the ISM Services PMI index. The Fed's wait-and-see stance on rates increases market sensitivity to macroeconomic data.
In the eurozone, attention is on the ECB's future policy. Having already cut rates to 2.75%, the ECB may continue easing, which limits the euro's growth potential. Another risk for EUR/USD is the potential for US trade tariffs against the EU, adding economic uncertainty.
In the short term, EUR/USD dynamics will depend on US macroeconomic data and ECB rhetoric. A further weakening of the dollar could support the pair's growth, but the threat of new tariffs and the ECB’s dovish policy poses risks to the euro’s sustainable strengthening.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart of EUR/USD, the pair is consolidating below the resistance at 1.0344. If it fails to consolidate above this level, the price may return to the support at 1.0220.
The pound sterling is recovering against the US dollar, supported by expectations of the Bank of England's rate decision and the weakening of the US currency.
Possible technical scenarios:
On the daily chart, GBP/USD remains below the strong level of 1.2500, where there is still technical potential for recovery after yesterday's decline. An alternative scenario for the pound could be a drop back to the support level of 1.2306.
Fundamental drivers of volatility:
The key macroeconomic event for the pound this week will be the Bank of England's rate decision. Investors are anticipating a 25 basis point rate cut this week, with a total easing of 81 basis points expected by the end of the year. The pound is also under additional pressure from the decline in the yield on 30-year British bonds to 5.04%, reflecting growing market caution.
At the same time, the US dollar is struggling to strengthen after Donald Trump announced a temporary suspension of 25% tariffs on Canada and Mexico. This reduced demand for the dollar, although trade tensions with China remain. Beijing's response, with its own tariffs on American imports, is adding uncertainty, limiting investors' risk appetite, and increasing volatility in currency markets.
The key factor for further movement in GBP/USD will be the upcoming US macroeconomic data. On Friday, the market is expecting the release of the non-farm payrolls (NFP) report, which could significantly influence expectations regarding the Fed's monetary policy. For now, Fed Chairman Jerome Powell remains cautious, stating that rate changes are possible only if the labor market weakens or inflation decreases.
Intraday technical picture:
According to the 4H chart, GBP/USD is consolidating below the resistance level of 1.2430. If this level is not overcome, the price may retreat back to the support level of 1.2306.
The Japanese yen remains under pressure due to a drop in demand for safe-haven assets and concerns about US trade policy.
Possible technical scenarios:
On the daily chart, the USD/JPY pair is holding at the support level of 154.83. A consolidation above this level could push the price towards the target of 157.10.
Fundamental drivers of volatility:
US President Donald Trump’s decision to delay tariffs on Canada and Mexico has increased investors' appetite for risk, weakening the yen. At the same time, there are concerns that Japan could become the next target of US tariffs, adding further pressure on the yen.
Despite the weakness, the yen's losses are limited by expectations of further rate hikes by the Bank of Japan. Rising inflation in Tokyo and the central bank's readiness to tighten monetary policy support the yen. However, the ongoing rate differential between the Fed and the Bank of Japan is a key factor, with investors pricing in the possibility of easing by the Fed, which could narrow the rate gap and provide support for the yen.
The market will closely watch the upcoming meeting between Japan's Prime Minister and Donald Trump, which could clarify the outlook for trade relations. Additionally, US economic data, including JOLTS and the employment report on Friday, will be important. If the data confirms the strength of the US economy, it could strengthen the dollar and limit any potential recovery for the yen.
Intraday technical picture:
As we see on the 4H chart of USD/JPY, a local sideways range has formed between 153.95 and 156.46, marked by two dotted lines. Within this range, the pair has the technical potential to recover toward resistance.
USD/CAD is holding above 1.4400 after Donald Trump decided to postpone the introduction of 25% tariffs on Canada and Mexico.
Possible technical scenarios:
On the daily chart, USD/CAD broke out the 1.4556 level on Monday but failed to remain above it and returned to the local range between 1.4297 and 1.4467, the two red dotted lines. For now, the price has room to stay within this range, but if the trade war escalates, a retest of the 1.4556 level is possible.
Fundamental drivers of volatility:
US President Trump’s decision to postpone the introduction of 25% tariffs on Canada and Mexico has supported the Canadian dollar, easing concerns about trade restrictions. However, the long-term outlook for the Canadian dollar remains uncertain due to the risks of inflation falling below the Bank of Canada’s target level of 2%.
The market expects the BoC to cut interest rates by 25 bps in March, which may limit the currency's potential for gains. Meanwhile, the US dollar is under pressure as demand for safe assets decreases following the tariff delay.
Traders are focusing on US and Canadian labor market data this week, which could impact the pair's dynamics.
Intraday technical picture:
On the 4H chart of USD/CAD, after the price returned to the sideways range between 1.4297 and 1.4467, the two red dotted lines, the pair has the technical potential for a local decline toward the support at 1.4297.
Oil prices are falling amid the escalation of the trade war between the US and China.
Possible technical scenarios:
On the daily chart of Brent, we see a breakout of the strong mirror support level of 75.18. If the price consolidates below this level, it could continue to decline toward the 70.85 level. However, if the breakout turns out to be false, the target for recovery will be the resistance at 77.25.
Fundamental drivers of volatility:
The introduction of tariffs on Chinese oil by Washington, followed by a retaliatory response from Beijing, has heightened concerns about energy demand.
China has imposed 10% tariffs on American oil and introduced export controls on strategic metals, which could increase pressure on oil prices. Meanwhile, OPEC+ continues its plan for a gradual increase in production starting in April, despite ongoing market volatility.
Further pressure on oil comes from the strengthening US dollar, which makes raw materials more expensive for holders of other currencies.
The temporary suspension of US tariffs on energy imports from Canada and Mexico has provided the market with some relief. However, investors are closely watching US oil inventories, which are expected to increase, potentially strengthening the downtrend.
Intraday technical picture:
On the 4H chart of Brent, there are signs that the price may consolidate below the 75.18 level. The nearest target for a decline is the dotted support level at 73.63.
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