The EUR/USD pair received support amid a weakening dollar, but will be sensitive to US data this week.
Possible technical scenarios:
As evidenced by the daily chart, EUR/USD returned to the support of the range between 1.0777 and 1.0938 and is attempting to rebound upwards. If the support holds, we can expect a recovery to the resistance of the sideways trend. Otherwise, the price could fall to the level of 1.0638.
Fundamental drivers of volatility:
The main factor putting pressure on the dollar was the softening rhetoric of US President Donald Trump on tariffs. Investors are reassessing the risks, expecting a more limited impact of trade duties on the global economy. This has reduced demand for the dollar as a safe-haven asset, boosting the euro's growth.
In the meantime, strong data from the US services sector, where the PMI index rose to 54.3, supported the dollar. However, the impact of this factor is limited by expectations of a soft Fed policy, with the regulator’s representatives signaling the possibility of only one rate cut in 2024. This creates a balance between positive macro statistics and limited potential for further dollar strengthening, which may keep EUR/USD within the current range.
In terms of the euro, the key factor remains the expected ECB rate cut in April. According to IFO, the German business climate improved but did not meet forecasts, which may increase pressure on the ECB. This week, markets will closely monitor the comments from both Fed and ECB representatives, as well as the developments in US tariff policy, since their outcomes could determine the further direction of EUR/USD.
Intraday technical picture:
The 4H chart of EUR/USD demonstrates a cautious price rebound upwards from the support level of 1.0777, which gives grounds for a recovery toward the resistance at 1.0938.
The pound sterling has been strengthening since the start of the week amid a weakening US currency, but the gains are limited by expectations of important economic data and UK budget measures. At the same time, inflation risks in the US remain an important factor for GBP/USD movement this week.
Possible technical scenarios:
Judging by the unfolding situation on the daily chart, GBP/USD continues to consolidate above the support at 1.2862, which provides room for movement toward the resistance at 1.3147.
Fundamental drivers of volatility:
The pound sterling continues to strengthen against the US dollar, supported by a weakening US currency amid improving global trade sentiment caused by easing tensions over targeted tariffs. This had a positive impact on risk assets, including the pound. However, the growth is limited by expectations surrounding UK inflation data and risks related to budgetary policy.
The main events for the pound this week are the UK consumer price data and the spring budget. The CPI is expected to fall from 3% to 2.9%, which could put pressure on the currency if the budget measures are less decisive. Traders will also be keeping a close watch on the effects on the government bond market, which could undermine confidence in the pound.
In the United States, the focus will be on inflation expectations and statements from Fed officials. Increased risks of accelerating inflation could support the dollar, as market participants anticipate tighter monetary policy. An important indicator will be the core PCE index, which could influence expectations for Fed rates and the further movement of the dollar.
Intraday technical picture:
As we can see on the 4H chart of GBP/USD, the price has formed a local resistance level at 1.3009, with room for upward movement. If this level is overcome, growth may continue to the next target of 1.3147.
USD/JPY fell on Tuesday amid a stronger Japanese yen and uncertainty over U.S. tariff policy.
Possible technical scenarios:
Given the look of things on the daily chart, USD/JPY is trading in the middle of the range between 148.63 and 151.96, with some room to move towards resistance.
Fundamental drivers of volatility:
Expectations of a rate hike by the Bank of Japan, explained by improving inflation and rising wages, are supporting the yen. The Governor of the Bank of Japan, Kazuo Ueda, has emphasized the possibility of adjusting monetary policy if inflation reaches the 2% target. Optimism surrounding wage growth, which is projected to be 5.4% this year, is also contributing to hawkish sentiment.
In contrast, the US dollar is under pressure due to reduced expectations for President Trump's tariff program. The announcement of potential tariff relief has reduced investor interest in the dollar as a safe-haven asset.
In the coming days, investors will be keeping a close watch on the US Personal Consumption Expenditures Index (PCE), which could affect the Fed's monetary policy outlook. The upcoming inflation data has a major impact on the market, given its significance in the Fed's rate decisions.
Intraday technical picture:
On the four-hour chart of USD/JPY, the pair shows an upward trend. While a local pullback within the corrective movement is possible, the price may still rise toward the resistance at 151.96.
The USD/CAD pair declined amid weakening expectations about the economic impact of President Trump's tariff policy. The attractiveness of the American currency in the pair is also diminishing due to the limited scale of the upcoming trade duties.
Possible technical scenarios:
The daily chart of USD/CAD shows that the pair continues to trade at the support level of the sideways range between 1.4271 and 1.4468. From here, an upward reversal and price recovery are still possible. That being said, if the 1.4271 level fails and the price consolidates below it, the next target for the decline will be the support at 1.4149.
Fundamental drivers of volatility:
The Canadian dollar is supported by a stable economic situation in the country, despite the rise in inflation in February. The Governor of the Bank of Canada, Tiff Macklem, confirmed that inflationary pressure is not related to US tariffs and will not change monetary policy. The bank will continue to adhere to a soft monetary policy, limiting further growth for the CAD.
The US dollar weakened after Trump mentioned the possibility of offering tariff reductions to several countries, bringing down uncertainty about the scale of the trade war.
Aside from that, the US Consumer Spending Index (PCE) data to be released on Friday could serve as an important indicator for future inflation expectations and the Federal Reserve's monetary policy.
Intraday technical picture:
According to the 4H chart of USD/CAD, we see another attempt at an upward reversal from the support at 1.4271. If this support holds, the pair will have enough momentum to reach the resistance at 1.4468.
Under the influence of new trade tariffs and growing investor interest amid global economic instability, gold continues to rise, approaching an all-time high.
Possible technical scenarios:
Given what we see on the daily chart, the XAU/USD price found support at 3002.23, from where it has some room to move towards the resistance at 3057.18, the all-time high. If this level is updated, 3111.53 will serve as the next target for growth.
Fundamental drivers of volatility:
Changes in US trade policy are one of the key factors influencing the price of gold. The introduction of "secondary tariffs" on goods from countries that buy oil from Venezuela creates additional risks for the global economy.
Such measures, including higher duties on cars and aluminum, increase uncertainty in the markets, making gold an attractive safe-haven asset.
Another vital factor driving gold prices is the inflow of gold into exchange-traded funds (ETFs), signaling increased interest in this precious metal. In the first half of 2025, gold began to attract significant investments, and if this trend remains, it could support further price growth into the second quarter. Investors are turning to gold amid global instability, which helps to strengthen its position.
The impact of international politics cannot be underestimated. Tariffs imposed by the Trump administration, as well as potential new duties targeting Chinese ships and products, are causing panic in certain US sectors, especially agriculture. Given global economic risks and uncertainty, gold remains a preferred safe-haven asset, continuing to support its growth.
Intraday technical picture:
On the 4H chart of XAU/USD, we see an upward reversal from the support of the corridor between 3002.23 and 3057.18, with enough room for price movement to its upper boundary.
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