The euro strengthened amid economic adjustments and central bank discussions, while the pound weakened following unexpected economic contraction, impacting investor sentiment. The yen held steady, supported by expectations of continued policy adjustments and safe-haven flows, despite US data focus. Gold surged to record highs, driven by geopolitical tensions, central bank purchases, and ETF inflows, as investors sought refuge from economic uncertainty and potential rate adjustments.
EUR/USD
The EUR/USD pair continues to exhibit a bullish trend, supported by recent economic developments in the Eurozone. The euro has strengthened due to Germany’s debt renegotiation and increased government spending, alongside ECB officials’ cautious stance regarding interest rate adjustments.
Key Factors Influencing EUR/USD:
- ECB Monetary Policy: ECB officials have hinted at maintaining rates at current levels, with concerns about inflation resurgence being a priority. Swaps indicate a 53% probability of a rate cut in April.
- U.S. Economic Data: Upcoming U.S. retail sales, Empire Manufacturing Index, and housing market reports will be key determinants of the dollar’s strength.
- Technical Levels:
- Support: 1.0803, 1.0677, 1.0602
- Resistance: 1.0897, 1.0937, 1.0979
- Market Sentiment: Traders are watching for liquidity tests at 1.0803. A break below this level could trigger further downside, while a hold above 1.0897 may push the pair towards 1.0979.
Forecast: EUR/USD is likely to remain within a bullish consolidation phase unless significant U.S. economic strength triggers a reversal. The pair could test 1.0937 and 1.0979 in the near term.
GBP/USD
The GBP/USD pair has faced a minor pullback amid weak UK economic data. The unexpected contraction in January’s GDP (-0.1%) has cast doubts on the UK’s economic outlook.
Key Factors Influencing GBP/USD:
- UK Economic Growth Concerns: The Bank of England (BoE) has revised growth projections lower, increasing concerns over stagnation.
- U.S. Dollar Strength: Strong U.S. economic data could apply downward pressure on the pound.
- Technical Levels:
- Support: 1.2914, 1.2866, 1.2811
- Resistance: 1.3010
- Market Sentiment: A narrowing triangle formation suggests an imminent breakout. If the price remains above 1.2914, an upside move could test 1.3010.
Forecast: The short-term outlook for GBP/USD remains mixed. If price action breaks below 1.2860, a more substantial downtrend could resume. Conversely, a move above 1.3010 may trigger a continuation of the bullish trend.
USD/JPY
The Japanese yen is trading near a five-month high, reflecting increased expectations of BoJ policy tightening. However, external market factors, including U.S. economic concerns and a weakening dollar, have contributed to the yen’s resilience.
Key Factors Influencing USD/JPY:
- Bank of Japan Policy Outlook: Traders anticipate potential rate hikes this year, adding to yen strength.
- U.S. Dollar Performance: Weakness in the greenback due to shifting trade policies and economic concerns has driven demand for the yen.
- Technical Levels:
- Support: 148.48, 148.17, 147.61
- Resistance: 149.20, 149.32, 150.16
- Market Sentiment: USD/JPY remains in a broadly volatile flat structure. Selling opportunities emerge near 149.32 with a potential downward move towards 147.61.
Forecast: USD/JPY may continue its range-bound movement unless the BoJ surprises the market with aggressive policy shifts. The pair could face resistance at 149.32, with a potential downside move to 147.61.
XAU/USD
Gold prices have experienced strong momentum, briefly testing the $3000/oz level before pulling back. This movement reflects profit-taking and cautious positioning ahead of key global economic events.
Key Factors Influencing Gold:
- Geopolitical and Economic Uncertainty: Concerns over tariffs, inflation, and sluggish retail sales continue to drive demand for gold.
- Central Bank Buying: Central banks have significantly increased gold purchases, providing long-term price support.
- ETF Flows: Gold ETFs have seen a surge in inflows, further bolstering demand.
- Technical Levels:
- Support: 2994, 2982, 2950
- Resistance: 3025, 3050
- Market Sentiment: The $3000 level is proving to be a key psychological barrier. Historically, such whole-number levels require multiple attempts before establishing sustained acceptance above them.
Forecast: Gold remains well-supported, with dips being bought. A sustained break above $3000 could see further gains toward $3050, while downside risk appears limited unless sentiment shifts dramatically.
Conclusion
- EUR/USD: Bullish bias with potential upside to 1.0979, unless U.S. data strengthens the dollar.
- GBP/USD: Mixed outlook; a break below 1.2860 signals a stronger bearish move, while a break above 1.3010 could fuel further gains.
- USD/JPY: Range-bound with downside potential towards 147.61 if resistance at 149.32 holds.
- Gold: Strong long-term demand and technical factors suggest a continued bullish trajectory, with key resistance at $3050.
