Swiss investor sentiment declined in March with UBS noting that investors are growing more cautious on the outlook for the economy. Well, increased global uncertainty would do that I guess.

This article was written by Justin Low at www.forexlive.com.

• Prior +0.8%

Overall, the Spanish economy grew by 3.2% in 2024. Once again, it remains of the brighter spots in the euro area economy amid the struggles in Germany and France in particular.

This article was written by Justin Low at www.forexlive.com.

Cable is now down to 1.2908, lower by 0.3% on the day, following the softer UK CPI report here. The pair was trading around 1.2940 before the inflation numbers with traders pricing in ~45% odds of a rate cut for May. On the latter, we’re seeing traders step up their pricing to ~55% odds currently. But are sterling sellers overreaching here?

Headline annual inflation may have dipped to 2.8% but as a reminder, even the BOE expects that to peak at 3.75% in Q3 this year. The push higher in the months ahead is expected to be driven by higher energy costs and regulated tariffs on utilities.

Besides that, there is the expectation that firms will have to raise prices when NICS and NLW increases come into effect next month. And when you add in Trump tariffs and business/investment uncertainty, it makes for a challenging outlook. That even as the spring budget statement later is not expected to include any tax increases.

Meanwhile, the details earlier were also not all too comforting. Core annual inflation remains at 3.5% and that’s still well above what the BOE would like. Then, you have services inflation remaining sticky at 5.0% – unchanged from January. That’s one core metric that the central bank is watching closely and isn’t helping their bid at the moment.

Some analysts are forecasting UK inflation to rise back to around 4% by the time we get to the April or May reports. So, just be wary of that when trying to make sense of the latest data from the UK here. It is not what it may seem just by looking at the numbers alone today.

This article was written by Justin Low at www.forexlive.com.

• Prior +3.0%
• Core CPI +3.5% vs +3.6% y/y expected
• Prior +3.7%

The readings are a surprise to the downside even as services inflation held unchanged at 5.0% in core terms on the month. Instead, goods inflation was the one leading the drop with a fall from 1.0% in January to 0.8% in February. The former will not be too welcome by the BOE as it reaffirms stickier inflation as a whole still.

The pound is a touch softer on the report with GBP/USD falling to 1.2920 from around 1.2940 earlier. But given the breakdown, I wouldn’t see this as being too comforting for the BOE (that should limit sterling downside as such). With services inflation holding up and core prices still keeping between 3% to 4%, it’s not anything to rush the next rate cut in my view.

The odds of a May rate cut were at ~45% coming into the report. I reckon that might increase slightly but it shouldn’t overwhelmingly favour a rate cut. All else being equal, it should still be a coin flip when considering the details of the report here.

This article was written by Justin Low at www.forexlive.com.

Core annual inflation is estimated to ease a little to 3.6%, down from 3.7% in January. But overall, that’s still a high figure that won’t provide the BOE with much comfort. Meanwhile, headline annual inflation is expected to remain unchanged at 3.0%. As energy inflation becomes less of a drag, it will be a tricky outlook for UK inflation this year. The monthly readings exemplify that with both headline and core monthly estimates expected to show a 0.5% increase. One of the BOE’s main focus is on services inflation and that continues to sit stubbornly high, estimated to keep closer to 5% still later today. Here’s a summary of forecasts by analysts ahead of the release (h/t @ MNI Markets):

This article was written by Justin Low at www.forexlive.com.

Global Markets:

•  Asian Stock Markets : Nikkei up 1.23%, Shanghai Composite up 0.07%, Hang Seng up 0.21% ASX up 0.71%
• Commodities : Gold at $3048.35 (0.60%), Silver at $34.1 (0.68%), Brent Oil at $72.5 (0.5%), WTI Oil at $69.2 (0.54%)
• Rates : US 10-year yield at 4.338, UK 10-year yield at 4.7555, Germany 10-year yield at 2.7930

News & Data:

• (USD) CB Consumer Confidence 92.9  to 94.2 expected
• (USD) New Home Sales 676K  to 682K expected

Markets Update:

Australia’s S&P/ASX 200 opened 0.71% higher, while Japan’s Nikkei 225 rose 0.63% and the Topix added 0.39%. South Korea’s Kospi climbed 0.38%, though the small-cap Kosdaq dipped 0.28%. In Thailand, the SET Index gained 0.4% after Prime Minister Paetongtarn Shinawatra survived a no-confidence vote. Hong Kong’s Hang Seng Index advanced 0.75%, while mainland China’s CSI 300 remained flat. The Hang Seng Tech Index, tracking Hong Kong’s 30 largest tech firms, rose 0.84% as it hovered near correction territory.

Reports from The Wall Street Journal and Bloomberg indicate that U.S. tariffs set for April 2 may be more limited in scope. Trump also hinted at potential flexibility in his reciprocal tariff plans for trading partners. However, U.S. consumer confidence appears to be weakening. Morning Consult noted that as Trump prepares to escalate trade tensions, U.S. consumers face increased inflation concerns, fragile finances, and labor market risks. As a result, spending cuts are expected across all income brackets.

U.S. stock futures showed little movement after the S&P 500 recorded a modest gain, marking its third consecutive positive session. Overnight, the S&P 500 added 0.16% to close at 5,776.65, the Nasdaq Composite rose 0.46% to 18,271.86, and the Dow Jones Industrial Average edged up 4.18 points to 42,587.50.

Upcoming Events: 

• 12:30 PM GMT – USD Core Durable Goods Orders m/m
• 12:30 PM GMT – USD Durable Goods Orders m/m

The post Wednesday 26th March 2025: Asia-Pacific Markets Gain Amid Hopes of Softer U.S. Tariffs first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 26 March 2025

What happened in the Asia session?

After increasing to an annual rate of 2.5% in December 2024 and January this year, the monthly CPI eased marginally to 2.4% in February. Not only did the latest print moderate from a four-month high, it also came in lower than market forecasts of 2.5% with categories such as food; housing; and electricity all rising at a slower pace. The ‘soft’ inflation print initially sent the Aussie as low as 0.6278 but it reversed swiftly to climb above the 0.6300 level, hitting 0.6310 by midday in Asia.

What does it mean for the Europe & US sessions?

Headline and core consumer inflation in the U.K. both accelerated in January 2025, with the former jumping from an annual rate of 2.5% in the previous month to 3.0% while the latter spiked from 3.2% to 3.7%. Headline CPI recorded its highest reading since March 2024 as categories such as transport; food and non-alcoholic beverages; recreation and culture; and education led the price increases. Inflationary pressures are expected to remain persistent in February and a ‘hot’ print could trigger a surge in demand for the pound before the start of the European trading hours.

After increasing nearly 8.8M barrels over the prior two weeks, the API stockpiles registered its first draw in three weeks as 4.6M barrels of crude were removed from storage – easily exceeding market expectations of a 2.5M drawdown. Combined with U.S. President Donald Trump’s threatened tariffs against countries importing oil and gas from Venezuela, oil prices rose higher on concerns of tighter supplies with WTI oil making an overnight high of $69.68 per barrel. Should the EIA inventories also buck a three-week trend of higher inventory builds, oil prices could receive another tailwind later today.

The Dollar Index (DXY)

Key news events today

Durable Goods Orders (12:30 pm GMT)

What can we expect from DXY today?

After declining in November and December of 2024, new orders for durable goods rose strongly in January of this year. Orders jumped 3.2% MoM with the rebound driven by sectors such as transportation equipment and capital goods. However, orders are now expected to decline 1.1% in February, signalling an inconsistent start to the new year for the manufacturing sector. A significantly larger drop could cause the dollar to lose some steam in the near term.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25 to 4.50% on 19 March 2025
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run but uncertainty around the economic outlook has increased; the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while the unemployment rate has stabilized at a low level in recent months, and labour market conditions remain solid. However, inflation remains somewhat elevated.
• GDP growth forecasts were revised downward for 2025 (1.7% vs. 2.1% in the December projection) while PCE inflation projections have been adjusted slightly higher for 2025, with core inflation expected to reach 2.5%, partly due to tariff-related pressures.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and is prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals.
• Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25B to $5B while maintaining the monthly redemption cap on agency debt and agency mortgage-backed securities at $35B.
• The next meeting is scheduled for 6 to 7 May 2025.

Next 24 Hours Bias

Medium Bullish

Gold (XAU)

Key news events today

Durable Goods Orders (12:30 pm GMT)

What can we expect from Gold today?

After declining in November and December of 2024, new orders for durable goods rose strongly in January of this year. Orders jumped 3.2% MoM with the rebound driven by sectors such as transportation equipment and capital goods. However, orders are now expected to decline 1.1% in February, signalling an inconsistent start to the new year for the manufacturing sector. A significantly larger drop could cause the dollar to lose some steam in the near term, potentially providing a lift for gold.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

CPI (12:30 am GMT)

What can we expect from AUD today?

After increasing to an annual rate of 2.5% in December 2024 and January this year, the monthly CPI eased marginally to 2.4% in February. Not only did the latest print moderate from a four-month high, it also came in lower than market forecasts of 2.5% with categories such as food; housing; and electricity all rising at a slower pace. The ‘soft’ inflation print initially sent the Aussie as low as 0.6278 but it reversed swiftly to climb above the 0.6300 level, hitting 0.6310 by midday in Asia.

Central Bank Notes:

• The RBA reduced the cash rate by 25 basis points to bring it down to 4.10% on 18 February, marking the first rate cut since November 2020.
• Financial conditions are restrictive, which is weighing on demand and is helping to bring down underlying inflation; growth in private demand has been subdued.
• Underlying inflation has moderated over the past three quarters with trimmed mean inflation easing to 3.2% over 2024 and it is expected to reach the 2–3% target range in early 2025, which is sooner than expected at the time of the November Statement.
• The unemployment rate declined a little in late 2024 to 4% with much of the strength in the labour market underpinned by strong employment growth, which has also bolstered household incomes.
• The announcement of tariffs between the United States and other major economies poses challenges to the global outlook but the scale and incidence of the tariffs and their effects remain highly uncertain – which may itself delay some investment until the outlook becomes clearer.
• Economic activity strengthened in China but growth there is still facing structural headwinds while domestic economic growth is forecast to pick up and the labour market is forecast to remain tight.
• If the cash rate follows the market path, underlying inflation is projected to be a little above 2.5% over most of the forecast period. The anticipated recovery of GDP growth and lingering tightness in labour market conditions are expected to sustain some upward pressure on inflation.
• Sustainably returning inflation to target within a reasonable timeframe remains the Board’s highest priority. This is consistent with the RBA’s mandate for price stability and full employment.
• The Board will continue to rely upon the data and the evolving assessment of risks to guide its decisions, paying close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.
• The next meeting is on 1 April 2025.

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

After falling sharply at the end of last week, the Kiwi found a near-term floor around the level of 0.5700 over the last couple of days. Demand for the greenback could begin to taper on Wednesday, providing a lift for this currency pair.

Central Bank Notes:

• The Monetary Policy Committee (MPC) agreed to reduce the Official Cash Rate (OCR) by 50 basis points bringing it down to 3.75% on 19 February, marking the fourth consecutive rate cut.
• The Committee assessed that annual consumer price inflation remains near the midpoint of the MPC’s 1 to 3% target band; inflation expectations are at target and core inflation continues to fall towards the target mid-point.
• Economic activity in New Zealand remains subdued and with spare productive capacity, domestic inflation pressures continue to ease. Price and wage-setting behaviours are adapting to a low-inflation environment while the price of imports has fallen, also contributing to lower headline inflation.
• Economic growth is expected to recover during 2025 as lower interest rates will encourage spending, although elevated global economic uncertainty is expected to weigh on business investment decisions. Higher prices for some key commodities and a lower exchange rate will increase export revenues and employment growth is expected to pick up in the second half of the year as the domestic economy recovers.
• Global economic growth is expected to remain subdued in the near term as geopolitics, including uncertainty about trade barriers, is likely to weaken global growth. Global economic activity is also likely to remain fragile over the medium term given increasing geoeconomic fragmentation.
• Consumer price inflation is expected to be volatile in the near term, due to a lower exchange rate and higher petrol prices. Nevertheless, the Committee is well placed to maintain price stability over the medium term.
• The economic outlook remains consistent with inflation remaining in the band over the medium term, giving the Committee confidence to continue lowering the OCR. If economic conditions continue to evolve as projected, the Committee has scope to lower the OCR further through 2025.
• The next meeting is on 9 April 2025.

Next 24 Hours Bias

Medium Bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Overhead pressures for the yen remained firmly intact as USD/JPY reached as high as 150.94 on Tuesday. However, this currency pair dipped under the level of 150 overnight. As Asian markets came online on Wednesday, USD/JPY stabilized around this level and it could resume its upward ascend as the day progresses.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 19 March, by a unanimous vote, to maintain the following guidelines for money market operations for the inter-meeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
  2. The Bank will continue its plan to reduce the amount of its monthly outright purchases of JGBs, aiming to reach about 3 trillion yen by January-March 2026.
• Japan’s economy has continued to recover moderately, with some sectors showing improvement. Exports and industrial production have remained relatively stable, while corporate profits continue on an improving trend and business sentiment maintains a favourable level.
• The employment and income situation has shown moderate improvement, with private consumption on a moderately increasing trend despite ongoing impacts from price rises.
• On the price front, the year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) has been in the range of 3.0-3.5% recently. Services prices continue to rise moderately, reflecting factors such as wage increases, while the effects of cost pass-through from past import price rises have diminished.
• Inflation expectations have continued to rise moderately, with underlying CPI inflation gradually increasing toward the price stability target of 2%. The virtuous cycle between wages and prices continues to strengthen, with businesses increasingly reflecting higher costs in selling prices.
• Japan’s economy is expected to maintain growth above its potential rate, supported by moderately growing overseas economies and the intensifying virtuous cycle from income to spending, underpinned by accommodative financial conditions.
• The next meeting is scheduled for 19 June 2025.

Next 24 Hours Bias

Medium Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

Business confidence in Germany improved in March, rising from 85.3 in the previous month to 86.7 as companies grew more optimistic about the months ahead, following a historic debt deal to increase defence spending by easing strict rules and establishing a substantial infrastructure fund by the new German government. This latest reading marked the highest level since July while firms’ assessment of the current business situation improved and sentiment improved across all industries. Despite business confidence showing signs of green shoots, the euro remained under pressure as it declined for the fifth consecutive trading day – this currency pair was hovering around 1.0790 at the beginning of the Asia session.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 6 March to mark the fifth successive rate cut.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 2.65%, 2.90% and 2.50% respectively.
• The Council acknowledged that monetary policy was becoming meaningfully less restrictive, easing borrowing costs for businesses and households with inflation projected to average 2.3% in 2025, 1.9% in 2026, and 2.0% in 2027, while core inflation also neared the 2% target.
• Although domestic inflation remains elevated due to delayed wage and price adjustments, wage growth is moderating.
• Economic growth forecasts were revised downward to 0.9% for 2025 and 1.2% for 2026, reflecting weak exports and investment.
• The asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
• The ECB remains data-dependent and will adjust its policy as needed to ensure inflation stabilizes around its 2% medium-term target without committing to a specific rate path.
• The next meeting is on 17 April 2025.

Next 24 Hours Bias

Medium Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

With demand for the franc waning, USD/CHF has remained above the threshold of 0.8800 this week. This currency pair hit an overnight high of 0.8848 before easing by the end of the U.S. session. With the dollar seeing a renewed resurgence, USD/CHF could continue to grind higher on Wednesday.

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.50% to 0.25% on 20 March 2025, marking the fifth consecutive reduction.
• Underlying inflationary pressure has decreased further this quarter.
• Inflation in the period since the last monetary policy assessment has again been lower than expected, decreasing from 0.7% in November to 0.3% in February, primarily due to lower electricity prices.
• In the shorter term, the new conditional inflation forecast is slightly higher than December: 0.3% for Q2 2025, 0.4% for 2025 overall, and 0.8% for 2026 and 2027, based on the assumption that the SNB policy rate remains at 0.25% over the entire forecast horizon.
• GDP growth in Switzerland remains moderate, with the services sector continuing to show slightly stronger growth, while manufacturing faces challenges.
• The SNB anticipates GDP growth of around 1.0% to 1.5% for 2025.
• The SNB will continue to monitor the situation closely and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.
• The next meeting is on 19 June 2025.

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

CPI (7:00 am GMT)

What can we expect from GBP today?

Headline and core consumer inflation in the U.K. both accelerated in January 2025, with the former jumping from an annual rate of 2.5% in the previous month to 3.0% while the latter spiked from 3.2% to 3.7%. Headline CPI recorded its highest reading since March 2024 as categories such as transport; food and non-alcoholic beverages; recreation and culture; and education led the price increases. Inflationary pressures are expected to remain persistent in February and a ‘hot’ print could trigger a surge in demand for the pound before the start of the European trading hours.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to maintain the Bank Rate at 4.50% on 19 March 2025, while one member preferred to reduce it by 25 basis points (bps).
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
• Twelve-month CPI inflation increased to 3.0% in January from 2.5% in December, slightly higher than expected in the February Report; domestic price and wage pressures are moderating, but remain somewhat elevated.
• Although global energy prices have fallen back recently, they remain higher than last year and CPI inflation is still projected to rise to around 3.75% in 2025 Q3. While CPI inflation is expected to fall back thereafter, the Committee will pay close attention to any consequent signs of more lasting inflationary pressures.
• While UK GDP growth estimates have been slightly stronger than expected at the time of the February Monetary Policy Report, business survey indicators generally continue to suggest weakness in growth and particularly in employment intentions. In recent quarters, subdued activity has been judged to reflect both demand and supply factors.
• The labour market had continued to ease, although it was still judged to be broadly in balance – some indicators of employment intentions had deteriorated markedly, to levels consistent with shrinking employment while other indicators, such as the number of vacancies, had not weakened to the same extent.
• Domestic price and wage pressures were moderating, but remained somewhat elevated. A range of indicators suggested that underlying pay growth had eased further in recent months, although annual growth in private sector regular average weekly earnings had picked up to 6.1% in the three months to January.
• Based on the Committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate and it will continue to monitor closely the risks of inflation persistence and what the evolving evidence may reveal about the balance between aggregate supply and demand in the economy.
• Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 8 May 2025.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Demand for the Loonie remained relatively strong as USD/CAD fell under 1.4300 on Tuesday. Rising oil prices have bolstered the Loonie, with Canada being one of the largest non-OPEC+ producers. This currency pair was floating around 1.4285 as Asian markets came online.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points bringing it down to 2.75% on 12 March; this marked the seventh consecutive meeting where rates were reduced.
• The bank announced its plan to complete the normalization of its balance sheet, ending quantitative tightening, and will restart asset purchases in early March, beginning gradually so that its balance sheet stabilizes and then grows modestly, in line with growth in the economy.
• The Governing Council noted that the economy grew more than expected in the fourth quarter of last year, spurred by past rate cuts but growth is now expected to slow at the turn of the year due to increasing trade conflict with the United States.
• Employment growth strengthened in November through January and the unemployment rate declined to 6.6%. In February, job growth stalled. While past interest rate cuts have boosted demand for labour in recent months, there are warning signs that heightened trade tensions could disrupt the recovery in the jobs market. Meanwhile, wage growth has shown signs of moderation.
• Inflation remains close to the 2% target. The temporary suspension of the GST/HST lowered some consumer prices, but January’s CPI was slightly firmer than expected at 1.9%. Inflation is expected to increase to about 2½% in March with the end of the tax break. The Bank’s preferred measures of core inflation remain above 2%, mainly because of the persistence of shelter price inflation. Short-term inflation expectations have risen in light of fears about the impact of tariffs on prices.
• While economic growth has come in stronger than expected, the pervasive uncertainty created by continuously changing U.S. tariff threats is restraining consumers’ spending intentions and businesses’ plans to hire and invest.
• While monetary policy cannot offset the impacts of a trade war, the Governing Council will carefully assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs.
• The Council will also be closely monitoring inflation expectations and is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• The next meeting is on 16 April 2025.

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

After increasing nearly 8.8M barrels over the prior two weeks, the API stockpiles registered its first draw in three weeks as 4.6M barrels of crude were removed from storage – easily exceeding market expectations of a 2.5M drawdown. Combined with U.S. President Donald Trump’s threatened tariffs against countries importing oil and gas from Venezuela, oil prices rose higher on concerns of tighter supplies with WTI oil making an overnight high of $69.68 per barrel. Should the EIA inventories also buck a three-week trend of higher inventory builds, oil prices could receive another tailwind later today.

Next 24 Hours Bias

Medium Bullish

The post IC Markets Europe Fundamental Forecast | 26 March 2025 first appeared on IC Markets | Official Blog.

After finishing yesterday with slight gains, US futures are more muted today once again. Investors are still holding out some caution as all eyes are on Trump’s tariffs implementation next week. Here’s a catch up of the headlines from overnight:

• Goldman Sachs puts a number on what level of tariffs is expected
• Goldman Sachs warns of potential tariff shock on April 2
• Another view on what’s priced in for Trump tariffs
• Trump: Mexico and Canada have stepped it up a lot
• Canada could be on the lower end of Trump’s tariffs – report
• More from Trump on tariffs – Not many exceptions to April 2 tariffs
• Trump may implement copper tariffs within weeks

The headlines are aplenty but so far, they haven’t been adding more pressure to markets overall. Amid the calmer mood, major currencies are also keeping little changed for the most part. The dollar is still in a decent spot since the latter stages of last week, with EUR/USD keeping under 1.0800 and USD/JPY nudging back up above 150.00 today.

Coming up in the session ahead, the pound will be a key focus as we will have UK February CPI figures on the agenda alongside the spring budget statement later in the day around 1230 GMT. Those are the two main events on the economic calendar in Europe for today.

Besides which, trading sentiment will continue to revolve around the risk mood as we also gear towards month-end and quarter-end in the days ahead.

This article was written by Justin Low at www.forexlive.com.

• Changes in global environment will be challenging for China

The narrative is building on this front with many calling for Beijing to step up support, especially on services consumption. From last week: China economists urge Beijing to continue ramping up support for services consumption

This article was written by Justin Low at www.forexlive.com.

Bank of Japan Governor Ueda spoke:

• Bank of Japan Governor Ueda again – If prices overshoot will take stronger steps
• BoJ Gov Ueda again: If food inflation is temporary, shouldn’t respond with monetary policy
• Bank Japan Governor Ueda says cost-push inflation factors likely to gradually dissipate
• Bank of Japan Governor Ueda says expects underlying inflation to accelerate gradually

Other:

• Federal Reserve speakers Wednesday include Kashkari and Musalem
• ICYMI – Goldman Sachs lowered its Global AI Server shipment volume forecast
• ECB’s Villeroy speaks on the economy Wednesday, while Cipollone speaks on crypto
• More from Trump on tariffs – Not many exceptions to April 2 tariffs
• Trump may implement copper tariffs within weeks
• PBOC sets USD/ CNY central rate at 7.1754 (vs. estimate at 7.2559)
• Australian monthly CPI (February 2025) 2.4% y/y (vs. 2.5% expected)
• Canada could be on the lower end of Trump’s tariffs – report
• Japan Services Producer Price Index (February 2025) +3% y/y (exp +3.1%)
• Moody’s warns US fiscal strength is eroding amid rising debt costs and policy risks
• Chile Magnitude 6 earthquake
• Morgan Stanley upgrades China equities – both mainland and Hong Kong
• Heads up for Trump speaking soon – at 2100 US Eastern time (0100 GMT)
• Rabobank predicts EUR/USD rise to 1.12 in one-year outlook
• Forexlive Americas FX news wrap 25 Mar: US data weaker. Dollar mostly lower but off lows
• S&P analysts says the US economic outlook sees growth losing steam amid shifting policies
• Oil – private survey of inventory shows a headline crude oil draw larger than expected
• GameStop to invest corporate cash in bitcoin
• UBS sees S&P 500 falling to 5,300 as consumer fatigue bites
• Goldman Sachs warns of potential tariff shock on April 2
• Trade ideas thread – Wednesday, 26 March, insightful charts, technical analysis, ideas

Bank
of Japan Governor Ueda spoke at length today. If you want a one-word
summary mine would be ‘dovish’. Or at least ‘not hawkish’ (the two
word summary).

Ueda
spoke broadly, and in a mainly balanced fashion, but for every
indication he gave that the Bank will be raising rates he provided
caveats as to why they would not be doing so any time soon. In essence his message is that if
BoJ forecasts for the economy and prices come to fruition then the
Bank will adjust monetary policy (raise rates), but that he is not
expecting this quickly.

For
the equity folks, Ueda gave no indication of any hurry to sell off the
bank’s ETFs holdings.

I’ve
grouped the posts on Ueda all together in the points above, if you
want to go through them.

The
yen fell during the session against the USD and other major FX.

From
Australia we had February CPI data. The monthly CPI data is not the
official guide to inflation in Australia, that’ll have to wait for
the quarterly reading due in late April. Having got that out of the
way, February CPI came in at 2.4%, under the median estimate of 2.5%,
under January’s 2.5%, and under the mid-point of the Reserve Bank
of Australia’s 2 – 3% target band. A good report. The RBA meet next week, March
31 and April 1. What to expect? I suspect:

• 1. Given how hawkish they sounded in their
  February meeting,
• and 2. that today’s inflation data was not an
  official quarterly read,

a rate cut would be a surprise.

Trump
spoke in an interview, sending out mixed messages on what’s to come
on April 2 re tariffs:

• Not
  many exceptions to April 2 tariffs
• All
  we are doing is reciprocal
• I’ll
  likely be more lenient than reciprocal

On
balance these seem to indicate a dialling back of the threat, but
less cryptic would be helpful to folks trying to make
business decisions surrounding tariff and economic policy. Still,
he’s the Prez so I guess he knows what he is doing.

The
USD was not a lot changed on the session (yen excepted).

This article was written by Eamonn Sheridan at www.forexlive.com.

DXY (US Dollar Index):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 104.00
Supporting reasons: Identified as an overlap support that aligns with a 38.2% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 103.22
Supporting reasons: Identified as a multi-swing-low support, indicating a potential area where the price could stabilize once again.

1st resistance: 105.26
Supporting reasons: Identified as a pullback resistance, indicating a potential level that could cap further upward movement.

EUR/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

Price could rise toward the pivot and potentially make a bearish reversal off this level to fall toward the 1st support.

Pivot: 1.0860
Supporting reasons: Identified as an overlap resistance that aligns close to a 50% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 1.0687
Supporting reasons: Identified as a pullback support that aligns close to a 38.2% Fibonacci retracement, indicating a potential area where the price could stabilize once more.

1st resistance: 1.0951
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price has made a bullish bounce off the pivot and could potentially rise towards the 1st resistance.

Pivot: 161.94
Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 160.93
Supporting reasons: Identified as a multi-swing-low support that aligns close to a 38.2% Fibonacci retracement, indicating a potential area where the price could stabilize once again.

1st resistance: 164.02
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bullish
Overall momentum of the chart: Bearish

Price is trading close to the pivot and could potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 0.8337
Supporting reasons: Identified as a pullback support, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 0.8310
Supporting reasons: Identified as a pullback support, indicating a potential area where the price could stabilize once more.

1st resistance: 0.8377
Supporting reasons: Identified as an overlap resistance that aligns with a 38.2% Fibonacci retracement, indicating a potential level that could cap further upward movement.

GBP/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 1.2876

Supporting reasons: Identified as a multi-swing-low support, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 1.2779
Supporting reasons: Identified as a pullback support that aligns close to a confluence of Fibonacci levels i.e. the 23.6% and 50% retracements, acting as a potential level where the price could stabilize once again.

1st resistance: 1.3051
Supporting reasons: Identified as a multi-swing-high resistance, indicating a potential level that could cap further upward movement.

GBP/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 193.37
Supporting reasons: Identified as an overlap support that aligns close to a 50% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 192.26
Supporting reasons: Identified as a multi-swing-low support, indicating a potential level where the price could stabilize once more.

1st resistance: 195.88
Supporting reasons: Identified as an overlap resistance, indicating a potential level that could cap further upward movement.

USD/CHF:

Potential Direction: Bullish
Overall momentum of the chart: Neutral

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 0.8797

Supporting reasons: Identified as an overlap support, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 0.8758
Supporting reasons: Identified as a multi-swing-low support, indicating a potential level where the price could stabilize once again.

1st resistance: 0.8866
Supporting reasons: Identified as an overlap resistance that aligns with a confluence of Fibonacci levels i.e. the 23.6% and 38.2% retracements, indicating a potential level that could cap further upward movement.

USD/JPY:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price has made a bullish bounce off the pivot and could potentially rise towards the 1st resistance.

Pivot: 149.93

Supporting reasons: Identified as an overlap support that aligns close to a confluence of Fibonacci levels i.e. the 23.6% and 38.2% retracements, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 148.26
Supporting reasons: Identified as a swing-low support that aligns with a 61.8% Fibonacci retracement, suggesting a potential area where the price could stabilize once more.

1st resistance: 151.29
Supporting reasons: Identified as an overlap resistance, indicating a potential level that could cap further upward movement.

USD/CAD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

Price could make a bearish break below the pivot and potentially fall toward the 1st support.

Pivot: 1.4275

Supporting reasons: Identified as a potential breakout level where selling pressures could intensify. The presence of the red Ichimoku Cloud adds further significance to the strength of the bearish momentum.

1st support: 1.4237
Supporting reasons: Identified as a pullback support that aligns with a 78.6% Fibonacci retracement, indicating a key level where the price could stabilize once more.

1st resistance: 1.4326
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bearish

Overall momentum of the chart: Neutral

Price could rise toward the pivot and potentially make a bearish reversal off this level to fall toward the 1st support.

Pivot: 0.6355
Supporting reasons: Identified as an overlap resistance that aligns with a 78.6% Fibonacci projection, indicating a potential area where selling pressures could intensify.

1st support: 0.6262

Supporting reasons: Identified as a multi-swing-low support, suggesting a potential area where the price could stabilize once again.

1st resistance: 0.6388
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish

Overall momentum of the chart: Bearish

Price could rise toward the pivot and potentially make a bearish reversal off this level to fall toward the 1st support.

Pivot: 0.5762

Supporting reasons: Identified as a swing-high resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 0.5712

Supporting reasons: Identified as a swing-low support that aligns close to a 50% Fibonacci retracement, suggesting a potential area where the price could stabilize once more.

1st resistance: 0.5783

Supporting reasons: Identified as a pullback resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 42,114.80

Supporting reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 41,410.00

Supporting reasons: Identified as an overlap support that aligns with a 61.8% Fibonacci retracement, indicating a potential level where the price could stabilize once again.

1st resistance: 43,012.90

Supporting reasons: Identified as a swing-high resistance that aligns close to a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

DE40 (DAX):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 23,005.30

Supporting reasons: Identified as an overlap support that aligns with a 38.2% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 22,723.90

Supporting reasons: Identified as an overlap support that aligns with a 61.8% Fibonacci retracement, indicating a key level where the price could stabilize once more.

1st resistance: 23,438.30
Supporting reasons: Identified as a multi-swing-high resistance that aligns close to a 61.8% Fibonacci projection, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could fall toward the pivot and potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 5,710.10

Supporting reasons: Identified as an overlap support that aligns close to a confluence of Fibonacci levels i.e. the 23.6% and 38.2% retracements, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 5,603.80

Supporting reasons: Identified as a multi-swing-low support that aligns close to a 61.8% Fibonacci retracement, indicating a potential level where the price could stabilize once again.

1st resistance: 5,843.10

Supporting reasons: Identified as a swing-high resistance that aligns close to a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price is falling toward the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 85,982.89

Supporting reasons: Identified as a pullback support that aligns with a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 81,319.71
Supporting reasons: Identified as a swing-low support that aligns with a 61.8% Fibonacci retracement, indicating a potential level where the price could stabilize once more.

1st resistance: 92,463.38
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

Price is falling toward the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 1,949.48

Supporting reasons: Identified as an overlap support that aligns close to a 50% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 1,832.10
Supporting reasons: Identified as a multi-swing-low support that aligns with a 78.6% Fibonacci retracement, indicating a potential level where the price could stabilize once again.

1st resistance: 2,132.80
Supporting reasons: Identified as an overlap resistance that aligns close to a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: Bearish
Overall momentum of the chart: Bullish

Price could rise towards the pivot and potentially make a bearish reversal off this level to fall towards the 1st support.

Pivot: 70.34

Supporting reasons: Identified as a multi-swing-high resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify. 

1st support: 68.00
Supporting reasons: Identified as a multi-swing-low support that aligns with a 50% Fibonacci retracement, indicating a key level where the price could stabilize once more.

1st resistance: 71.86
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price is falling toward the pivot and could potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 2,998.31
Supporting reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where buying interests could pick up to resume the uptrend. The presence of the green Ichimoku Cloud adds further significance to the strength of the bullish momentum.

1st support: 2,954.94
Supporting reasons: Identified as a pullback support that aligns close to a 50% Fibonacci retracement, acting as a potential level where price could stabilize once again.

1st resistance: 3,051.82
Supporting reasons: Identified as a swing-high resistance that aligns close to the all-time high, indicating a potential area that could halt any further upward movement.

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The post Wednesday 26th March 2025: Technical Outlook and Review first appeared on IC Markets | Official Blog.

IC Markets Asia Fundamental Forecast | 26 March 2025

What happened in the U.S. session?

Consumer confidence in the U.S. tumbled for the fourth successive month as consumers’ assessment of current and future business conditions weakened along with falling employment prospects. In addition, optimism about future income largely vanished due after holding up strongly over the past few months. Meanwhile, sales for new homes increased marginally from 664k in the previous month to 676k in February. Although sales missed the estimate of 682k, purchases for new homes have picked up over the past few months as mortgage rates declined from January’s highs. In addition, U.S. President Donald Trump indicated that not all proposed tariffs set for the 2nd of April will be implemented as initially planned; some countries may receive exemptions. His comments have alleviated concerns about broader trade disruptions, leading to gains across major equity indices such as the S&P 500 and Nasdaq Composite amid optimism regarding economic resilience despite ongoing tariff discussions.

What does it mean for the Asia Session?

After increasing to an annual rate of 2.5% in December 2024 and January this year, the monthly CPI eased marginally to 2.4%. Not only did the latest print moderate from a four-month high, it also came in lower than market forecasts of 2.5% with categories such as food; housing; and electricity all rising at a slower pace. The ‘soft’ inflation print initially sent the Aussie as low as 0.6278 but it reversed swiftly to climb above the 0.6300 level.

The Dollar Index (DXY)

Key news events today

Durable Goods Orders (12:30 pm GMT)

What can we expect from DXY today?

After declining in November and December of 2024, new orders for durable goods rose strongly in January of this year. Orders jumped 3.2% MoM with the rebound driven by sectors such as transportation equipment and capital goods. However, orders are now expected to decline 1.1% in February, signalling an inconsistent start to the new year for the manufacturing sector. A significantly larger drop could cause the dollar to lose some steam in the near term.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25 to 4.50% on 19 March 2025
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run but uncertainty around the economic outlook has increased; the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while the unemployment rate has stabilized at a low level in recent months, and labour market conditions remain solid. However, inflation remains somewhat elevated.
• GDP growth forecasts were revised downward for 2025 (1.7% vs. 2.1% in the December projection) while PCE inflation projections have been adjusted slightly higher for 2025, with core inflation expected to reach 2.5%, partly due to tariff-related pressures.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and is prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals.
• Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25B to $5B while maintaining the monthly redemption cap on agency debt and agency mortgage-backed securities at $35B.
• The next meeting is scheduled for 6 to 7 May 2025.

Next 24 Hours Bias

Medium Bullish

Gold (XAU)

Key news events today

Durable Goods Orders (12:30 pm GMT)

What can we expect from Gold today?

After declining in November and December of 2024, new orders for durable goods rose strongly in January of this year. Orders jumped 3.2% MoM with the rebound driven by sectors such as transportation equipment and capital goods. However, orders are now expected to decline 1.1% in February, signalling an inconsistent start to the new year for the manufacturing sector. A significantly larger drop could cause the dollar to lose some steam in the near term, potentially providing a lift for gold.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

CPI (12:30 am GMT)

What can we expect from AUD today?

After increasing to an annual rate of 2.5% in December 2024 and January this year, the monthly CPI eased marginally to 2.4%. Not only did the latest print moderate from a four-month high, it also came in lower than market forecasts of 2.5% with categories such as food; housing; and electricity all rising at a slower pace. The ‘soft’ inflation print initially sent the Aussie as low as 0.6278 but it reversed swiftly to climb above the 0.6300 level.

Central Bank Notes:

• The RBA reduced the cash rate by 25 basis points to bring it down to 4.10% on 18 February, marking the first rate cut since November 2020.
• Financial conditions are restrictive, which is weighing on demand and is helping to bring down underlying inflation; growth in private demand has been subdued.
• Underlying inflation has moderated over the past three quarters with trimmed mean inflation easing to 3.2% over 2024 and it is expected to reach the 2–3% target range in early 2025, which is sooner than expected at the time of the November Statement.
• The unemployment rate declined a little in late 2024 to 4% with much of the strength in the labour market underpinned by strong employment growth, which has also bolstered household incomes.
• The announcement of tariffs between the United States and other major economies poses challenges to the global outlook but the scale and incidence of the tariffs and their effects remain highly uncertain – which may itself delay some investment until the outlook becomes clearer.
• Economic activity strengthened in China but growth there is still facing structural headwinds while domestic economic growth is forecast to pick up and the labour market is forecast to remain tight.
• If the cash rate follows the market path, underlying inflation is projected to be a little above 2.5% over most of the forecast period. The anticipated recovery of GDP growth and lingering tightness in labour market conditions are expected to sustain some upward pressure on inflation.
• Sustainably returning inflation to target within a reasonable timeframe remains the Board’s highest priority. This is consistent with the RBA’s mandate for price stability and full employment.
• The Board will continue to rely upon the data and the evolving assessment of risks to guide its decisions, paying close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.
• The next meeting is on 1 April 2025.

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

After falling sharply at the end of last week, the Kiwi found a near-term floor around the level of 0.5700 over the last couple of days. Demand for the greenback could begin to taper on Wednesday, providing a lift for this currency pair.

Central Bank Notes:

• The Monetary Policy Committee (MPC) agreed to reduce the Official Cash Rate (OCR) by 50 basis points bringing it down to 3.75% on 19 February, marking the fourth consecutive rate cut.
• The Committee assessed that annual consumer price inflation remains near the midpoint of the MPC’s 1 to 3% target band; inflation expectations are at target and core inflation continues to fall towards the target mid-point.
• Economic activity in New Zealand remains subdued and with spare productive capacity, domestic inflation pressures continue to ease. Price and wage-setting behaviours are adapting to a low-inflation environment while the price of imports has fallen, also contributing to lower headline inflation.
• Economic growth is expected to recover during 2025 as lower interest rates will encourage spending, although elevated global economic uncertainty is expected to weigh on business investment decisions. Higher prices for some key commodities and a lower exchange rate will increase export revenues and employment growth is expected to pick up in the second half of the year as the domestic economy recovers.
• Global economic growth is expected to remain subdued in the near term as geopolitics, including uncertainty about trade barriers, is likely to weaken global growth. Global economic activity is also likely to remain fragile over the medium term given increasing geoeconomic fragmentation.
• Consumer price inflation is expected to be volatile in the near term, due to a lower exchange rate and higher petrol prices. Nevertheless, the Committee is well placed to maintain price stability over the medium term.
• The economic outlook remains consistent with inflation remaining in the band over the medium term, giving the Committee confidence to continue lowering the OCR. If economic conditions continue to evolve as projected, the Committee has scope to lower the OCR further through 2025.
• The next meeting is on 9 April 2025.

Next 24 Hours Bias

Medium Bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Overhead pressures for the yen remained firmly intact as USD/JPY reached as high as 150.94 on Tuesday. However, this currency pair dipped under the level of 150 overnight. As Asian markets came online on Wednesday, USD/JPY stabilized around this level and it could resume its upward ascend as the day progresses.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 19 March, by a unanimous vote, to maintain the following guidelines for money market operations for the inter-meeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
  2. The Bank will continue its plan to reduce the amount of its monthly outright purchases of JGBs, aiming to reach about 3 trillion yen by January-March 2026.
• Japan’s economy has continued to recover moderately, with some sectors showing improvement. Exports and industrial production have remained relatively stable, while corporate profits continue on an improving trend and business sentiment maintains a favourable level.
• The employment and income situation has shown moderate improvement, with private consumption on a moderately increasing trend despite ongoing impacts from price rises.
• On the price front, the year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) has been in the range of 3.0-3.5% recently. Services prices continue to rise moderately, reflecting factors such as wage increases, while the effects of cost pass-through from past import price rises have diminished.
• Inflation expectations have continued to rise moderately, with underlying CPI inflation gradually increasing toward the price stability target of 2%. The virtuous cycle between wages and prices continues to strengthen, with businesses increasingly reflecting higher costs in selling prices.
• Japan’s economy is expected to maintain growth above its potential rate, supported by moderately growing overseas economies and the intensifying virtuous cycle from income to spending, underpinned by accommodative financial conditions.
• The next meeting is scheduled for 19 June 2025.

Next 24 Hours Bias

Medium Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

Business confidence in Germany improved in March, rising from 85.3 in the previous month to 86.7 as companies grew more optimistic about the months ahead, following a historic debt deal to increase defence spending by easing strict rules and establishing a substantial infrastructure fund by the new German government. This latest reading marked the highest level since July while firms’ assessment of the current business situation improved and sentiment improved across all industries. Despite business confidence showing signs of green shoots, the euro remained under pressure as it declined for the fifth consecutive trading day – this currency pair was hovering around 1.0790 at the beginning of the Asia session.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 6 March to mark the fifth successive rate cut.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 2.65%, 2.90% and 2.50% respectively.
• The Council acknowledged that monetary policy was becoming meaningfully less restrictive, easing borrowing costs for businesses and households with inflation projected to average 2.3% in 2025, 1.9% in 2026, and 2.0% in 2027, while core inflation also neared the 2% target.
• Although domestic inflation remains elevated due to delayed wage and price adjustments, wage growth is moderating.
• Economic growth forecasts were revised downward to 0.9% for 2025 and 1.2% for 2026, reflecting weak exports and investment.
• The asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
• The ECB remains data-dependent and will adjust its policy as needed to ensure inflation stabilizes around its 2% medium-term target without committing to a specific rate path.
• The next meeting is on 17 April 2025.

Next 24 Hours Bias

Medium Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

With demand for the franc waning, USD/CHF has remained above the threshold of 0.8800 this week. This currency pair hit an overnight high of 0.8848 before easing by the end of the U.S. session. With the dollar seeing a renewed resurgence, USD/CHF could continue to grind higher on Wednesday.

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.50% to 0.25% on 20 March 2025, marking the fifth consecutive reduction.
• Underlying inflationary pressure has decreased further this quarter.
• Inflation in the period since the last monetary policy assessment has again been lower than expected, decreasing from 0.7% in November to 0.3% in February, primarily due to lower electricity prices.
• In the shorter term, the new conditional inflation forecast is slightly higher than December: 0.3% for Q2 2025, 0.4% for 2025 overall, and 0.8% for 2026 and 2027, based on the assumption that the SNB policy rate remains at 0.25% over the entire forecast horizon.
• GDP growth in Switzerland remains moderate, with the services sector continuing to show slightly stronger growth, while manufacturing faces challenges.
• The SNB anticipates GDP growth of around 1.0% to 1.5% for 2025.
• The SNB will continue to monitor the situation closely and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.
• The next meeting is on 19 June 2025.

Next 24 Hours Bias

Medium Bullish

The Pound (GBP)

Key news events today

CPI (7:00 am GMT)

What can we expect from GBP today?

Headline and core consumer inflation in the U.K. both accelerated in January 2025, with the former jumping from an annual rate of 2.5% in the previous month to 3.0% while the latter spiked from 3.2% to 3.7%. Headline CPI recorded its highest reading since March 2024 as categories such as transport; food and non-alcoholic beverages; recreation and culture; and education led the price increases. Inflationary pressures are expected to remain persistent in February and a ‘hot’ print could trigger a surge in demand for the pound before the start of the European trading hours.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to maintain the Bank Rate at 4.50% on 19 March 2025, while one member preferred to reduce it by 25 basis points (bps).
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
• Twelve-month CPI inflation increased to 3.0% in January from 2.5% in December, slightly higher than expected in the February Report; domestic price and wage pressures are moderating, but remain somewhat elevated.
• Although global energy prices have fallen back recently, they remain higher than last year and CPI inflation is still projected to rise to around 3.75% in 2025 Q3. While CPI inflation is expected to fall back thereafter, the Committee will pay close attention to any consequent signs of more lasting inflationary pressures.
• While UK GDP growth estimates have been slightly stronger than expected at the time of the February Monetary Policy Report, business survey indicators generally continue to suggest weakness in growth and particularly in employment intentions. In recent quarters, subdued activity has been judged to reflect both demand and supply factors.
• The labour market had continued to ease, although it was still judged to be broadly in balance – some indicators of employment intentions had deteriorated markedly, to levels consistent with shrinking employment while other indicators, such as the number of vacancies, had not weakened to the same extent.
• Domestic price and wage pressures were moderating, but remained somewhat elevated. A range of indicators suggested that underlying pay growth had eased further in recent months, although annual growth in private sector regular average weekly earnings had picked up to 6.1% in the three months to January.
• Based on the Committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate and it will continue to monitor closely the risks of inflation persistence and what the evolving evidence may reveal about the balance between aggregate supply and demand in the economy.
• Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 8 May 2025.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Demand for the Loonie remained relatively strong as USD/CAD fell under 1.4300 on Tuesday. Rising oil prices have bolstered the Loonie, with Canada being one of the largest non-OPEC+ producers. This currency pair was floating around 1.4285 as Asian markets came online.

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 25 basis points bringing it down to 2.75% on 12 March; this marked the seventh consecutive meeting where rates were reduced.
• The bank announced its plan to complete the normalization of its balance sheet, ending quantitative tightening, and will restart asset purchases in early March, beginning gradually so that its balance sheet stabilizes and then grows modestly, in line with growth in the economy.
• The Governing Council noted that the economy grew more than expected in the fourth quarter of last year, spurred by past rate cuts but growth is now expected to slow at the turn of the year due to increasing trade conflict with the United States.
• Employment growth strengthened in November through January and the unemployment rate declined to 6.6%. In February, job growth stalled. While past interest rate cuts have boosted demand for labour in recent months, there are warning signs that heightened trade tensions could disrupt the recovery in the jobs market. Meanwhile, wage growth has shown signs of moderation.
• Inflation remains close to the 2% target. The temporary suspension of the GST/HST lowered some consumer prices, but January’s CPI was slightly firmer than expected at 1.9%. Inflation is expected to increase to about 2½% in March with the end of the tax break. The Bank’s preferred measures of core inflation remain above 2%, mainly because of the persistence of shelter price inflation. Short-term inflation expectations have risen in light of fears about the impact of tariffs on prices.
• While economic growth has come in stronger than expected, the pervasive uncertainty created by continuously changing U.S. tariff threats is restraining consumers’ spending intentions and businesses’ plans to hire and invest.
• While monetary policy cannot offset the impacts of a trade war, the Governing Council will carefully assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs.
• The Council will also be closely monitoring inflation expectations and is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• The next meeting is on 16 April 2025.

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

After increasing nearly 8.8M barrels over the prior two weeks, the API stockpiles registered its first draw in three weeks as 4.6M barrels of crude were removed from storage – easily exceeding market expectations of a 2.5M drawdown. Combined with U.S. President Donald Trump’s threatened tariffs against countries importing oil and gas from Venezuela, oil prices rose higher on concerns of tighter supplies with WTI oil making an overnight high of $69.68 per barrel. Should the EIA inventories also buck a three-week trend of higher inventory builds, oil prices could receive another tailwind later today.

Next 24 Hours Bias

Medium Bullish

The post IC Markets Asia Fundamental Forecast | 26 March 2025 first appeared on IC Markets | Official Blog.