Forex Morning Report - Wed Mar 26 2025
Overnight Market Snapshot
The British pound eased by 0.3% after the UK CPI report missed expectations, with traders now pricing in 55% odds of a rate cut for May. Elsewhere, Eurostoxx and US futures are steady, as Trump’s tariffs continue to dictate risk sentiment ahead of the 2 April implementation. US fiscal strength has weakened, according to Moody’s, and Goldman Sachs warns of a potential tariff shock, as market optimism may not align with the administration’s stance. Australian monthly CPI hit 2.4% y/y, below the 2.5% expected. The economic calendar in Asia features February month inflation data from Australia, expected to hold steady at 2.5% y/y. Forex traders are urged to exercise caution as they approach these main events.
Central Bank Insights
– ECB: Panetta emphasizes focus on inflation expectations instead of estimated neutral level for setting rates, while there is uncertainty as rates near neutral level
– Fed: Goolsbee warns about market-based inflation expectations and suggests potential for lower interest rates in 12-18 months, but noted economic uncertainty
– Fed speakers Kashkari and Musalem to discuss labor market conditions and U.S. economy
– ECB’s Villeroy to speak on the economy, and Cipollone to speak on crypto, with waverings on likelihood of a rate cut
– BOJ Governor Ueda expects underlying inflation to accelerate gradually, will take stronger steps if prices overshoot expectations
– PBOC sets USD/CNY central rate at 7.1754, there is net injection of yuan, previous close was 7.2593
– PBOC expected to set USD/CNY reference rate at 7.2559
– BOJ Governor Ueda suggests not responding with monetary policy to temporary food inflation
– FOMC member Kugler notes progress on bringing inflation to target has slowed and uncertainty tied to trade policy
– ECB’s Kažimír open to discussing a rate cut or pause in April
– PBOC follows managed floating exchange rate system allowing value of yuan to fluctuate within a certain range around a central reference rate
Key Economic Events Today
- No high-impact events today
Technical Analysis
– Gold: Bullish bias above $3,024, key upside targets at critical price junctions
– Crude oil: Settles at $69.00, first decline after 4 days of gains, ceasefire agreement between Ukraine and Russia, broad supply concerns remain
– Spain’s Ibex: Closes at 1.36% near 13504.31, hopes for no proposed tariffs and some countries being exempted support prices
– AUDUSD: Shows constructive technical shift, trading above 100- and 200-bar moving averages
– USDJPY: Moves lower on weak US data, extends losses as US yields decline and falls below key support and moving average
– NZDUSD: Holds key 4-hour 200-bar moving average for fourth time, focus shifts to 100-day moving average support
– USDCAD: Reverses at 100-hour moving average, eyes swing area support at 1.4268
– USDCHF: Rejected break higher at 0.8848, back down testing key support at 0.8810 to 0.8816
– EUR, JPY, GBP: All trading higher vs USD, EURUSD higher after early downside stall near swing area, USDJPY trades at session lows
Trade smart—stay tuned for tomorrow’s update!