The forex market opened this week amid a cautiously optimistic mood, supported by easing U.S.-China trade tensions and shifting market sentiment. Last week’s surge in U.S. equities, particularly a 6.4% jump in the Nasdaq 100, reflects a renewed risk appetite. However, caution prevails ahead of crucial economic releases, including U.S. Core PCE Inflation data and Eurozone consumer confidence numbers.
Central banks remain in focus, with traders closely watching comments from the Federal Reserve and the European Central Bank (ECB) for signals about future rate policy. Meanwhile, rising U.S. Treasury yields continue to bolster the dollar’s strength against major currencies.
Major Economic Events Impacting Markets
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U.S. Core PCE Inflation (March): Set for release later this week, it is the Fed’s preferred inflation measure. A hotter-than-expected number could reignite discussions of prolonged higher interest rates.
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Eurozone Economic Data: Eurozone Consumer Confidence, Retail Sales, and Unemployment Rate figures are due. Weak results could strengthen expectations of an ECB rate cut later this year.
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Geopolitical Climate: Calmer U.S.-China relations have provided a tailwind to riskier assets, but Middle East tensions and the Russia-Ukraine situation still pose headline risks.
EUR/USD: Euro Under Pressure
Summary: The EUR/USD pair trades lower, pressured by expectations of dovish ECB actions and relative U.S. economic strength.
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Current Price: Around 1.0935
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Key Support: 1.0915, then 1.0875
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Key Resistance: 1.0980, then 1.1020
Analysis:
The pair remains vulnerable to breaking below the 1.0900 psychological level if Eurozone data disappoints. On the upside, a strong close above 1.0980 could allow a test of the 1.1020 zone. Momentum indicators like the RSI are neutral, suggesting range-bound conditions for now.
GBP/USD: Sterling Struggles for Traction
Summary: The pound is weaker, weighed down by cautious sentiment around the UK’s economic outlook and a stronger dollar environment.
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Current Price: Around 1.3030
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Key Support: 1.3000, then 1.2965
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Key Resistance: 1.3100, then 1.3147
Analysis:
GBP/USD is flirting with the critical 1.3000 support area. A sustained move below this level could open a deeper retracement toward 1.2965. Upside potential remains capped unless the pair can reclaim the 1.3100 resistance area convincingly.
USD/JPY: Dollar Advances as Yields Climb
Summary: USD/JPY continues its bullish run, propelled by surging U.S. Treasury yields and a lack of BoJ intervention.
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Current Price: Around 151.80
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Key Support: 150.90
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Key Resistance: 152.00, then 152.50
Analysis:
The dollar-yen pair is inching closer to the 152.00 resistance level, an area where intervention threats from Japanese authorities could intensify. Until then, the path of least resistance remains to the upside. Watch for yield movements and risk-off flows.
USD/CHF: Dollar Strength Remains Firm
Summary: USD/CHF moves higher, reflecting general dollar strength and cautious market tone.
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Current Price: Around 0.9125
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Key Support: 0.9000
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Key Resistance: 0.9150, then 0.9200
Analysis:
The 0.9000 mark has proven strong support in recent sessions. As long as USD/CHF holds above it, bulls could eye a move toward 0.9200. The Swiss franc’s safe-haven appeal could slow gains if global sentiment deteriorates suddenly.
Other Notable Movements
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AUD/USD: Soft, trading below 0.6500 amid declining commodity prices and lingering China growth concerns.
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NZD/USD: Similarly pressured, with no major domestic catalysts, focusing mainly on broader risk sentiment.
Technical Outlook and Trade Setups
Markets are largely technical today, with few major catalysts on the immediate calendar. Key levels to monitor:
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EUR/USD: A break below 1.0915 could trigger a test of 1.0875.
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GBP/USD: Bulls need to protect 1.3000 to prevent deeper losses.
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USD/JPY: Watch 152.00 closely; breach or rejection could define near-term direction.
Momentum remains mixed across major pairs, suggesting potential for range trading until fresh catalysts (like U.S. inflation data) emerge.
Trading Outlook for the Days Ahead
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Short-term: Expect choppy, range-bound trading ahead of key data releases.
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Medium-term: A strong U.S. Core PCE reading could extend the dollar’s bullish bias.
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Risks: Sudden geopolitical escalations, central bank surprises, or unexpected macro data swings could trigger volatility spikes.
