The US Dollar remains firm against major currency pairs, driven by rising Treasury yields and hawkish Federal Reserve expectations. EUR/USD and GBP/USD experience downward pressure, while NZD/USD weakens ahead of the RBNZ rate decision. Meanwhile, USD/CAD remains steady as markets anticipate key Canadian inflation data.

KEY HIGHLIGHTS 

• EUR/USD Drops as US Dollar Strengthens Further
• GBP/USD Slips Amid UK Labor Market Concerns
• NZD/USD Weakens Ahead of RBNZ Rate Decision
• USD/CAD Steady Before Key Canadian Inflation Data

EUR/USD Drops Amid Strong US Dollar and Hawkish Fed Stance

Market Overview

EUR/USD continues its decline, approaching 1.0450 as the US Dollar strengthens due to rising Treasury yields. During Tuesday’s Asian session, the pair trades near 1.0460, marking its second consecutive session of losses.

Key Drivers

• Hawkish Fed Sentiment: Federal Reserve Governor Michelle Bowman warned that rising asset prices might slow inflation progress, stressing the need for more confidence before considering rate cuts.
• ECB Dovish Outlook: European Central Bank (ECB) officials support multiple rate cuts this year, following the 25 basis-point reduction to 2.75% last month.
• Geopolitical Influence: A ceasefire in Ukraine and resumed gas supplies could provide upside support, with JPMorgan estimating a potential 5% EUR/USD appreciation in such a scenario.

Technical Analysis

• Moving Averages: Positive crossover on Exponential (MA 10, MA 20, MA 50) and Simple (MA 10, MA 20, MA 50) indicates bullish potential.
• Indicators:
  • RSI: 55.92 (Buy Zone, Bullish)
  • Stochastic Oscillator: 87.19 (Neutral)
• Key Levels:
  • Resistance: 1.0492, 1.0576
  • Support: 1.0220, 1.0136

Trade Suggestion

• Limit Buy: 1.0468 | Take Profit: 1.0390 | Stop Loss: 1.0520

GBP/USD Slips Ahead of UK Employment Data

Market Overview

GBP/USD retraces towards 1.2600, ending a five-day rally as traders await UK labor market data.

Key Drivers

• UK Employment Data:
  • Claimant Count Change: Expected to rise to 10K (previous: 0.7K)
  • ILO Unemployment Rate: Forecasted at 4.5% (previous: 4.4%)
• Stronger US Dollar: The US Dollar Index (DXY) rebounds to 106.90, supported by firm Treasury yields.
• Geopolitical Concerns: UK Prime Minister Keir Starmer emphasized the need for a “US backstop” in any Ukraine peace deal, reinforcing the global risk sentiment.

Technical Analysis

• Moving Averages: Positive crossover on Exponential (MA 10, MA 20, MA 50) and Simple (MA 10, MA 20, MA 50) signals bullish momentum.
• Indicators:
  • RSI: 60.47 (Neutral)
  • Stochastic Oscillator: 91.11 (Neutral)
• Key Levels:
  • Resistance: 1.2538, 1.2650
  • Support: 1.2174, 1.2062

Trade Suggestion

• Limit Buy: 1.2530 | Take Profit: 1.2637 | Stop Loss: 1.2475

NZD/USD Weakens Amid RBNZ Rate Cut Expectations

Market Overview

NZD/USD faces selling pressure near 0.5700 as traders anticipate a dovish stance from the Reserve Bank of New Zealand (RBNZ).

Key Drivers

• Expected Rate Cut: RBNZ is anticipated to lower the Official Cash Rate (OCR) by 50 basis points to 3.75%.
• RBNZ Policy Outlook: ASB Chief Economist Nick Tuffley expects 25bp cuts in April and May.
• US Tariff Concerns: President Donald Trump reaffirmed new auto tariffs from April 2, strengthening safe-haven demand for the US Dollar.

Technical Analysis

• Moving Averages: Positive crossover on Exponential (MA 10, MA 20, MA 50) and Simple (MA 10, MA 20, MA 50) suggests bullish trends.
• Indicators:
  • RSI: 55.83 (Buy Zone, Bullish)
  • Stochastic Oscillator: 89.38 (Neutral)
• Key Levels:
  • Resistance: 0.5703, 0.5745
  • Support: 0.5564, 0.5521

Trade Suggestion

• Limit Buy: 0.5693 | Take Profit: 0.5750 | Stop Loss: 0.5662

USD/CAD Steady as Markets Await Canadian Inflation Data

Market Overview

USD/CAD remains stable around 1.4185, with traders focusing on Canada’s upcoming CPI data.

Key Drivers

• Canadian CPI Expectations:
  • Annual CPI: Forecasted at 1.8% YoY
  • Monthly Inflation: Expected to rebound to 0.1% after a 0.4% decline in December
• US Trade Policy: Ongoing tariff developments could drive USD demand.
• Crude Oil Influence: Rising oil prices may support the CAD due to Canada’s role as a major oil exporter.

Technical Analysis

• Moving Averages: Negative crossover on Exponential (MA 10, MA 20, MA 50) and Simple (MA 10, MA 20, MA 50) signals a bearish outlook.
• Indicators:
  • RSI: 39.99 (Sell Zone, Bearish)
  • Stochastic Oscillator: 5.85 (Neutral)
• Key Levels:
  • Resistance: 1.4587, 1.4666
  • Support: 1.4333, 1.4254

Trade Suggestion

• Limit Buy: 1.4270 | Take Profit: 1.4129 | Stop Loss: 1.4369

Forex Market Snapshot

• USD/CHF: Up 0.03% to 0.9033
• AUD/USD: Down 0.02% to 0.6355
• EUR/GBP: Down 0.05% to 0.8299
• EUR/AUD: Down 0.26% to 1.6447
• AUD/NZD: Up 0.47% to 1.1013
• USD/CNY: Up 0.25% to 7.2800
• AUD/SEK: Up 0.34% to 6.8202

Key Economic Events & Data Releases Today

• (AUD) RBA Interest Rate Decision (Feb): Forecast 4.10%, Previous 4.35% at 09:00 GMT
• (GBP) BoE Gov Bailey Speech: 15:00 GMT
• (CAD) Core CPI (MoM) (Jan): Forecast -0.3% at 19:00 GMT

Conclusion

The forex market remains highly volatile as traders react to economic data and geopolitical factors. The US Dollar’s strength continues to weigh on major currency pairs, making upcoming data releases crucial for market direction.