March 13, 2025 – Written by Ben Hughes

STORY LINK Euro to Dollar Forecast: EUR/USD Drops as US-EU Trade War Escalates

Risk markets are fading lower again and the Euro (EUR) is retracing some of its recent rally against the US Dollar (USD). This comes despite better-than-expected inflation readings in the US. The trade war has escalated in the last 24 hours and the EU is in Trump’s sights.

There was a peculiar reaction to Wednesday’s cooler CPI readings in the US. After a strong rally, stocks faded back into the red, while the US dollar reversed higher. Not only that, the odds of rate cut in May from the Fed fell from 40% to 30%.

This was not the expected reaction – fears of inflation have been weighing on risk markets so the lower-than-expected readings should have given them a significant boost. There were several possible reasons for the reaction.

Firstly, the February data may be the calm beofre the storm. Tariffs are expected to significantly increases inflation over the coming months as prices of imports increase and are passed on to consumers. This has only just started happening.

Secondly, President Trump took credit for the better inflation readings with a post on Truth Social stating,

“The price of eggs have come down, interest rates have come down, gasoline prices have come down—It’s all coming down!”

The problem – at least for markets – is that Trump’s policies seem to be tackling inflation, at least in the short-term. This encourages more of the same policies and Trump has taken to social media to air his thoughts.

“The U.S. doesn’t have Free Trade. We have “Stupid Trade.” The Entire World is RIPPING US OFF!!!,” he posted on Thursday.

Indeed, the last 24 hours have been awash with trade war threats., with the EU now firmly in the crosshairs.

“The European Union, one of the most hostile and abusive taxing and tariffing authorities in the World, which was formed for the sole purpose of taking advantage of the United States, has just put a nasty 50% Tariff on Whisky. If this Tariff is not removed immediately, the U.S. will shortly place a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES.”

This has hit the euro and EURUSD is down 0.4% at 1.085 having reached a peak of 1.095 earlier this week. Tariffs threaten the still-fragile EU economy and could lead to further aggressive cuts from the ECB in a bid to support affected businesses.

The Bank of Canada has taken a similar approach and lowered rates by 25bps yet again this week, taking the rate to 2.75%. This marks 225bps of cuts since June 2024, when rates peaked at 5%. The statement blamed US-Canada trade tensions as a potential drag on growth and a driver of inflation. As ING noted on Wednesday,

“The Bank continues to acknowledge “more than usual uncertainty” due to trade tariffs and has a sense that this uncertainty is “restraining consumers’ spending intentions and businesses’ plans to hire and invest.” After all, 76% of Canadian exports go to the US, equivalent to 20% of Canadian GDP – so even a modest drop in exports could risk a recession.”

Cutting rates will help the economy but they are only now around neutral rates – if stimulus is required to avoid a recession they may have to go much lower and this prospect should keep the Canadian Dollar and euro suppressed and the US dollar bid. So far, there are no signs of inflation making a comeback but both the BoC and ECB will have a challenging year trying to balance out growth and inflation with a messy trade war constantly evolving in the background.

Euro to Dollar Exchange Rate Technicals: Short-Term

According to FX strategists at Scotiabank, the short-term outlook remains neutral.

“EURUSD continues to consolidate. Spot losses are extending for a second day and testing support in the upper 1.08s but the broader, technical undertone remains constructive and dips to the low/mid 1.08 area should remain supported. Key short-term support is 1.0805. Resistance is 1.0950 and 1.10.”

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March 13, 2025 – Written by Tim Boyer

STORY LINK GBP/USD Forecast: Pound Sterling Unable to Break 1.30 – Where Next?

The Pound to Dollar exchange rate (GBP/USD) peaked at 4-month highs just below 1.2990 on Wednesday before a retreat to near 1.2950.

Huge global influences of trade wars and the Ukraine situation will remain crucial for markets with stock market trends also watched very closely.

Markets will also have to factor in the possibility of a US government shutdown given that Senate Democrats are threatening to block the Republican budget resolution.

According to ING; “we retain a bearish bias on GBP/USD, although near-term noise linked to the US macro outlook might still bring the pair temporarily above 1.3000.”

Domestic factors will come into greater focus, especially if there is greater evidence of vulnerability.

The RICS housing index dipped to 11 for February from a revised 21 previously, below consensus forecasts of 20 and a 4-month low.

The indicator of new buyer enquiries also slipped to the lowest level since November 2023.

RICS Chief Economist Simon Rubinson commented; “The UK housing market appears to be losing some momentum as the expiry of the temporary increase in stamp duty thresholds approaches. Some concerns are also being expressed by respondents about the re-emergence of inflationary pressures and the more uncertain geopolitical environment.”

He was still broadly optimistic over the outlook; “That said, looking beyond the next few months, sales activity is seen as likely to resume an upward trend with prices also moving higher.”

The latest UK GDP data will be released on Friday. Consensus forecasts are for 0.1% growth for January after a 0.4% increase previously.

Any monthly contraction in GDP for the month would trigger fresh selling pressure on the Pound.

Monetary and fiscal policy will come into greater focus with the latest Bank of England policy decision on March 20th and budget on March 26th.

The government is likely to announce medium-term departmental spending cuts given the erosion of fiscal headroom.

ING commented; “We still look with some concern at the upcoming 26 March Budget event in the UK, which runs the risk of unnerving a gilt market already hit by EU-bond spillover. We see downside risks for sterling ahead of the risk event.”

Globally, there has been some relief for equity markets with US markets able to secure tentative gains and the FTSE 100 index opening higher on Thursday.

Overall sentiment remains fragile, especially with unease over an escalation in trade wars.

If US markets decline and European markets are resilient, the dollar will tend to weaken. If all markets come under pressure, the US currency could benefit.

According to ING; “the key is whether more equity declines are a US-only matter or followed by European stocks. Futures point to the latter today, so the dollar may not face much idiosyncratic pressure.”

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TAGS: Pound Dollar Forecasts

Created on March 13, 2025

• The bitcoin market has a bit of bent stomach churning during the trading session on Wednesday as we have seen a little bit of a pullback early, only to turn around and skyrocket toward the $85 level.
• This was mainly in reaction to the cooler than anticipated CPI numbers, as traders suddenly thought the Federal Reserve was going to be cutting rates quickly.
• However, reality set in as the reality of inflation still being part of the US landscape become apparent. Even if the Federal Reserve does cut rates sometime this year, it could be a very short cycle.

This will be interesting to watch, because Bitcoin was built on the idea of the United States having lower rates in perpetuity. Most Bitcoin traders have no idea how to trade a market that is watching rates rise, and for that matter, I would suggest that most Bitcoin traders have no idea there is an interest rate market. This is where retail traders find trouble, when it becomes a little bit more of a complex game other than just simply “HODLing.”

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Dollar Cost Averaging

However, there is something to be said for those who simply hold on for dear life. After all, Bitcoin has rallied in the past, but the catch is you cannot be trying to trade it for short-term moves, looking at it as an investment. You of course have to ignore the fact that it’s not being used for anything at the moment, but it seems like there’s a lot of money on Wall Street willing to pump into this ETF, which of course is exactly what Bitcoin has become.

From a technical analysis standpoint, the Bitcoin market is hanging on by a thread, but I would also point out that the $75,000 level should be somewhat supported, as that area was significant resistance previously. As long as we can stay above there, I’m comfortable buying little dips, and building a bigger position. In fact, that’s what I’ve been doing despite the fact that I’m not necessarily a true believer. I’m fine with making money on a market that may or may not be a real thing in the real world.

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The GBPJPY pair formed strong bullish rally yesterday, to approach the previously targeted barrier at 193.25, forcing it to postpone the bullish attempts and form new negative rebound to settle near 191.60.

Note that the contradiction between the major indicators and the stability of the mentioned barrier might force the price to provide mixed trades, with chances to decline towards 190.60 soon, followed by attempting to renew the bullish attempts and repeat the pressure on the barrier in order to find a way to resume the bullish attack in the upcoming period to target 193.80 and 194.40 levels.

The expected trading range for today is between 190.60 and 192.70

Trend forecast: Bullish

The GBPJPY pair formed strong bullish rally yesterday, to approach the previously targeted barrier at 193.25, forcing it to postpone the bullish attempts and form new negative rebound to settle near 191.60.

Note that the contradiction between the major indicators and the stability of the mentioned barrier might force the price to provide mixed trades, with chances to decline towards 190.60 soon, followed by attempting to renew the bullish attempts and repeat the pressure on the barrier in order to find a way to resume the bullish attack in the upcoming period to target 193.80 and 194.40 levels.

The expected trading range for today is between 190.60 and 192.70

Trend forecast: Bullish

On an annual basis, headline CPI declined to 2.8% from 3.0%, and core CPI dropped to 3.1% from 3.3%. The data reinforced expectations of a policy shift toward monetary easing, though Fed officials remain measured in their outlook.

Despite inflation cooling, the Federal Reserve has signaled no immediate changes to policy. Fed Chair Jerome Powell noted that rate cuts are not urgent given ongoing economic uncertainties.

San Francisco Fed President Mary Daly added that while slowing business activity is a factor, it is not yet enough to justify immediate adjustments. This cautious approach has tempered expectations for aggressive rate reductions.

Key Economic Events to Watch on March 13

Traders are closely watching key US economic data scheduled for release on Thursday, March 13, which could impact market sentiment and the Federal Reserve’s policy outlook.

The Producer Price Index (PPI) and Core PPI are expected to show 0.3% monthly growth, with a slight slowdown from the previous 0.4% PPI reading.

Additionally, weekly unemployment claims are forecast at 226K, up from 221K last week, signaling potential shifts in the labor market and broader economic trends.

The GBPUSD price trades positively to attempt to move away form 1.2925$ level, reinforcing the expectations of continuing the bullish trend in the upcoming sessions, which gets continuous support by the EMA50.

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Inflation in the United States (US), as measured by the change in the Consumer Price Index (CPI), declined to 2.8% on a yearly basis in February from 3% in January, the US Bureau of Labor Statistics (BLS) reported on Wednesday. This reading came in below the market expectation of 2.9%. On a monthly basis, the CPI rose 0.2% following the 0.5% increase recorded in January.

Follow our live coverage of the US inflation data and the market reaction.

The core CPI, which excludes volatile food and energy prices, rose 3.1% on a yearly basis. This print followed the 3.3% increase in January and came in below analysts’ estimate of 3.2%. On a monthly basis, the core CPI rose 0.2%.

Market reaction to US inflation data

The US Dollar (USD) Index, which tracks the USD’s performance against a basket of six major currencies, retreated from session highs following the CPI data. At the time of press, the index was up 0.1% on the day at 103.50.

This section below was published as a preview of the US Consumer Price Index (CPI) data at 03:00 GMT.

• The US Consumer Price Index is forecast to rise 2.9% YoY in February.
• The core CPI inflation is seen a tad lower at 3.2% last month.
• The inflation data could impact the US Dollar’s value and the Fed’s cautious policy stance.

The United States (US) Bureau of Labor Statistics (BLS) is set to publish the high-impact Consumer Price Index (CPI) inflation report for February on Wednesday at 12:30 GMT.

The CPI figures could notably impact the US Dollar (USD) and the Federal Reserve’s (Fed) cautious monetary policy stance. 

What to expect in the next CPI data report?

As measured by CPI, inflation in the US is set to rise at an annual pace of 2.9% in February, down slightly from 3.0% reported in January. Core CPI inflation, which excludes the volatile food and energy categories, is expected to ease to 3.2% in the same period from a year earlier, compared to a 3.3% growth in January.

On a monthly basis, a 0.3% increase is projected for the headline CPI and the core CPI inflation figures.

Previewing the report, analysts at TD Securities noted: “We expect core CPI inflation to cool down in February following the January jump to 0.45%, as price resets came in firmer than expected in the services segment. We look for slowing in both the goods and services segments, with owners’ equivalent rent (OER) inflation dropping to a 3-month low.”

“On a year-over-year (YoY) basis, headline and core CPI inflation are likely to drop by a tenth each to 2.9% and 3.2%, respectively,” TDS analysts said.

How could the US Consumer Price Index report affect EUR/USD?

Against mounting US economic slowdown concerns and President Donald Trump-led global tariff war, markets are now pricing in 85 basis points (bps) of easing from the Fed this year, compared to 75 bps on Monday, per the LSEG Fed interest rate probabilities.

The recent slew of US data releases has been quite discouraging, especially with the February Nonfarm Payrolls (NFP) report on Friday showing that the US economy added 151,000 jobs in February, compared with an expected rise of 160,000 and a previous downward revision of 125,000. The Unemployment Rate climbed to 4.1% versus expectations of 4%. The Labor Force Participation Rate ticked a tad lower to 62.4% in the same period from January’s 62.6%.

On the other hand, Fed Chair Jerome Powell stated on Friday that the US central bank would take a cautious approach to monetary policy easing, adding that the economy currently “continues to be in a good place”.

Therefore, stakes are high heading into the US CPI showdown as the inflation report could shed fresh light on the direction of the Fed’s interest rates and the USD.

A bigger-than-expected cooldown in the annual headline and core inflation prints could shake off concerns over risks to the disinflation path, compelling Fed to resume rate cuts while exacerbating the Greenback’s pain. 

Conversely, the US dollar would find renewed demand if the US CPI data surprises the upside. This scenario would justify the Fed’s prudence on inflation and policy outlooks, reviving hawkish Fed expectations. 

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for EUR/USD and explains: “EUR/USD’s near-term technical picture points to a likely buyer exhaustion as the Relative Strength Index (RSI) indicator on the daily chart sits within the overbought territory above 70. However, any pullback could be quickly bought into as a 21-day Simple Moving Average (SMA) and 100-day SMA Bull Cross remains in play.”

“EUR/USD needs acceptance above the November 6 2024 high of 1.0937 to extend the uptrend toward the 1.1000 psychological level. The next relevant bullish targe is seen at the 1.1050 mark. Conversely, the immediate support is at the 200-day SMA at 1.0721, below which the March 5 low of 1.0602 will be tested. The 21-day SMA at 1.0546 will be buyers’ last defence.”

March 12, 2025 – Written by Frank Davies

STORY LINK GBP/USD Forecast: Pound Sterling Subdued as US Inflation Cools

The British Pound Sterling (GBP) remained largely static versus the U.S. Dollar (USD) on Wednesday, as fresh US inflation figures failed to generate significant movement in the pairing.

At the time of writing, the Pound US Dollar exchange rate (GBP/USD)was trading at $1.2934, showing minimal change from the morning’s opening levels.

The US Dollar (USD) saw limited movement on Wednesday as fears of an economic slowdown continued to weigh on the currency.

USD remained pressured as concerns over US tariffs and potential retaliatory measures from other nations fuelled recession worries.

With tariffs on steel and aluminium imports coming into force, the European Union announced countermeasures set to take effect from 1 April.

In the afternoon, the latest US consumer price index revealed that inflation eased from 3% to 2.8% in February.

While this reinforced expectations that the Federal Reserve could cut interest rates more aggressively, the report did little to shift market sentiment.

Despite inflationary pressures cooling, fears of an economic downturn kept the ‘Greenback’ subdued. However, safe-haven demand limited any significant losses.

Meanwhile, the Pound (GBP) traded in a narrow range on Wednesday as a lack of UK economic data left the currency without clear direction.

As an increasingly risk-sensitive currency, Sterling faced mixed influences.

Market caution over escalating trade tensions limited GBP gains.

However, a temporary ceasefire agreement between Ukraine and Russia helped to improve overall sentiment, preventing Sterling from sliding lower.

Looking ahead, the GBP/USD exchange rate may experience volatility if the White House announces further tariff measures.

Should Donald Trump escalate trade tensions in response to EU countermeasures, market jitters could weigh on USD.

However, increased safe-haven demand could provide some support for the currency.

On the data front, USD traders will be eyeing the latest producer price index (PPI) release for further clues on inflation trends.

A softer PPI reading could reinforce expectations of Fed rate cuts, potentially weakening the US Dollar.

Meanwhile, UK economic data remains limited until Friday’s GDP release. With expectations of a slowdown in January, Sterling could face headwinds at the end of the week if growth figures disappoint.

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• The USD/JPY forecast shows a pullback in the yen.

• Trump’s tariff on steel and aluminium imports came into effect on Wednesday.

• Traders are looking forward to the US CPI report.

The USD/JPY forecast shows a pullback in the yen as the focus shifts to the impact of Trump’s tariffs on Japan’s export-reliant economy. At the same time, fears of the US recession kept the dollar under pressure. However, the greenback rebounded ahead of the US CPI report to gauge the outlook for Fed rate cuts.

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The yen pulled back from recent highs as Trump maintained his aggressive stance on tariffs. On Wednesday, his tariff on steel and aluminium imports came into effect, igniting a trade war with the Eurozone. This has also shone a light on the looming reciprocal tariff. 

Trump’s tariffs will significantly impact the global economy. This includes Japan’s export-reliant economy. As a result, demand for the yen eased on Wednesday. Investors are seeking safety in other assets like gold. 

Meanwhile, the Bank of Japan remains hawkish on policy. Companies in Japan agreed to more wage hikes on Wednesday, setting in place the right conditions for rate hikes. As a result, market participants expect more rate hikes this year. However, the next move might come in May. 

Meanwhile, traders are looking forward to the US CPI report. Economists expect inflation to increase by 0.3%, lower than the previous reading of 0.5%. Meanwhile, the annual figure might ease to 2.9%.

USD/JPY key events today

• US Core CPI m/m
• US CPI m/m
• US CPI y/y

USD/JPY technical forecast: Bulls approach the 149.00 resistance

On the technical side, the USD/JPY price has broken above the 30-SMA, indicating a bullish shift in sentiment. At the same time, the RSI has broken above 50, indicating stronger bullish momentum. This shift came after the RSI made a bullish divergence. While the price made a lower low, the RSI made a higher one, showing weaker momentum. This allowed bulls to return to the market. 

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However, the price has to break above the 149.00 resistance level to confirm a new bullish trend. Moreover, it must start making higher highs and lows. On the other hand, if the 149.00 resistance holds firm, USD/JPY will return to retest the 147.00 support. A break below this level will make a lower low, confirming a continuation of the previous downtrend.

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