I wrote on 30^th March that the best trades for the week would be:

1. Long of Gold, which fell by 1.78%.
2. Long of EUR/USD following a daily close above $1.0951. This set up on Thursday, but the week ended lower by 0.80%.
3. Long of US Copper futures following a daily close above $5.25. This did not set up.

The overall result was a loss of 2.58%, which was 0.86% per asset.

Last week saw the Presidency of the USA announce new tariffs on imports which were set at a flat 10% with many individual countries given higher rates, sometimes considerably so. The key USA trading partners tariffs were set at:

1. China 54%
2. Japan 24%
3. European Union 20%
4. Canada 25%
5. Mexico 25%

The tariffs have been justified as “reciprocal” by President Trump, with the White House publishing an infographic showing the tariffs imposed and the claimed related “tariffs and other barriers to trade” imposed on US exports by the same countries, which were invariably higher, hence Trump’s claim that he is being “kind”. However, the numbers given are extremely questionable and certainly cannot be verified as tariffs or taxes on imports but seem to have been calculated by comparing the balance of trade between the USA and the relevant nation.

No country except China has yet reacted by imposing retaliatory tariffs against the USA. The Trump administration will be hoping that the tariffs on both sides will be mostly negotiated away, which would likely provide a boost to US corporate profits and economic growth. However, if this does not happen, especially with the key US trading partners, it is hard to see how the world will escape a global recession and a renewed spike in inflation.

The tariffs were somewhat worse than expected and have triggered huge market moves which rival the coronavirus crash of 2020 and the market crash of 2008, especially in US stock markets and in certain currencies (especially the commodity currencies and the Japanese Yen) and major commodities, such as foodstuffs, energies, and metals. Markets are extremely volatile, and the usual technical factors will be mostly irrelevant, with the future of the tariffs being the only major question driving prices over the short term.

There were a few important data releases last week which should also be noted:

1. US Average Hourly Earnings – as expected.
2. US Non-Farm Employment Change – this was much better and stronger than expected, showing 228k net new jobs created when only 137k were expected, suggesting the US economy is stronger than thought.
3. US Unemployment Rate – this rose unexpectedly from 4.1% to 4.2%.
4. US JOLTS Job Openings – a bit worse than expected, suggesting a slowing economy.
5. US ISM Manufacturing PMI – this was slightly worse than expected.
6. German Preliminary CPI (inflation) – a 0.3% increase month on month, as expected.
7. Swiss CPI (inflation) – a tick lower than expected, completely flat month on month.
8. Reserve Bank of Australia Policy Meeting – the Cash Rate was left unchanged at 4.10% as expected.
9. US ISM Services PMI – this was worse than expected.
10. US Unemployment Claims –as expected.
11. Canadian Unemployment Rate – as expected, this rose from 6.6% to 6.7%.

The coming week has a lighter schedule of important releases, but the releases are the most important ones in the market. However, unless there is more news about the tariff issue, volatility is likely to be at least a little bit lower this week.

This week’s important data points, in order of likely importance, are:

1. US CPI (inflation)
2. US PPI (Purchasing Power Index)
3. US FOMC Meeting Minutes
4. US Preliminary UoM Inflation Expectations
5. US Preliminary UoM Consumer Sentiment
6. Reserve Bank of New Zealand Official Cash Rate and Rate Statement
7. UK GDP
8. US Unemployment Claims

For the month of April 2025, I again made no monthly forecast, as the Forex market was dull and there were only mixed long-term trends.

Last week, I made no weekly forecast, as there were no unusually strong movements in any weekly currency crosses.

This week, I make weekly forecasts as there have been very strong price movements in currency crosses:

• GBP/JPY is likely to rise
• AUD/JPY is likely to rise
• GBP/CHF is likely to rise
• NZD/JPY is likely to rise
• EUR/NZD is likely to fall
• EUR/AUD is likely to fall
• GBP/AUD is likely to fall
• AUD/CAD is likely to rise
• NZD/CAD is likely to rise
• NZD/CHF is likely to rise

The Japanese Yen and the Swiss Franc were the strongest major currencies last week, while Australian Dollar was the weakest. Volatility increased markedly last week, with more than 75% of the most important Forex currency pairs and crosses changing in value by more than 1%. Next week will likely see relatively high volatility as the tariff saga continues, but it will likely be at least a little lower than the volatility we saw last week.

You can trade these forecasts in a real or demo Forex brokerage account.

Last week, the US Dollar Index printed a very large bearish candlestick, but the price regained most of its losses at the end of the week, leaving a large lower wick. There was a lot of movement in the Forex market last week due to the US announcing large tariffs on imports.

The price is well below its level of 3 months ago, invalidating its former long-term bullish trend. The price is still above its level from 6 months ago, but not by much. The support level at 102.25 held, and this level is starting to look like the last pivotal defense against the formation of a new long-term bearish trend in the greenback.

It is very difficult to say what will happen next, as the Dollar will be driven by political developments – whether the tariffs are negotiated away, or whether they stay or even increase, is likely to make all the difference.

The NASDAQ 100 Index fell very sharply last week, closing in bear market territory for the first time in almost 4 years. The price is more than 20% off its record high it made just a few months ago and is far below its 200-day moving average. It last saw these levels in August 2024.

The main reason for the strong drop in most global stock markets, and the major US indices in particular, is of course the large tariffs President Trump has imposed on US imports. This tech index is more strongly affected than the broader market, due partly to higher prices of chips which will result, especially from Taiwanese imports. However, the decline is mostly due to uncertainty and a fear of recession.

The price closed near the week’s low, and there is no bottom in sight yet.

The S&P 500 Index fell very sharply last week, closing near bear market territory for the first time in almost 4 years. The price is more than 15% off its record high it made just a few months ago and is far below its 200-day moving average. It last saw these levels in May 2024 almost a year ago.

The main reason for the strong drop in most global stock markets, and the major US indices in particular, is of course the large tariffs President Trump has imposed on US imports. There are many companies which rely upon strong domestic sales in the USA which manufacture abroad that are hard hit. A good example is NIKE, which fell by 14% in one day after the tariffs were announced.

The price closed near the week’s low, and there is no bottom in sight yet. Some analysts are looking to the big round number at 5000 as potential support.

Gold rose firmly last week to reach a new record high just below the round number at $3,200. However, after the new US tariffs were announced, the price see-sawed sharply, selling off strongly twice before closing the week significantly lower, almost three times the long-term average true range off its high closing price. Many trend traders will still be long but will be very close to being shaken out and exiting.

Gold can advance during periods of crisis like the one we are in now but seems to not be behaving as a hedge against risk, and this is common during strongly risk-off markets like we are seeing now.

So, I think it is wise to not be long of Gold right now, unless we get a new record high New York close over the coming week.

The AUD/JPY currency cross fell very strongly over the week, with the Australian Dollar extremely hard hit by Trump’s new tariffs as a major exporter of raw materials for manufacturing, and its close economic ties to China. The Japanese Yen was the week’s big gainer, along with the Swiss Franc, as a safe- haven.

This currency cross is often a barometer of market sentiment, and this is what we see happening here. The price has reached a new 2-year low.

There is a good chance we will see the price rebound somewhat over the coming week, especially if there are any signals of tariff negotiations getting underway, or even if there is no further tariff escalation.

Technically, the fact that we may be seeing a bottom at the big quarter-number of ¥87.50 could also be significant.

It may be wise to drill down and look for a long trade if this bottom continues to hold.

I see the best trades this week as:

1. Long of Gold following a daily close above $3,134.31.
2. Following these expected movements in the Forex market:
   1. GBP/JPY is likely to rise
   2. AUD/JPY is likely to rise
   3. GBP/CHF is likely to rise
   4. NZD/JPY is likely to rise
   5. EUR/NZD is likely to fall
   6. EUR/AUD is likely to fall
   7. GBP/AUD is likely to fall
   8. AUD/CAD is likely to rise
   9. NZD/CAD is likely to rise
   10. NZD/CHF is likely to rise

Although it might be tempting to short stock market indices or individual stocks, this is a very risky move for beginners. With such high levels of volatility and relevant political factors, stock markets might make a very strong recovery any day.

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April 5, 2025 – Written by Frank Davies

STORY LINK US Jobs Data Stems Panic Selling, GBP/EUR and GBP/USD Recover

Markets have attempted to stabilise after the US jobs data, but the underlying mood remains extremely fragile.

Earlier, confidence took a further dive following China’s announcement that it would impose retaliatory 34% tariffs on imports from the US.

The move triggered further concerns over retaliation by other countries and increased fears that the global economy would slide into recession.

The FTSE 100 index plunged 4% to 2025 lows before a recovery.

The Pound to Dollar (GBP/USD) exchange rate dipped sharply to lows at 1.2965 before trading just above the 1.3000 level after the US data.

According to Scotiabank; “GBPUSD has retreated back to the psychologically important 1.30 level and momentum is fading from overbought levels. The near-term range is now expected to be bound between support in the upper-1.28s and resistance above 1.31.”

The Pound to Euro (GBP/EUR) exchange rate slumped to 7-month lows near 1.1750 before a recovery to 1.1800.

SocGen sees crucial near-term GBP/EUR support around 1.1750.

The US employment report recorded an increase in non-farm payrolls of 228,000 for March compared with consensus forecasts of around 135,000, but the February increase was revised lower to 117,000 from the flash reading of 151,000.

The unemployment rate ticked higher to 4.2% from 4.1% while average earnings increased 3.8% over the year from 4.0% previously.

The data will provide immediate relief surrounding the US economy, but markets are also focussed more on the impact of US tariffs and potential trade wars.

Goldman Sachs’s Lindsay Rosner commented; “Today’s better than expected jobs report will help ease fears of an immediate softening in the US labor market. However, this number has become a side dish with the market just focusing on the entrée: tariffs.”

There are also still reservations surrounding the labour market after Challenger recorded a huge job in Federal layoffs.

ING commented; “The rise in job cut announcements during March, tracked by Challenger and released this week, was frankly astonishing. It eclipsed anything we saw in the height of the financial crisis or dot-com bubble.”

According to Scotiabank; “The USD is likely to retain a defensive undertone for the foreseeable future as investors re-allocate capital to more appealing locales.”

The UK construction PMI index recovered slightly to 46.4 for March from 44.6 the previous month.

Tim Moore, Economics Director at S&P Global Market Intelligence, commented; “March data highlighted a challenging month for UK construction companies as sharply reduced order volumes continued to weigh on overall workloads.”

Global developments are likely to dominate in the short term with developments in risk appetite and equities likely to be the crucial element.

Scotiabank commented; “Broader developments are likely to continue driving movement in GBP, and the near-term outlook for reconciliation on trade appears to be slim as media reports suggest that the US’s 10% tariff rate on UK goods may be a permanent baseline.”

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Copper price gave in to negative pressures and fell below the stable support of $4.8100, and hesitantly approached $4.7400, delaying any attempts at rising even as the price remains within an ascending channel.

As the $5.000 forms as a barrier and negative signals emerge from the Stochastic, the price  will likely head towards $4.6500 then $4.5600.

Expected trading range today is between $4.6500  and $4.9500.

Today’s price forecast: Bearish

April 3, 2025 – Written by David Woodsmith

STORY LINK Pound Sterling Slides vs Euro After UK 10% Tariff

The Pound to Euro (GBP/EUR) exchange rate fell back overnight, after markets reacted to the April 2 US Tariffs.

At the time of writing, GBP/EUR traded at 1.1951, a 0.41% decline on the daily opening levels.

GBPEUR had struggled for momentum on Wednesday as investors exercised caution ahead of US President Donald Trump’s impending tariff announcement.

The Euro (EUR) found little support on Wednesday as traders hesitated to take strong positions before Trump’s tariff decision.

The European Union has frequently been the target of Trump’s criticisms over trade imbalances, leading to concerns that the Eurozone economy could face significant disruptions if US tariffs are extended to European goods.

Adding to the uncertainty, European Commission President Ursula von der Leyen has reiterated that the EU is prepared to retaliate against any aggressive US trade measures, potentially imposing tariffs on American products such as motorcycles, whiskey, and denim.

EUR investors fear that escalating tensions between the US and EU could lead to a prolonged trade conflict, further undermining the Eurozone’s economic outlook.

The Pound (GBP) saw little movement on Wednesday as reports suggested that UK officials had yet to secure exemptions from Trump’s latest round of tariffs.

While discussions between Prime Minister Keir Starmer and President Trump have been described as constructive, no immediate resolution is in sight.

Even if a deal is reached in the future, GBP investors fear that the UK’s open economy remains vulnerable to disruptions in global trade.

Looking ahead, in addition to the fallout from Trump’s tariff announcement, the Pound to Euro exchange rate may also be influenced by an upcoming speech from European Central Bank (ECB) Vice President Luis de Guindos on Thursday.

If de Guindos signals that the ECB may need to implement more accommodative policies in response to Trump’s tariffs, the Euro could face additional downside pressure.

Meanwhile, the UK’s latest services PMI could provide some support for the Pound, particularly if the finalised March figures confirm a strong performance in the sector.

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TAGS: Pound Euro Forecasts

• GBP/USD declines below 1.3000 following Thursday’s impressive upsurge.
• Safe-haven flows continue to dominate the market action on Friday.
• US Nonfarm Payrolls data and Fed Chairman Powell’s remarks on the economic outlook awaited.

GBP/USD climbed above 1.3200 for the first time since early October on Thursday but erased a portion of its daily gains later in the American session. The pair stays under bearish pressure in the European session on Friday and trades below 1.3000.

The broad-based selling pressure surrounding the US Dollar (USD) fuelled GBP/USD rally on Thursday. US President Donald Trump’s aggressive tariffs fed into fears of an economic downturn in the US, forcing the USD to weaken against its peers.

As markets remain risk-averse on Friday, GBP/USD finds it difficult to hold its ground. At the time of press, the UK’s FTSE 100 Index was down nearly 1.5% on the day and US stock index futures were losing between 0.3% and 0.9%.

Later in the day, the US economic calendar will feature the March employment report, which will feature Nonfarm Payrolls (NFP), Unemployment Rate and wage inflation figures.

Markets forecast an increase of 135,000 in NFP in March. A significant negative surprise, with an NFP reading at or below 100,000, could weigh on the USD and help GBP/USD find support. Conversely, an NFP print of 160,000 or higher could have the opposite impact on the pair’s action with the immediate reaction.

Ahead of the weekend, Federal Reserve (Fed) Chairman Jerome Powell will speak on the US economic outlook at the annual conference for the Society for Advancing Business Editing and Writing. Powell will also attend a moderated panel discussion afterward.

In case Powell voices his concerns over the growth outlook, citing the new tariff regime, the USD could come under renewed selling pressure. On the other hand, the USD could end the week on a bullish note if Powell puts more emphasis on the upside risks to inflation outlook and reiterates their willingness to remain patient with regard to further policy easing.

According to the CME FedWatch Tool, investors are currently pricing in about a 32% probability of a 25 basis points Fed rate cut in May. The market positioning suggests that the USD has room on the upside if Powell’s remarks revive expectations for a policy hold at the next meeting.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart dropped below 50, reflecting a bearish tilt in the short-term outlook.

On the downside, 1.2960 (100-period Simple Moving Average (SMA), 50-period SMA) aligns as first support before 1.2935 (lower limit of the ascending channel) and 1.2900 (static level, round level).

In case GBP/USD reclaims 1.3000 (round level, static level), technical buyers could take action. In this scenario, 1.3080 (mid-point of the ascending channel) and 1.3100 (round level, static level) could be seen as next resistance levels.

USD/JPY edged higher in latest intraday trading while trying to recoup some recent losses, as the price also tried to vent off oversold saturation in the Stochastic with positive signals emerging from it.

It comes as the price settles below the pivotal support of 146.65 that was breached yesterday, while hurt by exiting an ascending correctional price channel previously, with the dominance of the main downward trend.

USD/JPY edged higher in latest intraday trading while trying to recoup some recent losses, as the price also tried to vent off oversold saturation in the Stochastic with positive signals emerging from it.

It comes as the price settles below the pivotal support of 146.65 that was breached yesterday, while hurt by exiting an ascending correctional price channel previously, with the dominance of the main downward trend.

Created on April 04, 2025

• The British pound has fallen rather significantly during the trading session on Thursday as we continue to see a lot of risk aversion, especially after the tariff announcement came out of the United States.
• Because of this, we’ve seen a lot of traders run toward the Japanese yen, long considered one of the premier safety currencies in the world.

What will be interesting to see is how the market behaves after we’ve had time to digest all of the news, which of course has been very rapidly released. The Americans have slept massive tariffs on most of the rest of the world, and how certain countries behave will have a major outsized influence on how the markets behave. For example, some of the bigger ones like China and the European Union obviously will be crucial, but there are other countries that will also be moving, both of these groups will more likely than not move this pair, if for no other reason than the fact that the GBP/JPY pair tends to move based on risk appetite more than anything else.

Friday Could Be Wild

During the trading session on Friday, we will get the employment numbers coming out of the United States, which almost always causes quite a bit of volatility as far as risk appetite is concerned. Because of this, it’s very likely that we will continue to see a lot of noisy behavior, and if it’s more of a “risk off day”, then the Japanese yen will continue to strengthen. The ¥190 level is an area that you need to be watching very closely, as it is a large, round, psychologically significant figure, and of course an area that traders will be paying close attention to for any signs of a bounce.

The ¥195 level above is going to be important as well, and if we can break above there then it would be a very bullish sign. That being said, we are nowhere near doing that, so I think more likely than not, we start bouncing around in a bit of a bounce.

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USD/JPY edged higher in latest intraday trading while trying to recoup some recent losses, as the price also tried to vent off oversold saturation in the Stochastic with positive signals emerging from it.

It comes as the price settles below the pivotal support of 146.65 that was breached yesterday, while hurt by exiting an ascending correctional price channel previously, with the dominance of the main downward trend.

USD/JPY Forecast: the USD/JPY currency pair, representing the exchange rate between the U.S. dollar and the Japanese yen, is closely watched by traders and investors alike.

Overview of the USD/JPY Currency Pair

The USD/JPY pair is one of the most actively traded currency pairs in the world, reflecting the economic relationship between the United States and Japan. Both countries have significant global economic influence, making their currencies important in international trade and finance. The movements in this currency pair can be attributed to various factors, including economic data releases, central bank policies, and geopolitical events.

Economic Indicators Impacting USD/JPY

U.S. Economic Data
Economic indicators from the United States play a pivotal role in determining the direction of the USD/JPY pair. Key reports such as gross domestic product (GDP) growth, employment figures, and inflation rates provide insights into the health of the U.S. economy. Strong economic performance often leads to a stronger dollar, as investors seek to capitalize on growth prospects. Conversely, weaker economic data can result in a decline in the dollar’s value against the yen.

Japanese Economic Indicators

Similarly, economic data from Japan significantly impacts the yen’s value. Reports on Japan’s GDP, trade balance, and consumer sentiment help gauge the overall strength of the Japanese economy. A robust economic outlook may bolster the yen, while weak data could lead to depreciation. The Bank of Japan’s policies and responses to economic conditions also play a crucial role in shaping market perceptions of the yen.

Central Bank Policies

Federal Reserve Actions
The U.S. Federal Reserve’s monetary policy decisions are vital for the USD/JPY exchange rate. Changes in interest rates, quantitative easing measures, and forward guidance influence market expectations. When the Fed signals a tightening of monetary policy, the dollar typically strengthens against the yen. On the other hand, accommodative policies may lead to a weaker dollar as investors seek higher yields elsewhere.

Bank of Japan Policies

The Bank of Japan (BOJ) also plays a significant role in the dynamics of the USD/JPY pair. The BOJ’s stance on interest rates and its approach to economic stimulus impact the yen’s value. If the BOJ maintains a dovish stance, it may lead to yen weakness, while a shift towards tightening could strengthen the currency. The BOJ’s interventions in the foreign exchange market can also cause significant fluctuations in the USD/JPY exchange rate.

Market Sentiment and Geopolitical Factors on USD/JPY

Risk Sentiment
Market sentiment is a crucial driver of currency movements. In times of uncertainty, investors tend to favor currencies perceived as more stable. The yen is often viewed as a currency that can provide stability during market volatility. Thus, shifts in risk sentiment can lead to movements in the USD/JPY pair, with heightened uncertainty typically resulting in yen appreciation.

Geopolitical Events
Geopolitical tensions and events can create significant volatility in the foreign exchange market. Developments such as trade negotiations, political instability, or natural disasters in either the U.S. or Japan can influence investor behavior and, consequently, impact the USD/JPY exchange rate. Monitoring these events is essential for understanding potential market reactions.

Future Outlook for USD/JPY

Economic Recovery and Growth Prospects
Looking ahead, the economic recovery in both the U.S. and Japan will be a key factor influencing the USD/JPY exchange rate. Strong growth in the U.S. economy could lead to a stronger dollar, particularly if the Federal Reserve continues to adopt a hawkish stance. Conversely, Japan’s economic performance and the BOJ’s policy direction will determine the yen’s strength.

Inflation and Interest Rate Expectations
Inflation trends in both countries will significantly impact monetary policy decisions. Rising inflation in the U.S. may prompt the Federal Reserve to raise interest rates, supporting the dollar. In Japan, however, the BOJ has historically maintained a low-interest-rate environment, which could keep the yen under pressure. Monitoring inflation data will be essential for anticipating future movements in the USD/JPY pair.

Global Economic Influences
Global economic developments, including trade relationships and international market trends, will also shape the USD/JPY outlook. As the global economy becomes more interconnected, external factors can have significant ramifications for currency pairs. Staying informed about global economic conditions will be crucial for understanding the potential direction of the USD/JPY exchange rate.

Conclusion

The USD/JPY currency pair is influenced by a myriad of factors, including economic indicators, central bank policies, market sentiment, and geopolitical events. Understanding these dynamics is essential for anyone looking to navigate the foreign exchange market effectively. As we approach the future, keeping a close watch on economic developments and market trends will provide valuable insights into the potential movements of the USD/JPY pair. With careful analysis and informed decision-making, traders can better position themselves to respond to the ever-changing landscape of the currency market.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.