This week, global markets reacted to major geopolitical shifts, economic policies, and interest rate trends. The impact of US trade policies, European defense spending, and economic slowdowns in key regions continue to drive price movements. Here’s a detailed breakdown of the week’s fundamental and technical market trends.
Weekly Fundamental Analysis
AUD (Australian Dollar)
The Australian dollar struggled early last week due to concerns about the US-led trade war slowing global growth. However, by mid-week, the currency rebounded as Europe announced an initiative to boost defense spending.
- The Australian dollar remains closely correlated with the Canadian dollar (0.78) and moves inversely with the US Dollar Index (-0.55).
- Investors should watch for further trade war developments that could influence AUD movements.
JPY (Japanese Yen)
The Japanese yen is seeing a weakening correlation with the US 10-year Treasury yield. Previously at 0.70 in mid-January, the correlation has now dropped to 0.50, signaling potential market volatility.
- The swaps market indicates an 80% probability of the next rate hike in July, though September remains a more likely scenario.
- Traders should monitor Treasury yields and BOJ policy signals for JPY price movements.
EUR (Euro)
The euro is heavily influenced by US trade tensions and European defense spending plans. Recent policy shifts in Germany and a relaxed stance from the European Commission on budget deficits suggest increased government spending.
- Core European 10-year yields rose by 34-35 basis points last week.
- The US two-year yield premium over Germany dropped by 21 basis points, the sharpest decline since August 2022.
- European finance ministers are meeting to discuss fiscal policies, which could further impact EUR valuation.
GBP (British Pound)
The pound’s movement is largely dictated by the US dollar’s trajectory. After declining 10% between September and January, GBP rebounded as the USD weakened.
- US tariffs could push the UK towards closer economic ties with Europe post-Brexit.
- Rising European interest rates could exert downward pressure on GBP against EUR.
- Traders should keep an eye on trade policies and Brexit-related economic shifts.
CAD (Canadian Dollar)
The Canadian economy is facing headwinds due to US policy changes.
- Only 1.1k jobs were created in February, with full-time employment dropping by 20k—the biggest decline since August 2024.
- Unemployment has risen to 6.6%, up from 5.9% last year.
- The US is increasing pressure on Canada with tariff threats, including on dairy and lumber exports.
USD (US Dollar)
The US dollar is at the center of global financial volatility due to economic uncertainty and trade conflicts.
- Concerns over weak US economic data have increased expectations for a federal reserve rate cut in June.
- The probability of a second rate cut by Q3 is rising, with a 60% chance of a further cut in Q4.
- The US debt ceiling will be reached on March 15, raising the possibility of a government shutdown.
Weekly Technical Analysis
USD/JPY H4 Analysis – March 10, 2025
The USD/JPY pair continues to exhibit a bearish trend within a descending channel. Price action suggests that a short-term retracement may occur before the trend resumes.
- A potential bullish retracement could push the price toward the resistance level at 148.800. However, any sustained movement beyond this level would require significant bullish momentum.
- If the price fails to break above the resistance, the bearish trend is likely to continue, with a downward target around the support level of 145.900.
- Traders should closely monitor price action near these levels and look for confirmation signals before taking positions.
EUR/USD H4 Analysis – March 10, 2025
The EUR/USD pair has experienced a strong bullish rally in recent sessions, bringing it to a critical decision point where the next trend direction will be determined.
- A continuation of bullish momentum could lead the price toward the resistance level at 1.08800. A break above this level may reinforce further gains.
- Conversely, if the pair faces rejection at this level, a bearish correction could drive prices down toward the support level at 1.07400.
- Traders are advised to watch for momentum shifts and price action confirmations before executing trades.
XAU/USD H4 Analysis – March 10, 2025
Gold prices remain at a key inflection point, where market sentiment and external factors will likely dictate the next move.
- If the bullish trend continues, the price could reach the resistance level of 2950.00. Strong demand for safe-haven assets may further support this move.
- A failure to hold above key support levels may result in a bearish retracement toward 2915.00.
- Traders should assess price movements and macroeconomic influences before making forex trading decisions.
The markets are facing significant shifts due to global economic and political uncertainties. As a trader, staying informed is the key to making profitable decisions. With Vestrado, you can gain access to expert market insights, real-time updates, and strategic trading tools to enhance your trading experience.
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