Sample Category Title

Markets

While European markets were closed for the Easter weekend on Friday and yesterday, US investors had to cope with an additional layer of uncertainty as the Trump administration is putting pressure on the Fed to cut rates more and sooner than they currently (communicate) are considering. Even Fed independence is again becoming a genuine source of debate. Yesterday this triggered an additional leg in the ‘sell US trade’, with US equities, the dollar and LT US Treasuries all facing strong headwinds. However, some calm returned today, or at least the pressure didn’t intensify. Probably awaiting other social media comments from the US president. In technical trading, US yields currently are changing between + 2 bps (2-y) and -4 bps (30-y). We don’t draw any firm conclusions from today’s price action yet. Even so, both at the short end of the curve (almost 3.5% Fed fund rate eoy) and at the long end of the curve (US 30-y 4.90%) quite some good/bad news should already be discounted by now, unless you take into account an extreme scenario. Whatever the consideration, markets didn’t feel the need to push further after yesterday’s US sell-off. US equities are rebounding about 1% at the open. The EuroStoxx 50 also shows some resilience (-0.25%) given yesterday’s WS sell-off. US equity investors for several reasons will take a close look at the Tesla results to be announced after the close of cash trading in the US later today. At the reopening of European markets post-Easter, a mild safe haven bid still supports German Bunds with yields declining between 1.5 bps (2-y) and 3.2 bps (30-y). Even if you assume some deflationary impact from the global context on Europe (negative demand shock, stronger euro, lower energy prices…), European money market have gone (very) far in anticipating the ECB ability/necessity to support growth later this year/early next year (low of the ECB cycle potentially near 1.5%). The pause in the ‘sell US trade’ for now also prevents further USD losses. DXY is gaining modestly to 98.55, but still holds below the key previous support area of 98.97 (62% retracement)/99.57. EUR/USD corrects off the 1.15+ area (currently 1.1463). At USD/JPY 140.6, the yen again outperforms (especially the against the euro). Comments from people familiar with the internal debate with the Bank of Japan this morning indicated that the BoJ currently isn’t at a point yet to profoundly change its stance of gradually raising rates further. A relative mild risk sentiment also gave some relief for sterling. EUR/GBP eased from the 0.86 area to currently trade near 0.8575. Headlines from (hawkish) BoE member Greene, did catch the eye as she assessed that US tariffs represent more of a disinflationary than an inflationary risk, suggesting more room for the BoE to take a more growth supportive stance.

News & View

The ECB published its Q2 Survey of Professional Forecasters. Respondents’ expectations for headline inflation were 2.2% for 2025 (from 2.1%) and 2% for 2026 (from 1.9%) and 2027 (from 2%).Core inflation expectations were also 0.1 ppt higher at 2.3%-2.1%-2.1% for the 2025-2027 period and for the longer term (2% from 1.9%). Respondents expected real GDP growth of 0.9% in 2025 (from 1% in the Q1 survey), 1.2% in 2026 (from 1.3%) and 1.4% in 2027 (from 1.3%). The expected trajectory of the unemployment rate was revised slightly downwards. The unemployment rate is expected to average 6.3% from 2025 to 2027, and then to fall to 6.2% in the longer term. The Q2 SPF was conducted between 1 and 4 April 2025, when US President Trump announced reciprocal tariffs.

The IMF updated its World Economic Outlook. Major policy shifts are resetting the global trade system and giving rise to uncertainty that is once again testing the resilience of the global economy. These developments come against an already-cooling economic momentum. The IMF warns for diminished policy space to support economies in case of new negative shocks or a pronounced downturn. Fiscal space is much tighter after stimulus in the wake of the pandemic and the energy crisis with rising debt services costs hindering the already historic fiscal adjustment necessary to stabilize debt ratios. There is also little leeway for central banks to look through new negative supply shocks with inflation expectations exceeding central bank targets in most advanced economies. To try to captures the huge amount of uncertainty, the WEO today released three different scenarios. The reference forecast is based on measures announced as of April 4 (peak tariffs) and projects growth to fall from 3.3% in 2024 to 2.8% (from 3.8% in January update) this year before recovering to 3% in 2026 (from 3.3%). For the US, the IMF plots 1.8% for this year and 1.7% for next. For EMU it’s 0.8% and 1.2%.

Futures for the S&P 500 and Nasdaq rose on Tuesday ahead of the US open.

A welcome development after all three main stock indexes fell over 2% on Monday when Trump increased his criticism of Fed Chair Powell for not cutting interest rates, raising worries about the central bank's independence and future monetary policy.

Investors seem to be pouring out of US assets with safe havens like Gold benefiting. It appears market participants are now starting to price in political risk for US assets, and this appears to be on the rise.

Looking to the US session and attention will shift temporarily to US corporate earnings. A wave of earnings reports today will offer more clues on how companies are dealing with tariff-related uncertainty and potential impacts on future profits.

Earlier in the day, Verizon dropped 3.6% after losing more subscribers than expected last quarter. Northrop Grumman fell 8.7% following weak quarterly results as well. Tesla, which is set to start earnings for the "Magnificent Seven" megacap stocks after the market closes, gained 0.8% in premarket trading. Some other companies reporting today are shown on the calendar below.

For a technical view of the Dow Jones read: Dow Jones (DJIA) Technical Outlook: Value stocks do not provide a safe haven refuge

Gold prices remain some way off their Asian session highs and are hovering around the $3445/oz handle at the time of writing. I suspect the drop is largely down to profit taking as the overall narrative remains the same. For more read: Gold ETFs and retail investor activity: What's driving the XAU/USD surge?

According to people familiar with the matter, BoJ officials see little need to change their present stance of gradually lifting interest rates for now, despite uncertainties stemming from US tariffs.

Economic data releases

For now focus will shift to earnings with a host of Fed Policymakers scheduled to speak later. It will be interesting to see whether they weigh in on the Trump-Powell situation and how they see Fed policy developing in upcoming meetings

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Chart of the day - US Dollar Index (DXY)

The US Dollar Index (DXY) has staged a mini recovery so far today, whether this will prove sustainable remains to be seen.

If the bounce continues, immediate resistance rests at 99.00 before the 99.20 and 99.57 may be areas to focus on.

Immediate support rests at 98.00 before the 97.70 handle comes into focus.

Given the RSI is about to break above the 30 handle this could be the confidence boost that bulls need for a sustained recovery, however this needs to materialize first. So keep a close watch.

US Dollar Index (DXY) Chart, April 22, 2025

Source: TradingView.com (click to enlarge)

Daily Pivots: (S1) 140.18; (P) 141.16; (R1) 141.85; More...

Intraday bias in USD/JPY stays on the downside as fall from 158.86 is in progress for 139.57 support. Strong support could seen from 139.26 fibonacci level to bring rebound. On the upside, above 141.60 minor resistance will turn intraday bias neutral first. However, decisive break of 139.26 will carry larger bearish implications, and target 138.2% projection of 158.86 to 146.52 from 151.20 at 134.14.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Daily Pivots: (S1) 0.8026; (P) 0.8104; (R1) 0.8169; More…

Further decline is expected in USD/CHF with 0.8196 resistance intact. Current down trend should target 200% projection of 0.9196 to 0.8757 from 0.8854 at 0.7976 next. Nevertheless, considering bullish convergence condition in 4H MACD, break of 0.8196 will indicate short term bottoming, and turn bias back to the upside for stronger rebound.

In the bigger picture, the break of 0.8332 (2023 low) confirms resumption of long term down trend from 1.0342 (2017 high). Next target is 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9196 at 0.8075. Firm break there will target 100% projection at 0.7382. In any case, outlook will now stay bearish as long as 55 W EMA (now at 0.8794) holds.

Daily Pivots: (S1) 1.3297; (P) 1.3359; (R1) 1.3444; More...

Further rally is expected in GBP/USD as long as 1.3277 support holds. Current rise should extend to retest 1.3433 high. Firm break there will confirm larger up trend resumption and target 100% projection of 1.2099 to 1.3206 from 1.2706 at 1.3813. Nevertheless, considering bearish divergence condition in 4H MACD, break of 1.3277 will indicate short term topping, and turn bias back to the downside for deeper pullback.

In the bigger picture, price actions from 1.3433 are seen as a corrective pattern to the up trend from 1.3051 (2022 low). Rise from 1.2099 could be the second leg. Overall, GBP/USD should target 1.4248 key resistance (2021 high) on break of 1.3433 at a later stage.

Daily Pivots: (S1) 1.1414; (P) 1.1494; (R1) 1.1592; More...

Further rally is expected in EUR/USD as long as 1.1357 support holds. Current rise from 1.0176 should target 161.8% projection of 1.0358 to 1.0953 from 1.0731 at 1.1694 next. Nevertheless, considering bearish divergence condition in 4H MACD, break of 1.1357 should indicate short term topping. Intraday bias will be turned back to the downside for deeper pullback.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0776) holds.

Global markets saw a modest pause in volatility today as risk sentiment stabilized following yesterday’s US selloff. US futures are pointing to a mild recovery, helping to calm nerves in early trading. Meanwhile, US 10-year Treasury yield dipped slightly but remains elevated around 4.4%, reflecting persistent investor caution. Gold also retreated marginally after coming within striking distance of the 3500 mark earlier in the session, as the appetite for safe havens eased slightly.

Despite today’s calm, market sentiment remains on a knife edge. The political backdrop in the US continues to cast a long shadow over financial markets, with fears about Fed's independence following recent attacks by US President Donald Trump. Any further comments from US officials questioning Fed’s autonomy could quickly reignite volatility. For now, the market is watching closely for signals from a lineup of Fed speakers scheduled for the US session, who are expected to reinforce the central bank’s institutional independence and data-driven approach.

On the trade front, optimism remains scarce. The ongoing 90-day truce on US reciprocal tariffs has so far yielded little tangible progress, with talks reportedly stalling even among close allies like Japan. Uncertainty over what happens when the truce expires continues to weigh on global confidence, limiting the potential for any sustained rebound in risk assets.

In the currency markets, Loonie is underperforming for the week so far, followed by Dollar and Aussie. Yen leads on the stronger side, followed by Kiwi and Euro. Sterling and the Swiss Franc are positioning themselves in the middle of the pack.

Looking ahead, attention will quickly shift to tomorrow’s global flash PMI releases, which will provide a crucial read on business activity, prices and sentiment across major economies. These surveys will be particularly important in gauging the fallout from recent tariff shocks and in setting the tone for monetary policy discussions in the weeks ahead.

Technically, CAD/JPY's fall from 111.55 is now trying to resume through 101.36 support. The key level to watch is 61.8% projection of 110.45 to 101.36 from 105.85 at 100.23. There is prospect of a bounce from there to complete the five wave sequence from 111.55. However, firm break there should bring downside acceleration to 100% projection at 96.76 next.

In Europe, at the time of writing, FTSE is up 0.27%. DAX is down -0.46%. CAC is down -0.31%. UK 10-year yield is up 0.012 at 4.582. Germany 10-year yield is down -0.014 at 2.459. Earlier in Asia, Nikkei fell -0.17%. Hong Kong HSI rose 0.78%. China Shanghai SSE rose 0.25%. Singapore Strait Times rose 0.96%. Japan 10-year JGB yield rose 0.022 to 1.311.

ECB Survey: Inflation expectations tick higher, growth outlook softens

ECB’s latest Survey of Professional Forecasters for Q2 showed a modest upward revision to inflation expectations, signaling persistent price pressures across the Eurozone.

Headline HICP inflation is now expected to average 2.2% in 2025, before easing to 2.0% in both 2026 and 2027. These figures reflect a 0.1% upward revision for 2025 and 2026. Figures for 2027 was left unchanged.

Core inflation, which excludes energy and food, was also revised slightly higher across all horizons, now projected at 2.3% (prior 2.2%) in 2025 and 2.1% (prior 2.0%) for both 2026 and 2027.

Long-term expectations for headline inflation remain anchored at 2.0%, with core inflation expectations edging up from 1.9% to 2.0%.

On the growth front, the outlook was revised slightly lower for the near term. Real GDP is expected to expand by 0.9% in 2025 and 1.2% in 2026—both down -0.1% from the prior survey—before picking up to 1.4% in 2027. Longer-term growth expectations remain unchanged at 1.3%.

ECB's Kazimir sees rate near neutral, emphasize flexibility and agility

Slovak ECB Governing Council member Peter Kazimir said in a blog post today that Eurozone inflation is approaching the 2% target and expressed confidence that it will be reached “within the next few months.”

Following the recent rate cut, Kazimir suggested that ECB’s deposit rate at 2.25% is no longer restrictive and could now be considered close to neutral.

Meanwhile, Kazimir cautioned that the economic backdrop remains highly volatile, with uncertainty continuing to dominate the outlook.

“We are operating in a fast-shifting environment,” he said, pointing to escalating global trade tensions linked to US tariff policies as a key source of instability. He warned that this unpredictability "introduced significant ambiguity into the system, eroding confidence."

Looking ahead to the June meeting, Kazimir emphasized that any decision will depend on incoming data, revised economic forecasts, and a comprehensive risk assessment. His comments reinforce the central bank’s commitment to "flexibility and agility."

BoE’s Greene: US tariffs more of a disinflationary risk for the UK

BoE Monetary Policy Committee member Megan Greene stated today that the US tariffs pose "more of a disinflationary risk than an inflationary risk" for the UK.

However, she emphasized that domestic factors also remain a concern, particularly the UK’s limited supply capacity, which continues to drive underlying inflationary pressures.

Greene highlighted that this supply-side constraint is a key reason behind her cautious stance on interest rate cuts.

Addressing questions on central bank independence amid political scrutiny of the Fed, Greene emphasized the importance of maintaining institutional credibility.

"Credibility is the currency of central banks," she said, adding that independence is a critical component of that credibility.

New Zealand posts surprise NZD 970m trade surplus as exports surge 19%

New Zealand recorded stronger-than-expected trade surplus of NZD 970m in March, far exceeding forecasts of NZD 80m. The surprise was driven by a robust 19% yoy increase in goods exports, which rose by NZD 1.2B to NZD 7.6B. Imports also grew, up 12% yoy to NZD 6.6B.

Export performance was particularly strong across key trading partners. Shipments to China rose by NZD 371m (23% yoy), while exports to the US and the EU grew by 22% yoy and 51% yoy respectively. Exports to Japan also increased 11% yoy, although shipments to Australia dipped slightly, down -0.47% yoy.

On the import side, the largest increases came from the US, with a 48% yoy jump worth NZD 243m. This was followed by China and the EU, which posted 14% yoy and 19% yoy gains respectively. Imports from South Korea bucked the trend, falling -12% yoy.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1414; (P) 1.1494; (R1) 1.1592; More...

Further rally is expected in EUR/USD as long as 1.1357 support holds. Current rise from 1.0176 should target 161.8% projection of 1.0358 to 1.0953 from 1.0731 at 1.1694 next. Nevertheless, considering bearish divergence condition in 4H MACD, break of 1.1357 should indicate short term topping. Intraday bias will be turned back to the downside for deeper pullback.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0776) holds.

Slovak ECB Governing Council member Peter Kazimir said in a blog post today that Eurozone inflation is approaching the 2% target and expressed confidence that it will be reached “within the next few months.”

Following the recent rate cut, Kazimir suggested that ECB’s deposit rate at 2.25% is no longer restrictive and could now be considered close to neutral.

Meanwhile, Kazimir cautioned that the economic backdrop remains highly volatile, with uncertainty continuing to dominate the outlook.

“We are operating in a fast-shifting environment,” he said, pointing to escalating global trade tensions linked to US tariff policies as a key source of instability. He warned that this unpredictability "introduced significant ambiguity into the system, eroding confidence."

Looking ahead to the June meeting, Kazimir emphasized that any decision will depend on incoming data, revised economic forecasts, and a comprehensive risk assessment. His comments reinforce the central bank’s commitment to "flexibility and agility."

BoE Monetary Policy Committee member Megan Greene stated today that the US tariffs pose "more of a disinflationary risk than an inflationary risk" for the UK.

However, she emphasized that domestic factors also remain a concern, particularly the UK’s limited supply capacity, which continues to drive underlying inflationary pressures.

Greene highlighted that this supply-side constraint is a key reason behind her cautious stance on interest rate cuts.

Addressing questions on central bank independence amid political scrutiny of the Fed, Greene emphasized the importance of maintaining institutional credibility.

"Credibility is the currency of central banks," she said, adding that independence is a critical component of that credibility.

The Japanese yen has rallied for a third straight day. In the European session, USD/JPY is trading at 140.38, down 0.33% on the day. The yen has climbed 1.3% since Thursday, as the US dollar is under pressure against the major currencies.

BOJ Core CPI remains at 2.2%

BoJ Core CPI, a key inflation indicator, remained at 2.2% for a third consecutive month in March, shy of the forecast of 2.4%. This follows Japan's National Core CPI, which rose 3.2% y/y, matching expectations but higher than the 3.0% gain in February. National CPI eased to 3.6%, down from 3.7% in February and below the market estimate of 3.7%.

The inflation data comes a week before the BoJ's policy meeting next week. The central bank has signaled that it will continue to raise interest rates as wages and inflation have been rising. However, the risks to inflation and growth from US tariffs have muddied the rate outlook and the BoJ may decide to push off another hike until later in the year.

US and Japan meet to de-escalate trade war

The finance ministers of Japan and the US will meet later this week, as Tokyo looks to carve out some tariff exemptions. The BoJ is likely to sit tight and see if the talks lead to a breakthrough. The US is expected to bring up the exchange rate, as President Trump has accused Japan of deliberately keeping the yen weak in order to protect its export sector.

There are no key releases out of the US today, but we'll hear from three FOMC members later today. The markets have priced in a rate cut in May at 10%, with a 62% probability of a rate cut in June.

USD/JPY Technical

• USD/JPY tested support at 140.18 earlier. Below, there is support at 139.49
• There is resistance at 141.16 and 141.85