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The forex markets are ending the week in a sluggish and indecisive mood, despite a flurry of notable economic data releases. The highlight was the hotter-than-expected US core PCE inflation, which firmed expectations that Fed will hold rates steady in May, with market pricing now around 90% chance. However, expectations for a June rate cut remain relatively resilient at around 65%.

Yet, Dollar showed little appetite to capitalize on the data. It briefly lost ground against Euro and Sterling earlier in the session but quickly settled back into tight ranges. Similarly, stronger-than-expected Canadian GDP data failed to meaningfully support Loonie, which remains on the softer side for the day. Sterling, too, couldn’t hold onto gains despite upbeat retail sales figures, suggesting broader market hesitancy.

The overall restrained price action suggests that traders are simply not ready to make big moves ahead of next week's "reciprocal tariff" announcement from the US.

Looking at weekly performance, Australian Dollar leads the pack, while Canadian Dollar and British Pound follow. On the flip side, Japanese Yen remains the weakest, even after a brief bounce on Tokyo CPI figures, followed by Euro and New Zealand Dollar. Dollar and Swiss Franc are holding in the middle of the performance board.

In Europe, at the time of writing, FTSE is up 0.07%. DAX is down -0.83%. CAC is down -0.79%. UK 10-year yield is down -0.062 at 4.729. Germany 10-year yield is down -0.028 at 2.753. Earlier in Asia, Nikkei fell -1.80%. Hong Kong HSI fell -0.65%. China Shanghai SSE fell - 0.67%. Singapore Strait Times fell -0.23%. Japan 10-year JGB yield fell -0.038 to 1.554.

US core PCE accelerates to 2.8% in Feb, above expectations

US PCE inflation data for February came in largely in with notable surprises. Headline PCE rose 0.3% mom and held steady at 2.5% yoy, both matched expectations. However, core PCE, excluding food and energy, rose by 0.4% mom, slightly hotter than expected 0.3% mom. That pushed , pushing the annual core PCE rate up to 2.8% from 2.7%, also above forecasts.

On the household side, personal income surged by 0.8% mom, significantly outpacing expectations of 0.4% mom, reflecting strong wage growth and robust labor market. But personal spending only rose 0.4% mom, slightly below forecasts of 0.5% mom, hinting at a more measured pace of consumption.

Canadian GDP grows 0.4% mom in Jan, but Feb flatline tempers momentum

Canada's GDP expanded by 0.4% mom in January, outpacing expectations of a 0.3% mom gain. Growth was broad-based, with 13 of 20 sectors contributing.

Goods-producing industries led the charge, rising 1.1% mom, the strongest monthly gain since October 2021, as all major components saw expansion. Services-producing industries posted a more modest 0.1% mom increase.

However, early estimates for February point to a flat reading, suggesting a pause in momentum. Strength in manufacturing and financial services was offset by pullbacks in real estate, oil and gas, and retail trade.

Swiss KOF rises to 103.9, robust economic outlook

Switzerland's KOF Economic Barometer rose to 103.9 in March, beating expectations of 102.6 and up from revised 102.6 in February. The index has remained above its medium-term average since the start of the year, reinforcing the view that the Swiss economy "remains robust".

KOF noted that improvements were broad-based, with stronger signals coming from manufacturing, services, and construction. Private consumption indicators also showed improvement while foreign demand remains unchanged.

UK retail rales rises 1% mom in Feb with broad-based gains

UK retail sales volumes jumped 1.0% mom in February, far surpassing market expectations for -0.3% mom decline.

The gain was driven by strong performances across all non-food store categories, including department stores, clothing, and household goods, suggesting consumers were more willing to spend on discretionary items. The only notable drag came from supermarkets, where sales volumes dipped slightly following a solid increase in January.

Looking at the broader trend, sales volumes rose 0.3% in the three months to February compared to the previous three-month period, and were up 2.0% from the same period a year earlier.

German Gfk consumer sentiment improves marginally to -24.5

Germany’s GfK Consumer Sentiment for April ticked up slightly from -24.6 to -24.5, falling short of expectations at -22.2.

According to Rolf Bürkl of the NIM, the minor improvement may reflect "lessened pessimism" following recent elections and the hope for a stable new government. However, willingness to save continues to signal significant uncertainty among German households.

Bürkl emphasized that "fast formation of a government and the early adoption" could play a key role in boosting consumer confidence and spending ahead.

Tokyo CPI core rises to 2.4%, driven by soaring food and rent prices

In Japan, Tokyo’s CPI core, which excludes fresh food, rose from 2.2% yoy to 2.4% yoy in March, surpassing expectations of 2.2% yoy. Even more notable was the rise in the core, core measure, which strips out both food and energy—climbing from 1.9% yoy to 2.2% yoy, signaling broader-based inflation. Headline inflation also ticked higher to 2.9% yoy from 2.8% yoy.

The key driver behind the spike was food prices, which surged 5.6% yoy, the fastest pace since January 2024. A standout was the massive 92.4% yoy jump in rice prices, the steepest rise since 1976.

Adding to the inflationary pressure was the services sector, where prices rose 0.8% yoy, up from 0.6% yoy in February. Rent prices, a key component, increased by 1.1% yoy, the sharpest rise since 1994.

BoJ opinions highlight tariff risks, but path to further hikes still intact

The Summary of Opinions from BoJ’s March monetary policy meeting revealed growing concerns over the fallout from US trade policy, particularly the risk that new tariffs could negatively impact Japan’s real economy.

One board member warned that downside risks from the US have “rapidly heightened". I f tariff issues worsen, it could have a "negative impact" on Japan's real economy. BoJ should be “particularly cautious” when considering further interest rate hikes if trade tensions escalate.

Other members echoed similar concerns, citing elevated uncertainty from tariff threats, global supply chain disruptions, and stiff competition from low-priced Chinese products.

The tone suggests policymakers are carefully monitoring how these factors affect inflation expectations, wage growth, and investment—particularly among SMEs.

A separate opinion suggested that as underlying CPI inflation edges closer to the 2% target, BoJ should prepare to shift from accommodative to "neutral" policy.

Overall, BoJ still sees a path toward rate normalization—contingent on its inflation outlook materializing—but recent developments in global trade and domestic firm performance will dictate the pace and timing of the next move.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2883; (P) 1.2937; (R1) 1.3004; More...

GBP/USD is still bounded in range below 1.3013 and intraday bias remains neutral. Consolidation from 1.3013 could extend. In case of another fall, downside should be contained by 38.2% retracement of 1.2248 to 1.3013 at 1.2721 to bring rebound. On the upside, break of 1.3013 will resume the rally from 1.2099 towards 1.3433 high.

In the bigger picture, up trend from 1.3051 (2022 low) is not completed. Resumption is expected after corrective pattern from 1.3433 completes. Next target will be 1.4248 key resistance. This will now remain the favored case as long as 1.2099 support holds.

US PCE inflation data for February came in largely in with notable surprises. Headline PCE rose 0.3% mom and held steady at 2.5% yoy, both matched expectations. However, core PCE, excluding food and energy, rose by 0.4% mom, slightly hotter than expected 0.3% mom. That pushed , pushing the annual core PCE rate up to 2.8% from 2.7%, also above forecasts.

On the household side, personal income surged by 0.8% mom, significantly outpacing expectations of 0.4% mom, reflecting strong wage growth and robust labor market. But personal spending only rose 0.4% mom, slightly below forecasts of 0.5% mom, hinting at a more measured pace of consumption.

Full US personal income and outlays release here.

Canada's GDP expanded by 0.4% mom in January, outpacing expectations of a 0.3% mom gain. Growth was broad-based, with 13 of 20 sectors contributing.

Goods-producing industries led the charge, rising 1.1% mom, the strongest monthly gain since October 2021, as all major components saw expansion. Services-producing industries posted a more modest 0.1% mom increase.

However, early estimates for February point to a flat reading, suggesting a pause in momentum. Strength in manufacturing and financial services was offset by pullbacks in real estate, oil and gas, and retail trade.

Full Canada GDP release here.

• USD/CAD maintains sideways movement above 1.4270 support.
• Trend signals deteriorate; a break above 1.4635 could provide relief.

USDCAD extended its four-month sideways trajectory above the 1.4270 base for another week as the US tariffs deadline approached on April 2 and the Fed chairman reaffirmed economic stability.

Trend signals remain fragile. The pair slipped below the support trendline from September 2024 and remains capped below the 20- and 50-day exponential moving averages (EMAs) at 1.4330. Additionally, recent price action seems to be forming a descending triangle, which is usually a sign of a bearish breakout.

However, Wednesday’s green hammer candlestick and the rising stochastic oscillator suggest upside potential hasn’t vanished. The 20-day EMA is also holding resilient above the 50-day EMA for the fifth consecutive month. Still, bulls must reclaim 1.4365 and then break successfully above 1.4470 to exit the neutral zone.

A climb above 1.4470 could initially pause near 1.4600. If the bulls sustain power, a tougher obstacle could emerge within the 1.4700-1.4730 territory before the 1.4800 mark comes into play.

Conversely, a close below 1.4235-1.4270 may activate fresh selling orders toward 1.4100-1.4150. A drop past the 200-day EMA at 1.4065 could push prices toward 1.3970, aligning with the 61.8% Fibonacci retracement of the September-February rally.

Overall, USDCAD remains in limbo. A break above 1.4365 or below 1.4235 could set the next direction.

Gold spiked to new record high ($3086) in early Friday trading, in extension of Thursday’s 1.2% advance.

The yellow metal is on track for the fourth consecutive weekly gain and also for the third straight bullish monthly close (over 7% up in March), with the price increasing by 17% in the first three months of 2025.

Gold price was lifted by rising safe have demand, driven by growing economic, and geopolitical uncertainty, signals or more rate cuts, as well as increased physical buying

The latest story with US reciprocal trade tariffs further fueled concerns of trade war escalation which could cause a colossal negative impact on global economy and further boost migration into safety.

Short term outlook is likely to remain very bullish, as there are no signs that situation in any of key fields would calm soon, but more likely to deteriorate further.

The notion is also supported by quick and easy break of $3000 milestone, where stronger headwinds were expected, due to significance of this psychological barrier, with fresh acceleration higher coming close to next round figure resistance at $3100.

Some easing could be anticipated here, due to week-end and month-end profit taking, though gold’s major drivers remain firmly in play, suggesting that dips are likely to be limited.

Technical picture is firmly bullish on daily chart, although stretched indicators warn that bulls may take a breather.

Previous top at $3057 offers immediate support, followed by rising 10DMA ($3033) where dips should ideally find a footstep and guard lower pivot at $3000 (former key barrier reverted to strong support).

Res: 3086; 3093; 3100; 3112.
Sup: 3057; 3033; 3012; 3000.

The Japanese yen has posted considerable gains on Friday. In the European session, USD/JPY is trading at 150.53, down 0.33% on the day.

Tokyo core inflation accelerates to 2.4%, higher than expected

Inflation in Japan's capital accelerated in February. Tokyo Core CPI, one of the most important inflation indicators, rose to 2.4% y/y, up from 2.2% in January and above the market forecast of 2.2%.

Tokyo CPI climbed to 2.9%, up from 2.8% in January but below the market estimate of 3.1%. The gain was largely driven by rising rice prices, which have soared by 90% over the past year.

This is the fifth straight month that both headline and core inflation has stayed above the Bank of Japan's 2% target, supporting the case for the central bank to continue raising interest rates. The BoJ has been cautious and held rates earlier this month, citing the uncertainty in the global economy.

Earlier this week, Governor Kazuo Ueda said that the recent spike in inflation was driven by temporary factors such as higher import costs and food prices, which was not a reason to tighten policy. However, Ueda warned that if the acceleration in food and other prices proved to be broad-based, the BoJ would have to respond with a rate hike.

Ueda has been sending strong signals about another rate hike but hasn't specified a timeline. The BoJ meets next on May 1 and the money markets have priced in a 27% chance of a quarter-point hike.

BOJ Summary of Opinions indicates concern over inflation

Overshadowed by the Tokyo inflation report was the release of the BoJ Summary of Opinions from the March meeting.

Hawkish members noted that inflationary pressures were rising and rising food prices could have a significant impact on underlying inflation, while the more dovish members focused on risks to Japan's economy due to US tariff policy. The takeaway from the discussion is that the BoJ has probably not circled a date to raise rates and remains in a wait-and-see-mode.

USD/JPY Technical

• USD/JPY is testing support at 150.75, followed by support at 15.035
• 151.45 and 151.85 are the next resistance lines

The GBP/USD pair is consolidating around 1.2941 this Friday as the British pound continues to outperform its peers. Unlike other major currencies, the pound has remained relatively insulated from escalating global trade tensions, giving it a distinct advantage.

Why the pound is outperforming

The UK’s distance from ongoing trade wars has shielded sterling from the worst volatility triggered by US tariff policies. While other economies brace for the impact of trade restrictions, the UK, at least in theory, faces fewer immediate risks from President Trump’s protectionist measures.

Adding to sterling’s resilience is the fiscal plan of UK Treasury Chief Rachel Reeves, which outlines spending reductions totalling 14 billion GBP. This move could significantly boost the economy’s fiscal potential, creating a 10 billion GBP reserve for future spending needs. As a result, the government may reduce bond issuance, easing pressure on public finances.

Mid-week, the pound dipped slightly following the release of UK inflation figures. The Consumer Price Index (CPI) rose by 0.4% month-on-month in February, rebounding from a -0.1% decline in January. On an annual basis, inflation eased to 2.8% (down from 3.0%), likely due to seasonal energy demand during the colder months. However, the market reaction was short-lived, suggesting sustained confidence in the pound’s strength.

Technical analysis of GBP/USD

H4 Chart: The pair is consolidating near 1.2934, with a potential upward extension towards 1.2998. A subsequent downward wave towards 1.2784 remains possible, supported by the MACD indicator, where the signal line remains below zero but is trending upward.

H1 Chart: After hitting a local high at 1.2970, a pullback towards 1.2934 (testing support from above) is likely. A rebound towards 1.2998 could follow before a potential decline to 1.2888. The Stochastic oscillator supports this outlook, with its signal line below 50 and pointing downward towards 20.

Conclusion

While short-term fluctuations persist, the pound’s resilience, supported by favourable fiscal policies and its detachment from global trade conflicts, positions it as a standout performer. Traders should monitor key technical levels for potential breakouts or reversals in the coming sessions.

On 19 March, we reported that gold had surpassed $3,000 per ounce for the first time in history and suggested this psychological level could be tested.

As shown on the XAU/USD chart, the price briefly dipped below $3,000 but quickly rebounded. According to the Smart Money Concept methodology, this may have been a liquidity sweep triggered by stop-loss orders placed below the key level. Regardless, the test occurred (as indicated by the arrow), and the bulls resumed the rally. The new all-time high is now around $3,080 and could be broken again today.

Why Is Gold Rising?

➝ Uncertainty over Trump’s tariff plans

➝ Expectations of lower interest rates

Gold is traditionally seen as a hedge against economic and political uncertainty and tends to perform well in a low-rate environment. Analysts at Goldman Sachs have raised their year-end 2025 gold price forecast to $3,300.

Technical Analysis of XAU/USD

➝ Looking at gold’s broader trend, price movements continue to follow an upward channel (marked in blue), which has remained relevant since early 2025.

➝ Alternatively, a second, less steep ascending channel (marked in purple) suggests that gold is currently near its upper boundary, indicating a possible pullback. However, the $3,056 level—previously resistance—could now act as support, paving the way for a move towards the next milestone at $3,100.

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Switzerland's KOF Economic Barometer rose to 103.9 in March, beating expectations of 102.6 and up from revised 102.6 in February. The index has remained above its medium-term average since the start of the year, reinforcing the view that the Swiss economy "remains robust".

KOF noted that improvements were broad-based, with stronger signals coming from manufacturing, services, and construction. Private consumption indicators also showed improvement while foreign demand remains unchanged.

Full Swiss KOF release here.

Daily Pivots: (S1) 194.07; (P) 195.03; (R1) 196.54; More...

GBP/JPY's rebound from 187.04 resumed by breaking through 194.97 temporary top. Intraday bias is back on the upside for 198.94 resistance. For now, further rally is in favor as long as long as 193.44 support holds, in case of retreat. Overall, corrective pattern from 180.00 is still extending.

In the bigger picture, price actions from 208.09 are seen as a correction to rally from 123.94 (2020 low). Strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. However, sustained break of 152.11 will bring deeper fall even still as a correction.