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On 27 January, our analysis of the natural gas chart highlighted the formation of an ascending channel. Later, on 10 March, we noted that the sharp price increase had created technical conditions for a correction.

Since then, as indicated by the arrow on the XNG/USD chart, natural gas prices have declined by approximately 19%.

Why Is the Price of Natural Gas Falling?

• Unseasonably Warm Weather: Atmospheric G2 reported on Wednesday that forecasts now indicate significant warming across the eastern half of the U.S. from 31 March to 4 April. This could reduce demand for natural gas used in heating.
• Rising Inventories: According to the EIA’s forecast, weekly natural gas storage levels are expected to increase by +33 billion cubic feet over the past week.

Technical Analysis of XNG/USD Chart

Looking at the broader trend since the start of the year, the ascending channel (marked in blue) remains relevant. However, bears have pushed the price below its median line, shifting movement into a short-term downward channel (marked in red).

Currently, natural gas is trading near the $3.780/MMBtu level, a key price point that has previously acted as both support and resistance. Whether a bearish breakdown or a bullish rebound occurs largely depends on the upcoming EIA report, scheduled for release at 17:30 GMT+3.

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Yesterday, it was revealed that Donald Trump plans to introduce new 25% tariffs on cars not manufactured in the United States. This duty will be added to existing tariffs and is set to take effect on 2 April. The White House believes that these measures will support the US economy and, in the long term, create new jobs.

At the same time, critics warn that the new tariffs could trigger inflation and lead to a recession. Currently, markets are responding to the news with a strengthening of the US dollar.

USD/JPY

Following the formation of a bullish engulfing pattern on 11 March, USD/JPY buyers have managed to hold above the key resistance level of 150.00.

Technical analysis suggests that if the pair continues trading above 149.30–149.00, further growth towards the 152.00–151.20 range is possible. A break below 149.00 could trigger a new downward move, potentially leading to a retest of the March lows at 146.60.

Key events that may influence USD/JPY today:

• 15:30 (GMT+2) – Core Personal Consumption Expenditures (PCE) Price Index (US)
• 15:30 (GMT+2) – US GDP
• 15:30 (GMT+2) – Initial Jobless Claims (US)
• 15:30 (GMT+2) – US Retail Inventories (excluding autos)

USD/CAD

The USD/CAD pair continues to trade within the medium-term range of 1.4540–1.4230.

A break below the lower boundary of 1.4230 may lead to a test of the January low at 1.4160. If USD buyers manage to push the price back above 1.4300, a recovery towards 1.4580–1.4500 could follow.

Key events that may affect USD/CAD in the upcoming sessions:

• Today at 15:30 (GMT+2) – Average Weekly Earnings (Canada)
• Today at 23:30 (GMT+2) – US Federal Reserve Balance Sheet
• Tomorrow at 15:30 (GMT+2) – Canadian GDP

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Belgian ECB Governing Council member Pierre Wunsch suggested that pausing rate cuts in April should at least be “on the table”, and highlighted how tariff-induced stagflation poses a policy dilemma.

Wunsch warned that tariffs would complicate ECB’s path forward: “To the extent that tariffs will impact the economy … this will have an impact on our decision-making,” he noted.

While downplaying the immediate importance of April's tariff development, Wunsch stressed that "It’s going to have an impact over the medium term.”

In contrast, Latvian Governing Council member Martins Kazaks suggested that if ECB’s baseline scenario holds, a “gradual reduction in rates in the future” could be expected.

Markets

Again no really congruent storyline to guide US and European markets yesterday. Equities on both sides of the Atlantic were captured in a risk-off modus as Trump’s Liberation Day tariff announcement was coming ever closer. The uncertainty, however, still resulted in a different performance between US and EMU interest rate markets. EMU (swap) yields declined further in a steepening move (2-y -4.1 bps, 30-y -2.2 bps). Money markets apparently are still embracing the idea of a ‘frontloaded’ April ECB interest rate cut (75% discounted). We join this view but are far more reluctant on the room for further steps later this year. In the US, bond markets despite the lingering risk-off, went in the other direction. Yields added between 0.3 bps (2-y) and 4.3 bps (30-y). Markets apparently assume that the Fed will stay in a wait-and-see approach. Even so, several Fed member including ST Louis Fed President Musalem are making reservations on Powell’s assessment last week that the inflationary impact of tariffs will likely be temporary. This debate, combined with CBO fiscal outlook might be important for yields in the (near?) future. If the Fed doesn’t respond decisively enough the market might. On FX markets, the dollar this time outperformed on (or is it despite?) the risk-off. DXY closed at 104.55. EUR/USD finished the session at 1.0754 (from 1.0791). The yen also weakened to USD/JPY 105.6. UK markets reacted rater constructive to softer than expected CPI data and to Fin Min Reeves’ spring budget update (and new OBR fiscal projections). UK yields eased between 1.1 bp (2-y) and 6.0 bps (30-y). Sterling declined after the CPI data, but regained most of the loss especially against the euro later (EUR/GBP 0.8345 close).

US President Trump announcing 25% tariffs on all cars imported in the US after the close of US markets is dominating the headlines this morning. Equity markets of the likes of Japan and South Korea are trading in red, but the reaction is very orderly. The EuroStoxx 50 future cedes 0.5%. US futures trade little changed. Trump also already warned on more tariffs on the EU and Canada if the work against the US. Even so, the orderly reaction suggests that an important part of this news was discounted. The intraday dynamics of EU equity markets might be telling. Also interesting, in FX EUR/USD (1.0775) trades off yesterday’s lows. DXY also eases (104.35). Later today, the eco calendar is thin (US weekly jobless claims), but several ECB policy makers will speak. Still, investors’ reaction to the tariffs announcement will set the tone for global trading. We especially keep a close eye at the reaction of US Treasuries. Will markets continue to accept Powell’s view at the press conference last week that the impact of tariffs on inflation/inflation expectations will probably remain temporary? If doubt is creeping in further, this might affect risk premia. In this respect, also keep a close look at the long term CBO US budget outlook to be updated today. Additional negative headlines on the sustainability of US debt might put pressure, especially at the long end of the US yield curve. For the dollar, the jury is still out. Even so, we look out for signs of a topping out process after recent rebound as quite some negative news on tariffs might gradually be discounted for the likes of the euro and the yen.

News & Views

The non-partisan US Congressional Budget Office estimates the United States risk no longer being able to cover its obligations by August unless Congress acts to raise the debt ceiling. It warned that this so-called X-date could even be as soon as late May or somewhere in June should borrowing needs in coming months exceed CBO projections. The estimate is also complicated by shifts in timing and amount of revenue collection and spending. The CBO to that end noted several important dates, including the April 15 deadline for taxpayers to submit annual filings, a mid-June tax payment deadline and June 30, when additional extraordinary (accounting) measures for the US Treasury become available.

France’s budget deficit widened from 5.4% in 2023 to 5.8% last year, the country’s statistical office reported this morning. While huge and well-above the 3% EC limit, it was slightly less than the 6% the Finance Ministry had forecasted. It offers the government a slight reprieve and a better starting point for bringing down the gap to 5.4% again this year. That was already a hard-fought compromise by a minority government in a highly fractured parliament. The goal is to get back to the 3% cap by 2029 but didn’t get any easier by the plans to significantly increase military outlays over the coming years. Finance Minister Lombard, however, already said he won’t deviate from the current trajectory, meaning spending cuts will have to found elsewhere. France’s public debt rose to 113% of GDP end last year, up from 109.8% in 2023. The debt ratio prior to the pandemic stood at 97.9% (2019)

Daily Pivots: (S1) 0.9487; (P) 0.9516; (R1) 0.9532; More....

Intraday bias in EUR/CHF remains neutral and outlook is unchanged. Strong support is expected fro 0.9489 to complete the correction from 0.9660. On the upside, above 0.9581 minor resistance will bring retest of 0.9660 first. However, sustained break of 0.9489 will dampen this view, and bring deeper fall back to 0.9331 support next.

In the bigger picture, prior strong break of 55 W EMA (now at 0.9487) is a medium term bullish sign. Sustained break trading above long-term falling channel resistance (at around 0.9618) would suggest that the downtrend from 1.2004 (2018 high) has bottomed at 0.9204. Stronger rally should then be seen to 0.9928 key resistance at least.

Daily Pivots: (S1) 0.8323; (P) 0.8349; (R1) 0.8369; More...

Intraday bias in EUR/GBP stays mildly on the downside for the moment. Rise from 0.8239 might have completed at 0.8448 already. Deeper fall would be seen back to 0.8239 support. On the upside, above 0.8384 minor resistance will turn bias back to the upside for 0.8448. Overall, consolidation pattern from 0.8221 is still in progress and could extend further.

In the bigger picture, EUR/GBP is still bounded inside medium term falling channel. While rebound from 0.8221 might extend higher, it could still develop into a corrective pattern. Overall outlook will be neutral at best and down trend from 0.9267 (2022 high) could extend, at least until decisive break of channel resistance (now at 0.8495).

Daily Pivots: (S1) 1.7027; (P) 1.7097; (R1) 1.7144; More...

Intraday bias in EUR/AUD remains mildly on the downside as correction from 1.7417 is extending lower. But downside should be contained by 1.6990 support to bring rebound. On the upside, above 1.7270 will bring retest of 1.7417 first. Break there will resume whole rise from 1.6335.

In the bigger picture, the breach of 1.7180 key resistance (2024 high) suggests that up trend from 1.4281 (2022 low) is resuming. Sustained trading above 1.7180 will confirm and target 61.8% projection of 1.4281 to 1.7062 from 1.5963 at 1.7682, which is also close to 61.8% retracement of 1.9799 (2020 high) to 1.4281 at 1.7691. For now, this will remain the favored case as long as 1.6800 resistance turned support holds, even in case of deep pullback.

Daily Pivots: (S1) 161.52; (P) 162.07; (R1) 162.49; More...

Intraday bias in EUR/JPY remains neutral first, as consolidation continues below 164.16. Further rally remains in favor as long as 160.02 support holds. Above 164.16 will target 164.89 and then 166.67. On the downside, however, break of 160.02 will argue that rise from 154.77 has completed and turn bias to the downside. Overall, sideway consolidation pattern from 154.40 is still extending.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). Strong support should be seen from 38.2% retracement of 114.42 to 175.41 at 152.11 to contain downside. However, sustained break of 152.11 will bring deeper fall even still as a correction.

Daily Pivots: (S1) 193.45; (P) 194.12; (R1) 194.77; More...

Intraday bias in GBP/JPY remains neutral at this point. On the upside, above 194.97 will resume the rebound from 187.04 towards 198.94 resistance. On the downside, break of 192.00 support will turn bias back to the downside for 188.77 support. Overall, corrective pattern from 180.00 is still be 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.

In focus today

In the US, we will receive the second revision of GDP final. We do not anticipate a significant impact on market movements.

In the euro area, monetary aggregates and credit data will be released. As the ECB continues its active discussions on restrictiveness of monetary policy - pivotal for rate decisions - data on credit growth will be crucial. Credit growth has increased to approximately 2% y/y for the private sector, following the recent easing of monetary policy. However, momentum (the credit impulse) has remained flat at around 1% over the past six months, which, in our view, suggests that monetary policy remains tight. There is also a string of ECB speeches, including Schnabel, scheduled today.

In Norway, we anticipate Norges Bank will cut the policy rate to 4.25%, as signalled. This is a non-consensus view, as market pricing and consensus suggest only a 25-30 % probability of a cut. Admittedly, the inflation figures for February were significantly higher than expected and will contribute to a higher rate path. However, we anticipate that the monetary policy analysis will conclude that the combination of declining inflation, below-normal capacity utilization and restrictive monetary policy strongly supports lower rates. Although we expect the upcoming monetary policy report to adjust the rate path upwards by 25-30bp., it is still likely to indicate about two cuts in 2025, with further reductions planned for 2026-2028. In that case, it should be possible to stick to the plan and cut the policy rate already at this crossroad.

Economic and market news

What happened overnight

In the US, President Trump has announced a 25% tariff on imports of foreign-made vehicles as well as car parts. The tariffs will go into effect on 2 April as part of a series of other tariffs set to be implemented on "Liberation Day". The announcement has already faced criticism, including from the EU and Canada, which will take measures to protect their interests.

What happened yesterday

In the US, February's durable goods orders data showed a 0.9% increase, outperforming expectations (cons: -1.0%), yet it did not lead to further market reactions.

In the evening Fed's Musalem cautioned that tariffs could lead to more persistent inflation, potentially exceeding the Fed's 2% target and requiring tighter monetary policy.

In the UK, February inflation came in to the low side with headline and core inflation lower than expected at respectively 2.8% y/y (cons: 3.0%, prior: 3.0%) and 3.5% y/y (cons: 3.6%, prior: 3.7%). Services remained unchanged at 5.0% y/y (cons: 4.9%, prior: 5.0%). More broadly, inflationary pressures eased, and inflation is currently at or below the Bank of England's expectations, paving the way for another cut at the upcoming meeting. We will receive another inflation print before the next meeting in May. In the afternoon, the Labour government presented its Spring statement, which was overall in line with expectations with Chancellor Reeves aiming to reassure markets of the government's commitment to fiscal sustainability. Gilts initially reacted strongly but ended the day with benchmark yields only 1-3bp lower, supported by a downside surprise to inflation figures released earlier in the day.

In Sweden, The Economic Tendency Survey from NIER indicated a negative outlook for the economy, with decreased confidence, particularly among consumers, indicating a weaker sentiment than usual. Households are pessimistic about both their current economic situation and outlook. Pricing plans rose further in March and are now significantly above normal levels. This accelerates the stagflation trend, creating a more challenging environment for the Riksbank.

The Minutes from last week's Riksbank meeting was also released yesterday. The Board communicated a balanced view, acknowledging inflation risks but suggesting the recent uptick is temporary, while emphasising the need for ongoing economic support. Despite concerns over stagflationary trends, they maintain a positive outlook for inflation and activity, stressing readiness to act if needed. Current policy rate path suggests balanced risks, but there is potential downside in market pricing (12bp worth of hikes for coming year) as the minutes are slightly dovish in comparison.

In geopolitics, the truce agreements between Ukraine and Russia are currently hitting a wall, with the two parties accusing each other of violating the US-brokered deal, while the EU has rejected Russia's conditions for a Black Sea ceasefire. Hence, uncertainty remains high. Today, French President Macron is set to host European leaders, including Ukrainian President Zelensky, to discuss Ukrainian security in light of the potential ceasefire with Russia. For our assessment of the implications of a ceasefire, please see Research Global - What would a dirty deal in Ukraine mean for markets?, 16 February.

Equities: US equities lower on Wednesday as Trump laid out his plans of a 25% car tariff. The jury is still out on how car part will be handled which means that the risk to supply chains is uncertain. Supply chains is a bigger headache for equity investors than more expensive cars. Hence, this was more of a targeted selloff (Tesla and other car makers, MAG7) while overall equities held up well. S&P 500 dropped 1.1% but equal weight S&P 500 only down -0.2%. Tariffs were announced after closing, so it is surprising to see US futures even slightly higher this morning, although European ones are lower. A defensive rotation took place below the surface yesterday though, with consumer staples and utilities in the lead, financed by most cyclicals.

FI&FX: The latter part of yesterday's trading session was dominated by sour risk sentiment, as equities gradually found new daily lows. Trump has announced that starting April 3rd, there will be a 25% tariff on US auto imports, at the same time downplaying the reciprocal tariffs set to be announced next week as "very lenient". He also opened a door for a tariff reduction on China in order to secure a deal for the sale of TikTok. EUR/USD, having initially traded heavy, recovered losses on the tariffs news and is back just shy of 1.08. Scandies defied the shaky sentiment and traded mostly sideways, with some downside on NOK/SEK. A quiet day for European rates, although the Swedish government announced plans to boost their defence spending by SEK300bn until 2030. The main event of today is Norges Bank's rate decision, where we still see a 25bp cut although it is a really close call.