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Daily Pivots: (S1) 1.2889; (P) 1.2927; (R1) 1.2989; More...

Intraday bias in GBP/USD is back on the upside for now. Sustained trading above 61.8% retracement of 1.3433 to 1.2099 at 1.2923 will resume the rise from 1.2099, and pave the way back to 1.3433 high. Nevertheless, break of 1.2860 support should indicate short term topping and bring deeper pullback.

In the bigger picture, fall from 1.3433 (2024 high) should have completed at 1.2099 as a corrective move. Up trend from 1.3051 (2022 low) is still in progress but it's too early to say that it's resuming. Corrective pattern from 1.3433 could extend with one more down leg. But after all, eventual upside breakout is expected at a later stage.

The Consumer Price Index (CPI) rose 0.2% month-on-month (m/m) in February, or less than half of the monthly gain in January. On a twelve-month basis, CPI was up 2.8% (from 3.0% in January).

• Energy prices were relatively flat on the month, while food prices (+0.2% m/m) continued to edge higher and are up 2.6% on a year-ago basis.

Excluding food and energy, core inflation also rose 0.2% m/m – a tick below the consensus forecast – and a notable deceleration from the 0.45% m/m gain in January. The twelve-month change ticked down to 3.1% (from 3.3% in January), while the three-and-six-month annualized rates of change both sit at 3.6%.

A cooling in services price pressures was largely behind the slowdown in inflation last month, which were up a 'soft' 0.3% m/m (0.25% m/m unrounded) compared to a 0.5% m/m in January. On a year-ago basis, services prices remain somewhat elevated, up 4.1% y/y.

• Primary shelter costs rose 0.3% m/m and accounted for nearly half of the monthly increase in headline inflation.
• Meanwhile, price growth for non-housing services (aka "supercore") slowed to a modest 0.1% m/m gain following a hot 0.8% m/m rise in January. Encouragingly, price growth eased across categories that saw a significant uptick in January, including vehicle insurance (Feb: 0.3 m/m vs. Jan: 2.0% m/m) and travel costs (Feb: -1.5% m/m vs. Jan: +1.4% m/m).

Core goods prices rose 0.2% m/m, with notable gains in used vehicle prices (+0.9% m/m), apparel (+0.6% m/m), and home furnishings (+0.2% m/m).

Key Implications

Following a sharp uptick to start the year, price growth showed signs of cooling in February. While cooler services price pressures is welcome news, the uptick in apparel and home furnishing costs bear close watching in the months ahead. The additional 10% tariff on Chinese goods that came into effect on February 4th may be already having an impact on consumer prices.

Since February, the U.S. administration has imposed an additional 10% tariff on China (effective March 4th) as well as a 25% tariff on all steel & aluminum imports (effective March 12th). It remains to be seen whether the currently paused tariffs on Canada and Mexico as well as the reciprocal tariffs will be implemented on April 2nd. But both the ISM surveys showed a sharp uptick in the 'prices paid' sub-component in February, suggesting price pressures are building further up the supply chain. These are likely to show up in consumer prices over the coming months. As a result, the Federal Reserve is likely to sit tight for now and wait for more clarity on the policy and inflation front before making its next move. Fed futures barely budged post-CPI release and are still showing the next quarter-point rate cut to come in June.

Daily Pivots: (S1) 1.0849; (P) 1.0898; (R1) 1.0968; More...

While EUR/USD continues to lose momentum as seen in 4H MACD, there is no clear sign that a correction is imminent yet. Further rise is in favor as long as 1.0804 support holds. Sustained trading above 161.8% projection of 1.0176 to 1.0531 from 1.0358 at 1.0932 will target 261.8% projection at 1.1287, which is slightly above 1.1274 key resistance. Nevertheless, firm break of 1.0804 should now indicate short term topping, and bring deeper pullback.

In the bigger picture, the strong break of 55 W EMA (now at 1.0675) suggests that fall from 1.1274 (2024 high) has completed as a three wave correction to 1.0176. Rise from 0.9534 is still intact, and might be ready to resume. Decisive break of 1.1274 will target 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. Also, that will send EUR/USD through a multi-decade channel resistance will carries larger bullish implication. This will now be the favored case as long as 1.0531 resistance turned support holds.

Dollar is struggling to find a definitive direction in early US session, even after the softer-than-expected Consumer Price Index report offered fresh evidence of easing inflation pressures. Annual core CPI now sits at its lowest level since 2021, a development that should bring some relief to both the Fed and markets. However, the data release has not sparked a substantial move in the greenback, as lingering tariff concerns keep traders in a wait-and-see mode.

The most immediate market reactions have been more evident in equities and bonds. US stock futures are rebounding on the prospect of Fed easing sooner. Funds are flowing out of bonds, pushing the benchmark 10-year Treasury yield higher. Yet overall market caution remains elevated, with tariffs casting a shadow over trade and growth prospects.

For now, Canadian Dollar is currently in the lead for the day, although BoC’s upcoming rate decision could quickly change that dynamic. Dollar is the second-best performer on the day, followed by the British pound. At the other end of the spectrum, Japanese Yen is faring the worst, trailed by Euro, which is digesting recent strong gains, and then Australian Dollar. New Zealand Dollar and Swiss Franc are hovering in the middle of the pack.

Technically, USD/JPY's rebound today is much more due to Yen's pullback then Dollar's strength. Price actions from 146.52 are still viewed as a corrective pattern. Upside should be limited by 150.92 support turned resistance. Fall from 158.86 is expected to resume through 146.52 after the corrective pattern completes.

In Europe, at the time of writing, FTSE is up 0.50%. DAX is up 1.87%. CAC is up 1.35%. UK 10-year yield is up 0.054 at 4.684. Germany 10-year yield is up 0.038 at 2.934. Earlier in Asia, Nikkei rose 0.07%. Hong Kong HSI fell -0.76%. China Shanghai SSE fell -0.23%. Singapore Strait Times rose 0.19%. Japan 10-year JGB yield rose 0.017 to 1.524.

US core CPI falls to 3.1%, lowest since 2021

US consumer inflation slowed more than expected in February. Headline CPI rose just 0.2% mom, below forecasts of 0.3% mom. Core CPI, which excludes food and energy, also increased by 0.2% mom, missing expectations of 0.3% mom.

On an annual basis, inflation eased to 2.8% yoy from 3.0% yoy in January. Core CPI fell from 3.3% yoy to 3.1% yoy, the lowest level since April 2021. The deceleration in price pressures suggests that disinflationary momentum is gradually resuming after months of stubbornly high core readings.

ECB's Lagarde stresses commitment to price stability amid exceptional high uncertainty

ECB President Christine Lagarde highlighted the "exceptionally high" level of global uncertainty in her speech today, highlighting the challenges posed by trade policy shifts and geopolitical tensions.

She noted that an index measuring trade policy uncertainty is now close to 350—more than six times its average value since 2021. Geopolitical risk indicators are at levels unseen since the Cold War, aside from periods of war and major terrorist attacks.

Against this backdrop, Lagarde emphasized that ECB’s primary focus remains on maintaining price stability over the medium term, stressing that this commitment is "more important than ever" in an unpredictable economic environment.

To achieve this, Lagarde stressed the need for "agility to respond to new shocks" while maintaining a structured policy framework that prevents "short-sighted reactions and unbridled discretion".

She also noted the importance of combining agility with clarity, stating that while the ECB may not always be able to provide certainty about the exact path of interest rates, it can ensure "clarity about our reaction function".

BoJ’s Ueda acknowledges rising yields as market bets on policy shift

BoJ Governor Kazuo Ueda addressed the recent rise in bond yields, and noted, "I don't see a big divergence between our view and that of markets".

Speaking to parliament, Ueda emphasized the "biggest determinant" of long-term interest rates is market expectations regarding the central bank’s short-term policy rate.

He added, it is "natural for long-term rates to move in a way that reflects such market forecasts". His comments come as Japan’s benchmark 10-year bond yield surged to a 16-year high of 1.575% on Monday.

Separately, Japan’s latest inflation data showed that annual wholesale inflation slowed slightly in February. Corporate goods price index , which tracks the prices businesses charge each other for goods and services, rose 4.0% yoy, in line with market expectations, down from January’s 4.2% yoy increase.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0849; (P) 1.0898; (R1) 1.0968; More...

While EUR/USD continues to lose momentum as seen in 4H MACD, there is no clear sign that a correction is imminent yet. Further rise is in favor as long as 1.0804 support holds. Sustained trading above 161.8% projection of 1.0176 to 1.0531 from 1.0358 at 1.0932 will target 261.8% projection at 1.1287, which is slightly above 1.1274 key resistance. Nevertheless, firm break of 1.0804 should now indicate short term topping, and bring deeper pullback.

In the bigger picture, the strong break of 55 W EMA (now at 1.0675) suggests that fall from 1.1274 (2024 high) has completed as a three wave correction to 1.0176. Rise from 0.9534 is still intact, and might be ready to resume. Decisive break of 1.1274 will target 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. Also, that will send EUR/USD through a multi-decade channel resistance will carries larger bullish implication. This will now be the favored case as long as 1.0531 resistance turned support holds.

US consumer inflation slowed more than expected in February. Headline CPI rose just 0.2% mom, below forecasts of 0.3% mom. Core CPI, which excludes food and energy, also increased by 0.2% mom, missing expectations of 0.3% mom.

On an annual basis, inflation eased to 2.8% yoy from 3.0% yoy in January. Core CPI fell from 3.3% yoy to 3.1% yoy, the lowest level since April 2021. The deceleration in price pressures suggests that disinflationary momentum is gradually resuming after months of stubbornly high core readings.

Full US CPI release here.

USD/JPY climbed to 148.19 on Wednesday, marking its second consecutive session of gains after touching a low of 146.53, its weakest level since 4 October 2024. While this movement partly resembles a technical rebound, broader market conditions appear to shift, influencing the yen’s trajectory.

Key market factors affecting USD/JPY

Bank of Japan (BoJ) Governor Kazuo Ueda stated that it is natural for bond yields to reflect market expectations regarding short-term interest rates. He downplayed the significance of any divergence between the BoJ’s stance and market sentiment.

Despite this, financial markets continue to bet on the BoJ sticking to its interest rate hike strategy for 2025. Japan’s latest inflation data further strengthens this view.

The Consumer Price Index (CPI) for January 2025 surged to 4.0%, the highest since January 2023. The primary driver was food prices, which spiked 7.8% y/y, while rising electricity and gas prices also contributed to overall inflation. Meanwhile, core inflation hit a 19-month high at 3.2%.

Given this inflationary environment, the BoJ remains pressured to maintain its tightening cycle, a strong supporting factor for the yen over the longer term.

Technical analysis of USD/JPY

On the H4 chart, USD/JPY is developing a growth wave targeting 148.38. After reaching this level, a correction towards 147.34 may follow, outlining the consolidation range at the recent lows. If the price breaks upwards, the pair could extend gains towards 150.20, the next key resistance level. A correction to 148.38 could then occur. The MACD indicator supports this outlook, with its signal line below zero but pointing strictly upwards, indicating bullish momentum.

On the H1 chart, the pair is forming a growth wave towards 148.38, marking the first key target. A potential pullback to 147.34 may follow before a renewed push higher towards 149.40, the next local target. The Stochastic oscillator confirms this scenario, with its signal line above 50 and trending upwards, suggesting continued buying pressure.

Conclusion

USD/JPY is experiencing a short-term rebound, with market sentiment driving the pair higher amid shifting rate expectations. However, the BoJ’s stance and Japan’s strong inflation figures provide longer-term support for the yen, keeping the broader outlook mixed.

In the near term, 148.38 remains a key resistance level, with the potential for further gains towards 150.20 if bullish momentum persists. A corrective pullback to 147.34 could provide a buying opportunity before the next upward wave towards 149.40. Market participants will closely watch economic developments and BoJ policy signals to determine the yen’s next move.

• USDJPY aims for a rebound after hitting five-month low.
• Recovery could be short-lived within the bearish channel.
• US CPI inflation data due at 12:30 GMT.

USDJPY kicked off Wednesday’s session on a strong positive note ahead of the much-awaited US CPI inflation figures, building on its rebound from a five-month low of 146.52 to a weekly high of 148.59.

There is hope for further gains as both the RSI and stochastic oscillator are pivoting from oversold levels, signaling that recent selling pressures may have been excessive.

However, the pair remains trapped within a bearish channel, suggesting that any bullish attempts might be short-lived and limited below the 149.55-150.00 resistance zone. The bearish outlook is further reinforced by the death cross created between the 50- and 200-day exponential moving averages (EMAs), limiting the potential for a trend reversal.

If the rally manages to break above the 150.00 level, the next key resistance could emerge within the 151.25-151.70 zone, where the 23.6% Fibonacci retracement of the 2025 downfall and the 50- and 200-day EMAs are currently positioned. A sustained push higher could pave the way for a test of 152.70, aligning with the 50% Fibonacci mark, followed by a potential surge toward the 154.40 ceiling.

In the event the bears retake control, the focus could shift back to the 147.00-147.55 support region. A deeper decline may challenge the lower boundary of the bearish channel near 146.00, with further losses likely targeting the constraining zone of 144.77.

Overall, while USDJPY is showing signs of a bullish revival, this recovery may still be a temporary correction within the broader 2025 downtrend.

Gold price is held in a narrow range on Wednesday morning and pressuring near-term congestion ceiling ($2930).

Near term bias is expected to remain with bulls while the action stays above psychological $2900 level, although daily indicators are mixed (negative momentum / MA’s in bullish setup).

Markets await release of US Feb inflation report (2.9% f/c vs 3.0% in Jan) for more signals to the central bank about the stance on monetary policy.

Another key factor that could strongly influence metal’s performance are US tariff policies, which were extended by the latest decision to impose 25% tariff on all imports of steel and aluminium to the US.

Escalation of trade war would further undermine global economy and negatively impact economic growth, as many developed economies struggle to speed up recovery or being in recession.

Economists also point out the growing risk of stronger slowdown of the US economy which would add to already fragile global economic situation, with heated geopolitical situation contributing to overall supportive environment for gold.

Initial support at $2900 is reinforced by 10DMA, followed by a higher base at $2880 and Fibo level at $2868 (23.6% of $2582/$$2956 upleg).

Res: 2930; 2942; 2956; 2985.
Sup: 2908; 2900; 2891; 2880.

The Canadian dollar posted gains earlier but couldn’t consolidate. In the European session, USD/CAD is trading at 1.4439, up 0.03% on the day.

Bank of Canada likely to cut by 25 bps

It’s decision day at the Bank of Canada, which is widely expected to lower rates by 25 basis points. This would lower the cash rate to 2.75%, its lowest level since July 2022. The BoC has been aggressive and has lowered rates at five straight meetings, chopping 200 basis points during that time.

The economy remains weak despite the sharp drop in interest rates and the central bank plans to continue lowering rates in order to boost economic growth. The BoC finds itself in a difficult position as far as rate policy. The labor market is showing weakness, with almost no job growth in February, while at the same time inflation remains sticky, above the BoC’s 2% target. Throw into the mix the Trump administration’s tariffs on Canada, and the situation has become fluid. The specter of a long trade war between Canada and the US would be disastrous for Canada and has complicated matters for the BoC.

US inflation expected to tick lower

In the US, inflation has been contained but remains above the Federal Reserve’s target of 2%. Headline CPI for February is expected to ease to 0.3% m/m, down from 0.5% in January, and down to 2.9% y/y from 3.0%. The core rate is projected to drop to 0.3% m/m from 0.4% and to 3.2% from 3.3%.

If the CPI estimates prove to be on target, it would point to little movement in inflation and investors may feel relieved that Trump’s tariffs policies have not yet raised inflation. The Federal Reserve is widely expected to hold rates at next week’s meeting but it’s unclear what happens after that, with the chances of a May cut at around 50/50.

USD/CAD Technical

• USD/CAD is testing resistance at 1.4445. Above, there is resistance at 1.4511
• 1.4370 and 1.4304 are the next support levels

Market picture

The cryptocurrency market bounced 2% in the last 24 hours to $2.67 trillion. So far, the situation looks like a small rebound after the collapse. We should not talk about the beginning of recovery as long as the market is below its 200-day moving average of $2.83 trillion.

Sentiment in the crypto market has shifted from extreme fear to fear at 34. The indicator was last higher more than three weeks ago, indicating that now is a good time to buy. However, it’s worth paying attention to the nervous stock market before considering investments in more volatile cryptocurrencies.

Bitcoin was climbing above $83,000 on Tuesday, hitting resistance in the form of the 200-day moving average. If a long-term trend line is repurposed as resistance, that’s a worrisome bearish fact.

Ethereum ended Tuesday with growth and was trading near $1900 at the start of Wednesday, but this is a timid rebound within the steep peak the coin has been in since February 24th and the broader downtrend of the past three months.

News background

CryptoQuant states a sharp drop in open interest in Bitcoin and Ethereum futures, suggesting a ‘leverage washout’ and a chance of market stabilisation. The Kobeissi Letter admits a wave of short position unwinding in risk assets after extreme fear levels are reached.

Clearstream, the post-trading arm of Deutsche Börse, will offer cryptocurrency settlement and custody services to institutional clients as early as next month, starting with Bitcoin and Ethereum. It then plans to add support for other cryptocurrencies and services for staking, lending and brokerage.

Glassnode notes that Solana fell below its realised price of $134 for the first time in three years. The metrics show the average cost for investors to purchase the coin.

According to Arkham Intelligence, on 11 March, bankrupt exchange Mt. Gox transferred 11,501 BTC (~$905 million) to an unknown address. Mt. Gox-related addresses hold a total of 35,915 BTC worth $2.89bn.