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Daily Pivots: (S1) 159.17; (P) 159.82; (R1) 160.39; More...

Intraday bias in USD/JPY remains neutral for the moment. On the downside, sustained break of 55 4H EMA (now at 159.27) should confirm short term topping at 160.45, on bearish divergence condition in 4H MACD. Deeper fall should then be seen to 157.49 support to correct the rally from 152.25. Nevertheless, strong rebound from current level, followed by 160.45, will target 161.94 high.

In the bigger picture, outlook is unchanged that corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. This will remain the favored case as long as 55 W EMA (now at 152.97) holds. Firm break of 161.94 will pave the way to 61.8% projection of 102.58 to 161.94 from 139.87 at 176.75.

Daily Pivots: (S1) 0.7969; (P) 0.7991; (R1) 0.8019; More….

With 0.7951 minor support intact, intraday bias in USD/CHF stays mildly on the upside despite some loss of momentum. Current rally from 0.7603 should target 38.2% retracement of 0.9200 to 0.7603 at 0.8213. On the downside, below 0.7951 minor support will turn intraday bias neutral first. But further rally is expected as long as 0.7833 support holds, in case of retreat.

In the bigger picture, a medium term bottom should be in place at 0.7603 on bullish convergence condition in D MACD. Rebound from there is seen as correcting the fall from 0.9200 only. However, decisive break of 55 W EMA (now at 0.8088) will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high). On the other hand, rejection by the 55 W EMA will setup down trend resumption to 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382 at a later stage.

Global markets are frozen as traders grapple with conflicting interpretations of U.S. President Donald Trump’s latest post on the Iran war, leaving oil prices rangebound near 110 and broader price action lacking conviction. The message introduces competing scenarios with sharply different implications for supply, creating pricing paralysis across assets. While European recovered along with US futures, there was not clear momentum for a genuine reversal. Dollar's retreat today looked more like a consolidation than a turnaround.

In the post, Trump declared that Iran has been “essentially decimated” and that “the hard part is done,” while telling allies to “go to the Strait, and just TAKE IT” and warning that “the U.S.A. won’t be there to help you anymore.” The language suggests a redefinition of success, where achieving military objectives no longer requires reopening the Strait of Hormuz.

One interpretation is that this signals a shift toward containment. Under this view, the U.S. is preparing to step back even if no deal is reached by April 6, leaving affected countries to manage the reopening of shipping lanes. This aligns with earlier reporting of an exit strategy and would likely place a ceiling on oil prices, with Brent potentially easing toward 100 as risks stabilize rather than escalate.

However, an opposing scenario remains equally plausible. Trump’s comments can also be read as insulating the U.S. from the consequences of further escalation. By telling allies to “go get your own oil,” Washington creates political cover if massive infrastructure strikes on Iran proceed and the Strait remains closed. In this case, supply disruptions would intensify sharply, pushing oil prices significantly higher.

A third risk lies in inaction. If the April 6 deadline passes without either a deal or escalation, the “Maximum Pressure” strategy risks losing credibility, weakening U.S. leverage in upcoming negotiations, including the U.S.-China summit in particular. At the same time, Iran’s move toward selective access to the Strait raises the prospect of a structural bottleneck in global energy flows.

These competing scenarios—containment, escalation, or policy erosion—are leaving markets unable to form a dominant narrative. Oil’s tight range around 110 reflects a balance between downside caps and upside risks, while equities and gold show similarly subdued, directionless moves.

In currency markets, Dollar is easing mildly but the move lacks follow-through, consistent with consolidation rather than reversal. Elevated energy prices and inflation risks continue to provide an underlying bid, even as near-term momentum softens.

Euro is holding steady following March CPI data, where headline inflation rose to 2.5% while core inflation edged lower. The divergence complicates the ECB’s outlook, with an April rate hike still likely but not certain. Much will depend on how persistent energy costs prove and how quickly they feed into core inflation.

Yen failed to extend gains despite recent intervention rhetoric, as USD/JPY is no longer pressing the 160 threshold. Without that trigger, demand for Yen has faded. For the week so far, Yen remains the strongest performer, followed by Aussie and Dollar, while Kiwi lags, reflecting a market driven more by positioning than conviction.

In Europe, at the time of writing, FTSE is up 1.01%. DAX is up 1.03%. CAC is up 0.82%. UK 10-year yield is down -0.049 at 4.829. Germany 10-year yield is down -0.024 at 3.011. Earlier in Asia, Nikkei fell -1.58%. Hong Kong HSI rose 0.15%. China Shanghai SSE fell -0.80%. Singapore Strait Times fell -0.24%. Japan 10-year JGB yield closed flat at 2.359.

Silver Price Gains “Oxygen” from Yield Pullback; Break Above 74.52 to Confirm Momentum

Silver price rebounded as US yields pulled back from the 4.5% level and Powell’s comments eased expectations for further Fed tightening. The move has provided “oxygen” for metals, but a break above 74.52 is needed to confirm upside momentum. Further gains depend on sustained yield weakness or easing geopolitical risks. Read More.

Canada GDP Edges Higher as Resource Sector Offsets Manufacturing Weakness

Canada’s economy grew 0.1% in January, supported by strength in resource sectors despite weakness in manufacturing. Services activity was broadly flat, highlighting uneven momentum. Early estimates suggest a stronger 0.2% expansion in February, pointing to modest but ongoing growth. Read More.

Eurozone CPI Jumps to 2.5% as Energy Drives Rebound, Core Inflation Eases Slightly

Eurozone CPI jumped as energy inflation rebounded sharply, but cooling core prices suggest underlying pressures remain contained. The ECB now faces a more complex policy trade-off. Read More.

RBA Minutes Highlight Excess Demand and Oil Shock as Case for Further Tightening

RBA raised rates to 4.10% in a split 5–4 decision, with minutes showing growing concern over oil-driven inflation risks. The Board signaled more tightening may be needed, despite uncertainty around growth and the Middle East conflict. Read More.

China PMIs Return to Expansion as Output and Orders Rebound, but Cost Pressures Surge

China’s Manufacturing PMI rose to 50.4 in March, signaling a return to expansion as production and new orders improved. However, input costs surged sharply, while output prices lagged, pointing to growing margin pressure. Non-manufacturing activity also edged back into expansion. Read More.

NZ ANZ Business Confidence Tumbles to 32.5 as Cost Pressures Surge to Highest Since 2023

New Zealand business confidence tumbled in March as cost pressures surged to the highest since 2023, with more firms expecting to raise prices. Inflation expectations also climbed while activity outlook weakened, pointing to a growing stagflation risk. Read More.

Japan Tokyo CPI Core Weakens to 1.7% as Energy Subsidies Drag Inflation Lower

Tokyo CPI slowed to 1.7% in March, marking a second month below the BoJ’s 2% target as energy subsidies continued to suppress prices. However, the sharp slowdown in gasoline declines points to rising oil pressures beginning to offset policy support. The data highlight a fragile balance between near-term disinflation and emerging upside risks. Read More.

Japan Factory Output Contracts as Auto Weakness Weighs, Outlook Remains Uncertain

Japan industrial production fell -2.1% in February after a 4.3% rise in January, with weakness across most sectors led by autos. Retail sales also disappointed, pointing to soft demand, while unemployment edged lower to 2.6%. The data highlight a mixed outlook with fragile growth but stable labor conditions. Read More.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.7969; (P) 0.7991; (R1) 0.8019; More….

With 0.7951 minor support intact, intraday bias in USD/CHF stays mildly on the upside despite some loss of momentum. Current rally from 0.7603 should target 38.2% retracement of 0.9200 to 0.7603 at 0.8213. On the downside, below 0.7951 minor support will turn intraday bias neutral first. But further rally is expected as long as 0.7833 support holds, in case of retreat.

In the bigger picture, a medium term bottom should be in place at 0.7603 on bullish convergence condition in D MACD. Rebound from there is seen as correcting the fall from 0.9200 only. However, decisive break of 55 W EMA (now at 0.8088) will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high). On the other hand, rejection by the 55 W EMA will setup down trend resumption to 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382 at a later stage.

Canada’s economy expanded by 0.1% mom in January, beating expectations of a flat reading, as strength in resource-related sectors helped offset ongoing weakness in manufacturing.

Goods-producing industries rose 0.2% mom for a second consecutive month, supported by gains in mining, quarrying, and oil and gas extraction, alongside construction and utilities. These gains more than compensated for a contraction in manufacturing.

Services activity, however, showed little momentum. While retail trade and finance and insurance posted increases, these were offset by declines in wholesale trade and transportation and warehousing, leaving the sector broadly unchanged.

Overall, 9 of 20 industries recorded growth, reflecting a mixed but slightly positive economic backdrop.

Looking ahead, advance estimates suggest GDP rose a further 0.2% mom in February, indicating that growth is continuing, albeit unevenly across sectors.

Full Canada's GDP release here.

• Expectations of ECB hikes are not helping the EURUSD.
• Iran holds the reins of the conflict in the Middle East.

The US dollar ends March with its best monthly performance since September 2022, whilst the euro ends with its worst quarterly performance since 2024. This divergence has been driven by investor concerns about the global economy. The conflict in the Middle East has pushed Brent above $105 per barrel. The supply shock is heightening the risks of a slowdown in global GDP and putting pressure on currencies sensitive to falling export demand.

The divergence in monetary policy is not helping the EURUSD. Before the conflict in the Middle East, the chances of an ECB rate cut in 2026 stood at 35%, and the Fed’s at 96%. However, a month on, the futures market expects three rounds of monetary tightening from the European Central Bank, and a 74% probability that the Fed will keep the federal funds rate at its current level.

Alas, monetary policy operates with a lag and cannot counter energy disruptions in real time. This is the view of Jerome Powell. He and his FOMC colleague, New York Fed President John Williams, believe the best course is to keep rates at current levels.

Meanwhile, according to Société Générale, Brent risks rising to $150 per barrel in April, with an average price of $125. A closure of the Bab al-Mandab Strait by the Houthis could push prices higher. Saudi Arabia has managed to bypass the Strait of Hormuz and deliver 6 million BPD via alternative routes. However, new difficulties will automatically force Riyadh to cut production.

Amid escalating geopolitical tensions, risks to energy infrastructure and supply routes are driving concerns over a potential surge in oil prices and a broader economic slowdown. The situation remains fluid, leaving policymakers with difficult strategic choices. Market-based indicators suggest a rising probability of further escalation.

Meanwhile, gold is attempting a counter-offensive amid falling US Treasury bond yields. Treasury yields are falling due to a shift in investor sentiment. Whereas stagflation previously frightened them, markets are now discussing the likelihood of a US economic downturn.

Market Overview

The crypto market remains stable, having risen slightly over the past 24 hours, and market capitalisation has reached $2.33 trillion, rebounding from an intraday low of $2.28 trillion. The overall trend mirrors that of stock indices.

The cryptocurrency market sentiment index remains in the extreme fear zone at 11 points, up 3 points from the day before. Over the past two months, the figure has risen above 25 only twice, and the average for the period barely exceeds 12 — a record low and the longest sustained level in the indicator’s history.

Bitcoin is trading at $67,700, up around 1% since the start of the day, though it remains below the 50-day moving average. At the same time, BTC is forming another bounce off the upward support line running through the lows of the last two months.

News Background

According to CoinShares, global investment in crypto funds fell by $414 million last week — the first decline since late February. The outflow affected leading assets: investments in Bitcoin fell by $194 million, in Ethereum by $222 million, and in Solana by $12 million. The exception was XRP, which attracted $16 million.

CoinShares analysts attribute the first outflow in five weeks to the escalation of the geopolitical situation surrounding Iran and concerns regarding rising inflation. Notably, market expectations regarding the Fed rate for June have shifted from a cut to a hike.

Over the longer term, the picture is mixed. Finality Capital anticipates a multi-stage market reset, which will ultimately form a sustainable bull cycle. Bitcoin Vector co-founder Willy Wu, based on on-chain models, has identified a potential bottom for Bitcoin in the $46,000–$54,000 range. Analyst Darkfost notes that over 40% of altcoins have come close to or broken their all-time lows — a figure exceeding the peak of the previous bear market (38%).

On the regulatory front, the ECB has highlighted the high concentration of control within the DeFi sector, noting that this simplifies the supervision of market participants. Meanwhile, despite unrealised losses of $7.5 billion, BitMine has purchased an additional 71,179 ETH for $147 million, bringing its reserves to 4.73 million ETH (3.92% of the supply).

GBP/USD is attempting to recover on Tuesday following earlier declines, bouncing from 1.3198 after five consecutive sessions of selling. Sterling remains under pressure as investors assess the impact of the Iran conflict on the British economy.

Despite this, since the beginning of March, the pound has remained one of the most stable currencies against the dollar.

However, sterling remains vulnerable. Britain's high reliance on gas imports, persistently high inflation, and pressure on public finances are heightening risks. The yield on 10-year government bonds is holding around 4.98%, near highs not seen since 2008, following recent increases.

Additional attention is focused on the debt market: after the government bond sale, some pension funds were required to increase collateral to hedge positions, although the scale remains far from the 2022 crisis levels.

Macroeconomic data also point to a slowing economy. Business activity is growing at its slowest pace in six months, producer costs are accelerating, and retail sales are declining.
The Bank of England is likely to remain cautious about changing rates – this remains the prevailing expectation.

Technical Analysis

On the H4 GBP/USD chart, the market is forming a broad consolidation range around 1.3297, currently extending up to 1.3434. A decline to 1.3156 is likely in the near term, followed by the formation of a new consolidation range. An upside breakout would open the way for a continuation move to 1.3300, while a downside breakout would suggest further movement to 1.3100. Technically, this scenario is confirmed by the MACD indicator, whose signal line is below zero and pointing downwards.

On the H1 chart, the market has formed a compact consolidation range around 1.3322. A downside breakout has initiated a wave structure extending to 1.3100. Should this level be breached, further downside potential towards 1.3050 would emerge. Conversely, an upside breakout from the range could trigger a rebound towards 1.3300. Technically, this scenario is confirmed by the Stochastic oscillator, with its signal line below 50 and pointing downwards.

Conclusion

GBP/USD is attempting to stabilise after five consecutive days of selling, though the broader outlook remains fragile. While sterling has shown relative resilience compared to other currencies since March, mounting headwinds – including the UK's energy import dependence, stubborn inflation, debt market pressures, and slowing economic activity – continue to weigh on the pound. The Bank of England's cautious stance offers little immediate support, and technical indicators point to further downside potential. A recovery pause may materialise, but sustained upside appears unlikely without a tangible shift in either geopolitical tensions or domestic economic data.

Silver price strengthened notably as a sharp pullback in US Treasury yields provided fresh support for precious metals, with markets reassessing Federal Reserve policy outlook following yesterday's comments from Chair Jerome Powell. The decline in yields, alongside softer rate expectations, has eased pressure on non-yielding assets, giving Silver the “oxygen” to rebound and push toward key resistance at 74.52.

The move in yields has been decisive. US 10-year yield spiked to as high as 4.484 last Friday, but faced strong rejection at the 4.500 psychological level before falling back below 4.35 yesterday. This shift reflects a reassessment of the Fed’s reaction function, particularly after Powell maintained “strategic ambiguity” while signaling that policymakers may “look through” supply-driven inflation shocks such as the recent surge in oil prices.

By effectively decoupling energy-driven inflation from immediate rate hike expectations, Powell’s comments lowered the perceived “hawkish floor” for policy. This reinforced the view that the Fed would prefer to avoid further tightening if conditions allow. The result has been a supportive backdrop for Silver’s recovery from recent lows.

Technically, further rise is in favor in Silver as long as 66.70 support holds. Firm break of 74.52 will add to the case that whole corrective fall from 121.83 has completed with three waves down to 60.97, after drawing support from 60 psychological level. That would pave the way to 55 D EMA (now at 78.33) to confirm this bullish case.

However, the bullish case remains conditional. Sustained gains in Silver are likely to depend on a continued pullback in yields or a clearer de-escalation in the Iran War risks. Without these drivers, the rebound may struggle to extend beyond resistance, leaving the current move vulnerable to renewed volatility.

Eurozone inflation accelerated sharply in March, with headline CPI rising from 1.9% yoy to 2.5% yoy, matching expectations and marking the highest level since January 2025. The jump was driven primarily by a reversal in energy prices, which surged from -3.1% yoy to 4.9% yoy, reflecting the impact of rising oil costs linked to ongoing Iran War.

However, underlying inflation showed signs of moderation. Core CPI, which excludes energy, food, alcohol, and tobacco, edged down from 2.4% yoy to 2.3% yoy, below expectation of 2.4% yoy. This suggests that while headline inflation is being pushed higher by external factors, broader price pressures within the economy are not accelerating at the same pace.

Across components, services inflation eased slightly from 3.4% yoy to 3.2% yoy. Food, alcohol and tobacco slowed from 2.5% yoy to 2.4% yoy. Non-energy industrial goods declined from 0.7% yoy to 0.5% yoy.

Full Eurozone CPI flash release here.

• Consistent with guidance given by Governor Breman in a recent speech, we expect the RBNZ to hold the OCR at 2.25% at the 8 April review.
• Barring major developments over coming days in the Middle East, the associated commentary – which will include a post-meeting press conference – will likely closely mirror Governor Breman’s recent speech.
• We expect the Bank to emphasise that it will not react to the first-round impact of higher energy prices on near-term inflation but that it will respond should there be evidence of second‑round effects that might create persistent inflation.
• While the post-meeting statement will present the consensus view of the MPC, the Record of Meeting will likely reflect a diversity of views about the likelihood of second-round persistent inflation and thus the appropriate policy stance.
• The Bank is not scheduled to present revised economic projections at this meeting. However, it is possible that the RBNZ will provide some guidance of the likely magnitude of the upward revision to near-term inflation and downward revision to GDP growth that might be considered in May.
• We think the Bank will aim to balance a desire to avoid a further tightening of financial conditions with the desire to not sound complacent about the medium-term inflation risks that come with an energy price shock.

The RBNZ will announce the outcome of the next Monetary Policy Review (MPR) at 2pm NZT on 8 April. In addition to the usual release of a post-meeting statement and the Record of Meeting, this meeting is notable as it will feature the first post-meeting press conference at a MPR meeting – a welcome innovation introduced as part of Governor Breman’s drive for greater transparency.

In the absence over coming days of major developments in the Middle East, we think that the Bank’s communication at this meeting is likely to closely mirror the speech given by Breman on 25 March – a speech that had received input from the Bank’s Monetary Policy Committee (MPC), albeit it not necessarily representing every member’s view. And so, with the Bank already indicating that it will not respond in a knee-jerk manner to a near-term oil-driven lift in inflation, the OCR is almost certain to be held at 2.25% next week, as would have been the case in the absence of the oil shock.

The RBNZ’s guidance about what to expect at future meetings will also likely echo the Governor speech. In crafting this guidance, the MPC will aim to reassure markets that it will not overreact to the shock, which could cause markets to further tighten financial conditions. At the same time, the RBNZ will need to ensure it sounds credible to households and businesses about its willingness to tighten policy if inflation expectations and pricing behaviour evolve in a manner inconsistent with achieving the inflation target over the medium-term. While monetary policy should look through a temporary spike in energy prices, the MPC will need to be vigilant – and be seen to be vigilant – against the risk that inflation becomes persistent.

The magnitude of that risk will depend in part on the duration of the conflict, with a more protracted conflict likely to lead to greater damage to energy infrastructure and enduring damage to supply chains, prolonging the inflation shock. It will also depend on the state of the domestic economy. As the Governor noted in her speech, while the recovery may be broadening, it is still early – as demonstrated by the disappointing Q4 GDP outcome – and the economy is operating well below capacity. In this context, many businesses may struggle to fully pass on cost increases without losing demand – a dynamic that should delay or limit second‑round inflation effects stemming from the rise in oil prices.

While the post-meeting statement and the Governor’s press conference will largely represent the consensus view of the Committee, the Record of Meeting will likely reveal a diversity of views. Key areas where the views of the Committee could diverge include the likely duration of the conflict, the impact on the economy, the likelihood of second-round effects driving persistent inflation over the medium-term, and the appropriate course for monetary policy over time. Such discussions might provide some insight into how the consensus view of the MPC might evolve as more is learnt about the evolution of the conflict and its economic impact.

The RBNZ is unlikely to provide a full update of its economic projections next week – that will likely come as usual when it releases the next Monetary Policy Statement (MPS) in May. That update will include reaction to pre-conflict data, such as the slightly disappointing Q4 GDP report. It will also allow reflect reaction to the first reports showing how the global and domestic economies have responded to the oil shock (so far there has been some evidence of softer PMI readings offshore, together with a marked drop in consumer confidence in New Zealand). Developments in financial conditions, including the exchange rate, will also factor into those revisions.

But we don’t rule out the possibility that next week the RBNZ could provide some preliminary quantification of how the conflict has impacted the near-term outlook for inflation and GDP growth that was presented in the February MPS (such as where inflation may peak and how much growth might be impacted this year). Such estimates could be refined in May based on developments in the Middle East and with the benefit of early economic data and further anecdotes quantifying the impact on New Zealand consumer and business behaviour. In our own recent forecast update, we upgraded our outlook for CPI inflation (now expected to peak at 4.1%y/y this year) and downgraded our forecasts for economic growth (now expected to be 1.9%y/y this year, down from a pre-war forecast of 3.3%y/y).

In its communications on 8 April, the RBNZ will balance a desire to avoid a further tightening of financial conditions with the desire to not sound complacent about the medium-term inflation risks that come with an energy price shock. Reinforcement of the approach communicated in Breman’s speech guidance should continue to lean against the market’s current pricing of more than three 25bp OCR hikes by the end of this year, especially once current liquidity issues in the domestic market ease. As we discussed in our own forecast update, we continue to forecast just one 25bp hike this year, but also that significant tightening will occur in 2027 once the activity implications of the energy shock begin to dissipate.

Kelly’s take.

No change is very appropriate for now. This supply shock is extremely unwelcome and will likely significantly boost headline inflation for a while. But at least for now the large, accumulated level of excess capacity likely means the risk of entrenched inflation remains modest.

The MPC has time to assess how the outlook will evolve. We don’t know how far and for how long inflation will remain elevated. Forecasts are necessarily uncertain if only because the duration of the war and restriction of oil supplies remain uncertain.

We can’t assume inflation will automatically revert to more normal levels, but we also can’t assume it won’t. We should be alert to the possibility of financial stability issues globally that could see financial conditions tighten. That’s another reason for not putting maximum weight on forecasts that suggest risks of inflation remaining elevated for a long time. The market might do some of the job for us. And there might be bigger fish to fry.

If inflation rises for a protracted period, then it won’t be appropriate to have interest rates in the 2’s or even the low 3’s as real interest rates will be too low. But there’s time to assess and plenty of scope to move quickly once it’s determined that real interest rates closer to more neutral settings are appropriate. I’d want to see a lot more data before coming to that judgement.