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Market picture

The crypto market remains in a downtrend. Its cap rose 0.2% over the past 24 hours to $2.72 trillion and generally remains in a very tight range with a short-term ceiling of $2.75 trillion. Just over a month ago, similar local resistance was half a trillion higher.
The crypto market remains in a downtrend, with resistance lowered to $2.75 trln from $3.25 trln

While almost all altcoins combined have been broadly stable at 30% market share since July 2023, Ethereum has been giving away its share since July 2024, falling to 8%, a five-year low. BTC’s share has been growing for more than two years, reaching 60.7%. Interest from institutional traders and governments has so far not extended beyond the first cryptocurrency, which they see as a strategic reserve asset rather than the practicality offered by altcoins, including ETH.

Bitcoin reversed to the downside again on Tuesday, touching its 200-day average. Nevertheless, it gained around 2% from the start of the day to $83.3K on Wednesday. Ultimately, it is worth paying closer attention to the dynamics of the crypto market after the Fed’s comments, as this could be the start of a longer trend.

News Background

Standard Chartered downgraded its 2025 Ethereum forecast from $10,000 to $4,000. One of the reasons is the growing influence of L2 solutions, especially the Base platform. The changes made to Ethereum in recent years, “while perhaps necessary, have damaged its value”.

The US Securities and Exchange Commission is set to relax storage requirements for crypto assets. Current SEC commissioner Mark Uyeda has ordered a review of a proposal to tighten storage rules for cryptocurrencies.

The GMCI Meme Coin Index, tracked by The Block, is down 90% from its peak in December, indicating a cooling of interest in this type of risky asset.

USDJPY attacked again pivotal 150 barrier (psychological / bear-channel upper boundary / 30 DMA) in early Wednesday, offsetting initial negative signal from Tuesday’ bearish inverted hammer that was formed after strong upside rejection just under 150 zone.

Yen was deflated by BoJ’s decision to keep interest rates unchanged at 0.5%, as policymakers responded to growing uncertainty over negative impacts from tariffs but also highlighted increased risk that trade war escalation may fuel inflation.

Mixed daily studies add to warning signals about possible stall of recovery leg from 148.53 (Mar 11 low) which was sparked by a double bear trap under 146.95 Fibo support.

Another failure at 150 pivot would increase downside risk, though near-term bias would remain with bulls as long as the price holds above 20DMA (148.86).

Firm break of 150 barrier to spark stronger acceleration higher and expose targets at 151.30/88 (Mar 3 lower top /200DMA).

Conversely, loss of 20DMA handle would weaken near term structure and generate initial signal that corrective phase might be over.

Res: 150.00; 150.73; 151.00; 151.30.
Sup: 149.14; 148.86; 148.35; 147.73.

The Japanese yen continues to lose ground against the US dollar. In the European session, USD/JPY is trading at 149.74, up 0.32% on the day. Earlier, the yen reached the symbolic 150 level for the first time in two weeks.

BoJ notes concern about US trade policy

There were no surprises from the Bank of Japan, which maintained rates at 0.50%. The decision was widely expected and the yen has posted modest losses today. The Bank's rate statement noted that "inflation expectations have risen moderately ", an acknowledgement of upwards pressure on inflation.

Governor Kazuo Ueda said at his press conference that "wage and price conditions are on track, possibly stronger than expected". However, Ueda added that the US and global outlook were "uncertain" and the Bank would determine its rate path based on upcoming data.

The BoJ has stressed that it will continue to hike rates if it sees that inflation is kept sustainable by rising wages. The BoJ wanted to see strong wage gains at the recent wage negotiations and should be pleased that large employers are offering wage hikes of around 5%.

Governor Ueda also expressed concern about US trade policy, saying "it is hard to qualify the risk" of US tariffs on Japan economic and inflation outlook. The US hasn't slapped tariffs on Japan but the country relies heavily on its export sector and Japanese manufacturers reported a decrease in confidence in March.

Fed expected to hold rates

The Federal Reserve meets later today and is virtually certain to maintain the benchmark rates at 4.25%-4.5%. The economic outlook has darkened recently, with the stock market selloff and an escalating trade war. The markets have priced in another hold at the May meeting at 83%, up from 56% in early March, according to CME FedWatch.

Eurozone headline CPI was finalized at 2.3% yoy in February, down from 2.5% yoy in January. Core CPI , which excludes energy, food, alcohol, and tobacco, eased slightly to 2.6% yoy from 2.7% yoy.

The largest driver of Eurozone inflation was services, contributing +1.66 percentage points, followed by food, alcohol, and tobacco (+0.52 pp). Non-energy industrial goods and energy made smaller contributions, with energy adding just +0.01 pps.

In the broader EU, inflation was finalized at 2.7% yoy, down from 2.8% yoy in January. Inflation disparities across member states remain stark, with France (0.9%), Ireland (1.4%), and Finland (1.5%) registering the lowest rates, while Hungary (5.7%), Romania (5.2%), and Estonia (5.1%) recorded the highest. Compared to January, inflation declined in 14 member states, remained unchanged in six, and increased in seven.

Full Eurozone CPI final release here.

The USD/JPY pair surged to 149.58 on Wednesday, marking its fourth consecutive day of gains as the Japanese yen extended its decline. The Bank of Japan's (BoJ) latest policy decision failed to inspire confidence, leaving investors underwhelmed and further weakening the yen.

Key factors driving USD/JPY movement

As expected, the Bank of Japan maintained its benchmark interest rate at 0.5% while reiterating its forecast that the Japanese economy will grow above its potential level. However, the central bank also acknowledged emerging signs of economic fragility, adopting a cautious tone in its outlook. Policymakers emphasised the need to gather and analyse more data before making significant moves, particularly in light of global economic risks.

A key concern is the potential impact of US tariff hikes, which could weigh heavily on Japan's export-driven economy. Investors are now closely monitoring comments from BoJ Governor Kazuo Ueda for further insights into the central bank's strategy and future policy direction.

Recent data has painted a mixed picture of Japan's economic health. The monthly Reuters Tankan survey revealed growing pessimism among Japanese manufacturers in March, citing concerns over US trade policies and China's slowing economy. On a brighter note, Japan's trade balance shifted to a surplus in February, driven by robust export growth. However, this improvement has done little to strengthen the yen amid broader market concerns.

Technical analysis of USD/JPY

On the H4 chart, USD/JPY is forming a bullish wave structure, targeting 150.20. Upon reaching this level, a corrective pullback to 149.20 is possible, likely establishing a consolidation range near the current highs. A breakout above this range could signal further upward momentum, with the next target at 151.80. This scenario is supported by the MACD indicator, with its signal line remaining above zero and trending upwards.

The H1 chart shows USD/JPY developing a growth wave toward 150.20, representing the midpoint of the third wave in the current structure. A consolidation range is expected to form around 149.62, with an upward breakout potentially opening the path to 151.80. The Stochastic oscillator corroborates this outlook, with its signal line above 50 pointing upward.

Conclusion

The Japanese yen's decline reflects market disappointment with the Bank of Japan's cautious stance and lack of decisive action. While Japan's trade balance has shown improvement, concerns over global economic risks and domestic manufacturing sentiment continue to weigh on the currency. From a technical perspective, USD/JPY remains in a bullish trend, with key resistance levels at 150.20 and 151.80. Traders should monitor BoJ Governor Ueda's statements and upcoming economic data for further clues on the yen's trajectory.

Just five days ago, we noted that gold was approaching the $3,000 level and suggested that a breakout could occur this month.

Yesterday, as shown on the XAU/USD chart, the spot price of gold rose above the psychological $3,000 mark for the first time ever. The new all-time high now stands at around $3,045.

Why Is Gold Rising?

Bullish sentiment is being driven by traders positioning themselves ahead of a key event—the Federal Reserve’s interest rate decision, set to be announced today. According to ForexFactory, analysts expect rates to remain unchanged at 4.5%, but surprises cannot be ruled out.

Additionally, gold is becoming more attractive as a safe-haven asset. As reported by Reuters:

→ Tensions in the Middle East are escalating—Israel warns of further casualties, as airstrikes in Gaza have already resulted in over 400 deaths.

→ Gold is gaining amid uncertainty over US tariffs.

Technical Analysis of XAU/USD Chart

In the short term, gold’s price action has formed movements that outline an ascending channel (marked in blue), with key developments including:

→ A breakout (as shown by the arrow) above not only the psychological $3,000 level but also the upper boundary of the channel.

→ A prior consolidation zone formed between $3,000 and $2,980.

It seems the bulls were looking for confirmation and confidence before attempting to break through resistance. The fact that they succeeded suggests this resistance zone may now act as support, making a retest of $3,000 possible.

However, the future direction of gold prices will largely depend on the news backdrop. Brace for volatility—the Fed's interest rate decision will be released today at 21:00 GMT+3, followed by a press conference by Chair Jerome Powell at 21:30 GMT+3.

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The US dollar weakened slightly yesterday despite lower stocks, which remain in consolidation ahead of the key Fed decision—or more importantly, the press conference—where we may get more clarity on whether policy will become even more dovish. This is especially relevant given the sharp stock market drop in last few weeks amid uncertainty over Trump’s tariffs. If Powell sounds dovish, stocks could stabilize, US yields could ease, and the dollar could face even more downside pressure, as it is already in a strong impulsive sell-off.

Looking at the dollar index on the hourly time frame, the market only retested the previous lows around 103.25 and is now attempting to break out of the downward channel. This suggests that we could still be in a higher-degree, complex wave four consolidation, as discussed yesterday. If so, there is still a chance for a retest of the 104.10 to 104.30 resistance area. Above that, the key level to watch is 104.80, where wave four would equal wave two in length.

I'm still watching EURUSD for potential longs, but it's best to be patient and wait for the Fed decision first. After the event, we may get clearer opportunities to enter.

Markets

Core bonds gained slightly yesterday with US Treasuries marginally outperforming Bunds. German yields eased 1.3 bps at the front while remaining flat at the long end of the curve. The outgoing parliament greenlighted a historical debt plan that paves the way for hundreds of billions of investments in defense and infrastructure. Its approval triggered a minor profit-taking (short-covering) move in Bunds without technical implications. US rates fell between 0.4 and 1.8 bps in volatile trading and ahead of the Fed meeting today with a decent 20-yr bond auction adding to momentum. EUR/USD gained ground to 1.0945, despite a poor US risk sentiment. The common currency brushed off kneejerk weakness coming from Bloomberg reporting that Russian president wants all arms supplied to Ukraine to be halted as part of a truce. Upping the ante like this dented hopes for a quick win. Eventually though, the US and Russia during the highly anticipated talks agreed to a 30-day ceasefire strictly confined to energy infrastructure. That’s well short of the unconditional and general truce the US and Ukraine proposed. The US Middle East envoy Steve Witkoff after the meeting said talks with Russia will continue on Sunday in Saudi Arabia. Sterling traded stoic after hearing about the £5bn welfare spending cuts per year by 2030. The weakening economic outlook (and rising bond yields) force UK Chancellor Reeves into additional spending squeezes at next week’s Spring Statement.

The Japanese yen is among the weaker performers this morning against an overall stronger USD. It follows the Bank of Japan meeting earlier (cfr. infra). The central bank in the US takes center stage later today. The March meeting is accompanied with an updated dot plot and new inflation and growth forecasts. Data recently have added to a growing market narrative of stagflation, mostly in soft indicators (e.g. consumer confidence, NY manufacturing index). But hard economic data wasn’t so bad (services ISM, solid payrolls growth, IP, housing). That should prevent the Fed (and therefore the new projections) from getting carried away by the recent bearish (stock) sentiment, especially with uncertainty on the tariff narrative still this big. It’s not until April 2, when Trump’s reciprocal tariffs are to be announced, it’s worth making an analysis. In theory there’s little to push the Fed off the January track (extended pause) but the devil for US rates and the dollar could be in the details. Any touch of dovishness by Powell during the presser is likely to be picked up by markets. The downside in (front-end) US yields is nevertheless limited with the March correction low serving as solid support. At that time, markets were pricing around three cuts this year, deviating from the current (and probably new) dot plot. EUR/USD is catching a breather now, but we stick to the view of upside potential (1.12 in first instance).

News & Views

The Bank of Japan as expected left its policy rate unchanged at 0.5%. The domestic economy is continuing a gradual improving trend. Private consumption has been on a moderate increasing trend despite the impact of price rises and other factors, as is business fixed investment. Exports and industrial production have been more or less flat. CPI inflation (ex fresh food) has been in the range of 3.0-3.5% recently, amid rising services prices (wage increases) and a rollback of government energy measures. The BOJ expects the economy to keep growing above potential, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies. Underlying CPI inflation is likely to be at a level that is generally consistent with target. The BOJ earmarks the international developments regarding trade as an important risk to the outlook. Domestic developments suggest room to gradually normalize policy, but the BOJ creates space to adapt the timing to cope with international developments. The next BOJ policy decision is May 1. The 2-y bond yield this morning adds 2 bps (0.84%). The 10-y adds 1.2 bps (1.52%). The yen continues its recent correction with USD/JPY nearing the 150 barrier.

Fitch in a comment yesterday said that Hungary’s recently announced fiscal measures highlight the authorities’ balancing of policy priorities ahead of parliamentary elections in spring 2026. The rating agency thinks authorities will calibrate economic stimulus measures to avoid increasing financial market volatility, especially given the greater inflationary pressures at the start of this year. The government recently announced targeted fiscal measures of HUF 900bln over 2025/28 to support families. Fitch raised its deficit forecast to 4.5% of GDP in 2025 and 4% in 2026, from 4.2% and 3.7%, respectively. The revision reflects weaker macroeconomic conditions, higher inflation and government bond yields, and additional tax exemptions. Still Fitch doesn’t expect aggressive monetary easing or fiscal expansion on a scale similar to that ahead of 2022’s parliament election.

Nvidia yesterday revealed new products at the company’s annual GPI Technology Conference at San Jose. The CEO Jensen Huang showed off its new AI system Vera Rubin, called after nothing less than the astronomer who discovered the evidence of dark matter, and announced new partnerships with GM and Taco Bell. The new Vera Rubin, the next, next generation chip, is more than twice as fast as its predecessor Blackwell. GM will integrate Nvidia’s technology into its self-driving cars and will also benefit from their systems for improving the performance of its factories and robots, while Yum Brands is looking to boost its AI-powered drive-thru ordering. A year ago, investors would be popping champagnes on the news, but this time around, they just weren’t impressed. The stock price fell 3.43% yesterday.

Of course, it was not about Nvidia or the AI conviction, it was about the overall market mood that’s been souring due to a number of reasons including the tariff war, the high tech valuations, the rotation trade, the uncertain Federal Reserve (Fed) outlook and the ugly geopolitics. As such, the S&P500 reversed two-session gains and fell 1%, Nasdaq 100 lost 1.66% and the Dow Jones eased 0.62%. Facebook became the last of the Magnificent 7 stocks to give back all of its ytd gains. If Nvidia’s AI news couldn’t wet investors’ appetite, it means that the correction is poised to extend deeper. The S&P500 could shed additional 5-10% from the actual levels. For the short-term investors, there could be a tactical opportunity in the selloff, for the long-term investors, the periods of correction are not particularly enjoyable, but there has always been light at the end of the tunnel.

Jawohl!

Across the Atlantic Ocean, the spring winds are gently blowing across the markets. The Germans agreed to pass a bill that will allow the government to increase its spending without being laid back by the strict borrowing rules. Germany could borrow up to EUR 500bn in the context of a special, off-budget fund to finance infrastructure and defence needs. The other European nations will feel free do the same, of course. Rheinmetall jumped more than 5.5%, the BAE systems added more than 1%, The Select Stoxx 600 Europe Aerospace & Defence ETF – that includes these names among other defence names - gained another 1.46% and the Stoxx 600 was up by 0.61% in a continued contrast with the American peers’ morose performances. Cherry on top, the German 10-year yield eased as the government’s intention to boost spending was fully priced in, and the EURUSD traded above 1.0950. The traders are now shifting their focus to today’s Fed meeting to find out whether the Fed could, and will do something to reverse the negativeness among the US market investors.

What does the Fed think about it?

The Fed is expected to maintain its rates unchanged today. But the committee will update its dot plot, growth and inflation projections and will provide a hint regarding where the policymakers are planning to put pressure in the changing economic landscape. Is the Fed worried about a renewed uptick in inflation due to the government’s hectic tariff policies? Is it more worried about the negative impact of the wide-ranging White House policies on employment and growth? Is it worried about the stock market selloff?

What investors are explicitly wishing is to hear that Powell and the Fed are ready to step in in case the market selloff gets worse to ensure a minimum financial stability – a thing that it’s beautifully done in the past by lowering rates and buying bonds. Economists expect the Fed to cut the rates two times this year as a response to economic slowdown with limited progress toward the 2% inflation goal. Traders see three cuts as a response to a potentially ugly selloff in equity markets. Either way, activity on Fed funds futures hints to around 65% chance for the next rate cut to arrive in June. The dot plot will tell who is closer to the Fed’s mind and when we could expect a rate cut. A dovish stance could help slow the equity selloff and give a minor rebound to equities and the US dollar, while a cautious stance could sent the S&P500 back into the correction territory – meaning 10% or more lower than its February peak – and extend the scope for deeper losses for both US equities and the US dollar.

The US 2-year yield is hovering around the 4% mark this morning, the 10-year yield sits near the 4.30%. The US dollar index remains under the pressure of the waning growth prospects, the EURUSD bulls are waiting in ambush to push the pair above the 1.10 psychological mark.

Note that yesterday’s conversation between Trump and Putin didn’t hint at a sustainable peace anytime soon, but the Russians agreed to not bomb the Ukrainian energy infrastructure for a month. Crude is extending losses this morning below the $67pb level. The candlesticks of the past days have long upper wicks hinting at a lack of conviction from the price rebounds that suggest that the bearish trend remains strong in the short run and we could see further losses toward the $65pb mark.

In focus today

The main event will be the FOMC meeting tonight. We expect an unchanged rate decision which is also fully priced in the markets, but all eyes will be on Powell's communication about the outlook for further rate cuts as well as the updated rate and economic projections. The Fed could also provide signals about further tapering or even completely ending QT over coming months.

Economic and market news

What happened overnight

In Japan, the Bank of Japan concluded its two-day policy meeting, keeping the policy rate at 0.5% as expected. They highlighted that exchange rate developments are, compared to the past, more likely to affect prices. The market reaction to the decision was muted. With the outlook for another significant wage bump this year, we anticipate the BoJ will find room to hike rates again in July. We will keep an eye on the 07.30 CET press conference to look for clues on the future rate path.

What happened yesterday

In Ukraine, Russian President Putin agreed to a 30-day halt to strikes against energy infrastructure in Ukraine following talks with President Trump. While President Putin did not agree to the full 30-day ceasefire proposal like Ukraine, the US and Russia have agreed to work quickly towards more extensive peace agreements. Further discussions are set to take place in Saudi-Arabia on Sunday between the US and Russia.

In Germany, the new German government has successfully passed the significant fiscal package through the Bundestag, with support from The Green party. The package is expected to pass the Bundesrat on Friday, backed by a two-thirds majority between the CDU/CSU, SPD, Greens, and Bavarian Free Voters. The ECB anticipates upside risks to inflation and growth from this package, supporting a slower pace of rate cuts. While Germany will experience a positive demand shock, we expect the bulk of growth impacts to occur from 2026 onwards, with GDP growth potentially rising by 1-2 percentage points in 2027. Germany's shift towards fiscal spending may influence EU-level agreements on increased defence spending and common borrowing, although growth impacts depend on rising production capacities in Europe.

Equities: Global equities were lower yesterday, primarily due to the US pulling global indices down with its significant weight in global indices. In Europe, the belief that Germany would pass the historic spending package in the Bundestag grew throughout the day, leading to indices ending higher, buoyed by Germany, manufacturing-related cyclicals, and notably banks. Consequently, Europe, not just Germany, is now outperforming the US by more than 15% year-to-date in local currency, and by more than 20% when measured in common currency. In the US, we once again saw Mag 7 and cyclicals under pressure. Banks, on the other hand, had a better day, finishing as the best-performing industry in the S&P 500. Yesterday in the US, Dow -0.6%, S&P 500 -1.1%, Nasdaq -1.7%, and Russell 2000 -0.9%. This morning presents a mixed bag in Asia, and the same could be said about Western futures. To be clear, calmness, days with sub-1% moves, and fewer noisy political headlines would be beneficial for equities at the moment.

FI&FX: EUR/USD rose to a new high yesterday following the passing of the German fiscal package in the Bundestag and progress on Russia-Ukraine ceasefire. The Bund ASW spread was about unchanged on the news. In Scandies, EUR/SEK fell back below 11.00, which also sent NOK/SEK lower again. The NOK curve steepened considerably driven by a decline in the short end.