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Dollar appears to be gathering steam for a stronger, sustainable near-term rebound, although the precise catalyst remains unclear. One contributing factor an undercurrent of risk aversion, which is reflected in the broad selloff in the Australian and New Zealand Dollars. Yet, the overall market picture is mixed, as US stock futures inch higher and Treasury yields hold steady, hardly signaling a deep risk-off move or robust safe-haven flows.

Another explanation points to traders positioning ahead of Nvidia’s earnings release, due after the bell. With the AI-driven rally serving as a key theme for tech stocks, any surprise in the results could influence wider market sentiment, thereby affecting the currency markets. Additionally, speculation is building around the upcoming March 4 tariff deadline, when US levies on Canada and Mexico—postponed for a month to address border and fentanyl issues—are set to take effect.

At present, the greenback tops the leaderboard for the day, followed by Sterling and Loonie. Aussie and Kiwi lag, with Swiss Franc also underperforming. Euro and Yen are holding middle ground.

Technically, considering bearish divergence condition in 4H MACD, a short term top could already be in place in Gold at 2956.09, ahead of 3000 psychological level. Firm break of 2876.93 support should confirm this case, and bring deeper correction to 38.2% retracement of 2584.24 to 2956.09 at 2814.04. If realized, that would be a confirmation for Dollar's rebound.

In Europe, at the time of writing, FTSE is up 0.65%. DAX is up 1.69%. CAC is up 1.32%. UK 10-year yield is down -0.0316 at 4.483. Germany 10-year yield is down -0.032 at 2.429. Earlier in Asia, Nikkei fell -0.25%. Hong Kong HSI rose 3.27%. China Shanghai SSE rose 1.02%. Singapore Strait Times fell -0.20%. Japan 10-year JGB yield fell -0.0098 to 1.367.

German Gfk consumer sentiment drops to -24.7, no sign of recovery yet

Germany's GfK Consumer Sentiment Index for March declined further from -22.6 to -24.7, missing expectations of -21.1.

February data showed income expectations plunging -4.3 points to -5.4, marking a 13-month low, while the economic outlook for the next 12 months improved slightly by 2.8 points to 1.2.

According to Rolf Bürkl, consumer expert at NIM, the data highlights that "no signs of a recovery" are visible in German consumer sentiment. He noted that headline index has been stuck at a low level since mid-2024, with "great deal of uncertainty among consumers and a lack of planning security".

Australia’s monthly CPI holds at 2.5%, core measures edge higher

Australia’s monthly CPI was unchanged at 2.5% yoy in January, falling short of expectations for a slight uptick to 2.6%.

However, underlying inflation pressures showed signs of persistence, with CPI excluding volatile items and holiday travel rising from 2.7% yoy to 2.9% yoy. Trimmed mean CPI edged up from 2.7% yoy to 2.8% yoy.

These figures suggest that while headline inflation appears stable, core price pressures are still lingering, reinforcing RBA’s cautious stance on further easing.

The largest contributors to annual inflation included food and non-alcoholic beverages (+3.3% yoy), housing (+2.1% yoy), and alcohol and tobacco (+6.4% yoy).This was partly offset by a notable decline in electricity prices, which fell -11.5% yoy.

AUD/USD Mid-Day Report

Daily Pivots: (S1) 0.6325; (P) 0.6341; (R1) 0.6360; More...

AUD/USD's break of 0.6327 support should confirm short term topping at 0.6407, on bearish divergence condition in 4H MACD. Corrective rebound should have completed just ahead of 38.2% retracement of 0.6941 to 0.6087 at 0.6413. Intraday bias is back on the downside for retesting 0.6087 low. For now, risk will stay on the downside as long as 0.6407 holds, in case of recovery.

In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.6505) holds.

Market Picture

The crypto market fell below the support for the last three months on Tuesday, going into a brutal sell-off mode. Institutional investor sentiment didn’t help either, as US stock indices also saw a sell-off. Sentiment stabilised on Wednesday, and we see an attempt to form a bottom, pushing off from the $2.87T market cap and now up to $2.93T.

The cryptocurrency index has pulled back to the extreme fear area at 21, its lowest value since August last year. Earlier, we pointed out that the market lacked the drop into the fear region to attract greedy speculators. But now the question is whether those speculators have enough courage to buy.

Bitcoin broke through support in the 92000 area on Tuesday, near where the 61.8% retracement level of the November-December rally was. Bitcoin has given up half of the gains of that rally. The local target for the bears now looks like the area of the 200-day moving average at 82000. But already, Bitcoin is walking the edge of a bear market, losing about 20% from the peak. Further declines could open the floodgates for expanded liquidation of long positions in the crypto. As usual, saying, ‘I’ll be greedy when everyone else is scared,’ is much easier when you don’t have skin in the game.

Ethereum and Solana have already rolled back to October-November levels, with huge technical potential for further capitulation. In the event of a further sell-off, Ethereum could fall another 35% to $1600, while Solana faces a much steeper potential decline of over 80% from its current price.

News Background

Bitcoin will fall to $70,000 if hedge funds liquidate positions in spot bitcoin ETFs, ex-BitMEX chief Arthur Hayes said. He noted that the funds are focused on gaining the so-called ‘basis spread,’ which is generated by the difference between longs in ETFs and shorts on CME-traded futures. The strategy looks attractive if its profit exceeds the yield on short-term US government bonds.

Strategy last week bought an additional 20,356 BTC for $1.99bn at an average price of $97,514. The company now holds 499,096 BTC worth $33.1bn at an average price of $66,357.

Pectra’s update to Holesky’s Ethereum testnet didn’t go according to plan, so the network stopped finalising slots. A bug related to Holesky’s features has already been identified, and it does not affect the main network in any way.

OKX will pay more than $504 million in settlement of the US Department of Justice claims. The exchange pleaded guilty to operating an unlicensed money transfer business in the US.

EUR/USD climbed to 1.0504 on Wednesday, nearing its monthly high of 1.0528. The pair gained momentum following positive news from Germany, fuelling market optimism.

Key factors driving EUR/USD

Reports have emerged suggesting that Germany is considering the creation of a 200-billion-euro emergency fund, boosting expectations for increased local fiscal spending.

Additionally, Friedrich Merz, a leading candidate for the next German Chancellor, has proposed reforming the country’s debt brake to allow for more flexible financing of key expenditures. This could include tax cuts, lower energy prices, and a significant increase in defence spending – all of which could stimulate the German economy and support the euro.

Meanwhile, market participants are closely analysing recent comments from the European Central Bank (ECB) comments ahead of next week’s policy meeting. The ECB is widely expected to cut interest rates for the fifth consecutive time. However, some policymakers, including Isabel Schnabel, suggest that the central bank may soon need to pause or halt rate cuts altogether. The euro could find additional support if the ECB signals a more cautious stance on further easing,

Technical analysis of EUR/USD

On the H4 chart, EUR/USD completed a growth wave to 1.0524 and is now developing a downward wave towards 1.0450. A breakout below this level would open the potential for a further decline towards 1.0380. After reaching this target, a corrective rebound towards 1.0450 is likely. The MACD indicator confirms this scenario, with its signal line positioned above zero but pointing sharply downward.

On the H1 chart, the market declined to 1.0453, followed by a correction to 1.0524. The likelihood of the downward wave continuing towards 1.0450 remains high. If this level is breached, the correction could extend towards 1.0380, with the broader trend potentially targeting 1.0373. The Stochastic oscillator supports this outlook, with its signal line above 50 and pointing decisively downward.

Conclusion

EUR/USD benefits from renewed optimism surrounding Germany’s potential fiscal expansion, but downside risks persist due to the uncertainty surrounding ECB policy. While technical indicators suggest an ongoing downward wave, the pair’s movement will depend on key support levels around 1.0450 and 1.0380. The upcoming ECB meeting remains a critical event that could shape the euro’s near-term direction.

• USD/JPY retains support around 149.00 after slide to four-month low.
• Trend signals are negative, but a pause might be possible in short term.

USDJPY slid to a four-month low of 148.59 on Tuesday but managed to close just around the 149.00 psychological level, where the price found significant support back in December.

There is growing speculation now about whether the pair can replicate its December-January rally after shedding nearly 6% from its peak of 158.86.

The technical indicators are flagging oversold conditions as the RSI is forming a double bottom slightly above its 30 level and the stochastic oscillator is set for an upside reversal from below 20. However, the recent bearish crossover of the 20- and 200-day exponential moving averages (EMAs) – the first since August – is feeding concerns that any recovery may be short-lived.

The 149.50 barrier, which switched from support to resistance, must give way for an advance towards the 20- and 200-day EMAs seen within the 151.50-152.00 area. The 38.2% Fibonacci retracement of the December-January upleg is also in the neighborhood, while the descending trendline coming from January’s peak could cement that ceiling too. In the event of a bullish breakout above the 50-day EMA at 153.00, the rally could pick up steam towards the 23.6% Fibonacci of 154.30.

In the opposite case where the price closes below 149.00, the 148.00 mark may attempt to prevent a drop into 146.45-146.94, where the 61.8% Fibonacci level resides. A step lower could see a test within the 144.70-145.00 area.

Overall, USDJPY bulls may have another chance for an upside reversal, but confirmation above 149.50 remains crucial.

The Australian dollar has declined by 0.37% on Wednesday and is trading at 0.6320 in the European session. AUD/USD is down for a fourth consecutive trading day and has lost 1.2% during that time.

January inflation unchanged at 2.5%

Australia’s consumer price index was unchanged at 2.5% y/y for a second straight month in January. This was below the market estimate of 2.6% but inflation stayed at its highest level since August 2024. The drivers behind CPI were higher prices for food, electricity, alcohol and tobacco. Core CPI, a more reliable inflation indicator than headline CPI, edged up to 2.8% year-on-year from 2.7% in January.

The monthly inflation indicator is not as comprehensive as the quarterly inflation report, but shows that inflation remains relatively soft. The Reserve Bank of Australia won’t be too concerned as the inflation figures support last week’s decision to lower rates by 25 basis points, which brought the cash rate down to 4.1%.

RBA joins easing cycle but remains hawkish

Inflation is running within the Reserve Bank of Australia’s (Reserve Bank of Australia) target band of between two and three percent but the central bank remains concerned about upside risks to inflation. The RBA finally pressed the rate-cut trigger last week after maintaining rates for over a year and joined most of the major central banks which are well into their easing cycles.

Still, the RBA decision can be considered as a “hawkish cut” as the central bank stated at the last meeting that it “remains cautious” about the possibility of further cuts. The easing cycle could end up being very short and the markets aren’t expecting another rate cut before May.

Central banks across the globe are concerned about US President Trump’s trade policy, specifically the threat of tariffs, which would dampen global growth and boost inflation. The Trump administration has already imposed tariffs and China has imposed counter-tariffs. Another US-China trade war would damage the Australian economy as China is Australia’s largest trading partner.

AUD/USD Technical

• AUD/USD is testing support at 0.6320. Below, there is support at 0.6284
• 0.6365 and 0.6401 are the next resistance lines

• Revigorated US trade tariffs threat on Canada spark refresh weakness in commodities proxy currencies such as AUD.
• AUD/JPY may face further headwinds supported by a further narrowing of the 2-year yield spread premium between Australian and Japanese government bonds.
• A further risk-off in the major US stock indices may also trigger further weakness in the AUD/JPY.
• Watch the 93.65 potential major downside trigger level of the AUD/JPY.

Despite a slew of less dovish rhetoric speeches from Australia’s central bank (RBA) Governor Bullock and Deputy Governor Hauser warmed market participants to tone down the expectation of further interest rate cuts in 2025 after RBA enacted its first 25 basis points cut in four years to reduce the cash policy rate to 4.1% on last Tuesday, 18 February, the AUD/USD has failed to kickstart a bullish momentum run.

On the contrary, the Aussie dollar could not maintain its earlier gains against the US dollar from 18 February to 21 February. Instead, the AUD/USD recorded a decline of 1.3% from an intraday high of 0.6409 on 21 February to a current level of 0.6329 at this time of writing.

Risk-off in US stock indices and Trump’s incoming 25% trade tariffs on Canada

Fig 1: 3-month rolling performance of AUD/USD with major US stock indices as of 26 Feb 2025 (Source: TradingView, click to enlarge chart)

The Aussie dollar is considered a high-beta currency that has a higher sensitivity toward sentiment swings in the global stock market and commodities especially base metals as well as a direct correlation with other commodities proxy currencies such as the Canadian Loonie (CAD).

US President Trump has highlighted that the earlier planned 25% tariffs on Canadian exports to the US were scheduled to hit Canada on time next Tuesday after the “cooling off period” ends on 4 March.

Based on a five-day rolling performance basis, the Loonie (CAD) is the weakest major currency against the US dollar where it shed 0.6% at this time of the writing, and the Aussie dollar (AUD) trails behind with a loss of 0.2% against the US dollar.

Also, the lacklustre movements of the major US stock indices in the past month where the mega-cap and Artificial Intelligence (AI) centric S&P 500 and Nasdaq 100 have broken below their respective 50-day moving averages on Monday, 24 February, ignited a current risk-off sentiment behaviour that in turn triggered a negative feedback loop back into the Aussie dollar (see Fig 1).

Bearish technical elements remain intact on the AUD/JPY

Fig 2: AUD/JPY medium-term & major trends as of 26 Feb 2025 (Source: TradingView, click to enlarge chart)

In the lens of technical analysis and an intermarket study, the 11 July 2024 swing high area of 107.85/109.40 may be considered as a medium-term top for the AUD/JPY cross pair, and its current prices are evolving into a potential medium-term downtrend phase (multi-week) in the first step.

The daily MACD trend indicator has been trending downwards steadily since 14 October 2024. It broke below its centerline on 27 November 2024 and at this time of the writing, it has flashed out an impending MACD bearish crossover condition below the centerline.

These observations suggest that the downward movement seen on the AUD/JPY in place since the 7 November 2024 high may extend further to the downside as its medium-term bearish trend condition remains intact.

Intermarket analysis also advocates further potential weakness on the AUD/JPY as the yield spread between the 2-year Australian Government Bonds and Japanese Government Bonds (JGB) has continued to narrow since 31 October 2023 and it has staged a recent bearish breakdown below its previous 11 December 2024 swing low of 3.20%. Right now, the 2-year yield spread between the sovereign bonds of Australia and Japan is trading 20 bps lower at 3%.

Watch the major support of 93.65 defined by the lower boundary of the long-term secular ascending channel from the March 2020 low, and a break with a weekly close below 93.65 may trigger the start of a potential multi-week corrective decline sequence to expose the next medium-term supports at 90.14 and 87.00 in the first step (see Fig 2).

On the flip side, clearance above the 97.24 key medium-term pivotal resistance invalidates the bearish tone for a retest on the next medium-term resistance at 99.60 (also the 200-day moving average), and above it sees the next resistance coming in at 102.30 (7 November 2024 swing high).

As shown in the USD/CHF chart, the exchange rate dipped below 0.89250 Swiss francs per US dollar yesterday—the lowest level since December 2024. The Swiss franc, often seen as a safe-haven currency, may gain appeal due to:

→ heightened geopolitical tensions;

→ uncertainty surrounding Trump's plans to impose trade tariffs on 4 March.

Technical Analysis of USD/CHF

Fluctuations in 2025 have formed a downward channel (marked in red), with bearish sentiment prevailing in February as key psychological levels continue to be breached (as indicated by arrows):

→ in mid-February, bears pushed the price down from 0.905;

→ later, 0.900 acted as resistance.

If bearish momentum persists, further resistance may emerge around 0.895 and the median of the downward channel.

The upcoming market direction will likely be influenced by key economic data releases:

→ Swiss GDP (11:00 GMT+3) and US GDP (16:30 GMT+3) tomorrow;

→ US Core PCE Price Index (16:30 GMT+3) on Friday—an important inflation gauge.

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GBP/USD is attempting a fresh increase from the 1.2600 zone. EUR/GBP is gaining pace and might extend its upward move above the 0.8300 zone.

Important Takeaways for GBP/USD and EUR/GBP Analysis Today

• The British Pound is attempting a decent increase above the 1.2620 zone against the US Dollar.
• There is a connecting bullish trend line forming with support at 1.2625 on the hourly chart of GBP/USD at FXOpen.
• EUR/GBP started a fresh increase above the 0.8285 resistance zone.
• There is a major bullish trend line forming with support at 0.8300 on the hourly chart at FXOpen.

GBP/USD Technical Analysis

On the hourly chart of GBP/USD at FXOpen, the pair started a downside correction from the 1.2690 zone. The British Pound traded below the 1.2650 zone against the US Dollar.

A low was formed near 1.2605 and the pair is now attempting a recovery wave. There was a break above the 50% Fib retracement level of the downward move from the 1.2690 swing high to the 1.2605 low.

The pair even spiked above the 76.4% Fib retracement level of the downward move from the 1.2690 swing high to the 1.2605 low and settled above the 50-hour simple moving average.

On the upside, the GBP/USD chart indicates that the pair is facing resistance near 1.2675. The next major resistance is near the 1.2690 level. If the RSI moves above 60 and the pair climbs above 1.2690, there could be another rally. In the stated case, the pair could rise toward the 1.2750 level or even 1.2820.

On the downside, there is a major support forming near 1.2625. There is also a connecting bullish trend line forming with support at 1.2625. If there is a downside break below the 1.2625 support, the pair could accelerate lower.

The next major support is near the 1.2605 zone, below which the pair could test 1.2560. Any more losses could lead the pair toward the 1.2525 support.

EUR/GBP Technical Analysis

On the hourly chart of EUR/GBP at FXOpen, the pair started a fresh increase from the 0.8265 zone. The Euro traded above the 0.8285 level to move into a positive zone against the British Pound.

The EUR/GBP chart suggests that the pair settled above the 50-hour simple moving average and 0.8300. Immediate resistance is near 0.8305. The next major resistance for the bulls is near the 0.8320 zone.

A close above the 0.8320 level might accelerate gains. In the stated case, the bulls may perhaps aim for a test of 0.8365. Any more gains might send the pair toward the 0.8400 level in the coming days.

Immediate support sits near a major bullish trend line at 0.8300 and the 23.6% Fib retracement level of the upward move from the 0.8275 swing low to the 0.8305 high. The next major support is near the 0.8285 zone.

The 61.8% Fib retracement level of the upward move from the 0.8275 swing low to the 0.8305 high is also at 0.8285. A downside break below the 0.8285 support might call for more downsides.

In the stated case, the pair could drop toward the 0.8265 support level. Any more losses might send the pair toward the 0.8240 level in the near term.

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Yesterday was yet another ugly session for US stocks. The increasingly heavier weight of Trump talk, deteriorating relationships across the globe – except Russia – combined with higher inflation expectations on tariffs, the uptick in inflation and weakening expectations from US consumers are certainly to blame for the selloff in equities – that boost appetite in bonds, considered to be a safer investment option. Remember, last Friday, the data had showed that the US 5-10 year inflation expectations had spiked to the highest levels since 1995, another set of data yesterday – from Conference Board - approved concerns about rising inflation expectations and warned that consumer confidence declined for the third straight reading – the drop concerned all age and income groups. Also note that small businesses that have grown more optimistic about the America First policies are losing that optimism and have been severely cutting their capex plans... As such, small caps are extending losses below the 200-DMA, the mid caps, the same. The S&P500 extended losses yesterday, as well, and tipped a toe below the 100-DMA, while Nasdaq 100 retreated more than 1% - also testing levels below its own 100-DMA. Only the Dow Jones eked out gains yesterday thanks to gains in consumer staples and healthcare sectors, which are considered defensive industries. The rest... looked bad. Roundhill’s Magnificent 7 ETF for example dived more than 2%, Tesla tumbled more than 8% on news that its European sales nosedived 45% in January. The company sold less than 10’000 cars last month across Europe, a significant part of the decline is believed to be due to rising frustration about Elon Musk political involvement in European countries’ domestic affairs. Nvidia lost 2.80% and tested its 200-DMA to the downside a day before announcing its quarterly earnings.
Happy Nvidia day

Nvidia will reveal its Q4 earnings today, after the bell, and expectations are strong. The company is expected to have increased its quarterly sales to $38bn last quarter on the back of the launch of Blackwell chips and sustained spending from Big Tech companies. Note that TSM results were strong during the same quarter, as well. Moreover, the company’s forecast should be strong, as well, on the back of Stargate project and further spending pledges from the Big Tech companies. Big Tech companies that include names like Meta, Microsoft, Apple, Amazon, are nothing to be minimized as they made up to 50% of Nvidia’s revenue in the Q3. And the fact that they are looking for premium chips for game-changing innovations could turn to be an advantage for Nvidia in the short run, though the risk of high concentration should be addressed in the medium to long-run given that these companies are working to launch their own chips. Besides that, investors will also monitor other risks, including supply chain and capacity issues, profit margins, rising competition and the developments in China with DeepSeek claiming to have built its AI model on cheaper versions of Nvidia chips. Also, Morningstar warns that Nvidia chips dominate only 40% of GPUs used for inference training – that’s the process of drawing conclusions based on evidence and reasoning rather than direct statements or observations – and that, for inference, there could be increased competition for chips. All in all, investors are very much used to see impressive results, therefore the risk factors could reverse optimism from strong results. Add to that the fact that the market environment is not ideal these days, Nvidia has the heavy task of lifting the market mood this week. If it can not, the selloff in stocks could accelerate despite the falling yields. Note that the technology selloff is also impacting mood in cryptocurrencies. Bitcoin plunged below the $86K level yesterday, another weakening leg of the early Trump optimism.

In the FX

The US dollar remained under the pressure of trade and geopolitical worries and bad data. The EURUSD made another attempt on the 1.05 offers but is still below this level this morning, while sterling bulls continue to fight the bears against the US dollar near the 100-DMA. But hey, the mood in the European stock markets is somewhat different than the US. The Stoxx 600 was slightly positive yesterday, near a record high level.

Germany's GfK Consumer Sentiment Index for March declined further from -22.6 to -24.7, missing expectations of -21.1.

February data showed income expectations plunging -4.3 points to -5.4, marking a 13-month low, while the economic outlook for the next 12 months improved slightly by 2.8 points to 1.2.

According to Rolf Bürkl, consumer expert at NIM, the data highlights that "no signs of a recovery" are visible in German consumer sentiment. He noted that headline index has been stuck at a low level since mid-2024, with "great deal of uncertainty among consumers and a lack of planning security".

Full German Gfk consumer sentiment release here.