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Tomorrow’s FOMC meeting has been somewhat overlooked recently. The US central bank started 2026 on the back of three consecutive 25 bps rate cuts as downside employment risks warranted pre-emptive action on the notion that monetary policy could move from restrictive to neutral given falling upside inflation risks and strengthening confidence in the inflation outlook. At the start of the year, the Fed shifted to a wait-and-see mode as the labour market showed signs of stabilization. The equilibrium is precarious as a shrinking labour supply (immigration crackdown) balances the unemployment rate against relatively weak job growth, but it’s an equilibrium still. This allowed the Fed to switch the needle back to (goods) inflation which has been on the rise since US President Trump’s protectionist trade agenda got installed. The Fed’s preferred core PCE deflator accelerated from a 2.6% Y/Y low last year in April to 3.1% in January (highest since March 2024). These developments even urged uber-dove and Trump-disciple Miran into acknowledging that he would raise his end-of-year projection for the Fed funds rate from a 2-2.25% low in the dot plot to 2.5%-2.75% which would ceteris paribus still be the low point by the way. In the December dot plot, the median forecast projected room for one additional 25 bps rate cut over the course of 2026 and another one in 2027.

7 out of 19 Fed members in December already flagged a preference to hold rates steady over 2026. Minutes of the January FOMC meeting showed that several participants would’ve supported two-sided language on the rate path, putting the door open fore a rate hike if necessary. They also cautioned that easing policy further in the context of elevated inflation readings could be misinterpreted as implying diminished commitment to the 2% inflation objective. The start of the US-Israeli war against Iran adds to upside inflation risks in first instance through the energy channel. US diesel retail prices today hit $5/gallon for the first time since December 2022 compared to half of that price ahead of the war. Our in-house nowcast shows that, if petrol prices ($4.33 currently) join diesel in surpassing this psychological mark, PCE and CPI inflation would rise to 3.8% and 4% respectively by April. This compares with the latest prints of 2.8% (PCE, January) and 2.4% (CPI, February). That scenario also raises the risk of secondary effects on top of those stemming from tariff/goods inflation. In this context, it is very unlikely that the policy statement, the quarterly projections or Fed Chair Powell’s press conference will still pave the way for a rate cut this year. At the end of February, US money markets discounted 2.5 rate cuts by December with the policy rate bottoming out around 2.75%-3% next year. Now, Fed funds futures only discount one Fed rate cut this year which would most likely be the final one than this cycle but might be pushed further in time. That leaves more room for repositioning in bear flattening fashion especially as we don’t exclude inflation hawks to put rate hikes in their forecasts. Such hawkish outcome would add to overall USD strength since the beginning of March, denting risk sentiment.

News & Views

The Swiss National Bank barely, if any, intervened in FX markets in the final quarter of last year, data from its annual report revealed today. The central bank over the course of 2025 bought FX worth CHF 5.2bn but earlier data showed that the tally already stood at CHF 5.18bn after the first nine months of last year. The bulk occurred in Q2, after US president Trump unveiling his tariff plan sparked haven flows to the Swiss franc. The Iran war that erupted early March did the same, luring SNB officials from the shadows to signal their willingness to intervene in the market, if needed. The strong franc has always been a key focus for the SNB since it dampens imported inflation, especially at a time where it is already at the low end of the 0-2% target. The central bank is meeting on Thursday with EUR/CHF just inches away from the 0.90 record low (barring the 2015 episode) seen in early March.

The EU’s foreign policy chief Kaja Kallas has pushed back against a call by Belgian PM De Wever to normalize (trade) ties with Russia and regain access to cheap Russian energy. In an exclusive interview with Reuters, Kallas said she doesn’t see the appetite De Wever sees in other EU leaders to do so, adding that “if we go back to business as usual, we will have more of this, more wars.” Since the Ukraine war, Dutch TTF gas futures have settled at structurally higher levels than before. The Middle East conflict pushed prices to the highest since February 2025.

Market Picture

Crypto market capitalisation increased by a further 2.7% in the last 24 hours, reaching $2.54 trillion. At its peak earlier in the day, the market climbed to $2.58 trillion, its highest since early February. This indicates a period of consolidation above the 50-day moving average, an attempt to break free from the correction pattern following the decline, and a move above the 61.8% retracement level of the initial movement.

The sentiment index gained 5 points to reach 28 for the day, breaking out of the extreme fear zone and hitting its highest level since late January. This indicator’s positive signal complements the favourable technical picture.

Bitcoin rose to $76K, later retreating to $74K, where it is trading as the European session begins. The market is currently testing the rally’s stability. Meanwhile, sentiment in traditional markets has shifted: gold and stock indices closed higher on Monday, while the dollar index dived back below 100.

News background

According to CoinShares, global investment in crypto funds rose by $1.1 billion last week, marking the third week of inflows after five weeks of outflows. Investments in Bitcoin increased by $793 million, in Ethereum by $315 million, in Solana by $9 million, and in Chainlink by $3 million.

Since the beginning of the Iranian crisis, the total assets under management (AuM) in global crypto ETFs have grown by 9.4% to $140 billion, according to CoinShares.

Over the past 30 days, users have withdrawn more than 32,060 BTC from crypto exchanges. Only 2.44 million BTC remain on the balance sheets of trading platforms, the lowest figure in recent years, according to Crypto Patel.

Ethereum has outpaced Bitcoin in growth rates amid the return of institutional investors. According to Arkham, Erik Voorhees, the former CEO of the ShapeShift crypto exchange, purchased 24,968 ETH worth $56.5 million after a one-year hiatus.

Strategy bought a further 22,337 BTC ($1.57 billion) last week at an average price of $70,946 per coin. This is the largest bitcoin purchase since November 2024. Strategy now owns 761,068 BTC, bought for $57.61 billion at an average price of $75,696 per bitcoin.

BitMine acquired approximately 60,000 ETH over the past week. The company’s reserves now total 4.59 million ETH, representing 3.81% of the Ethereum market supply. BitMine aims to accumulate 5% of all ether.

Daily Pivots: (S1) 1.1436; (P) 1.1482; (R1) 1.1549; More….

Intraday bias in EUR/USD stays neutral at this point, and consolidation from 1.1408 could extend for a while. But further decline is expected as long as 1.1666 resistance holds. Below 1.1408 will resume the fall from 1.2081 to 38.2% retracement of 1.0176 to 1.2081 at 1.1353. Firm break there will target 61.8% projection at 1.0904 next.

In the bigger picture, the break of 55 W EMA (now at 1.1495) confirms rejection by 1.2 key cluster resistance level. The whole up trend from 0.9534 (2022 low) might have completed as a three wave corrective rise too. In either case, deeper fall is now expected to long term channel support (now at 1.0528. Risk will stay on the downside as long as 1.2081 holds, in case of recovery.

Daily Pivots: (S1) 1.3249; (P) 1.3295; (R1) 1.3365; More...

Intraday bias in GBP/USD remains neutral for the moment, and more consolidations could be seen above 1.3216. Risk will stay on the downside as long as 1.3482 resistance holds. Below 1.3216 will resume the fall from 1.3867 to 1.3008 structural support. Firm break there will carry larger bearish implication and target 1.2524 fibonacci level.

In the bigger picture, considering bearish divergence condition in both D and W MACD, a medium term top should be in place from 1.3867. Firm break of 1.3008 support will argue that fall from 1.3867 is at least correcting the rise from 1.0351 (2022 low) with risk of bearish reversal. That would open up further decline to 38.2% retracement of 1.0351 to 1.3867 at 1.2524. For now, medium term outlook will be neutral at best as long as 1.3867 resistance holds, or under further development.

Daily Pivots: (S1) 0.7853; (P) 0.7888; (R1) 0.7913; More….

USD/CHF is extending consolidations below 0.7921 and intraday bias remains neutral. Further rally is still expected as long as 0.7746 support holds. Rise from 0.7603 is seen as correcting whole down trend from 0.9200. Break of 0.7921 will target 38.2% retracement of 0.9200 to 0.7603 at 0.8213.

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 0.8091) 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.

Daily Pivots: (S1) 158.68; (P) 159.21; (R1) 159.58; More...

USD/JPY is extending consolidations below 159.74 and intraday bias remains neutral. On the upside, above 159.74 will target a retest of 161.94. Firm break there will confirm larger up trend resumption and target 61.8% projection of 139.87 to 159.44 from 152.25 at 164.34. However, considering bearish divergence condition in 4H MACD, break of 158.55 should indicate short term topping, and turn bias back to the downside for deeper pullback.

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 152.70) 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.

The global markets are holding in limbo today as the initial surge in geopolitical risk faded and attention shifted back toward the upcoming Fed decision tomorrow. While tensions in the Middle East remain elevated, price action across assets suggests that much of the shock has already been absorbed, leaving traders reluctant to take strong directional bets.

Oil prices briefly spiked earlier after renewed Iranian attacks on UAE energy infrastructure, pushing Brent toward the 104 level, but the move quickly reversed. The key shift in narrative is that the Strait of Hormuz, while heavily disrupted, is not fully blocked. Reports of selective tanker transits, including vessels linked to Pakistan and Turkey, suggest that the situation resembles a bottleneck rather than a complete shutdown. This distinction has been crucial in preventing a more aggressive repricing in energy markets.

At the same time, oil prices above 100 already reflect a significant geopolitical premium. Without a direct and sustained hit to major producers such as Saudi Arabia or Iraq, markets appear reluctant to push prices materially higher. As a result, the energy shock is now seen as elevated but contained, at least in the near term.

This stabilization in oil has removed a key pillar of support for Dollar. While the greenback initially attempted to rally on renewed risk aversion, gains quickly faded as energy markets failed to extend higher. The result is a sluggish Dollar, unable to capitalize on geopolitical tensions in the way it did earlier in the conflict.

Compounding this dynamic is the Fed’s blackout period, which has left markets without guidance on how policymakers are interpreting the recent oil-driven inflation shock. Since the surge in energy prices began in late February, there has been no official commentary, creating what can best be described as a valuation vacuum.

This uncertainty has become a central driver of current market behavior. With a rate hold fully priced for the upcoming FOMC meeting tomorrow, the real question is how hawkish that hold will be. Without clarity, traders are unwilling to commit, leading to muted price action across currencies and rates.

Against this backdrop, Australian Dollar has emerged as the standout performer. Initial volatility following the RBA’s split decision quickly gave way to renewed strength after Governor Michele Bullock clarified that the board remains united on the need for further tightening, with disagreement centered only on timing.

Market expectations have since stabilized, with April seen as a likely pause ahead of key inflation data, but another rate hike broadly anticipated in May. This clarity has allowed Aussie to outperform in an otherwise directionless FX landscape.

Overall, currency markets reflect a broader theme of consolidation. With oil risks capped for now and Fed policy uncertainty unresolved, major pairs remain trapped within last week’s ranges. Until either energy markets break higher again or the Fed provides clearer guidance, markets are likely to remain stuck in ranges.

In Europe, at the time of writing, FTSE is up 0.82%. DAX is up 0.47%. CAC is up 0.73%. UK 10-year yield is down -0.059 at 4.653. Germany 10-year yield is down -0.029 at 2.920. Earlier in Asia, Nikkei fell -0.09%. Hong Kong HSI rose 0.13%. China Shanghai SSE fell -0.85%. Singapore Strait Times rose 1.38%. Japan 10-year JGB yield fell -0.017 to 2.263.

German ZEW collapses to -0.5 on rising stagflation risks

German ZEW Economic Sentiment plunged into negative territory in March, with Eurozone sentiment also dropping sharply as rising energy prices dent confidence. The collapse reflects growing concern that Middle East tensions and inflation risks could derail Europe’s fragile recovery. Read more.

RBA rate hike to 4.10% lacks conviction as board splits 5–4

RBA raised the cash rate to 4.10%, but the narrow 5–4 vote revealed a divided board and limited conviction behind the move. While policymakers cited rising fuel costs and inflation risks, the split highlights growing uncertainty over the outlook as energy shocks threaten both inflation and growth. Read more.

RBA united on further tightening despite split vote, Bullock says

RBA Governor Michele Bullock said the board remains united on further tightening despite the 5–4 split, with disagreement centered on timing rather than direction. She emphasized that inflation remains too high and driven by excess demand, while warning that policy may need to stay restrictive to prevent more persistent price pressures. Read more.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 158.68; (P) 159.21; (R1) 159.58; More...

USD/JPY is extending consolidations below 159.74 and intraday bias remains neutral. On the upside, above 159.74 will target a retest of 161.94. Firm break there will confirm larger up trend resumption and target 61.8% projection of 139.87 to 159.44 from 152.25 at 164.34. However, considering bearish divergence condition in 4H MACD, break of 158.55 should indicate short term topping, and turn bias back to the downside for deeper pullback.

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 152.70) 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.

Germany’s ZEW Economic Sentiment plunged sharply in March, highlighting how rapidly confidence is deteriorating under the weight of the global energy shock. The expectations index collapsed from 58.3 to -0.5, far below market forecasts of 39.0, while Eurozone sentiment followed suit, dropping from 39.4 to -8.5.

The primary driver is the escalation in Middle East conflict, which has pushed energy prices sharply higher and revived inflation concerns across Europe. ZEW President Achim Wambach warned that the surge in energy costs is increasing inflationary pressure and raising the risk that Germany’s nascent recovery could stall. "The financial market experts are sceptical that a quick resolution of the conflict will take place,” he added.

In contrast, the current situation index showed modest improvement, rising from -65.9 to -62.9 in Germany, suggesting that present conditions are stabilizing slightly even as the outlook darkens. On the other hand, current situation in Eurozone also rose fell -16.3 pts to -29.9.

Full German ZEW release here.

On 10 March, analysing the EUR/USD chart, we:

• → considered the long-term descending channel, which remains relevant;
• → noted that the sequence of lower lows A–H was broken with the appearance of a higher peak I, with 1.1680 potentially acting as resistance.

At peak I, bulls exhausted their strength: after forming a consolidation zone near the channel’s median, bears regained control and pushed the price to a new yearly low, driven by a bearish fundamental backdrop.

Tomorrow, the Fed is expected to release its interest rate decision, while the ECB will issue comments the day after. These events could significantly shift market sentiment regarding EUR/USD, and current price behaviour suggests that bulls may attempt a comeback.

Technical Analysis of EUR/USD

Note the following:

• → The descending trendline from last week has been breached; the market is holding above the breakout level around 1.14560.
• → The pair is recovering from oversold territory just below the lower boundary of the channel. The psychological level 1.1500 may provide support.

Thus, traders should consider the scenario in which EUR/USD’s strong movement on Monday–Tuesday is confirmed by upcoming central bank news.

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