EUR/USD: German economic outlook index rose to 87.5 points in March
During the Asian trading session, the EUR/USD currency pair is experiencing a correction, reaching the level of 1.0813 after it updated the lows recorded on March 1 at the end of last week.
The upward trend is due to positive economic statistics from Germany: the January import price index remained at the same level after a previous decline of 1.0%, with an annual slowdown in the price drop from -7.0% to -5.9%. The index of economic expectations in March increased from 84.4 to 87.5 points, the assessment of current conditions rose from 86.9 to 88.1 points, and the overall business climate index from the IFO Institute increased from 85.7 to 87.8 points. This improvement in business sentiment may contribute to the recovery of the German economy, despite the continuing risks of a deepening recession in the coming months. The President of the Federal Bank of Germany, Joachim Nagel, expressed the opinion that the European Central Bank could adjust its monetary policy as early as June, given the return of inflation to the target of 2.0%. Nevertheless, the possibility of accelerating wage growth and consumer prices is still present.
- Resistance levels: 1.0850, 1.0920.
- Support levels: 1.0780, 1.0690.
USD/CAD: the US dollar remains near its recent peak values
During the Asian session, the USD/CAD currency pair shows mixed dynamics, being near the 1.3600 level and the peak values reached in mid-December. Market activity continues to be restrained, but the US dollar finds support in the latest macroeconomic statistics.
The US currency is gaining ground against the background of the results of the last meeting of the Federal Reserve System, which confirmed the regulator's desire for a cautious approach in adjusting monetary policy, and the decision of the Swiss National Bank to reduce the interest rate by 25 basis points. The market is reacting to updated economic activity data: the March S&P Global index in the manufacturing sector rose from 52.2 to 52.5 points, exceeding expectations of a decline to 51.7 points, while the index in the service sector fell from 52.3 to 51.7 points, which was below expectations of 52.0 points. The number of new applications for unemployment benefits for the week ended March 15 decreased from 212.0 thousand to 210.0 thousand, contrary to forecasts of an increase to 215.0 thousand.
- Resistance levels: 1.3600, 1.3650, 1.3700, 1.3750.
- Support levels: 1.3550, 1.3525, 1.3500, 1.3450.
GBP/USD: Pound retreats from lows
The GBP/USD currency pair is experiencing an upswing, trying to overcome the 1.2600 level in the direction of an upward movement: the exchange rate is being adjusted after losses incurred at the end of the previous week, while market activity remains moderate. Traders are assessing the consequences of the meetings of the US Federal Reserve and the Bank of England, which decided not to change interest rates, in anticipation of a possible reduction in the cost of lending by the Fed by June, while the Bank of England may take similar steps no earlier than August or even later.
The British pound was influenced by data on the UK economy published last Friday. Retail sales volumes in February remained unchanged from a month earlier after an increase of 3.6% in January, against the forecast of 0.3% growth, and in annual terms the decrease was 0.4% after an increase of 0.5%, despite the expectation of a drop of -0.7%. Excluding fuel, sales rose 0.2% after 3.4% in the previous month. According to the Confederation of British Industry (CBI), due to difficulties with navigation through the Red Sea, affecting supply chains and causing oil prices to rise, manufacturers expect an increase in selling prices for their products. Despite this, the CBI predicts an improvement in economic conditions in the next quarter. The consumer confidence index provided by Gfk Group in March remained at -21.0, although analysts had expected -19.0.
- Resistance levels: 1.2650, 1.2700, 1.2734, 1.2771.
- Support levels: 1.2600, 1.2550, 1.2500, 1.2450.
USD/JPY: the consumer price index in Japan increased from 2.2% to 2.4% in annual terms
The USD/JPY currency pair shows an uncertain movement, remaining near the level of 151.30 and being near the peak values of November 2023, which were reached last week. This was facilitated by a decrease in market expectations regarding an immediate reduction in US Federal Reserve rates. Investors' attention was also drawn to the increase in the S&P Global manufacturing activity index from 52.2 to 52.5 points, contrary to analysts' forecasts of 51.7 points.
The yen continued to feel pressure against the background of the Bank of Japan's historic decision to abandon the policy of negative interest rates, while maintaining a cautious tone in its statements, without hinting at rapid policy changes. Economic data did not support the yen: the consumer price index for February rose from 2.2% to 2.8%, while the indicator excluding the cost of food and energy decreased from 3.5% to 3.2%. Separately, it is worth mentioning a Reuters study among leading economists on the future actions of the Bank of Japan, according to which the majority of respondents expect an interest rate increase of 25 basis points at least once a year.
- Resistance levels: 151.50, 152.00, 152.50, 153.00.
- Support levels: 151.00, 150.50, 150.00, 149.50.