Financial market analysis on February 25, 2025

During Thursday's Asian session, USD/JPY is showing a moderate correction, retreating from recent highs. The pair is stabilizing near the level of 150.15. After active growth the day before, the market switched to standby mode before the publication of important macroeconomic data that may set the direction of movement for the coming sessions.The main attention of market participants is focused on inflation data in Tokyo (23:30 GMT), a key indicator for the Bank of Japan in assessing the prospects for monetary policy changes. The core consumer price index (excluding fresh food) is expected to remain at 2.2% in March, while the broader index may reach 2.9%.The head of the Bank of Japan, Kazuo Ueda, recently confirmed that the regulator is ready to consider raising interest rates if inflationary dynamics become stable. However, the February increase in the nationwide CPI to 3.7% and the baseline to 3.0% was largely due to temporary factors such as rising import costs. Ueda expects core inflation to approach the 2.0% target only in the second half of fiscal year 2026-2027, which pushes back the prospect of policy tightening.Today we should pay attention to the American statistics- Base PCE index (14:30 GMT+2) — expected to grow from 2.6% to 2.7% in annual terms- University of Michigan Consumer Confidence Index (16:00 GMT+2) — forecast to remain at 57.9 pointsYesterday's data on durable goods orders in February showed an unexpected increase (0.9% versus the expected -1.0%), which temporarily supported the dollar.USD/JPY technical analysis for todayOn the Daily, the main forex indicators give the following signals:- Bollinger bands indicate a moderate uptrend with an expansion of the price range- The MACD indicator retains a buy signal, testing the zero mark- Stochastic is rolling back from the overbought zone, signaling a possible short-term correctionTrading recommendations1. Selling: A breakdown below 150.00 opens the way to 149.09. Stop loss is 150.50.2. Purchases: A rebound from 150.00 followed by a rise above 150.50 may lead to a test of 151.50. Stop loss is 150.00.

Key economic events and market trendsUSA: GDP revision and tariff impactIn the second half of the day, a revised estimate of GDP growth will be published in the United States. However, no significant impact on the markets is expected.The main news was the announcement by the US president of the introduction of a 25% tariff on imports of foreign cars and auto parts from April 2. The move has raised concerns among trading partners, including the EU and Canada, which are considering retaliatory measures. The impact of these tariffs on inflation also remains in focus, as they may increase price pressures, leading to a review of the Fed's policy.In addition, in February, orders for durable goods increased by 0.9% against the forecast of -1.0%. However, this did not lead to significant movements in the market.Eurozone: credit activity and ECB policyData on monetary aggregates and lending will be published in the eurozone today. In the context of the ECB's ongoing debate on monetary policy rigidity, credit growth data will be key. In recent months, lending to the private sector has increased to 2% YoY, but the momentum (the difference between new and repaid loans) remains stable at 1%, indicating continued policy rigidity.In addition, representatives of the ECB, including Isabelle Schnabel, will speak today, which may give additional signals on the future policy course.Norway: Norges Bank rate decisionNorges Bank is expected to lower its key rate to 4.25%, despite the fact that market expectations estimate the probability of this step at only 25-30%. Inflation in February was higher than expected, which could support a tougher policy. However, Norges Bank is likely to focus on slowing inflation, low capacity utilization and maintaining a restrictive policy, which may be an argument in favor of lowering interest rates. We also expect the forecasts for 2025-2028 to be revised towards two rate cuts in 2025.United Kingdom: lower inflation and prospects for lower ratesUK inflation in February was lower than expected: the overall index was 2.8% YoY (forecast: 3.0%), while core inflation fell to 3.5% YoY (forecast: 3.6%). These data reinforce expectations of a possible rate cut by the Bank of England at the next meeting, especially if inflation remains within expectations in the April report.In the political sphere, the Government's spring budget was in line with expectations, confirming its commitment to fiscal stability measures. The initial reaction of the bond market was sharp, but by the end of the day, the yield on 10-year Gilts had dropped by only 1-3 bps.Sweden: worsening economic sentimentThe latest NIER economic survey showed a decline in confidence in the economy, especially among consumers, indicating continued weak sentiment. The planned price increase in March was higher than normal, which increases concerns about stagflation.The minutes of the Riksbank meeting reflected a balanced approach: despite high inflation, the bank considers its acceleration as temporary. Overall, the current policy course remains balanced, but the market may overestimate expectations for a rate hike, especially in the face of rising inflation.Geopolitics: tensions between Russia and UkraineThe ceasefire talks between Russia and Ukraine have reached an impasse, as the sides accuse each other of violating the agreements. The EU has rejected Russia's terms of the Black Sea agreement, raising uncertainty. A meeting of the leaders of the EU and Ukraine will take place in Paris today, where the issue of security will be discussed.Stock market: reaction to trade barriersUS stock markets closed lower amid news about Trump's tariffs. IndexThe S&P 500 fell 1.1%, but the equally weighted S&P 500 declined only 0.2%, indicating targeted sales in the automotive sector, including Tesla and other manufacturers.Despite the negative sentiment, US futures are trading with a slight increase, while European markets are showing weakness.Currency and debt market: expectations of Norges Bank's decisionAmid rising geopolitical risks and tariff news, EUR/USD initially declined, but then recovered, trading just below 1.08. The Scandinavian currencies moved in different directions, with a slight weakening of NOK/SEK.Today, the key event will be Norges Bank's rate decision, and despite the uncertainty, we see the likelihood of a 25bp decline.

FOREX Fundamental analysis for EUR/USD on March 27, 2025Donald Trump confirmed his intention to continue the policy of trade protectionism, announcing the introduction of 25% tariffs on car imports – a key point of his election program. Despite the expected severity of the measures, the US administration is demonstrating a selective approach, which somewhat softened the initial market reaction. The EUR/USD pair, having briefly declined, quickly regained its position, which indicates a skeptical perception of the scale of potential damage.The introduction of additional duties (on top of the existing 2.5%) will significantly increase the cost of imported cars, which make up about half of the American market. Although the formal purpose of the measures is to protect jobs, the real effect may be counterproductive.:- Disruption of global supply chains will trigger inflationary pressures- Lower consumer demand will slow down GDP growth- The forced continuation of the Fed's tight monetary policy will increase recessionary risksSuch a scenario creates a paradoxical situation – with the formal strengthening of the dollar as a defensive asset, the fundamental prerequisites for its long-term weakening will increase.The European Union, which had prepared a package of countermeasures in advance during Trump's previous term, has a significant arsenal of retaliatory actions.:1. Targeted restrictions for American tech giants2. Regulatory pressure on the US financial sector3. Manipulation of government debt portfoliosOf particular importance is the imbalance in trade in services (€109 billion in favor of the EU), which opens up additional levers of pressure.Against the background of the expected tightening of fiscal policy in the United States, Germany is showing a turn towards fiscal expansion. This divergent dynamics creates the foundation for a gradual strengthening of the euro.The current inability of the bears to test the 1.0715 level in EUR/USD indicates that the downward momentum is fading. However, considering:- Uncertainty of the real scale of tariff consequences (final decision expected on April 2)- The possibility of coordinating response measures between the EU, Japan and other affected economiesA wait-and-see approach with monitoring seems rational.:- Reactions of European regulators- Dynamics of inflation expectations in the USA- Technical signals when testing key levelsThe scenario of moderate EUR/USD growth in the medium term looks preferable, but its implementation will require confirmation of the resilience of the EU economy to external shocks.

In the United States, the Conference Board's consumer confidence report for March will be published.Earlier, a similar study by the University of Michigan showed a marked deterioration in sentiment caused by political uncertainty. The head of the Federal Reserve Bank of New York, John Williams, will also give a speech today.The IFO business activity index will be published in Germany. Investors are waiting to see if it will confirm the positive signal from the manufacturing PMI or repeat the decline in the services sector.Sweden will release producer price index data for February. The focus of attention will be on the sub-component of the domestic supply, which most accurately correlates with consumer prices.The Hungarian Central Bank will make a decision on the rate today. The regulator is expected to keep it at 6.50%, which is in line with the market consensus forecast.The People's Bank of China will make a decision on the key rate (1-year rate on medium-term loans). It is expected that it will remain unchanged, as the Central Bank of China is currently taking a wait-and-see attitude ahead of a possible rate cut by the US Federal Reserve.Eurozone: mixed PMI dataThe eurozone PMI for March was weaker than expected, although it generally reflected moderate economic growth. The composite index rose to 50.4 (expected 50.7), which is higher than the February reading of 50.2. The main growth was provided by the manufacturing sector, where the PMI unexpectedly rose to 48.7 (expected 48.2). However, the service sector disappointed, falling to 50.4 (forecast of 51.1, previous value of 50.6).Overall, the PMI data signals a positive start to 2025, with expected GDP growth of 0.2% QoQ. However, these data do not provide clear signals for the ECB's April rate decision, and the market has not changed its expectations yet.USA: industrial downturn amid tariff risksThe preliminary US PMI for March fell to 49.8 from 52.7 in February, reflecting a slowdown in business activity. The data shows the opposite trend compared to the eurozone.The manufacturing PMI returned to the contraction zone again amid uncertainty around trade tariffs, which was reflected in rising commodity prices and lower order volumes and employment. At the same time, the service sector showed a solid recovery, rising to 54.3 (from 51.0).The market reaction to this data was mixed. The EUR/USD exchange rate declined slightly, and the US stock markets played back positive expectations for easing trade restrictions. Donald Trump said that car tariffs will be introduced, but not all measures will take effect on April 2. It is possible that some countries will receive exceptions, which keeps the uncertainty around the US trade policy.UK: PMIs beat forecasts, supporting the poundThe preliminary PMI indices for March in the UK turned out to be better than expected, which led to a decrease in the EUR/GBP exchange rate. The composite index rose to 52.0 (expected 50.5), while growth in the service sector was particularly strong — 53.2 (forecast 51.0). At the same time, the industrial sector continues to experience difficulties, its PMI was 44.6 (47.2 expected).Despite the weak February data, employment figures began to improve. However, this increase should be interpreted with caution due to the increase in the national insurance contribution of employers since April. Pressure on prices in the service sector is decreasing, while the situation in industry remains ambiguous. In general, the data supports the scenario of a gradual easing of the Bank of England's policy with quarterly rate cuts.The geopolitical situationFollowing the talks in Saudi Arabia, the United States and Russia continued discussions aimed at establishing a maritime truce in the Black Sea ahead of negotiations on a broader ceasefire in Ukraine. Despite US optimism, the ongoing strikes between the sides highlight the fragility of the 30-day ceasefire.European countries remain skeptical about Russia's willingness to make real concessions, which increases uncertainty around possible agreements. A meeting of the US and Ukrainian delegations is scheduled in Saudi Arabia today.Stock markets: optimism amid lower trade risksEncouraging news about a possible easing of tariffs led to a rise in US stock indexes:• S&P 500 +1.8%• Nasdaq +2.3%• Russell 2000 +2.6%Investors took advantage of the moment to buy, especially the activity was high among Mag 7, which made this the best day for the group since January. Tesla became the main growth leader, adding 12%.In Europe, stock indexes remained at the same levels, despite the positive PMI data. However, activity in cyclical sectors such as banks and commodity companies indicates a latent increase in interest in risky assets.Nevertheless, optimism is waning today: Asian markets are showing multipolar dynamics, and futures on American and European indices are declining.Bonds and the foreign exchange market• The US indices showed growth, and the S&P 500 closed above the 200-day moving average again, which is associated with hopes for a reduction in tariff pressure.• US and European bond yields rose slightly, while spreads to peripheral assets narrowed in Europe.• The EUR/USD pair continues to trade around 1.08, and the improvement in market sentiment has put pressure on the yen.• In Canada, Prime Minister Mark Carney announced early elections on April 28, but the reaction of the foreign exchange market was restrained, as this step was expected.• The Norwegian krone was supported by rising oil prices, and EUR/NOK dropped below 11.40.• The Swedish krona strengthened and ended yesterday's session at its lows since the end of 2022, breaking the 10.90 mark.ConclusionsFinancial markets remain in a zone of uncertainty:• In the US, PMI data show a slowdown in industry, but growth in the services sector is still offsetting the negative effect.• In Europe, the PMI confirms a modest improvement in the economy, but does not provide clear signals for the ECB.• Geopolitical factors remain a key risk for the markets, despite the truce talks.Today, investors' attention will be focused on data on consumer confidence in the United States, as well as decisions by the central banks of Hungary and China.

NZD/USD analysis on March 25, 2025The New Zealand dollar remains under pressure against the US currency, trading in a narrow range near the 0.5725 mark. The pair is holding at local lows, updated on March 14, reflecting the dominance of "bearish" sentiment.The US dollar is showing mixed dynamics, which is facilitated by multidirectional macroeconomic data. In March, the S&P Global index of business activity in the services sector rose from 51.0 to 54.3 points, exceeding analysts' expectations (51.2 points). However, the index in the manufacturing sector unexpectedly dropped from 52.7 to 49.8 points, which was a signal of a slowdown in industrial growth.The New Zealand dollar received support after the publication of data on the Australian economy. The index of business activity in the service sector strengthened from 50.8 to 51.2 points, and in the manufacturing industry (according to data from Judo Bank) increased from 50.4 to 52.6 points.One of the key factors in the strengthening of the NZD/USD was the February performance of New Zealand's foreign trade. Exports increased from $6.06 billion to $6.74 billion, while imports decreased from $6.6 billion to $6.23 billion. This allowed the trade balance to reach a surplus of 510 million dollars, whereas a month earlier the deficit was recorded at the level of -544 million dollars.The New Zealand economy has emerged from the deepest recession since 1991, unrelated to COVID-19. In the fourth quarter of 2024, the country's GDP grew by 0.7% after declining by 1.1% in the previous period. However, the prospects for further growth acceleration remain limited. The Reserve Bank of New Zealand is likely to continue to regulate interest rates to support the recovery in domestic demand and strengthen consumer confidence.Senior Economist at Westpac Banking Corp. Michael Gordon noted that the quarterly economic growth exceeded market expectations (0.5%) and was in the upper limit of the forecasted range. The largest contribution to the recovery was made by the service sector, real estate, retail, hospitality, healthcare and social support.Technical analysis of NZD/USD for todayThe indicators give mixed signals on the daily chart.:• The Bollinger indicator is narrowing, indicating a decrease in volatility, but the range remains wide enough for active movements.• The MACD is declining, remaining below the signal line and approaching the zero mark, which indicates a continuing downward potential.• Stochastic has started to exit the oversold zone, which may signal an attempt to reverse upward in the near future.Trading recommendations• Sales can be considered after the breakdown of 0.5700 with a target of 0.5650. The protective stop loss is 0.5730.• If the exchange rate recovers and fixes above 0.5750, purchases with a target of 0.5800 are possible. The stop loss is 0.5720.

On Tuesday, USD/CAD shows an uncertain movement near the level of 1.4315. Investors are refraining from active actions in anticipation of new drivers that can set a clear direction for the asset. The caution of the bidders is explained by the mixed signals of the fundamental indicators.The March business activity indices in the United States presented a contradictory picture. The manufacturing sector unexpectedly contracted (the PMI fell from 52.7 to 49.8 points), while the service sector showed strong growth (from 51.0 to 54.3 points). Today, the market's attention is focused on data on new home sales and the price index, which may confirm a slowdown in price pressure in the construction sector.The Canadian Government is taking active steps to strengthen the national economy in the face of trade challenges. Prime Minister Mark Carney's plan includes:- Simplification of internal trade barriers- Investments in transport infrastructure- Acceleration of the implementation of major projectsThese measures are aimed at increasing the competitiveness of the Canadian economy in the face of external pressure.USD/CAD technical analysisThe main forex indicators paint an ambiguous picture:- Bollinger bands show a narrowing of the range- MACD shows weak bearish dynamics- Stochastic is turning downwards after a recent riseThis configuration indicates market indecision and a possible trend change.Trading recommendationsShort positions: relevant for the breakdown of 1.4300 with a target of 1.4200. The stop loss is 1.4350.Purchases will be promising with a rebound from 1.4300 and overcoming 1.4350 with a target of 1.4451. Stop loss 1.4300

FOREX Fundamental analysis for EUR/USD March 25, 2025The prevailing stereotype about the direct dependence of the dollar exchange rate on the strength of the American economy requires revision. The historical example of 2023-2024, when the strengthening of the USD really correlated with the economic superiority of the United States, may not work in the current conditions.JP Morgan research shows that the introduction of trade barriers will cause more damage to the U.S. economy than to the global economy as a whole. This fundamentally changes the traditional understanding of the factors influencing exchange rates.The scenario of full-scale universal tariffs, which could really paralyze the global economy, is giving way to selective measures. However, it is precisely this selectivity that creates the conditions under which individual economies can gain competitive advantages over the United States. The exclusion policy actively promoted by the Trump administration may lead to a paradoxical result - an increase in the gap between the growth rates of global and American GDP.The gradual and opaque introduction of trade restrictions creates significant difficulties for corporate planning. Uncertainty about the timing of duties on key product groups (semiconductors, automobiles) and possible exclusions is already affecting economic performance. The March drop in the US manufacturing PMI below the critical 50-point mark is a clear confirmation of this thesis.Market expectations of a recession are becoming particularly dangerous, as they can be realized according to the principle of a self-fulfilling prophecy. Historical analysis shows that the period between the growth of recession expectations and the actual start of the recession is usually about seven months. At the same time, the current situation differs from 2022, when fears of a recession did not materialize, since now a political component is being added to economic factors.There is a unique situation when the US administration publicly calls for easing monetary policy, citing a temporary decrease in energy inflation. However, the Fed is showing restraint, as evidenced by the revision of committee members' forecasts towards fewer easing measures. This creates an additional uncertainty factor for the currency markets.The current EUR/USD correction is likely to be short-term. The pressure on the pair will remain until the end of March, but then the key pivot level for the current strategy remains at 1.0855. As long as the exchange rate is below this limit, short positions are preferred. However, it should be borne in mind that any softening of the US administration's rhetoric on trade issues may provoke a sharp trend reversal.

Eurozone: impact of PMI on ECB decisionAn important event this week will be the publication of preliminary PMI indices for March in the eurozone. The data may influence the decision of the European Central Bank on interest rates in April.The composite PMI is expected to rise from 50.2 to 50.6 due to the stabilization of the manufacturing sector. The manufacturing PMI is likely to rise from 47.6 to 48.4, while the indicator of business activity in the service sector will remain at 50.6.The dynamics of the PMI historically correlates with the ZEW index, which also rose in March, which may indicate an improvement in economic expectations.USA: weak dynamics in the manufacturing sectorIn the US, preliminary PMI data for March will also be published. Earlier, regional leading indicators pointed to a slowdown in industrial growth after the winter recovery, which may increase investor concern.The calendar of macroeconomic events in the United States for the current week is quite light. The Conference Board consumer confidence index will be released on Tuesday, and the core PCE price index, which is a key indicator of inflation for the Fed, will be released on Friday.China: stable monetary policy of the People's BankThis week, the People's Bank of China will make a decision on the key interest rate (1-year rate on medium-term MLF loans). It is expected that it will remain unchanged, as the regulator is not in a hurry to take active measures, awaiting further actions by the US Federal Reserve System. With a stable USD/CNY exchange rate, the Chinese Central Bank is more likely to focus on changes in the Fed rate, using alternative mechanisms to support the economy, such as targeted loan programs.Market overview: key events• Japan: The PMI indices for March were worse than expected. The manufacturing PMI dropped to 48.3, the lowest level in a year, while the services index fell to 49.5, dropping below 50 for the first time since August 2020. The head of the Bank of Japan, Kazuo Ueda, confirmed his readiness to raise rates if core inflation approaches 2%. Two increases of 25 bps are projected in 2024, the next one in July.• USA: Fed members continue to make cautious comments on the regulator's policy. The head of the Federal Reserve Bank of New York, John Williams, said that a moderately restraining policy remains relevant. The Fed is still considering the first rate cut in June, followed by quarterly adjustments of 25 bps to the target range of 3.00–3.25% by June 2026.• Eurozone: The consumer confidence index fell from -13.6 to -14.5 in March, which is a negative signal for the ECB before the April meeting. The deterioration in household expectations calls into question the recovery in private consumption that the regulator is counting on.• Germany: The Upper House of Parliament has approved a large-scale fiscal stimulus package, including 500 billion euros for infrastructure, increased defense spending and easing regional budget constraints. These measures can accelerate economic growth, but also increase inflationary risks.• Canada: Prime Minister Mark Carney announced early elections on April 28. Initially, the Conservatives had a significant advantage, but the influence of Donald Trump reduced their gap.Geopolitics: Ukraine negotiations and trade risksConsultations between the United States and Ukraine on energy security and protection of critical infrastructure have begun in Saudi Arabia. Washington expects to conclude a 30-day truce by April 20, but the overnight strikes by both sides show that the situation remains unstable.In addition, Donald Trump confirmed that a new system of reciprocal tariffs will be announced on April 2, which could significantly affect global trade. It remains unclear exactly how the tariff regimes will change, but earlier Trump compared the VAT system in the EU with the actual trade barriers for the United States.Stock markets and currencies• Stock markets: Global indexes ended Friday in a slight negative, but the week as a whole turned out to be positive due to reduced concerns about tariffs. American technologies showed growth: Nasdaq +0.5%, S&P 500 +0.1%, Dow +0.1%. Asian markets are trading in different directions this morning, and futures on European and American indices indicate growth.• Forex: The US dollar ended the week with a strengthening, increasing in price for the third day in a row. EUR/USD briefly dropped below 1.08, but closed slightly higher. Despite the strength of the dollar, the Norwegian and Swedish krona strengthened, EUR/SEK fell below 11.00, and EUR/NOK — to 11.40.Current market conditions remain volatile, and the coming weeks will show how much the Fed's policy, trade risks, and geopolitical tensions will affect asset dynamics.