Synopsis:

Credit Agricole has upgraded its GBP/USD forecast, now expecting the pair to rise to 1.35 by Q4 2025 and 1.36 by Q4 2026. However, the bank is less bearish on EUR/GBP, citing a more resilient Eurozone economy and a less dovish ECB. As a result, EUR/GBP is expected to hover around 0.83 for most of 2025 before gradually drifting lower to 0.81 in 2026.

Key Points:

1️⃣ GBP/USD Forecast Upgraded 📈

• New target: 1.35 (Q4 2025), 1.36 (Q4 2026).
• Reflects improved UK outlook and relative USD weakness over time.

2️⃣ EUR/GBP to Remain More Resilient in 2025 💶➡️💷

• Less bearish view on EUR/GBP due to Eurozone economic resilience.
• Less dovish ECB outlook keeps EUR/GBP stable near 0.83 for most of 2025.

3️⃣ Gradual Downtrend in EUR/GBP Expected in 2026 📉

• EUR/GBP projected to drift lower toward 0.81 as the UK gains relative strength.

Conclusion:

Credit Agricole raises its GBP/USD forecast, expecting a move to 1.35 by late 2025 and 1.36 by 2026. However, the EUR/GBP outlook remains less bearish, with the pair staying around 0.83 in 2025 before trending lower to 0.81 in 2026. The Eurozone’s economic resilience and ECB policy stance keep EUR/GBP supported in the near term.

Sterling is outperforming other major currencies in Thursday's trading, supported by a more hawkish-than-expected BoE rate hold, despite weakening slightly after the Fed's hold on Wednesday, and still poised for further gains beyond its nearby 2025 high. The dollar's uptick appears driven by haven buying after the overnight equity and risk selloff with long-end Treasury yields dropping, despite the Fed's repeated no-rush-to-cut stance. Fed Chair Jerome Powell's comments on high economic uncertainty further support haven demand for Treasuries and by extension the dollar. So, given inflation and rate uncertainty amid steady Fed and BoE rate expectations, the one constant remains uncertainty as both central banks have noted they expect rates to remain steady. Thursday's BoE rate hold came with a surprise vote of 8-1 to hold versus a forecast of 7-2, and the BoE warned against assumptions that rates would be cut over the meetings. With Fed and BoE rhetoric touting similar policy expectations, markets must wait to see who moves first. Currently, LSEG's IRPR predicts three Fed cuts in 2025 versus two from the BoE. If these expectations hold, GBP/USD is likely to continue its upward trend, with resistance near 1.30 potentially giving way to October highs above 1.31 and September peaks above 1.34.
GBP Chart:

(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

Synopsis:

Goldman Sachs has revised its USD/JPY forecasts lower, citing growing downside risks to the US economy and higher policy uncertainty. The bank notes that diminished US exceptionalism is a meaningful risk to USD strength, and in periods of heightened concern over US growth, the JPY tends to outperform. With lower yields and weaker equities reducing USD upside potential, the range for USD/JPY has now shifted lower, limiting further gains unless uncertainty subsides.

Key Points:

1️⃣ USD/JPY Range Has Shifted Lower 📉

• Increased US economic uncertainty is weighing on USD.
• The yen typically outperforms when US yields and equities decline.

2️⃣ US Growth Risks & Policy Uncertainty Support JPY Strength 🇯🇵

• Higher policy uncertainty is reinforcing safe-haven demand for JPY.
• Market sentiment toward US growth remains fragile, adding to yen appeal.

3️⃣ Updated USD/JPY Forecasts 🎯

• New projections: 150 (3M), 151 (6M), 152 (12M).
• Previous forecasts: 152, 154, 156.
• More limited USD/JPY upside unless policy risks ease.

Conclusion:

Goldman Sachs sees growing downside risks for the USD, prompting a lower revision in USD/JPY forecasts. With weaker US growth expectations, policy uncertainty, and falling yields, the yen is likely to remain strong, capping further upside for USD/JPY.

• USD/CAD bounces back as dollar pares Fed drop, risk sentiment sours

• Canadian PM Carney expected to call snap election for Apr 28

• Dollar shorts are in a tricky position

• USD/CAD nears 1.44, though key resistance sits at 1.4500-40

• U.S. tariffs continue to pose a threat to the currency

• In turn, dips in the pair continue to find good demand

• Support resides 1.4253 (100DMA), 1.4180

• With political risks on the rise, this supports USD/CAD upside
USDCAD daily chart

(Justin McQueen is a Reuters market analyst. The views expressed are his own.)

• Cable hits 1.2946 after extending south from 1.3015 (19-week high in Asia)

• 1.2946 is lowest level since Monday (1.2926 was low that day)

• Drop to 1.2946 spurred by USD demand; GBP/EUR up to 1.1943 (two-week high)

• BoE rate hold expected at 1200 GMT; at least two MPC members to vote for cut

• The consensus forecast is that the BoE will reduce rates on May 8

• UK pay growth, excluding bonuses, up 5.9% in 3 months to Jan YY, as expected

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

March 20 (Reuters) - Foreign exchange traders can use a simple option strategy to insure against a bigger EUR/USD setback, as the currency pair has faltered ahead of major technical resistance.

Germany's parliament approved plans for a massive spending surge on Tuesday, throwing off decades of fiscal conservatism in the hope of reviving economic growth and scaling up military spending for a new era of European collective defence.

EUR/USD had reached its highest levels in more than five months, hitting 1.0955 ahead of the German vote. However EUR/USD was capped by the major 1.0957 Fibo, a 76.4% retrace of the 1.1214 to 1.0125 (September to February) EBS drop. That increases the risk that the euro could be set for a much bigger relapse in the days and weeks ahead.

Those who want to insure against a bigger EUR/USD fall can buy a one-week 1.0860 EUR put option at a cost of 44 pips, priced with spot at 1.0867. Profit potential is unlimited if spot is below the 1.0816 breakeven point at the March 27 expiry, while losses are limited to the 44 pips premium paid.

For more, click on [FXBUZ]

Weekly Chart:


Fenics Options Pricing Grid:

(Martin Miller is a Reuters market analyst. The views expressed are his own)

• Traders betting EUR/USD rises about to get bullish signals

• 20-DMA set to rise over 200-DMA, 55-DMA above 100-DMA - Golden Crosses

• Top 20-week Bollinger Bands is 1.0876

• Speed and size of March gains saw rally stretched - pullback likely

• The 200-DMA at 1.0725 likely limit for dips in the near-term

• The 200-DMA also lies close to centre of 2023-2024 range - neutral spot

• Potentially EUR/USD could settle, become trapped, in the old range

• Extremes traded 2023-2024 - 1.0448-1.1276, most trade within 1.05-1.10

•
EURUSD

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• Cable falls to 1.2963 after UK pay growth comes in fraction below forecast

• 5.8% vs 5.9% f/c. 1.2963 = intra-day low. 1.2986 was low just before UK data

• Bids likely pre-1.2950 (1.2956 was Wednesday low; 1.2953 was Tuesday low)

• 1.3015 was new 19-week peak in Asia (1.3010 = Tuesday/Wednesday high)

• BoE rate hold expected at 1200 GMT; at least two MPC members to vote for cut

• UK fiscal update next week. Fed in no rush to cut rates; Trump disagrees

GBPUSD

(Robert Howard is a Reuters market analyst. The views expressed are his own)

• Shares of New Murchison Gold fall 5.9% to A$0.016

• Stock set for its weakest session since March 5, if current losses hold

• The mineral explorer receives commitments to raise A$16.5 million ($10.47 million) by issuing 1.3 million shares at A$0.013 per new share

• Placement price represents a 23.5% discount to stock's last close

• About 72.1 mln shares change hands, 3.6x the 30-day average of 20 mln

• NMG stock up 77.8% YTD, including current session's moves

($1 = 1.5763 Australian dollars)

(Reporting by Manasi Dasa in Bengaluru)

Synopsis:

Both Morgan Stanley and BofA expect the BoE to hold rates at 4.50% during Thursday’s March policy meeting, with a split vote but no immediate policy shift. Morgan Stanley sees a 6-3 vote, while BofA expects a 7-2 vote, with Dhingra and Mann voting for a cut. While the gradual and careful approach remains in place, recent hawkish data, inflation forecasts, and shifting dovish members turning more neutral suggest that the BoE will stick to its cautious stance. Both banks continue to expect the first rate cut in May.

Key Points:

1️⃣ BoE Expected to Hold at 4.50%, With a Split Vote 🏦

• Morgan Stanley: 6-3 vote for no change.
• BofA: 7-2 vote, with Dhingra & Mann voting for a cut.

2️⃣ Dovish Members Turning More Neutral 🔄

• Taylor and Ramsden, previously leaning dovish, now more neutral, supporting a gradual approach.
• No urgent shift in policy expected despite market pricing for cuts.

3️⃣ "Gradual and Careful" Policy Remains the Baseline 📉

• BoE added "careful" to its February statement, signaling uncertainty.
• Hawkish inflation forecast revisions & supply-driven growth weakness reinforce the hold decision.

4️⃣ Next Rate Cut Still Expected in May 📆

• Morgan Stanley & BofA still forecast the first rate cut in May.
• Near-term risks skew hawkish, but easing is still expected later in 2025.

Conclusion:

Both Morgan Stanley and BofA expect the BoE to hold at 4.50%, with a split vote but no urgency to shift policy. The cautious approach remains intact, with dovish members turning neutral and inflation concerns keeping cuts on hold for now. The first rate cut is still expected in May, but hawkish near-term risks persist.

• Steady in a 1.2999-1.3015 range with moderate flow on FX Matching

• Bank of England set to sit tight on rates as uncertainty mounts

• Wait and see at the US tariffs, and German investment boost impact

• Fin min Reeves to announce GBP 9.9BLN fiscal buffer has been rebuilt BBG

• Charts - 5, 10 & 21-day MAs climb, as 21-day Bollinger bands head north

• Positive daily momentum studies - the Feb/March uptrend remains in play

• Friday's 1.2911 base and then the 1.2824 21-day moving average support

• The 1.3046 range top in November 2024 is the next significant resistance

• A sustained break of the 1.2824 21-day moving average ends the topside bias
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• AUD/USD trades lower as it digests Fed statement and AU employment release

• Feb employment -52.8k (poll +30k), Unemployment 4.1% (poll 4.1%)

• AUD likely to challenge 0.6320 support on employment miss

• U.S. current account, jobless claims, Philly Fed all due Thur

• Domestically, AU CPI due Wed (Reuters poll 2.5% weighted CPI y/y)

• Range early Asia 0.6329-64, support 0.6320 0.6260, resistance 0.6390 0.6415
AUD daily - midday


AUD midday

(James Connell is a Reuters market analyst. The views expressed are his own.)

• +0.05% after closing steady - resilient with the USD up 0.2%, EUR/GBP -0.4%

• The BoE rate decision leads event risk - no change at 4.5% is expected

• Expect a cautious stance amid tariff uncertainty and rising defence spending

• Charts - 5, 10 & 21-day MAs climb, as 21-day Bollinger bands head north

• Positive daily momentum studies - the Feb/March uptrend remains in play

• Friday's 1.2911 base and then the 1.2844 21-day moving average support

• The 1.3046 range top in November 2024 is the next significant resistance

• A sustained break of the 1.2844 21-day moving average ends the topside bias
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• +0.05% after closing down 0.35% - volatile Turkish lira weighed, USD firmed

• Trump, Zelenskiy pledge in phone call to work for end to war in Ukraine

• ECB President Lagarde will speak before the European Parliament today

• Regional response to the FOMC leads - EUR/USD expected to range trade

• Charts - 5, 10 & 21-day moving averages climb, as 21-day Bolli bands rise

• Neutral daily momentum studies - Uptrend stalled, topside bias remains

• 1.0980 0.786% Sep/Feb fall are first resistance, then the 1.1214 Sep high

• Last week's 1.0805 low, and then the 1.0725 200 DMA are initial supports

• 1.0900 2.674BLN and 1.0910 1.466BKN BLN close March 20th strikes
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• USD/JPY offered in Asia after closing 0.4% lower Wed on US stagflation fears

• Fed forecasts slower economic growth, higher inflation in 2025

• Sticks to projection of 2 quarter-point interest rate cuts this year

• Treasury yields slip; 2-year yield drops 7bps, closes below 4%

• Meanwhile BOJ Ueda's cautiously hawkish tone on rates likely to support JPY

• Japan markets closed Thu, lack of liquidity may lead to increased volatility

• Support at 148.77, 38.2% of 146.545-150.15 rally eroded, next support 148.35

• Resistance 149.15-20, 149.50-60; range Wed 148.62-150.15, Thu 148.55-148.87
JPY:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

Synopsis:

CIBC sees no surprises in the Fed’s March FOMC decision, with rates held steady and the dot plot unchanged, signaling two cuts in 2025, two in 2026, and one in 2027 (total 125bps of easing over three years). However, there is now more consensus among FOMC members on this path. The Fed also downgraded GDP projections, raised PCE inflation forecasts for 2025, and slightly increased the unemployment rate outlook, highlighting rising uncertainty. Additionally, the QT program was significantly slowed, though this appears to be a technical adjustment rather than a policy shift. Powell faces growing challenges balancing risks to growth and inflation, reinforcing a cautious, data-dependent approach.

Key Points:

1️⃣ Fed Holds Rates, No Changes to Rate Path 🏦

• Dot plot unchanged: Two cuts in 2025, two in 2026, and one in 2027.
• Total expected easing remains 125bps over three years.
• More consensus among FOMC members compared to December.

2️⃣ Growth Downgraded, Inflation Revised Higher 📊

• GDP slightly downgraded across all years.
• 2025 core PCE inflation revised up by 0.3pp, headline inflation slightly higher in 2026.
• Unemployment rate projection ticked higher for 2025, suggesting labor market concerns.

3️⃣ QT Significantly Slowed, But Not a Policy Shift 🔄

• Likely due to banking system reserves and debt ceiling concerns.
• Not an indication of broader policy easing.

4️⃣ Powell’s Challenge: Dual Mandate Pushing in Opposite Directions ⚖️

• Downside risks to GDP vs. upside risks to inflation & unemployment.
• Uncertainty remains high, especially with inflation expectations still sticky ahead of potential trade war impacts.
• Powell expected to maintain a cautious, data-dependent stance.

Conclusion:

CIBC sees the Fed maintaining its cautious stance, with two cuts still expected in 2025 but higher uncertainty around growth and inflation risks. The QT slowdown is a technical move rather than a policy shift, while Powell faces a growing challenge in balancing economic risks. The Fed’s cautious, data-driven approach is likely to remain in place.

• AUD/USD rallied off session lows in response to Fed outcome/policy statement

• Fed held FFR steady (4.25-4.50%), retains outlook of 50bps cuts by end 2025

• Powell noted unusually elevated uncertainty around economic outlook

• Updated Fed quarterly forecasts imply risks of higher inflation/lower growth

• Focus returns to domestic data, will set direction of next AUD move

• AU employment due 0030 GMT Thur (Reuters poll +30k jobs, 4.1% unemployment)

• Overnight AUD range 0.6321-63, support 0.6320, resistance 0.6390 0.6415
AUD mng

(James Connell is a Reuters market analyst. The views expressed are his own.)

• AUD/USD traded a tight range in NY's morning, held near overnight lows

• Pair neared 0.6320 ahead of the Fed statement, rallied after it

• Fed upped inflation, unemployment projects & lowered GDP projections

• US yields turned lower which dragged the US$ downward

• Stocks added to gains, USD/CNH sank, gold turned positive

• AUD/USD rallied above 0.6355, remained lower on the session, was down -0.10%

• Rising monthly RSI, hold above daily cloud, slew of DMAs gives longs comfort
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• EUR/USD added to earlier losses, neared 1.0860 before the Fed statement

• Fed's SEP for 2025 increased inflation, unemployment & lowered growth

• US yields softened which weighed down the US$

• EUR/USD rallied towards 1.0895 and sat just below the 5-DMA

• Daily RSI is falling but monthly is rising which sends mixed signals

• Fed Chair Powell's presser remains a risk
eurusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Synopsis:

SocGen has updated its G10 FX forecasts to reflect Germany’s fiscal expansion, US economic vulnerability, and Japan’s escape from deflation. The expectation of lower US Treasury yields and narrowing US-European rate spreads suggests a weaker USD outlook unless FX markets shift away from rate/yield-driven moves. The yen remains significantly undervalued, with SocGen most confident in Japan’s reflation story.

Key Points:

1️⃣ USD to Weaken as Yields Fall & Rate Differentials Narrow 📉

• Lower US Treasury yields expected in the coming year.
• US-European rate spreads narrowing, making USD less attractive.

2️⃣ Japan’s Escape from Deflation = JPY Upside 🚀

• JPY remains too cheap, with SocGen seeing strong conviction in Japanese reflation.
• The key question is how fast or slow the yen’s appreciation will be.

3️⃣ US Growth Forecasts Must Fall Further to Justify FX Pricing 📊

• Consensus growth forecasts for the US have fallen slightly.
• More downward revisions would be needed to fully justify current FX and rate pricing.

4️⃣ Updated FX Forecasts 🎯

• EUR/USD target: 1.13 (year-end 2025).
• USD/JPY target: 139 (year-end 2025).

Conclusion:

SocGen has updated its G10 FX forecasts to reflect a weaker USD in 2025, driven by lower US yields, narrowing rate differentials, and Japan’s economic shift. The yen remains deeply undervalued, and FX markets will likely adjust as US economic fragility becomes clearer.

• Cable has struggled to maintain a foothold above 1.30

• Stalling momentum largely stems from euro pullback

• With UK budget due Mar 26 - risks to GBP are lower leading into event

• BoE unlikely to move needle for sterling with UK budget ahead

• Tighter GB/US rate differentials backs a retracement in cable

• 10yr spreads suggest a test of 1.28 is possible

• Dollar shorts are in a tricky position
gbpusd vs 10yr spreads

(Justin McQueen is a Reuters market analyst. The views expressed are his own.)

Synopsis:

BofA's March Global Fund Manager Survey (FMS) reveals one of the biggest sentiment shifts in history, driven by stagflation fears, trade war risks, and the end of US exceptionalism. The survey shows the second-largest drop in global growth expectations ever, the biggest decline in US equity allocation on record, and the largest jump in cash holdings since March 2020. While sentiment suggests a market bottoming process, fund managers are not yet fully positioned for recession or extreme bearishness.

Key Findings:

1️⃣ Massive Growth Expectation Collapse 📉

• 2nd largest drop ever in global growth expectations.

2️⃣ Record Sell-Off in US Equities 📊

• Biggest decline in US equity allocation on record.

3️⃣ Cash Holdings Spike to Crisis Levels 💵

• Biggest jump in cash positioning since March 2020.
• Reflects defensive positioning amid rising uncertainty.

4️⃣ Bearish Sentiment, But Not at Capitulation Levels 🔄

• No extreme long positions in recession hedges (bonds, defensive assets).
• Positioning is cautious but not at full “panic sell” levels.

5️⃣ Key Market Implications for S&P 500 (SPX) 🏛️

• SPX >6,000 requires easing inflation and trade war concerns.
• SPX <5,000 likely in a full recession scenario.

Conclusion:

BofA’s March FMS shows a sharp deterioration in risk appetite, with fund managers aggressively cutting equities and boosting cash holdings. However, positioning is defensive but not at full-blown bear market extremes. The next market move depends on inflation and trade war developments, with SPX needing a reversal in macro risks to push above 6,000, while a recession would drive it below 5,000.

March 19 (Reuters) - EUR/USD fell away from the 76.4% Fibonacci retracement of the 1.1214-1.0125 decline Wednesday and the pair may extend its slide if the Fed does not cooperate with market expectations for future rate cuts. Though no move by the U.S. central bank is anticipated on Wednesday, SOFR futures prices indicate investors expect at total of 75bps of cuts from the Fed in 2025 . That contrasts with the Fed's last Summary of Economic Projections, which indicated only two cuts would be made this year. If Wednesday's dot plot sticks to only two cuts, EUR/USD could fall sharply as U.S. yields would be expected to rally, pushing German-U.S. spreads and terminal rate spreads for the Fed and ECB wider, thus increasing the dollar's yield advantage over the euro. Should Fed Chair Powell's presser focus more on inflation risk from President Donald Trump's trade and tariff policies instead of slowing economic growth, the U.S. rate complex and dollar might also rally significantly.

EUR/USD bears could then take control and erase a good portion of the pair's rally off February's monthly low. A move below the 200-DMA and towards key support in the 1.0550-1.0600 zone could then be on the cards.
deus


eurusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Synopsis:

Goldman Sachs expects no change in Fed policy at today’s March FOMC meeting, with the median 2025 dot plot still showing two rate cuts. The Fed’s updated economic projections will likely reflect higher tariffs and policy uncertainty, leading to higher 2025 core PCE inflation (2.8%) and slower GDP growth (1.8%). While rate normalization now appears further off, the dot plot is expected to remain unchanged. Goldman also anticipates a discussion on slowing balance sheet runoff, with a formal announcement likely in May, though a QT shift this week remains a risk.

Key Points:

1️⃣ Dot Plot Expected to Show Two Cuts in 2025 📊

• 2025 Fed funds rate forecast: 3.875% (two cuts).
• 2026: Two cuts to 3.375%.
• 2027: One cut to 3.125%.
• Neutral rate likely revised up to 3.125% (from 3.00%).

2️⃣ Economic Projections Adjusted for Tariffs & Uncertainty 🌍

• 2025 core PCE inflation revised up to 2.8% (vs. 2.5% prior).
• 2025 GDP growth revised down to 1.8% (vs. 2.1% prior).

3️⃣ Fed Balance Sheet Reduction (QT) Discussions in Focus 🏦

• Fed likely to discuss slowing Treasury runoff.
• Formal announcement expected in May, but could come as early as today.
• MBS runoff expected to continue until Q3.

Conclusion:

Goldman Sachs sees the March FOMC meeting reinforcing the Fed’s patient stance, with two rate cuts still projected for 2025 despite higher inflation and slower growth. Balance sheet discussions will be closely watched, with a May announcement likely but a risk of action today. The Fed remains cautious amid tariff-related uncertainty, delaying the path to normalizatio