• GBP/USD unchanged in Asia, recovers from an early 0.25% decline

• Under pressure after failing to sustain rally above 1.3000 last week

• Finance Minister Rachel Reeves delivers half-yearly budget update speech Wed

• Expected to announce belt-tightening after new jump in government borrowing

• GBP 2 bln civil service spending cuts eyed; fiscal rules to be adhered to

• BoE governor Andrew Bailey speaks Mon; UK inflation, final Q4 GDP due

• Support 1.2880-85, 1.2840-50, resistance 1.2950-55, 1.3000-10

• Friday range 1.28855-1.29695, Asia range 1.2883-1.2915
GBP:

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

• AUD/USD broke below its 55-DMA late Fri, softness remains Mon morning

• USD given respite by EUR profit taking and Fed caution on rate cuts

• Support near 0.6260 targeted, stop loss selling to emerge beneath

• Treasurer Chalmers' expectations management ahead Tue budget weighs on AUD

• RBA meeting Mar 31-Apr 1 moves into focus, no OCR change expected

• Range early Asia 0.6262-81, support 0.6260 0.6190, resistance 0.6390 0.6415
AUD mng

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

Synopsis:

Following the BoE’s March meeting, ING maintains its call for three rate cuts in 2025, though acknowledges that elevated data uncertainty and fiscal headwinds pose downside risks to UK growth and GBP. Despite inflation proving sticky, the BoE’s evolving tone—especially with Catherine Mann shifting away from dovish dissent—suggests greater openness to faster easing if labour market weakness emerges. Ahead of next week’s UK Budget, ING remains cautious on GBP and sees better downside opportunities in GBP/USD (Cable) rather than EUR/GBP.

Key Points:

1️⃣ BoE Hold with Subtle Hawkish Repricing 🏦

• Sterling curve saw a modest 5bp hawkish repricing after the BoE’s hold.
• Only one dovish dissenter left, as Catherine Mann reverted to a more neutral stance.
• BoE hinted that labour market deterioration could accelerate rate cuts.

2️⃣ Three Cuts Still Expected in 2025, But Risks Are Skewed 🔁

• ING’s base case: three cuts, but growth risks from tax hikes, tariffs, and fiscal squeeze weigh heavily.
• Sticky inflation means the Sonia curve only prices in two cuts, and rightly so.

3️⃣ UK Budget Next Week: Risk for GBP and Bonds 📉

• Upcoming corporate tax hikes and likely spending constraints will challenge growth.
• Budget likely to dampen sentiment for UK assets, limiting GBP upside.

4️⃣ GBP Weakness Best Played via Cable, Not EUR/GBP 💷

• ING sees limited scope for EUR/GBP to rise given supportive EUR dynamics.
• Prefers fading GBP strength via GBP/USD, especially if US data surprises to the upside.

Conclusion:

ING retains a bearish bias on GBP, especially into the UK Budget, expecting the mix of fiscal tightening, tariffs, and sticky inflation to reinforce downside risks to growth. With the BoE showing more flexibility, the risk is that GBP underperforms, particularly against the USD. Hence, shorting Cable is the preferred strategy over EUR/GBP.

March 21 (Reuters) - The dollar index climbed for the third day on Friday, hitting a two-week high due to short-covering following Fed comments and a shift towards safety ahead of the April 2 deadline for reciprocal U.S. tariffs. New York Federal Reserve President John Williams said that monetary policy is appropriately positioned at the moment, considering the economy's performance amid an uncertain outlook. Federal Reserve Governor Christopher Waller expressed his opposition to the central bank's recent decision to slow the reduction of its securities holdings. Chicago Fed President Austan Goolsbee said it remains uncertain as to whether the Trump administration's tariff plans will result in sustained inflation. The risk tone improved marginally after President Donald Trump said that he plans to speak with Chinese President Xi Jinping and the two leaders will talk about tariffs, adding that there is some flexibility.

EUR/USD is set for its first weekly loss in March since February 28 on softer bund yields and as long positions are trimmed. Greek central bank chief Yannis Stournaras said a rate cut in April is increasingly likely since inflation is slowing, wage growth is moderating and service price pressures are easing. EUR/USD is hovering above the base of its 1.0796-1.0954 two-week range.

Upcoming quarter-end flows and U.S. February PCE are seen as potential directional catalysts. There will also be attention paid to progress on Ukraine ceasefire talks next week.

Friday's pivot toward havens sent EUR/CHF lower, as well. GBP/USD dipped on Friday and may see further losses before the release of the UK budget on March 26. Chancellor Rachel Reeves is expected to reveal the largest spending cuts, further challenging an already sluggish UK economic expansion.

Associated pound weakness could see cable revisit its 200-day moving average at 1.2790-1.2800. The pair needs a close above 1.30 to entice bulls. USD/JPY reversed an earlier loss, turning higher as Treasury yields firmed following Fed comments. The pair holds a slight upward bias within a 148-150 range though haven-linked yen demand may slow its advance.

Longer-term bears are not seen exiting short positions until 151 is eclipsed. Japan data next week, including services PPI and updated PMI, will be closely examined for any signs of changing price trends. Additionally, the first-quarter Tankan report will be analyzed. AUD/USD continues to trade defensively, slipping below its 55-day moving average at 0.6279 as gold retreats and the offshore yuan weakens. China's central bank said it will cut banks' reserve requirement ratio and interest rates at the "appropriate time" and strengthen the resilience of its forex market.

Treasury yields were mixed with the curve steepening. The 2s-10s curve was up about 3 basis points to +30.7bp.

The S&P 500 slid 0.39% on weakness in the materials sector

Oil rose 0.41% on supply worries after U.S. sanctions on Iran and this week's OPEC+ output plan. Gold slipped 0.77% while U.S. copper edged down 0.05% with the stronger dollar weighing on metal prices

Heading toward the close: EUR/USD -0.30%, USD/JPY +0.27%, GBP/USD -0.32%, AUD/USD -0.43%, DXY +0.30%, EUR/JPY +0.01%, GBP/JPY -0.02%, AUD/JPY -0.15%.(Editing by Burton Frierson Reporting by Robert Fullem)

• GBP$ -0.4%, slips to 1.29, door open for 200DMA test (1.2790-1.2800)

• Euro topside stalls adds to bearish drift in GBP

• Jump in government borrowing underlines fiscal headwinds ahead

• Unwind of sterling exposure likely in lead up to UK budget

• Stage set for a dollar rebound
GBPUSD daily chart

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

Synopsis:

Nomura assesses potential FX market behavior if US equities undergo a deeper correction, drawing on prior bear market episodes like the Dotcom crash, GFC, Covid-19, and the 2022 inflation-driven sell-off. Historically, high-beta currencies such as KRW, IDR, NZD, and AUD have seen the steepest declines, while RMB and CHF have shown resilience. However, JPY and EUR may behave differently this time, with JPY likely to outperform due to Japan's improving macro backdrop and BOJ policy normalization, and EUR buffered by rising fiscal support and reduced ECB cut expectations.

Key Points:

1️⃣ High-Beta Currencies Most Vulnerable in Equity Bear Markets 📉

• Historically, KRW, IDR, NZD, and AUD depreciate sharply during major S&P 500 sell-offs.
• On average:
  • KRW -26.5%
  • IDR -20.5%
  • NZD -16.3%
  • AUD -16.2%

2️⃣ JPY Performance Depends on Macro Context, This Time Favors Strength 🇯🇵

• JPY reaction has varied in past:
  • Weaker in 2001 (BoJ QE)
  • Weaker in 2022 (Fed tightening)
• Current environment favors JPY strength:
  • Weakening US growth and questioning of US exceptionalism
  • Japan macro and inflation improving
  • BoJ tightening cycle underway

3️⃣ EUR May Hold Up Better Than in Past Bear Markets 🇪🇺

• In previous crises, EUR underperformed vs. USD.
• This time, fiscal expansion, macro resilience, and potential ECB repricing support EUR.
• Potential peace progress in Ukraine and rebalancing of US asset holdings also positive for EUR.

Conclusion:

If US equities experience a major correction, expect broad USD strength driven by risk aversion—but JPY and EUR could outperform other G10/Asia FX due to macro divergence and policy support. Meanwhile, high-beta currencies like AUD, NZD, and KRW remain most vulnerable, consistent with past bear market dynamics.

March 21 (Reuters) - GBP/USD fell on Friday, closing out what has been a soft week as the dollar sees a modest reprieve and 1.3000 has been a bridge too far, while risks are now skewed to the downside as UK budget ahead looms on March 26. The mood music surrounding the UK budget is downbeat. And with talk that Chancellor Reeves is set to reveal the biggest spending cuts since austerity leaves sterling in a precarious position as growth inhibiting measures will provide a further headwind to the already anaemic growth.

Though the recent Bank of England decision was a touch more hawkish than expected the impact on sterling was negligible, given that the meeting ultimately did not move the needle for the rate outlook. The central bank is still expected to deliver a rate cut at the May meeting. Next week, BoE Governor Andrew Bailey will deliver a speech, however, with the backdrop of heightened economic uncertainty, data will matter more in guiding policy. That said, the door is open for cable to retest the 200-day moving average at 1.2790-1.2800. Topside momentum in the euro – which was a key proponent behind cable’s bid – has stalled. Some traders are likely to reduce sterling exposure into the UK budget announcement, while near-term factors favour a rebound in the dollar.
gbpusd hourly chart

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

Synopsis:

In light of rising tariff risks, elevated inflation expectations, and stretched equity/credit valuations, Goldman Sachs outlines the strategic case for commodity investing. Far from being just a play on rare "supercycles," commodities can provide attractive long-term returns, portfolio diversification, and superior inflation protection — particularly during late-cycle phases or supply shocks when both equities and bonds tend to falter.

Key Points:

1️⃣ Returns Go Beyond Inflation 📈

• Commodity futures offer a "risk premium" for bearing price volatility.
• This premium supports positive long-term returns beyond just tracking inflation.

2️⃣ Powerful Diversification Benefits 🔀

• Commodities have low correlation to traditional assets in normal times.
• Correlation turns negative when most needed — during late cycles or disruptions.
• Direct commodity exposure is more diversifying than commodity producer equities, which track stock indices.

3️⃣ Superior Inflation Hedge vs. TIPS and REITs 💹

• Broad commodity indices often outperform TIPS and REITs during inflationary periods.
• Commodities are more directly tied to price pressures and less sensitive to rising interest rates.

Conclusion:

Goldman Sachs emphasizes that commodities offer a compelling long-term investment case, particularly in high-inflation, uncertain macro environments. They not only outperform traditional inflation hedges like TIPS and REITs but also enhance diversification and deliver an added return premium, making them a valuable strategic allocation in diversified portfolios.

March 21 (Reuters) - EUR/USD traded lower Friday but remained within its recent consolidation range and above key support near the 200-DMA and 1.0760/70 zone as investors awaited a catalyst, with U.S. February PCE inflation due on March 28 a potential candidate to spark a move. Particular attention could be placed on U.S. inflation data after the Fed's SEP lowered GDP projections but increased 2025 projections for price growth. Fed Chair Jerome Powell said that tariffs could drive inflation but that price increases could be transitory, which suggests policy makers could be looking past U.S. President Donald Trump's tariff and trade policies and are more focused on growth.

Investors may also be looking past those influences.

U.S. 2-year and 5-year break even inflation rates have been trending downward since mid February, which has helped weigh down the U.S. dollar as it is correlated with break evens.

Month-on-month headline and core PCE are estimated at +0.3, which would match January's result. Year-on-year core PCE is expected to rise to 2.7% from 2.6% while headline is expected to match January's 2.5%.

Below estimate or as expected results could indicate disinflation is in place or ease investors concerns inflation is running hot. If so, U.S. yields might sink and the dollar's yield advantage over the euro could decrease as German-U.S. spreads

and terminal rate spreads for the Fed and ECB tighten.

EUR/USD may end its consolidation phase and resume the broader up trend.
us2bei


us5ybei


eurusd

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

Synopsis:

ANZ remains bullish on gold, lifting its 6-month forecast to USD 3,200/oz, supported by strategic ETF inflows, ongoing geopolitical tensions, and expectations of Fed rate cuts. Meanwhile, their stance on the USD is neutral in the near term, as falling US yields have weighed on the DXY, particularly against European currencies. However, tariff risks and soft EU data could reignite EUR downside, with EUR/USD expected to retreat toward 1.05 if European optimism fades.

Key Points – Gold:

1️⃣ Gold Breaks $3,000, ETF Inflows Drive Rally 📈

• ETF holdings up 110t, reaching highest level since Oct 2023.
• Speculators have been liquidating, suggesting the rally is not positioning-driven.

2️⃣ Supply Dislocation Persists, Adds Volatility ⚖️

• Comex inventories hit record 1,287t.
• Swiss gold exports to the US surged 55t m/m in February.
• CME delisted Gold Kilo Futures, possibly increasing volatility.

3️⃣ Outlook Upgraded to $3,200/oz (6M Target) 🌍

• Geopolitical risks: Iran sanctions, Middle East escalation, Russia rejecting ceasefire.
• Lower real yields and risk-off sentiment continue to support gold.

Key Points – USD:

1️⃣ USD Under Pressure, Especially vs. Europe 💵

• DXY weaker as falling US yields reflect growth headwinds.
• Losses mostly against EUR and CHF; AUD, NZD, and CAD more stable.

2️⃣ April 2 Trade Review a Key Risk for USD and EUR/USD ⚠️

• Potential tariffs on EU could trigger renewed EUR weakness.
• Delays/disappointments in German spending may further unwind recent EUR strength.

3️⃣ Neutral Near-Term USD View, Watching PMIs & Data Momentum 📊

• Fed projected only 50bps of cuts, helping support USD.
• But Powell’s cautious tone leaves door open for earlier easing, depending on data.
• Upcoming US PMIs could shift sentiment if they show a rebound in activity.

Conclusion:

ANZ maintains a bullish gold view amid strong ETF flows and rising geopolitical risks, upgrading its 6-month forecast to $3,200/oz. For the USD, near-term risks are balanced, with attention turning to US PMIs and the April 2 trade review. Tariff announcements and fading EUR optimism could push EUR/USD back toward 1.05, but USD performance will hinge on US growth momentum and EU stimulus execution.

• U.S.-listed shares of gold miners slip premarket, tracking a fall in prices of the precious metal

• Spot gold down 0.4% to $3,031.62/ounce, while U.S. gold futures fall 0.2% to $3039.00/ounce [GOL/]

• Gold prices fall as the dollar firmed and investors booked profits after bullion hit three successive all-time peaks this week, buoyed by safe-haven demand amid trade war concerns and hopes of a rate cut by the Federal Reserve later this year

• Top gold miners Newmont and Barrick Gold , slip 0.9% and 1.1%, respectively

• U.S.-listed shares of South African miners Gold Fields , , AngloGold Ashanti , and Harmony Gold , down between 0.8% and 1.4%

• U.S.-listed shares of Canadian miners Agnico Eagle Mines , and Kinross Gold , slip 1.2% and 1.1%, respectively

(Reporting by Tanay Dhumal in Bengaluru)

((; Twitter: Click here))

• GBP/USD softer, slips through 200-hour SMA/EMA as dollar rebounds

• Negative sentiment over UK budget should see pair head lower into event

• Jump in government borrowing prompt gilts to underperform

• Spending cuts expected, likely to add to UK growth headwinds

• Consequently, a return to the 200-day MA at 1.28 looks in-play

• BoE decision did little to alter outlook. May cut remains the base case

• COMMENT-Dollar shorts are in a tricky position
gbpusd hourly chart

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

• A large 0.6300 option expiry is helping to anchor AUD/USD

• The size of the strike for the 10am ET NY cut is A$1 billion

• 0.6271 was Thursday's one-week low, as risk aversion hurt AUD

• Stop-loss sell orders tipped below 0.6260 (0.6259 = March 11 low)

• Australian Feb inflation data due next week (March 26); 2.5% forecast

AUDUSD

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

• Cable down to 1.2925 as fire at nearby electrical substation closes Heathrow

• World's fifth busiest airport will be closed until midnight GMT

• 1.2925 is one-week low (1.2926 was Monday's low). 1.2911 was March 14 low

• The high after the BoE's relatively hawkish rate hold on Thursday was 1.2979

• UK government borrowed more than expected in Feb: UK fiscal update next week

• UK statistics office hit by new data problem as some price data paused

GBPUSD

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

• Squeezed from shorts, traders may be unwilling to jump into longs

• Two bullish signals unfolding where short-term MAs rise over long-term MAs

• 21-DMA above 200-DMA and 55-DMA over 100-DMA (Golden Crosses)

• Bull targets: 1.1042, 1.1122, 1.1182, 1.1282 and 1.1410

• 1.1276 was peak achieved during 2023 and 2024

• The 200-DMA at 1.0726 is likely limit for dips following rise to 1.0955

• EUR/USD return to old turf has big implications

•
EURUSD

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

• Apparent break from long-held range followed by swift return to its centre

• EUR/USD drop to 1.0125 appeared to signal break lower from 2023-2024 ranges

• 1.0448-1.1276 extremes in 2023-24 and most trade conducted 1.05-1.10

• The centre of prior extremes is 1.0862

• Mid-point of 1.2349-0.9528 drop seen during US tightening cycle is 1.0938

• Recent annual trading range have been amongst smallest on record

• Influence interest rates may grow encouraging traders to sell short

•
EUR/USD

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

• USD/JPY up 0.2% in Asia buoyed by Fed's steady-for-longer stance on rates

• Initial dip to 148.585 on sticky Japan core CPI not sustained

• Japanese demand lifts dollar to 149.19 high before rally runs out of steam

• Pair drifts lower to 149.00, consolidates ahead of Europe open

• USD upside limited as sticky Japan inflation keeps alive BOJ rate-hike bets

• US-Russia talks on Ukraine war in Jeddah on Sunday is a risk event

• Resistance 149.15-20, 149.40, 149.70; support 148.50-60, 148.15-20
JPY:

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

• AUD/USD cedes ground, down 0.5% for week, March gain pared to 1.4%

• Risk-averse mood builds as chorus of central banks flag uncertainty

• Important 0.6260 support at risk, break to trigger stop-loss selling

• AU Feb CPI due March 26 (Reuters poll 2.5% weighted CPI y/y)

• RBA meeting Mar 31-Apr 1 comes into focus, no OCR change expected

• AUD range Asia 0.62865-0.6306, support 0.6260, resistance 0.6390 0.6415
AUD eod

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

• USD/JPY up 0.25%, buoyed by steady-for-longer Fed but resistances loom

• Upside limited as JP core CPI remains sticky, keeps alive BOJ rate-hike bets

• Trade war uncertainty and risk aversion likely to buoy JPY

• US-Russia talks on Ukraine war in Jeddah on Sunday is a risk event

• Test of initial resistance at 149.15-20 underway, more at 149.40 and 149.70

• Support 148.60, 148.15-20; Asia range 148.585-149.19
JPY:

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

• AUD/USD enters consolidation phase as traders reduce risk before weekend

• Economic uncertainty from trade/geopolitical turmoil dampens risk assets

• Global investment banks revise China GDP higher, stimulus may support AUD

• AUD/USD just above 55-DMA; needs to hold 0.6260 to maintain upswing

• Key inflection: AU CPI due March 26 (Reuters poll 2.5% weighted CPI y/y)

• Range early Asia 0.62955-0.6306, support 0.6260, resistance 0.6390 0.6415
AUD midday

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

• USD/JPY erases early losses on Japanese demand, trades flat

• Japan markets back from Thu holiday, react to Fed's caution on rates

• Fed's balancing act gives respite to tariff-struck investors

• Upside limited as Japan inflation remains sticky

• Core inflation hits 3% in February, keeps alive BOJ rate-hike bets

• Resistance 149.00, 149.20-25, support 148.50, 148.15-20

• Asia range 148.585-149.00
Fed dot plot:

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

• USD/JPY eases slightly as Japan's Feb core CPI rises more than expected

• Japan Feb core CPI up 3.0% yr/yr vs 2.9% expected but down from 3.2% in Jan

• BOJ already cautiously hawkish, data will raise rate hike expectations

• Safe haven JPY resilient to broad USD strength Thu as Fed cites uncertainty

• EUR/JPY -2% from Tue high, had gained 6% from Feb low on German debt brake

• AUD/JPY down 0.85 Thu on soft Australian jobs data

• USD/JPY support at 148.20 and 147.92 which is 61.8% of 146.54-150.15 rise

• Resistance 148.90-149.00, 149.20; Thu range 148.18-148.955

• Asia Friday range 148.585-148.80
Fed officials see slow growth in Trump's 'golden age':

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

• EUR/USD fell 1.3% from Tue's 1.0955 high amid building risk-off sentiment

• ECB & BoE join the Fed in citing increasing uncertainty on economic outlooks

• Euphoria over the passing of Germany's spending package continues to fade

• EUR consolidating, but will require renewed USD weakness to extend rally

• Euro zone consumer confidence due Fri (Reuters poll -13.0, prior -13.6)

• Range 1.081475-1.0917, support 1.0805 1.0765, resistance 1.0955
EUR mng

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

Synopsis:

ANZ maintains its NZD/USD forecast at 0.55 for H1 2025, with an expected recovery in H2 as excessive short positioning unwinds. While falling US bond yields and weakening US exceptionalism have supported the NZD, near-term risks remain due to tariff uncertainty and weak risk sentiment. The direct impact of US tariffs on New Zealand exports is minimal, and the NZD is likely to act as a shock absorber. Markets have largely shrugged off the RBNZ’s February rate cut and Governor Adrian Orr’s resignation, focusing instead on broader monetary policy stability.

Key Points:

1️⃣ NZD/USD Stuck in Range, Forecast Remains at 0.55 📉

• Current range: 0.56-0.5750.
• Forecast: 0.55 in H1 2025, rising thereafter.

2️⃣ Near-Term Caution Due to Tariff Uncertainty & Risk Sentiment ⚠️

• US tariffs have minimal direct impact on NZ exports.
• NZD likely to act as a shock absorber amid trade risks.
• Weak global risk appetite may weigh on NZD near-term.

3️⃣ Market Shrugs Off RBNZ Rate Cut & Orr’s Resignation 🏦

• February's 50bp rate cut had little FX impact as it was widely expected.
• Orr’s resignation also had a muted reaction, with focus shifting to policy continuity.
• Terminal OCR expected at 3.00%, below the RBA (3.85%) and Fed (3.75%), reducing NZD’s rate appeal.

4️⃣ H2 2025 Recovery Expected as Short Positioning Unwinds 🔄

• NZD/USD positioning is net short by a record margin (CFTC non-commercial data).
• Potential for a short squeeze to drive NZD/USD back toward 0.59.

Conclusion:

ANZ remains cautious on NZD/USD in the near term due to trade risks and weak sentiment, but expects a recovery in H2 2025, driven by short covering and a return to fair value (~0.59). Monetary policy stability and easing US exceptionalism should also help NZD regain strength later in the year.