Thursday’s upbeat US Q4 GDP failed to lift the US Dollar as mixed Jobless Claims data and a widening Current Account Deficit dampened sentiment. Concerns over the negative impact of US tariffs on economic growth further weighed on the Greenback, pushing the US Dollar Index (DXY) to its most significant daily drop in 12 days. Additionally, growing dovish bets on the Federal Reserve ahead of today’s US Core PCE Price Index, the Fed’s preferred inflation gauge, added to the pressure. As a result, the DXY remains sidelined early on Friday, following a downbeat day that influences major currencies, commodities, and risk assets.
On Thursday, the weaker dollar allowed EURUSD and GBPUSD to bounce from weekly lows, while USDJPY rose amid fears that Japan could be affected by US trade policies. Meanwhile, AUDUSD and NZDUSD edged higher on China-driven optimism, but USDCAD rebounded due to softer crude oil prices and US-Canada trade tensions.
Gold challenged its previous record high of $3,058 before surging to a fresh peak of $3,080 early Friday, defying the market’s uncertainty. However, crude oil struggled to capitalize on a weaker USD and China-inspired optimism amid expectations of increased supply. Cryptocurrencies remained defensive before attracting renewed selling pressure, while equities edged lower.
EURUSD braces for the second weekly loss despite optimism surrounding Germany as dovish statements from the ECB officials join looming economic woes due to the potential US-EU trade war. Additionally, Ukraine’s allegation that Russia broke the ceasefire also exert downside pressure on the Euro pair.
GBPUSD appears well set for the weekly positive despite posting mild losses early Friday. In doing so, the Cable pair ignores mostly downbeat UK data, growing fears of the BoE’s further rate cuts and unimpressive spring budget amid hopes of witnessing British economic recovery and slightly eased trade tensions between Washington & London. It should be observed that Friday’s upbeat UK GDP & Retail Sales pare the Cable pair’s daily loss by the press time.
USDJPY fails to justify strong Japan inflation, suggesting frequent rate hikes from the Bank of Japan (BoJ). The Yen pair’s run-up could be linked to doubts about Japan’s economic transition due to the US tariffs and the market’s quarter-end consolidation, not to forget mixed feelings about Japan’s meddling to defend the Yen.
A firmer US Dollar and market jitters ahead of the Fed's inflation data, coupled with political caution in Australia as the Prime Minister announces a May election, put pressure on AUDUSD early Friday. Despite this, the Aussie pair remains on track for a weekly gain.
NZDUSD, however, is set for a weekly loss, weighed down by disappointing New Zealand Consumer Confidence data for March.
Meanwhile, USDCAD extends its recovery from the previous day, trimming weekly losses as Canada’s new Prime Minister, Mark Carney, signals readiness to counter US tariffs, while dovish expectations for the Bank of Canada remain firm. Additionally, Crude Oil's struggle to attract buyers amid mixed supply-demand signals further weighs on the Canadian Dollar, given oil's significance as Canada’s key export.
Gold prices continue their rally, benefiting from the US Dollar’s struggle, uncertainty over US tariffs, central bank policy moves, and broader global growth and political concerns. The precious metal extends its rebound from key technical support, approaching an all-time high near $3,080 and targeting a 15-week-old resistance around $3,088. Additional support comes from rising dovish Fed expectations and increased demand from China and global central banks.
Meanwhile, Crude Oil hovers near its weekly high as concerns over slowing global energy demand clash with fears of an OPEC+ supply increase. A weaker US Dollar attracts WTI buyers, but risk-off sentiment and rising inventories limit the upside.
Bitcoin (BTCUSD) and Ethereum (ETHUSD) extend their daily losses and remain on track for a weekly decline as fresh trade and geopolitical tensions, waning confidence in Trump’s crypto stance, and heavy ETF outflows weigh on sentiment. Additionally, low market liquidity adds to the downside pressure. However, industry caution ahead of Liberation Day and renewed Bitcoin accumulation by some large investors help limit deeper losses amid the quarter-end consolidation.
Traders are now looking ahead to the Eurozone Consumer Confidence, Canada’s monthly GDP, and the US Core PCE Price Index for clearer market direction after digesting Japan’s inflation data and the UK’s economic releases. A dovish bias surrounding the ECB and BoC could keep EURUSD under pressure while supporting USDCAD buyers, unless the Fed’s inflation data further bolsters dovish Fed bets. Meanwhile, Gold remains on track for the $3,100 mark, benefiting from uncertainty around US tariffs, the Ukraine-Russia ceasefire, and renewed fears of a US-led trade war impacting global growth.
Against this backdrop, the US Dollar may pare weekly gains, but GBPUSD and Antipodeans might struggle to capitalize on it, while USDJPY could see a slight pullback. Cryptocurrencies and crude oil are likely to remain under pressure, whereas equities could trim weekly losses if US data disappoints.
May the trading luck be with you!
