Relief over the US reciprocal tariffs, optimism about the Ukraine-Russia ceasefire, and mixed PMI data led to a positive start for the week. However, market sentiment faded on Tuesday as traders awaited updates on US tariff plans and peace talks between the US, Russia, and Ukraine. Caution ahead of US Consumer Confidence data, housing reports, mixed Fed comments, and a quiet economic calendar also slowed momentum.
As a result, the US Dollar Index (DXY) hovers near a three-week high but struggles to extend its four-day rise. This led to a bounce in Gold, while EURUSD, GBPUSD and AUDUSD struggle to push back bears whereas USDJPY eases from a three-week top and snaps its three-day uptrend. Further, after five days of losses, NZDUSD remains under pressure, and USDCAD struggled after its most significant drop in a week. That said, Crude Oil retreated from a three-week high amid OPEC+ discussions, while cryptocurrencies pulled back. However, Asia-Pacific stocks rose, boosted by Wall Street’s positive performance.
Despite mixed US PMIs and cautious optimism testing the US Dollar bulls early Tuesday, EURUSD struggles near a two-week low after falling for four consecutive days. That said, unimpressive German and Eurozone PMIs for March, along with ECB policymakers resisting hawkish moves and concerns about the Ukraine-Russia ceasefire, challenge any EURUSD rebound.
GBPUSD ended its two-day losing streak on Monday after a hopeful speech from BoE Governor Andrew Bailey. However, mixed UK PMIs for March and uncertainty ahead of Wednesday’s British Spring Budget caused a slight pullback in the Pound early Tuesday.
Meanwhile, USDJPY posted its first daily loss in four, easing from a three-week high after the BoJ’s January meeting minutes indicated a hawkish stance. Additional pressure on the Yen comes from upbeat comments by BoJ Governor Kazuo Ueda and reports that Japan's PM Ishiba plans strong measures to curb inflation.
On Monday, the market optimism over US tariffs and China stimulus efforts outweighed mixed Aussie PMIs, helping AUDUSD post its first positive day in five. However, the gains faded early Tuesday due to quiet trading and consolidation ahead of key US data and news.
Meanwhile, NZDUSD remains on the decline for the sixth straight day, as concerns over New Zealand’s economic transition and the RBNZ’s dovish stance continue to weigh on the Kiwi, despite some slight optimism from China-related news.
USDCAD saw its biggest daily loss in a week, driven by rising crude oil prices and optimism around potential US tariff relief for Canada. However, the pair lacked recovery momentum early Tuesday, despite a retreat in crude oil and the US Dollar struggling to stay strong. This hesitation is likely due to political instability in Canada, US-Canada trade tensions, and mixed market sentiment.
Early Tuesday, gold snaps a three-day losing streak while bouncing off $3,006 technical support confluence. In doing so, the precious metal benefits from the market’s cautious mood and the US Dollar’s struggle to remain firmer. It should be noted that China’s readiness for heavy stimulus and an increasing central bank demand also underpin the bullion’s latest rebound.
Alternatively, crude oil remains sidelined at the highest level in three weeks amid chatters about the OPEC+ readiness to continue with its planned schedule of increasing supplies, per Reuters. The news cited three sources familiar with the matter to cite fears of more barrels coming back to the markets.
Trump Media’s deal with crypto.com to launch ETFs and a large Bitcoin whale buying BTC failed to boost Bitcoin (BTCUSD) and Ethereum (ETHUSD) early Tuesday, as both cryptocurrencies posted daily losses after a strong start to the week. This could be due to the lack of confidence in Trump, following disappointing crypto reserve announcements made earlier in March.
After a slow start, market volatility could rise with the release of Germany's IFO sentiment data, followed by US Consumer Confidence and housing market numbers. Traders will also be watching updates from the US-Russia talks on the Ukraine ceasefire and news about US reciprocal tariff plans ahead of the April 2 deadline.
Given the dovish bias about the US Federal Reserve and mixed economic data, the US Dollar may pull back if the upcoming data softens. This could help other major currencies, commodities, and Antipodeans recover some of their recent losses. However, USDCAD may struggle to lure sellers due to softer crude oil prices and ongoing political and trade tensions. If API data shows higher oil inventories, crude could drop further, while Gold may continue its rebound from key technical support.
May the trading luck be with you!
