USD/CAD remains firm at approximately 1.4260, impacted by fears of potential tariffs from the US on Canada and Mexico. Recent inflation figures show Canada’s inflation has stayed below the Bank of Canada’s (BoC) 2% target for three months.

The US Dollar Index is slightly down, around 106.70, despite recovering earlier. President Trump reaffirmed plans for 25% tariffs on imports from both Canada and Mexico, which could negatively affect Canada’s economy.

The USD/CAD has broken from a Descending Triangle pattern, indicating a potential bullish trend. If prices exceed 1.4280, further resistance could emerge at 1.4300 and 1.4380.

Conversely, if the pair falls below 1.4151, it could reach lows of 1.4094 and 1.4020. The Canadian Dollar is influenced by BoC interest rates, oil prices, economic health, inflation, and trade balances, with higher interest rates tending to boost its value.

Considering the present conditions, it is evident that a few forces are shaping what we see with this currency pair. Inflation in Canada has remained below what policymakers at the BoC aim for, staying under 2% for three consecutive months. That alone suggests that tightening monetary policy might not be on the immediate agenda. However, we cannot ignore external pressures. Given what Donald has recently reaffirmed regarding tariffs, there is a real chance of trade disruptions, which could weaken business expectations up north.

That said, while the US Dollar Index has softened slightly to 106.70, it has demonstrated some ability to recover. This matters because changes in the wider strength of the dollar could play into shifts in the exchange rate. If investors continue to interpret what is happening as a reason to favour the greenback, we could see additional USD demand pushing values higher.

Technically, we have already seen a breakout from a Descending Triangle pattern. That suggests an upward push in price action that could carry the pair beyond 1.4280. If that happens, we would likely need to pay attention to barriers at 1.4300 and 1.4380, as those might inspire selling or hesitation among traders. On the other side, if for some reason the pair drops below 1.4151, the focus would shift towards levels at 1.4094 and even down to 1.4020.

At the heart of it all, the value of the loonie will keep reacting to several elements. The BoC’s stance on rates, broader economic health, trade relationships, and energy prices all factor into whether the Canadian currency gains or loses ground. Historically, higher interest rates have been a source of strength for it, making it more attractive compared to lower-yielding alternatives. However, if inflation remains low for an extended period, policymakers may not feel rushed to adjust borrowing costs, leaving the currency exposed to other forces in the meantime.

For those making decisions based on these movements, staying ahead of both political and central bank developments will be as important as reading the charts.

Today’s economic calendar is busy, reflecting ongoing uncertainty in the market. Concerns are emerging due to declines in consumer and business sentiment, which counter early optimism following the election.

The key release is the consumer confidence report from the Conference Board at 10 am ET, with a consensus expectation of 102.5. A drop below 100 could be a cause for concern.

Prior to this, home price data for December will be released at 9 am ET, indicating struggles within the housing sector. Signs of a spring sales lift among entry-level buyers are currently absent.

Alongside the consumer confidence report, the Richmond Fed report will also be available at 10 am ET. Comments regarding tariff uncertainty were noted in the Dallas Fed survey.

Fed officials Barr and Barkin will speak at 11:45 am and 1 pm ET, respectively. Additionally, the tone of the ECB’s Schnabel today was perceived as hawkish.

A packed schedule of economic updates awaits, and each data point carries weight in shaping expectations. The upcoming consumer confidence figure holds particular importance. If sentiment dips below the 100 mark, it could highlight increasing unease among households. That would not be an isolated signal, as views on both personal finances and business outlooks have already softened.

Housing figures released earlier will offer insight into price trends, yet no early signs point to a reversal in sluggish home sales. The absence of demand from first-time buyers suggests affordability remains a hurdle, which could ripple through related markets.

At the same time, manufacturing and service-sector businesses in the Richmond area will provide an additional reading on economic momentum. A weaker result would align with concerns raised in the Dallas Fed survey, where uncertainty surrounding trade policy was a recurring theme.

Later in the day, remarks from Michael and Tom will draw attention. Comments from central bank officials often highlight areas of focus in monetary policy, and any hints of shifting priorities could send ripples through rate expectations. Earlier, Isabel’s confident stance reinforced a firm approach in Europe, contrasting with the more data-dependent statements seen elsewhere.

With these updates on the horizon, awareness of incoming figures is necessary. Adjustments to forecasts and positioning will matter, particularly if incoming data challenges prevailing sentiment.

The USD is currently the weakest performing G10 currency year-to-date, while the EUR has also struggled, ranking as the second worst. Since early February, the EUR/USD has had difficulty maintaining prices above the 1.05 level.

Although the USD’s decline is attributed to shifting views on inflation and growth risks, the EUR faces ongoing structural challenges in the Eurozone affecting growth, alongside emerging concerns over European defence. Predictions suggest that the EUR/USD may continue to weaken into mid-year.

Additionally, there is a target identified for EUR/JPY at the 155 level over the next one to three months.

The fact that the US dollar is at the bottom of the G10 currencies so far this year points to a broader shift in sentiment. Traders appear to be reassessing expectations for inflation and economic expansion in the United States, which has weighed on the currency. Meanwhile, the euro has had its own set of hurdles, performing only slightly better than the dollar but still lagging behind its peers.

One of the sticking points for the euro has been structural strains within the Eurozone, which have cast doubt on its ability to sustain steady growth. On top of that, fresh worries around European defence policy have added to the uncertainty, further dampening confidence in the common currency. With both of these factors in play, it is hardly surprising that EUR/USD has struggled to hold above the 1.05 threshold since early February.

Looking ahead, the expectation remains that EUR/USD could weaken further as we move towards the middle of the year. Traders should be factoring in the possibility that these downward pressures are not going away anytime soon. If recent trends persist, there may be further dips that could present opportunities for those positioned correctly.

Meanwhile, in the case of EUR/JPY, a target around the 155 mark has been highlighted for the next one to three months. This suggests that the yen is facing its own pressures, potentially creating scope for the euro to gain ground against it. Investors watching this pair closely may need to consider how broader economic conditions impact both currencies.

With these market dynamics in motion, traders should stay alert to any updates that might shift sentiment further. The next few weeks could be particularly lively, and small shifts in expectations could have outsized effects on price action.

Comments from ECB’s Schnabel indicate a shift in the economic landscape. Current financing conditions are less likely to impede consumption and investment activities.

Additionally, the inflation process appears to have undergone a lasting change. The natural rate of interest in the eurozone has notably risen over the past two years.

These statements mark the second round of similar comments from Schnabel, which may provide a boost for the euro.

Isabel’s remarks suggest borrowing costs might not be as restrictive as they seemed just months ago. Lending conditions, once expected to squeeze household spending and business expansion, appear less of an obstacle. If true, this could lead to steadier growth than previously thought.

Inflation trends may also no longer resemble past patterns. The estimated neutral interest rate—the level at which monetary policy neither stimulates nor restrains—has climbed in the euro area. This shift implies central bankers may tolerate higher borrowing costs than before without undermining economic momentum.

With this being the second instance Isabel has voiced such a perspective, these comments are not isolated. The euro could find support as market participants reassess expectations around how far policymakers might adjust rates.

Market moves tend to follow clear signals, and this development is no exception. If expectations about future policy rates shift, traders may recalibrate positioning accordingly. When a key figure at a central bank reinforces a particular narrative, financial instruments linked to interest rate differentials are often the first to respond.

The New Zealand Dollar (NZD) is experiencing slight downward pressure against the US Dollar (USD), with forecasts suggesting it could drop but unlikely to fall below the 0.5715 support level. A breach of this level may indicate that the target of 0.5790 is out of reach.

In a 24-hour view, the NZD fluctuated between 0.5735 and 0.5770, closing marginally lower at 0.5733. Downward momentum has slightly increased, with the potential for the NZD to continue edging lower, remaining below minor resistance at 0.5760.

In the medium term, the NZD had previously shown sharp upward movement but faced decline after reaching 0.5770. Continued holding above 0.5715, deemed strong support, would be key to maintaining upward momentum.

From what we see, the New Zealand Dollar is under mild pressure, struggling to maintain its footing against the US Dollar. The recent movement suggests a test of support around 0.5715, and should this level break, it would indicate weakness beyond what was previously expected. If that happens, any near-term rebound to 0.5790 looks increasingly unlikely.

Over the past day, the NZD has varied within a narrow range, drifting lower by the close. The current downward push is still modest but does leave room for more weakness, provided resistance at 0.5760 isn’t convincingly breached. Traders positioning for a short-term move should keep that in mind.

Looking beyond the immediate picture, there was a strong push higher before a pullback set in at 0.5770. If the currency manages to hold firmly above 0.5715, it keeps hopes alive for some stability. A break below, however, could mean adjusting expectations in the medium term.

For those trading derivatives, the message is clear. If the established support remains intact, there may still be buying interest limiting further declines. However, a slip below this level shifts the focus. We must be aware of how price action develops near this zone, as it will determine whether momentum favours continued consolidation or a more pronounced move downward.

USD/JPY recovered recently, reaching 149.77, following a rise in the USD. Factors influencing this movement include US policies on Chinese investments and trade agreements with Canada and Mexico.

Current daily momentum suggests a bearish trend, but with some potential for short-term rebounds. Support levels are identified at 149.20, 148.80, and 147, while resistance points lie at 150.50 and 151.50.

Further narrowing of UST-JGB yield differentials may influence downward movement. Bank of Japan Governor Ueda indicated that yields correspond to economic recovery, suggesting a potential rate increase if conditions improve.

This recent rebound to 149.77 signals that the dollar has found enough buyers to slow down any deeper pullback, at least for now. The strength of the currency appears to be tied to decisions coming from Washington, particularly those affecting China and trade relationships closer to home. Given the way things are unfolding, it’s becoming increasingly clear that political shifts are setting the tone for the market’s direction.

Despite regaining some ground, the broader downtrend remains visible on daily charts. There are signs of short-lived recoveries, but momentum still leans towards sellers. This suggests that while price spikes are possible, they might not hold for long. The levels marking potential areas of support sit at 149.20, 148.80, and 147. If prices slip lower, these are the points to watch for a possible pause or bounce. On the other side, resistance remains firm at 150.50 and 151.50, meaning any upswing will need strong momentum to break through.

Shifts in bond yields could also come into play. If US Treasury yields lose their advantage over Japanese government bonds, downward movement may pick up. Governor Kazuo spoke on this recently, pointing out that yield levels align with economic progress. His words leave room for the possibility that an interest rate hike could be on the table should conditions justify it. For traders mapping out the weeks ahead, attention to these shifts will be necessary.

The NZDUSD pair is nearing a key support zone as the market seeks new catalysts. Recent data has shown the USD gaining strength against other major currencies due to a risk-off mood triggered by poor US economic indicators.

The weak US Flash Services PMI and rising long-term inflation expectations have heightened concerns over the Federal Reserve’s response to a possible economic slowdown. This backdrop is pertinent as the Non-Farm Payroll and Consumer Price Index reports approach ahead of the March FOMC meeting.

On the daily chart, NZDUSD is approaching the 0.57 support level, which may attract buyers for a potential rally towards 0.5850. Conversely, sellers may target a move below 0.55.

The 4-hour chart indicates bullish momentum defined by an upward trendline, with a pullback potentially allowing buyers to target 0.5850. Sellers will be looking for a break below this trendline to increase their positions towards the 0.55 target.

The 1-hour chart reveals minor resistance at 0.5735, where a pullback could attract sellers. A breach of this resistance may encourage buyers to aim for higher values.

Upcoming US data, including the Consumer Confidence report, Jobless Claims on Thursday, and PCE data on Friday, is likely to influence market direction.

With markets reacting sharply to shifting sentiment, every data point holds more weight—especially with traders scrutinising how Jerome and his colleagues at the Federal Reserve might adjust policy. Last week’s weaker-than-expected US Flash Services PMI reminded us that parts of the economy may not be as resilient as previously thought. That, coupled with higher long-term inflation expectations, has created an uneasy environment ahead of the key reports scheduled over the coming days. The job market, inflation, and consumer confidence data will all feed directly into expectations for the next FOMC meeting.

NZDUSD is now hovering near an area that has historically attracted buying interest. On a daily timeframe, the 0.57 support level has caught attention, with past price action suggesting buyers could step in here. If demand re-emerges, a move up towards 0.5850 wouldn’t be surprising. However, if sentiment worsens or the US dollar gains further strength, those betting against the kiwi may attempt to drive prices beneath 0.55. Such a move would reinforce the broader bearish trend seen over the past few months.

Shorter-term price action reflects the ongoing push and pull. The 4-hour chart shows a rising trendline supporting the recovery, with buyers defending this structure. If the exchange rate stays above this dynamic support, upward movement towards 0.5850 remains possible. But a close beneath the trendline would likely encourage sellers to extend their positions, reinforcing the broader downtrend.

Even tighter timeframes expose near-term hurdles. Market participants are eyeing 0.5735, a level that has already slowed upward momentum. Should prices fail to breach this barrier, it may set the stage for another bout of selling pressure. Conversely, if the pair clears resistance, it could attract fresh buyers expecting further upside.

This week’s scheduled events could add fuel to volatility. Consumer confidence figures may offer insights into how households are weighing inflationary pressures against economic resilience. Thursday’s jobless claims will provide another snapshot of labour market conditions, a key factor influencing monetary policy outlooks. Then there’s the Core PCE price index on Friday—the Federal Reserve’s preferred inflation gauge. With uncertainty swirling around rate cuts, any surprise here may lead to repositioning by traders looking to stay ahead of the next big move.

Silver prices have dropped to approximately $32.00, marking a third consecutive day of decline. This movement occurs despite the confirmation from US President Trump regarding the implementation of a 25% tariff on Canada and Mexico.

The US Dollar has stabilized following weak US flash S&P Global Services PMI data for February, which showed a contraction in the services sector for the first time in 25 months. This steadiness in the Dollar has indirectly impacted Silver prices.

Ongoing geopolitical tensions, particularly surrounding peace talks related to the war in Ukraine, continue to influence the safe-haven demand for Silver. Recent discussions between French President Macron and Trump aim to secure military guarantees for Ukraine.

The Silver price retraced after failing to surpass a high of $33.40 earlier this month. The 50-day Exponential Moving Average indicates a bullish outlook, with key support around $30.00 from an upward trendline.

Market dynamics play a crucial role in Silver pricing, including geopolitical instability and industrial demand. Silver’s connection to Gold prices often dictates its movements, with the Gold/Silver ratio offering insights into relative valuations.

Silver’s recent downturn to around $32.00 is its third successive daily slide, suggesting that resistance remains firm at higher levels. This decline comes despite Donald Trump’s confirmation of fresh tariffs on Canadian and Mexican imports, a move that typically would have spurred safe-haven demand. The market reaction instead suggests that tariffs were already priced in, or that broader forces, such as currency movements, exerted greater influence.

The stabilisation of the US Dollar adds further pressure. February’s flash S&P Global Services PMI exposed a deterioration in the services sector—the first contraction in over two years. Although this pointed to potential economic weakening, the Greenback held steady. A firm Dollar tends to weigh on commodities priced in it, including Silver, making its downturn unsurprising given the prevailing conditions.

Meanwhile, developments surrounding Ukraine continue to play a role in shaping investor sentiment. Emmanuel Macron’s engagement with Trump to push for NATO security assurances for Ukraine adds another layer of geopolitical uncertainty. Historically, heightened tensions have reinforced Silver’s appeal, yet markets appear more focused on external drivers at the moment.

Technically, Silver struggled to maintain momentum beyond $33.40, leading to a pullback. The 50-day Exponential Moving Average still points to an underlying upward trend, with $30.00 acting as an essential support level. Unless that floor gives way, the broader bullish structure remains intact.

Market participants must also monitor the broader industrial demand for Silver, as shifts in manufacturing and green energy developments can alter the metal’s outlook. Its relationship with Gold remains relevant, particularly through the Gold/Silver ratio. A widening ratio often signals that Silver is lagging behind and could be undervalued in comparison.

These factors mean traders need to remain attentive to currency movements, geopolitical updates, and technical indicators in the weeks ahead.

Joachim Nagel of the ECB emphasises the importance of taking a cautious approach regarding rate cuts. He mentions that the inflation outlook appears encouraging, although persistent core and services inflation requires careful consideration.

Nagel states that there is little benefit in speculating publicly about future rate paths. Despite this, a rate cut is anticipated for March, which could influence future communications from the ECB.

Nagel’s comments suggest that those expecting rapid rate reductions may need to temper their outlook. While inflation expectations appear to be moving in the right direction, ongoing pressure from core and services inflation means decisions will not be rushed. Price stability remains a priority, and that makes policymakers wary of acting too soon.

A cut in March seems widely expected, but that does not mean further reductions will quickly follow. If inflation readings do not ease at the desired pace, hesitation from officials could increase. That would affect how markets interpret forward guidance, especially as expectations have already shifted multiple times in recent months.

Elsewhere, Christine emphasised patience, reinforcing the idea that rate-setting decisions will be based on data rather than market demands. She acknowledged that inflation has receded, but warned that risks remain. Wage growth, in particular, remains a factor that could complicate forecasting, adding another reason why adjustments to policy will be gradual.

Meanwhile, recent economic data has painted a mixed picture. Growth indicators suggest momentum remains weak, yet inflation figures have not softened quite enough to remove all concerns. This means that even if borrowing costs are lowered, officials may stress that they are not embarking on a swift easing cycle. That could create moments of unpredictability, as past meetings have shown how messaging can subtly shift within a short period.

Financial conditions remain a focus, with market movements being monitored closely. If expectations become misaligned with what officials prefer, then future statements could be crafted to steer sentiment back in line. Reactions to upcoming inflation reports will therefore play a role in shaping short-term positioning, as any deviation from expected trends could prompt sharper responses from those trying to anticipate the next move.

For now, rate expectations remain anchored around adjustments beginning in the first part of the year, but certain voices within the ECB continue to suggest that caution is needed. Joachim and Christine have both pointed to risks that could justify a measured approach, meaning those looking ahead must remain aware that recent trends could still prompt shifts.

Martins Kazaks, a policymaker at the European Central Bank (ECB), discussed the need for ongoing interest rate cuts. He emphasised a cautious approach as the bank nears the terminal rate, suggesting that cuts should be implemented step by step.

In other recent news, the ECB reported that negotiated wages in the Euro area advanced by 4.12% year-on-year in Q4 2024, compared to 5.43% in Q3. Additionally, the EUR/USD exchange rate appears to be facing resistance at the 100-day moving average.

Kazaks has made it clear that while rate cuts are expected to continue, they will not be rushed. Instead, adjustments will be made gradually as the central bank approaches what it sees as an appropriate level for rates. This suggests that officials remain watchful of inflation trends and broader economic conditions. If data shows that price pressures remain sticky, we could see more hesitation before adjustments are made.

On the wage front, the ECB’s latest data points to a slowdown in the growth of negotiated wages. This is something we will need to keep an eye on, as it plays a central role in inflation expectations. A deceleration here indicates that inflationary pressures from wages may be softening, which could make policymakers more comfortable with additional cuts. However, wage growth is still relatively high compared to pre-pandemic levels, meaning that cost pressures remain in the system.

In the foreign exchange market, the euro is showing signs of restraint against the dollar, with the 100-day moving average acting as a barrier. Traders watching this level should take note – if the EUR/USD fails to break through, this could reinforce a bearish outlook for the pair. On the other hand, if the currency manages a move beyond this resistance, we could see momentum shift in the short term. Given that central banks on both sides of the Atlantic are adjusting their policies, keeping a close watch on rate expectations will be necessary.

For those involved in derivatives trading, keeping an eye on how these factors play out in the coming weeks will be key. The adjustment in rate expectations, combined with movements in wage data and technical resistance in FX markets, provides multiple angles for positioning. If rate cuts proceed steadily and wage growth continues to ease, we might see a shift in sentiment that could open new opportunities. The relationship between these elements will be central to anticipating market moves and adjusting strategies accordingly.