The EUR is gaining due to a weaker USD and expectations of increased European government spending. The currency has remained below its short-term fair value of 1.0845 amid narrowing rate differentials between the eurozone and the US.

Recent spot gains above 1.0530 indicate bullish momentum. If these gains persist through the close, the EUR could advance towards the 1.0650/1.0750 range, with the 200-day moving average at 1.0722 serving as a target.

Impact Of US Dollar Weakness

These movements in the currency markets are not happening in isolation. The US dollar has been losing ground largely because traders expect the Federal Reserve to maintain or even ease policy rather than tightening further. Meanwhile, speculation about increased European government spending is giving the euro support, as fiscal expansion could help growth and inflation prospects in the region.

Despite the euro’s appreciation, it remains below what we estimate as its short-term fair value of 1.0845. This level is derived from a combination of factors, including interest rate differentials, investor positioning, and macroeconomic indicators. The narrowing gap between yields in the eurozone and the US has contributed to this steadiness, preventing either currency from pulling sharply away from the other.

The fact that spot prices have climbed above 1.0530 suggests that momentum is in favour of further gains. This threshold had previously served as a barrier, limiting upside movement, but now that it has been cleared, traders are watching closely to see if the market can sustain levels above it. If the euro remains elevated through the daily close, we could see a push higher towards the range of 1.0650 to 1.0750.

A key reference point would be the 200-day moving average, which currently stands at 1.0722. This is frequently monitored by market participants as a measure of long-term directional bias. If prices can break and hold above this level, it would reinforce the bullish case and potentially encourage more positioning in favour of the euro.

Policy Outlook Considerations

As these trends unfold, monitoring how the Federal Reserve and the European Central Bank communicate their policy outlooks will be essential. Any signs that US policymakers might hold rates steady for longer than expected could slow down the dollar’s decline. Similarly, discussions about fiscal policies in Europe could influence whether the euro sustains its upward movement. These factors create a dynamic environment where price levels and momentum patterns play a decisive role in positioning strategies.

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The Canadian Dollar (CAD) is performing well today, recovering from a decline caused by recent tariff news and trading in the low 1.44 range. The softer US Dollar (USD) is supporting this recovery, coupled with a decrease in short-term volatility.

Recent weeks have seen the CAD incorporate tariff risks, though the current price action suggests scepticism towards the longevity of 25% tariffs. Meanwhile, US/Canada 2Y spreads have narrowed by approximately 20 basis points, providing some support to the CAD amid tariff concerns.

Cad Upside Potential

Currently, CAD upside potential is confined to the 1.4350/1.44 range. USD support levels are at 1.4370 and 1.4344, while resistance is at 1.4550 and 1.48. Spot losses below these supports may indicate a move towards the mid-1.42s.

The Canadian Dollar appears to have steadied, having absorbed the concerns around tariffs over the past few weeks. Markets seem hesitant to fully price in long-term economic effects from the 25% tariff discussion, which has kept the currency from weakening further. With the USD itself losing momentum, the balance seems to favour a measured CAD recovery rather than a sharp move in either direction.

From a rate differential perspective, the compression of US-Canada two-year spreads by around 20 basis points seemingly adds a degree of support. However, this movement alone is unlikely to drive sustained CAD strength unless further developments reinforce the shift. We note that lower volatility is playing a role in the currency pair’s relatively contained movement, suggesting a more orderly trading range rather than erratic price action.

Key Technical Levels

Current technical levels frame the near-term potential. As it stands, gains for the CAD seem restricted within the 1.4350 to 1.44 corridor. Should the USD side weaken further, the next inflection points sit at 1.4370 and 1.4344, both acting as interim supports. A breach below these could pave the way toward the mid-1.42s, though traders may require additional conviction from economic data or policy signals before committing to this trajectory.

On the other hand, upward pressure on USD would likely encounter barriers at 1.4550 and further at 1.48. Should momentum shift in that direction, it would suggest a reassessment of the tariff narrative or broader USD strength resurfacing. For now, with spreads where they are and volatility contained, attention remains on whether external forces—such as Federal Reserve guidance or trade developments—adjust the prevailing range.

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Mexico has stated that it will delay the announcement of retaliatory tariffs until Sunday. This date coincides with the announcement of the new leader of the Liberal Party in Canada, likely to be Mark Carney.

Carney is expected to call an immediate election, which may occur between April 14 and May 26. If tariffs are not reduced, they could overshadow the election that initially seemed favourable for Conservative leader Pierre Poilievre, who has declined in polls due to concerns about his similarities to Trump.

Canadian Public Opinion Shifts

An Angus Reid poll indicates a shift in Canadian public opinion. Market reactions may reflect optimism if tariffs are adjusted, but a lack of reversal could lead to challenges next Monday.

Mexico’s decision to hold off on announcing retaliatory measures until the end of the weekend aligns with a key political event in Canada. The timing suggests that officials in Mexico City are aware of the potential effect on Ottawa’s decision-making. Once the new leader of the Liberal Party is confirmed, the response from the Canadian government could influence market sentiment before trading resumes next week.

Carney, expected to win the party leadership, is widely believed to be preparing for a swift general election. Holding the vote as early as mid-April or as late as the final week of May would give him time to frame the economic discussion around trade disputes. Meanwhile, Poilievre, who previously benefited from voter discontent with the Liberals, has lost momentum. The perception that his positions align too closely with those of Trump has weakened his standing in recent surveys. If that trend continues, the coming weeks could reshape expectations for Canada’s political direction and trade policies.

Market Sentiment And Trade Policy

Public opinion in Canada is showing signs of movement. The latest polling from Angus Reid suggests that sentiment has shifted, although how this translates into government action remains uncertain. Changes to trade policy—if they come—may ease concerns and spark optimism in markets. Without reductions in tariffs, however, traders must prepare for increased difficulty as early as Monday. Given the close link between political events and financial reactions, positioning ahead of the coming week requires caution.

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President Trump has stated that tariffs on Canada, Mexico, and China would start today, asserting that manufacturers must build their car plants in the US to avoid such charges. This announcement follows comments suggesting potential changes to the tariffs by Commerce Secretary Lutnick.

Concerns over the impact of these tariffs are growing, with indications that they could harm economic growth, particularly in the US and its neighbours. Recent data showed a slowdown in manufacturing activity, increasing prices, and a dip in employment, reflecting the challenges posed by tariff uncertainties.

Us Dollar Performance

The USD has weakened overall, with the DXY index showing a correlation with its performance during Trump’s first term. There are no significant data releases expected in North America today, while other global markets react to ongoing trade challenges.

Trump’s push to have manufacturing brought back domestically has now moved from rhetoric to policy, with tariffs on several key trading partners taking effect. The reasoning is plain: build within the country or pay to bring goods in. It’s a message aimed at manufacturers, but the broader market is reacting as well.

Lutnick’s earlier remarks hinted that there might be adjustments to these tariffs, yet it appears the position has been firmed up instead. Investors watching for flexibility will need to reconsider their expectations. The most immediate effects are already being seen in economic indicators, where manufacturing growth has slowed, costs have risen, and job numbers have softened. These are not isolated occurrences but rather a reflection of the uncertainty stirred up by trade policies.

In currency markets, the dollar’s weakening is notable. The DXY index is behaving in a way that aligns with its movements during the early years of Trump’s first term. This correlation is important for traders looking ahead, as it suggests historical patterns may offer guidance on what comes next.

Market Reactions

No market-moving economic data is scheduled out of North America today, leaving traders to take their cues from external developments. With other economies adjusting to these trade changes, global reactions will dictate short-term sentiment. Those involved in derivatives should keep a close watch on shifting momentum, as these policies continue to shape pricing beyond immediate headlines.

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Trudeau has announced retaliatory tariffs amounting to $30 billion, with an additional $125 billion planned within 21 days. Canada will also file challenges under the USMCA and WTO, while discussions about non-tariff measures are ongoing with provinces.

He emphasised that Canada does not desire a trade war, arguing that the US government risks American jobs and sabotages its own agenda. Trudeau claimed that the legal basis for tariffs concerning fentanyl is inaccurate, as less than 1% of fentanyl and illegal immigration originates from Canada.

Canada’s Fentanyl Commitment

Statistics indicate a 97% drop in fentanyl flows from December to January, affirming that Canada has met its commitments. Trudeau expressed the challenges Canadians will face, promising additional support and maintaining that these tariffs should be temporary.

The announcement highlights a direct response to the measures imposed by the U.S. administration, showcasing that Ottawa is not retreating from economic confrontation. The scale of the planned countermeasures should not be underestimated. An initial $30 billion tariff package is already set, with a much larger wave—an additional $125 billion—expected within three weeks. These actions are not taken in isolation; legal avenues through the USMCA and WTO will also be pursued. Provincial governments are engaged in discussions regarding alternative methods that do not rely on direct tariffs.

Trudeau has made clear that Canada is not seeking economic conflict. Instead, he frames these tariffs as a necessity, arguing that the White House is ultimately undermining its own labour force and economic priorities. His remarks directly challenge the justification provided by Washington, particularly the claim that fentanyl and migration concerns warrant such measures. He presents data to discredit the reasoning behind the U.S. decision, pointing to a 97% reduction in fentanyl flows from December to January.

This shift in numbers is not insignificant. From a trading perspective, this suggests that Canada has fulfilled its pledged commitments on border controls. If these figures hold under further scrutiny, the narrative from the United States appears weaker when backed by empirical evidence. In response, assurances have been made that domestic support will be provided to those affected, reinforcing that these measures should not be treated as permanent.

Economic Adjustments And Market Reactions

For those closely monitoring price movements in the coming weeks, the immediate focus should be on reactions from Washington. There is no ambiguity in the scale of the measures, meaning response strategies will be developed swiftly. The timeline for the next wave of tariffs is clear, which provides some predictability in an otherwise volatile situation. The legal disputes under the stated agreements introduce potential delays, though market participants should not expect resolution through litigation alone.

This is not a theoretical confrontation; practical effects are already emerging. Importers and exporters will make adjustments, adding pressure on policymakers and industries alike. The determination to establish economic leverage on both sides is evident. The stated intention to limit the duration of these tariffs suggests that outcomes in negotiations could shift the timeframe, but that remains dependent on the ability of either side to recalibrate its stance based on economic repercussions.

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US Treasury Secretary Scott Bessent indicated plans to reduce interest rates, asserting confidence that Chinese manufacturers will absorb tariffs. Following these remarks, the US Dollar (USD) experienced a decline of 0.6%, bringing the USD Index to 105.95.

Tariffs, which are customs duties on imports, aim to protect local producers by creating a price advantage over foreign goods. They are paid at entry points, differing from taxes that are settled at purchase.

Impact On The US Dollar

Donald Trump intends to leverage tariffs to bolster the US economy ahead of the November 2024 election, focusing on Mexico, China, and Canada, which represent 42% of US imports.

Bessent’s comments on interest rates directly impacted the strength of the dollar, which dipped by 0.6%. This shift pushed the USD Index down to 105.95, reflecting changing expectations in financial markets. The reasoning behind this move appears to rest on the belief that Chinese manufacturers will absorb the added costs from tariffs rather than passing them on to American consumers. This assumption is an economic gamble; if incorrect, inflation could creep higher.

Meanwhile, tariffs remain a tool of economic strategy, designed to give domestic producers an edge over their international competitors. Unlike consumption taxes paid by buyers at the till, these duties are settled when goods enter the country. This difference affects pricing structures before products even reach the shelves, shaping both trade flows and corporate decisions.

Trump, focusing on economic positioning before the November vote, plans to rely heavily on tariffs. His targets—Mexico, China, and Canada—account for nearly half of all US imports. Such measures aim to protect manufacturing jobs and sway voters who view foreign trade as a threat rather than an opportunity. While they might boost certain industries domestically, they also risk countermeasures from trading partners, potentially causing friction in global supply chains.

Market Reactions And Risks

For traders in derivatives markets, recent developments prompt questions about interest rate movements and their effect on forex positions. Bessent’s stance suggests a shift towards monetary easing, which typically weakens the dollar. If this approach continues while trade barriers tighten, currency values could see further volatility.

Bond markets will likely reflect this balancing act, with yields adjusting to expectations of rate cuts. A weaker dollar tends to support commodities priced in USD, creating opportunities in those sectors. However, uncertainty surrounding tariff absorption should keep traders watching inflation indicators closely. If businesses pass costs to consumers instead of absorbing them, inflationary pressures could cause rate-cut expectations to reverse.

Those active in derivatives may need to weigh these risks carefully. Currency movements are not isolated reactions; they result from a web of policy decisions, investor sentiment, and economic data. If tariffs disrupt trade balances more than anticipated, market shifts could be abrupt. Reaction times will matter, and positioning ahead of expected policy changes may prove beneficial.

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In market developments, the S&P 500 has dropped by 1.9%, reflecting an overall trend of selling.

Market Reactions

Concerns remain that if tariffs are lifted by the 2028 election, relocated companies might lose their competitive advantage.

Trump’s remarks suggest a policy direction supportive of domestic manufacturing, which implies direct consequences for firms evaluating production sites. Button brings attention to obstacles businesses could face when considering such shifts. Moving industrial operations is not only about avoiding tariffs; supply chain resilience, workforce availability, and equipment costs play substantial roles.

A company like Ford, should it take such a route, must balance immediate financial gains with long-term efficiency. Any transition carries expenses that could offset tariff benefits. Decisions will not be purely political but depend on materials access, logistical ease, and existing local facilities. If trade policies shift in the next administration, those who moved operations hastily could face tighter margins.

Stock markets have reacted. With the S&P 500 falling 1.9%, investors appear to be adjusting portfolios to reflect greater volatility. The selling mood suggests that market participants have concerns about business profitability if factories relocate under possibly temporary trade advantages. A major factor is the risk that by 2028, any new incentives could reverse, rendering current decisions costly miscalculations.

Policy Considerations

Watching upcoming policy speeches is necessary. If leaders clarify measures that directly reduce logistical or manufacturing expenses beyond tariffs, more industries might commit to domestic moves. However, without firm legislative groundwork, businesses may hesitate to take costly steps that could be unwound within a single election cycle.

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NU Holdings Ltd. operates a digital banking platform across several countries, offering various spending solutions, including cards and mobile payment options. The company is based in Brazil and trades on the NYSE under the ticker “NU”.

Recent analysis indicates that NU may decline further after reaching a high of $14.08, with the potential for a drop below $10.18 to extend towards $8.10. This follows an impulse sequence that completed at a high of $16.15 after an upward trend beginning in June 2022.

Nu Holdings Price Movements

NU’s waves have experienced fluctuations, including a low of $10.18, a high of $14.08, and currently, it is expected to face a decline before a potential bounce. A break below $10.18 would reinforce this expectation, whereas maintaining above may indicate an alternate wave structure.

A buying opportunity is noted, should prices pull back between $8.10 and $4.40, aiming for future upward movement. Caution regarding trading in the Foreign Exchange market is advised; risks must be assessed relative to individual investment capabilities.

The pattern developing in NU Holdings Ltd. shares suggests traders should remain vigilant for further declines, particularly if the price breaks below $10.18. This threshold has previously held, but its failure would reinforce the likelihood of further downward movement. Current indicators show that the stock has already pulled back from its peak of $16.15, and if momentum continues, levels below $8.10 could come into play.

From our perspective, traders who focus on derivatives must manage risk carefully. If prices enter the anticipated range of $8.10 to $4.40, long positions could offer strong returns, given that historical movements suggest that such dips often precede rebounds. However, waiting for confirmation within these levels is key before taking a position.

Trading Strategy And Risk Management

A sustained move above $14.08 would suggest an alternative wave structure is forming, potentially invalidating a deeper pullback scenario. Therefore, those trading shorter timeframes should track whether price action holds within the expected decline—or whether a sudden surge challenges the outlined downtrend.

We recognise that speculative trades carry higher risks, particularly in stocks susceptible to large price swings. As such, capital management remains paramount, especially for individuals leveraging options or futures. Setting stop-loss levels aligned with personal risk tolerance will be necessary over the coming weeks.

While the stock has displayed long-term growth potential, short-term developments must be handled with discipline. Movements below key levels may set up opportunities, but traders should assess whether broader market trends and external influences align with their strategies before taking action.

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US two-year yields have decreased by 10 basis points to 3.87% as market participants seek safer investment options.

The S&P 500 has fallen below its January low, erasing all gains made since the election.

Currently, the S&P 500 is down 1.4%, the Nasdaq has declined by 1.3%, and the Russell 2000 has decreased by 1.6%.

Market Confidence Weakens

This movement in short-term Treasury yields highlights a growing preference for reduced risk. When investors shift their capital into government bonds, it often reflects uncertainty or a reassessment of expected returns elsewhere. The 10 basis point drop in two-year yields signals an increased demand for safe assets, suggesting that market confidence has weakened.

Equities continue to face downward pressure. The S&P 500’s decline below its January low indicates that prior optimism has been erased. It is not just a single index under strain—broad-based selling is present, with the Nasdaq and Russell 2000 also experiencing losses. The fact that the S&P 500 has given up all post-election gains adds to the argument that sentiment has turned more defensive.

In periods like this, price action becomes a key indicator. A 1.4% drop in the S&P 500, alongside a 1.3% dip in the tech-heavy Nasdaq, suggests that losses are not confined to one particular sector. Meanwhile, the Russell 2000’s 1.6% decline implies small-cap stocks are struggling even more. This points to a general aversion to riskier assets rather than a rotation within equities.

Potential Market Openings

Short-term swings could create openings, but momentum needs to stabilise before conviction returns. If safe-haven flows persist, further downside across equities may not be out of the question. Yield-sensitive assets will likely respond rapidly, especially if treasuries continue to attract demand.

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Gold’s price reached approximately $2,915 on Tuesday, following a more than 1% increase on the previous day. The rise is linked to US President Donald Trump’s confirmation of tariffs on Canada, Mexico, and China.

In response, Canada announced retaliatory tariffs of 25% on $30 billion of US imports, starting Tuesday. China plans to impose additional tariffs of up to 15% on key US agricultural products, effective March 10.

Us Treasury Yields Decline

US 10-year benchmark yields fell to 4.11% in early trading, marking a low not seen since mid-October. The market’s expectation of a Federal Reserve interest rate cut by June stands at 85.6%, driven by concerns over inflation and economic activity.

Technical analysis indicates tight trading ranges for gold, with daily Pivot Point support at $2,879. Resistance is noted at $2,903 and further at $2,917, while support at $2,866 could be vital to prevent further declines.

Gold’s surge past $2,915 has come on the back of tariff announcements from Washington, leading to retaliatory measures from Ottawa and Beijing. The confirmation of duties on goods from North America and China creates direct consequences for trade costs and profit margins, making commodities such as gold more appealing as investments shift towards safer assets.

These retaliatory moves will not just impact goods directly subjected to tariffs; they could also influence broader supply chains, pricing pressure, and corporate earnings. By introducing a 25% tariff on $30 billion worth of American imports, Canadian policymakers signal a hard stance. At the same time, Beijing’s decision to target major US agricultural exports with a 15% levy is set to create additional uncertainty, especially for sectors reliant on sustained trade stability.

Gold Price Support And Resistance Levels

The effect on US Treasury yields has been immediate—early trading saw 10-year benchmark yields drop to 4.11%, a level that hasn’t been recorded since mid-October. Lower yields make non-yielding assets such as gold more attractive, adding to demand. Meanwhile, bond markets appear to be locking in expectations for monetary policy adjustments, with rate cut probabilities exceeding 85% by June. That shift is largely due to concerns over economic activity and persistent inflation worries, which policymakers will have to address sooner rather than later.

Examining recent price action, technical indicators suggest that price movements remain confined within narrow bands. Current trading patterns show support forming around $2,879, with buyers stepping in at this level. Immediate resistance sits at $2,903, while a push beyond $2,917 could signal further upward momentum. Conversely, if prices fall below $2,866, we may see an extended retreat, forcing traders to reconsider their positioning.

For those navigating this situation, it is becoming clearer that external macroeconomic developments continue to play a decisive role. With trade measures escalating and monetary policy shifts growing more likely, markets could remain volatile in the coming weeks.

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