Latest figures from INSEE show France’s consumer confidence index at 93 in February 2025, matching expectations but higher than the prior month’s reading of 92. This is the best rating recorded since October 2024, indicating a gradual improvement in consumer morale since the start of the year.

However, the index remains below the long-term average of 100, signalling ongoing uncertainties. Additionally, concerns about unemployment have risen, with the index reaching 55, the highest level since April 2021.

A reading of 93 suggests confidence is picking up, though it remains lower than the historical norm. Households are more optimistic than they were at the end of last year, but not enough to suggest a major shift in sentiment. With inflation pressures easing in recent months, spending appetite appears to be recovering slightly. That said, the figure remains well short of pre-pandemic levels, and caution persists.

The worry over jobs stands out. The unemployment concerns index climbing to 55 means a growing number of people fear job losses. It is the highest in nearly four years, pointing to lingering nervousness despite steady hiring trends over the last few months. Often, when job security becomes a larger worry, consumers hold back on discretionary spending. That could slow down any pick-up in domestic demand, even with the overall confidence figure showing modest gains.

Inflation expectations have also moderated, helping tilt sentiment upwards. Nonetheless, if households expect job risks to rise, any boost from lower inflation may be muted. The timing here matters—if labour market concerns increase while expectations for price stability improve, spending patterns may not change as much as anticipated.

Looking further ahead, these factors influence market sentiment beyond just consumer activity. Traders assessing near-term demand trends should watch upcoming employment data closely. If job-related worries persist, there may be knock-on effects on retail sales and broader growth expectations. Any divergence between household confidence and business sentiment surveys could hint at whether this soft improvement carries weight or remains fragile.

Upcoming economic releases will be key in shaping expectations, especially inflation and wage growth figures. If wage data shows strong increases, that could alleviate some concerns around job security. On the other hand, weak earnings growth may reinforce the caution already visible in the data. Labour market trends, particularly in key industries, will determine whether consumers feel secure enough to maintain spending patterns as the year progresses.

Germany’s GfK consumer confidence for March stands at -24.7, lower than the anticipated -21.4. This decline reflects a fall in income expectations, which have hit a 13-month low.

Factors such as rising prices, persistent political uncertainties, and a recession in the manufacturing sector are impacting consumer sentiment. Additionally, the willingness of households to spend has decreased to its lowest point since June of the previous year, indicating economic challenges.

These figures indicate that households in Germany are feeling increasingly cautious about their financial prospects. When expectations regarding income drop to this extent, it often suggests that consumers foresee a period of weaker earnings, higher living costs, or both. Given that these expectations have now fallen to their lowest levels in over a year, it is clear that confidence in economic stability has been shaken.

We are also seeing weaker appetite for spending, which is not unexpected when sentiment takes a hit like this. Consumer behaviour typically follows a pattern—when confidence declines, people become more reluctant to make discretionary purchases, instead prioritising essentials. This shift reduces overall consumption, which in turn slows down economic growth. It is worth paying attention to the timing as well; spending caution reaching its lowest point since June suggests that any post-summer improvement in sentiment has been erased.

There are multiple forces at play here. Inflation continues to squeeze household budgets, limiting disposable income. Political uncertainty remains an issue, as unresolved challenges both within Germany and across Europe create unpredictability. The downturn in manufacturing is another factor that cannot be overlooked. Germany’s industrial sector plays a key role in economic output, and when it struggles, it often leads to job insecurity and weaker growth expectations.

Looking ahead, it is important to gauge how sentiment shifts from here. If further declines in consumer confidence materialise, it could reinforce a downward cycle where reduced spending affects business earnings, which then impacts hiring decisions and wage growth. However, any signs of improvement in economic conditions, such as easing inflation or policy measures aimed at supporting households, could bring some relief.

Those monitoring developments should assess incoming data carefully, particularly any updates on inflation trends, labour market conditions, and further sentiment reports. Adjustments in expectations could provide insight into whether this downturn is temporary or part of a deeper economic trend.

The ZEW survey for Switzerland recorded a drop in expectations to 3.4 in February from 17.7 previously. This decrease indicates a more pessimistic outlook among respondents.

In currency markets, EUR/USD is trading under 1.0500 due to a modest recovery of the USD. Meanwhile, GBP/USD stabilises around 1.2650, affected by recovering US Treasury bond yields.

Gold prices rebound to stay above $2,900 following a decline, while Bitcoin trades around $88,800, having experienced a significant drop from its all-time high, partly due to large outflows from Bitcoin spot ETFs.

Inflation in February is expected to fall sharply in France, spurred by a reduction in regulated electricity prices. Overall, while disinflation appears widespread, prices in services are still increasing across the Eurozone.

The drop in Swiss economic expectations, from 17.7 to 3.4, suggests that sentiment among respondents has taken a downturn. A sharp move like this normally hints at concerns regarding the months ahead. Whether this stems from domestic economic conditions or external pressures, it suggests hesitation about growth prospects. When expectations fall this much, market participants tend to tread carefully, particularly those dealing with interest-rate-sensitive assets.

The currency market reflects some notable developments. With EUR/USD struggling below 1.0500, the dollar’s recovery appears to be exerting pressure. A firmer USD often weighs on the euro, especially when US bond yields edge higher and encourage capital flows toward dollar-denominated assets. GBP/USD, on the other hand, is pausing near 1.2650, as rising US Treasury yields exert a balancing act. The relationship between sterling and the US dollar is always influenced by yield differentials, so traders should monitor any additional bond market adjustments. Signs of firming yields may sustain USD demand, forcing both EUR/USD and GBP/USD to remain under pressure.

Gold has managed to hold its ground above $2,900 following a pronounced dip. The ability to rebound suggests ongoing demand, despite recent declines. Movement in gold is often tied to interest rate expectations, shifts in inflation sentiment, and broader fluctuations in risk appetite. If US yields keep climbing, maintaining these levels could be a challenge, though persistent inflation concerns may yet offer support.

Bitcoin’s retreat to around $88,800 follows a steep pullback from its peak, largely influenced by sizable outflows from spot ETFs. These outflows reflect profit-taking, shifts in sentiment, or broader portfolio rebalancing. Given how strongly ETFs have shaped liquidity in recent months, further outflows could prolong downside pressure. However, any signs of renewed institutional demand could stem the slide.

On the inflation front, February’s data in France is set to show a sharp cooling, largely driven by reductions in regulated electricity prices. While the overall trend points to slowing inflation, service-sector prices across the Eurozone continue rising. This divergence matters, as sticky services inflation could keep central banks hesitant about cutting interest rates too soon. Investors should watch for any signs that slowing inflation in goods is broad enough to outweigh persistent strength in services prices.

EUR/USD has key expiries at 1.0500 to 1.0530, with the pair approaching a potential breakout above 1.0500 this week. The 100-day moving average currently sits at 1.0537, providing additional resistance for buyers.

For USD/JPY, there is an expiry at 150.00, but the pair remains below its 100-hour moving average of 149.67 since the week began. If the pair rallies, the expiries may restrict movement in European morning trade.

Lastly, the expiry for USD/CHF is at 0.8955, with the pair aiming for a downside test of its 100-day moving average at 0.8901 following last week’s decline.

The mentioned levels are essential reference points that options traders will have in mind when positioning themselves. Expiry-related flows often generate temporary barriers, especially when spot prices approach them near the cut-off time.

For the euro against the dollar, the range between 1.0500 and 1.0530 holds weight this week. With the price drawing closer to a potential break above 1.0500, movement could become more unpredictable. The 100-day moving average, resting at 1.0537, presents an added obstacle. If the pair advances, that level might encourage some to offload positions, causing price hesitation. However, should it remain under pressure, sellers may attempt to reclaim control, preventing an extended rally.

The dollar-yen situation looks different. An expiry sits at 150.00, but prices have yet to reclaim the 100-hour moving average at 149.67 since Monday. If buyers push higher, the expiry level could slow further appreciation, particularly during European trading hours. On the other hand, if downward momentum builds before reaching that threshold, the path of least resistance may lean towards lower levels rather than a test of 150.00.

As for the Swiss franc pair, an expiry at 0.8955 is in focus. With the dollar slipping over the past week, attention is shifting towards support at the 100-day moving average, currently positioned at 0.8901. If bearish pressure continues, that level will become a testing ground. Those looking for a rebound may step in there, but failure to hold could encourage further selling interest.

Market participants will need to monitor how prices interact with these levels in the sessions ahead. Expiries can slow sharp moves, but they do not always dictate long-term direction. Trading activity near these thresholds deserves attention, especially if liquidity thins or broader technical patterns begin to shift.

The Australian Dollar (AUD) is projected to trade between 0.6325 and 0.6365 against the US Dollar (USD). In the long term, AUD is expected to consolidate within a range of 0.6280 to 0.6410 due to fading upward momentum.

Recent observations indicated a slight increase in downward pressure, resulting in a dip to 0.6323, before closing at 0.6344, down 0.09%. The expectation for today is continued trading within 0.6325 to 0.6365.

On February 25, the AUD’s outlook was revised to neutral, reflecting the reduced upward momentum. The proposed range remains unchanged.

What we are witnessing now is a period where the Australian Dollar has lost some of its previous strength, settling into a relatively narrow band. The dip to 0.6323 before recovering slightly to 0.6344 suggests that support remains, but any meaningful push upwards appears to be lacking.

With today’s expectations maintaining the 0.6325 to 0.6365 zone, it suggests stability, though not without its challenges. The shift to a neutral stance on 25 February wasn’t without reason. The fading ability to move higher has kept the currency from making any decisive moves in either direction.

Nathan and his team had previously hinted at this phase of reduced momentum, and that assessment is playing out as expected. Traders focusing on derivatives should consider what this means beyond mere short-term levels. When volatility remains low and a currency consolidates within set boundaries, one approach is to position trades around these levels rather than anticipating a breakout.

James has pointed out that markets can stay rangebound for longer than expected, especially when external drivers are lacking. This means that for now, any aggressive directional trades should be approached with caution. Market participants should also keep a close watch for any macroeconomic developments that could introduce fresh momentum.

Short-term, the strategy remains straightforward—recognising the areas where price is holding and adjusting as needed. The longer-term range of 0.6280 to 0.6410 remains in place, reinforcing the idea that while movement exists, it’s unlikely to break out of these boundaries just yet. The reduced upward momentum suggests patience is required when looking for opportunities.

A careful approach remains the best course of action as we move forward. Emma highlighted that external factors such as interest rate expectations or economic data could be the missing ingredient needed to jolt the market—but until then, traders should work with what they have in front of them.

Federal Reserve Bank of Richmond President Thomas Barkin will deliver a speech titled “Inflation Then and Now” at the Northern Virginia Chamber of Commerce. The event is set to take place at 1330 GMT, which corresponds to 0830 US Eastern Time.

Thomas is scheduled to speak on inflation, comparing past trends to present conditions. His remarks will likely provide insight into how policymakers view recent price movements and what that means for future monetary policy. Given his role at the Richmond Fed, his perspective carries weight, and traders will be listening for any hints about interest rates or broader economic conditions.

When central bankers speak, they do so with carefully chosen words. If he acknowledges that inflation remains stubborn or hints at further pressure on prices, it could push expectations towards tighter monetary policy. Conversely, if he suggests inflation is moderating as anticipated, markets could adjust in the opposite direction. Every phrase will be scrutinised for shifts in tone or outlook.

Markets tend to react not only to the content of speeches like this but also to their timing. His remarks come amid ongoing debates about whether the Federal Reserve has finished raising interest rates or if further action is needed. If his rhetoric aligns with recent statements from his colleagues, it could reinforce existing positions. However, if he diverges or implies new risks, that might spark short-term adjustments.

Those following interest rate movements should pay attention to whether Thomas links current inflation behaviour to any broader trends in employment or spending. If he connects higher-than-expected price pressures to consumer demand, that could be seen as a reason for the Fed to maintain its stance. On the other hand, if he attributes recent inflation trends to temporary factors, that may soften expectations of further tightening.

By the time he finishes speaking, traders will have parsed his comments for any indication of whether economic data is pushing policymakers in one direction or another. It won’t just be about what he says explicitly—what he chooses not to mention could be equally telling.

Pound Sterling (GBP) may begin to weaken in March, according to an FX analyst. The GBP/USD exchange rate is unlikely to maintain gains above 1.26.

This week, UK Prime Minister Starmer is set to meet Trump in Washington, which could generate positive press due to the UK’s commitment to increase defence spending by 2027. The market perceives the UK as relatively resilient amid trade tensions, with short-term risks for EUR/GBP potentially leaning downwards.

The outlook remains focused on a lower GBP/USD, casting doubt on the currency’s ability to retain its current levels.

The suggestion that the pound could weaken in March is not without reason. If GBP/USD struggles to maintain a position above 1.26, traders may begin adjusting their strategies accordingly. A lower exchange rate raises concerns about the sustainability of recent strength, particularly if market conditions do not provide fresh support.

Keir’s meeting with Donald has the potential to steer sentiment, especially due to the pledge to boost defence spending by 2027. The optics of such a trip matter – reaffirming ties with the US at a time when global trade tensions remain high could benefit Britain’s perception as a steady partner. But while this may foster some short-term confidence in sterling, it does not necessarily counterbalance the broader pressure leaning towards a weaker GBP/USD.

In contrast, those watching EUR/GBP may have noted that near-term risks remain skewed to the downside. If the pound retains some resilience against the euro, it could offer relief for those positioned accordingly. However, this does not change the bigger trend—caution remains warranted regarding sterling’s overall trajectory.

Given recent market conditions, traders should remain aware of these dynamics. If GBP/USD begins to slip, it might reinforce the idea that sterling’s current position is unsustainable. Without new drivers of strength, a drift lower could be the more natural path.

Hamas is preparing its military forces for a possible resurgence in hostilities with Israel as the cease-fire is set to lapse this weekend. Reports indicate that Hamas’ armed wing has appointed new commanders and is strategising the positioning of fighters.

Efforts are ongoing to maintain the cease-fire, with mediators actively involved. In addition, Hamas has initiated repairs on its underground tunnel network and is providing training materials to new fighters for guerrilla warfare tactics against Israel.

Attention from markets is likely to focus on oil due to the potential for price increases amid these developments.

Traders will need to consider the effects of these developments on oil markets. Geopolitical risks often drive fluctuations in energy prices, and tensions between Israel and Hamas have historically influenced supply concerns. If the cease-fire collapses, the likelihood of increased instability in the broader region could prompt volatility in crude futures.

Washington has already expressed concerns over the situation, urging restraint from both sides while working with regional partners to prevent escalation. However, past conflicts indicate that if violence resumes, the impact may not be isolated. With the Middle East being a key producer in global energy markets, even the perception of disruption can push prices upward.

Brent crude has already displayed sensitivity to geopolitical shifts this year. If supply chains are threatened, even indirectly, traders holding short positions in crude could face difficulty. We recall previous conflicts having swift effects on energy markets, requiring positioning adjustments in response. As such, anticipating potential surges—before confirmation of actual disruptions—tends to be a recurring theme during these periods.

Beyond energy, defence-related equities may see increased interest. We remember how previous escalations led to heightened investor attention on firms rooted in security and aerospace industries. If exchanges react similarly this time, some may look for opportunities in stocks tied to military technology and defence contracts, given expectations that governments in the region could raise procurement levels.

While discussions continue in diplomatic circles, those involved should be aware of how sentiment can shift quickly. Reactionary price movements can follow headlines rather than concrete changes on the ground. Observers may find it valuable to monitor updates from policymakers, as any remarks related to de-escalation or intervention could influence short-term trends.

Oil prices experienced a sharp decline yesterday, with Brent crude falling below USD74 per barrel, according to Danske Bank’s analyst Jens Nærvig Pedersen. This downturn seems linked to weakened risk sentiment, influenced by lower US consumer confidence figures released on the same day.

The oil market remains under pressure, with concerns over demand overshadowing potential supply worries stemming from tightened sanctions on Iran’s oil export. Additionally, the broader energy sector has faced challenges, as European natural gas prices have also retreated from recent highs.

This drop in oil prices adds to ongoing concerns within commodities, particularly as demand uncertainty continues to weigh heavily on sentiment. Jens notes that weaker consumer confidence in the US has amplified fears about lower spending, which in turn could dampen energy consumption. The fact that this aligns with an already fragile outlook only deepens worries among traders.

From our perspective, the reaction in markets shows how sensitive oil remains to economic signals rather than just supply constraints. Despite tighter sanctions on Iranian exports, which under different conditions might have pushed prices higher, the prevailing mood on consumption is outweighing any potential supply risks. That tells us a lot about the way investors are positioning themselves right now.

At the same time, natural gas markets in Europe have not been immune to this shift. A pullback in prices there suggests that short-term demand is not as strong as anticipated, or that previous supply fears were overstated. This is worth watching, as gas prices had been climbing in recent weeks on potential disruptions.

For those navigating derivatives in the coming weeks, the focus should be on demand-side developments rather than just supply risks. Traders need to monitor consumer confidence indicators closely, not only from the US but also from other major economies, as these are shaping sentiment more than geopolitical constraints. Additionally, recent movements suggest that even when supply risks appear, they may not result in sustained price increases if overall demand factors remain weak.

As we move forward, keeping an eye on how broader economic data feeds into energy is essential. If more signs of weak consumption emerge, particularly from large importing nations, it could reinforce downward pressure. Conversely, any positive shifts in consumer sentiment might help steady prices, but only if they indicate a real increase in energy use. This balance is what will likely drive price action in the near term.

On Monday, Trump indicated that tariffs on Canada and Mexico would proceed, stating they are “going forward on time.”

On Tuesday, the White House clarified that Trump was talking about a different set of retaliatory tariffs on various countries.

The proposed 25% tariffs on Mexico and Canada, set to be implemented on March 4, have not yet been confirmed.

This sequence of statements has introduced confusion around trade policy. When Trump said tariffs on Canada and Mexico would move ahead as planned, it initially seemed like confirmation that the 25% tariffs scheduled for March 4 were certain. However, the White House later clarified that he was actually referring to a separate group of retaliatory measures against other nations. At this point, it is not guaranteed that the March 4 tariffs will be enforced.

Market reactions tend to be swift when trade restrictions are discussed. Even uncertainty alone affects pricing. When tariffs of this scale appear likely, companies adjust their expectations. Some traders act immediately, while others wait for official confirmation. The potential for sudden changes in price movements increases, particularly in sectors most directly exposed.

Trump’s stance on trade has frequently shifted in response to negotiations and broader economic conditions. Because of this, any statement on tariffs should be considered in context with previous positions. Policy announcements from this administration have, at times, been reversed within days. Those watching closely have learned to focus on actual implementation rather than initial rhetoric.

Over the next few weeks, market participants will be looking for more than just verbal commitments. If full confirmation of the March 4 tariffs does not come soon, some may reconsider their positions. Adjustments will depend on whether further comments provide clarity or introduce more uncertainty.

Statements from White House officials will also be closely examined. If there is any suggestion of exemptions or delays, expectations could shift dramatically. Even a slight adjustment to tariff plans would have implications for how supply chains react. Companies that rely on cross-border imports would need to recalibrate their short-term decisions.

When markets process information like this, reactions are rarely uniform. Some traders adjust instantly, while others wait for official action. The longer there is ambiguity, the greater the opportunity for rapid price shifts when confirmation arrives. If no clear signal is provided soon, speculation could take hold, leading to short bursts of volatility.

For those making decisions in this space, the priority is separating rhetoric from concrete action. Any meaningful change to trade policy will not only affect pricing but also influence broader sentiment. Watching official announcements closely, rather than relying on brief remarks, will be the most reliable approach.