The fears of economic downturn in the US and other major economies trigger another round of selloffs in major assets. The US labor market data, released last week showed some cooling down in this sector. The US inflation data will be among the key fundamental indicators this week. According to forecasts, YoY inflation is likely to slow down again. According to forecasts, the Consumer Price Index is likely to plunge to 2.9% from 3.0%. 

EUR/USD: New Highs on US Dollar Selloffs

While the risk mode is off, major currencies like EUR still have some support from the financial markets. The so-called debt brake is widely discussed in Germany nowadays. The new initiative on increasing spending on defense may stimulate economic growth. Moreover, the shared currency is supported by the fact that the European Central Bank is likely to make two more cut rates this summer. This initiative is already included in the price.

On the USD side, the US dollar is losing ground due to several factors. First, traders and investors are concerned about the future economic growth in the country due to the new tariff policy by the current president’s administration. Import tariffs may put pressure on inflation, which, in turn, will prevent the Fed from cutting rates. On the other hand, new tariffs may also push the US economy down and the Federal Reserve will have to act in such conditions.

According to the latest comments from Fed Chair Jerome Powell, the Federal Reserves is likely to preserve its wait-and-see policy for longer. However, market participants have already started to price in the third rate cut that can take place in May 2025.

From the technical perspective, EUR/USD is trading above the SMA50, which suggests that buyers are totally dominating the market. However, the currency pair is close to 1.1000, which is a psychological level, and more drivers and triggers and needed to surpass this strong area. On the downside, the SMA50 prevents the currency pair from moving lower. 

GBP/USD: Market Participants Reassess BoE Policy

The British Pound gains ground as market participants become more confident about the results of the upcoming Bank of England meeting that will take place in March. According to the latest forecasts, the officials are unlikely to make another rate cut and the BoE will keep the restrictive policy for longer as the global situation remains unclear. The wager growth in the United Kingdom will bolster inflation, which, in turn, may step outside the target level.

The head of the BoE Andrew Bailey noticed last week that the Bank of England will cut rates gradually as the inflation persistence is less likely to fade on its own accord. This week, market participants will focus on the UK GDP data. The latest forecasts suggest that the economic growth in the UK will decline to 0.1% MoM from 0.4% in December 2024.

On the technical side, GBP/USD stays above the SMA50 confirming bullish domination. The target now is 1.3000, which is a psychological level that requires more triggers to be broken. On the downside, the SMA50 supports the currency pair. 1.2870 prevents the currency pair from moving lower.

WTI: Oil is Under Pressure

Oil is trying to gain momentum and breaks above 66.00 but the upside is limited amid tariff concerns. Import tariffs on oil were already imposed on Canada and Mexico. On the other hand, retaliatory measures by China put global economic wealth at risk. The new round of the trade war is on the way. Donald Trump hinted at a potential slowdown of the US economy saying that it is in the transitional period. 

When it comes to China, one of the major oil buyers, any slowdown in its economy may put pressure on oil prices. Moreover, OPEC+ has agreed to increase oil production starting in April, which is another factor exerting pressure on WTI quotes.

From the technical perspective, WTI stays below the SMA50, which means that sellers are now in control. The quotes are supported at 65.00, which prevents the asset from moving lower. On the upside, oil should break above the dynamic resistance level to move higher. The next resistance level will be at 67.30.

XAU/USD: Gold Attempts to Rise

The situation around the US import tariffs supports gold in the financial markets. While the US government continues to impose import tariffs against its major peers, trade tensions were launched between Canada and China, which creates another point of crisis in the global trade environment. 

According to Donald Trump, the US economy may first plunge before surging later. This supports the precious metal, which is a safe haven asset that market participants always buy when global concerns arise. When it comes to the US dollar, according to the latest data, the Fed is unlikely to cut rates in the upcoming meeting in March, but the probability of the next easing step in May has increased significantly and reached almost 50%.

From the technical perspective, XAU/USD is trading above the SMA50 marking the rising interest in gold from traders and investors. The next significant level on the upside is 3,000, which can be broken if fears of global recession continue to dominate. On the downside, The SMA50 supports the precious metal and prevents it from testing 2,900.