Trade war entered a new cycle as US President Donald Trump announced new tariffs on EU goods. The European Union has already announced reciprocal measures on goods from the US, which seem to irritate the head of the Oval Office. Donald Trump has promised “Czar” tariffs of 200% on alcohol coming from the EU. Tensions between trade partners become more and more aggressive, which may lead to even worse consequences for the global economy.

According to Trump’s latest rhetoric, the US economy may face recession in the near future but it should recover later. The US dollar is under pressure at the moment as the Fed is likely to cut rates at least twice this year to support the economic growth in the United States.

EUR/USD: German Debt Vote and US-Russia Peace Talks Support the Euro

The single currency is trading close to 1.1000 as the German debt deal is around the corner. German officials will vote for a special infrastructure fund with 500 billion Euros to boost defense spending. The initiative is likely to pass as it is highly supported by major parties. Market participants expect serious economic growth in Germany that may push the Euro even higher. 

The European Central Bank can pause further rate cut steps after easing the monetary policy six times since June 2024. According to the latest forecasts, the ECB will leave the rate unchanged during the upcoming meeting in April. Another reason for the central bank to make no adjustments is the concerns about the next moves from Donald Trump and his tariff agenda.

When it comes to the Russia-Ukraine situation, further negotiations between the United States and Russia may take place soon, which supports risky assets, including the Euro. However, the situation in the Middle East where the US fleet attacks Houthis in Yemen may exert some pressure on quotes.

From the technical perspective, EUR/USD is trading far above the SMA50, confirming buyers’ domination at the moment. However, the currency pair is close to 1.1000, which is a round psychological level from where a downside correction may occur. Moreover, the RSI indicator is moving straight in the overbought area, which is another sign of a future corrective move by the currency pair. On the downside, EUR/USD is supported by the simple moving average of 50, which prevents the price from moving below 1.0900 at the moment.

GBP/USD: Pound Moves Higher Ahead of the Bank of England Meeting

The Bank of England’s officials are going to meet on Thursday to decide whether to cut rates or leave them at the current level. Latest forecasts say that the BoE is likely to do nothing and the rates will remain at 4.5% as seven voting members will vote for holding on to the current wait-and-see strategy. Only two Monetary Policy Committee members are likely to support another rate cut. They have voted for a 50 bps rate cut in February. 

Apart from the interest rate decision, traders and investors will look closely at the BoE guidance on the monetary policy. On the tariff front, market participants are looking for more data related to trade relations between the United States and the United Kingdom. 

The British pound gained support on the hourly chart and is currently trading above the simple moving average of 50, which means that buyers are controlling the market. The currency pair has made an attempt to break above 1.3000 but failed to hold there. The closest short-term support is at 1.2970, which prevents the currency pair from moving to the SMA50. On the upside, there is a psychological round number of 1.3000, which is a strong resistance level.

XAU/USD: Gold Gains Support on Trade Tensions and Middle East Conflict

The situation in the Middle East puts pressure on risky assets as the US administration has affirmed its intentions to continue strikes on Houthis in Yemen until they cease their attacks on shipments in the Red Sea. The conflict may step outside the region as the US blames Iran for supporting Houthis, which may lead to new sanctions against this country as well as some military escalation in the region.

Another reason for gold to gain ground is news about import tariffs. The risks of global recession are closer than ever. Moreover, leaks from Russia say that one of the conditions of the Russian president is that the US stop all military deliveries to Ukraine. Market participants have fears that this condition may break negotiations.

Gold is moving above 3,000 after breaking a round psychological level. On the upside, the closest resistance is likely to be at 3,050, while the support level is at 3,000. The RSI indicator is close to the overbought area, which means that a downside correction is around the corner.

BTC/USD: Bitcoin is Under Pressure Due to Geopolitical and Economic Uncertainties

Bitcoin is trading below 83,000 due to trade war tensions, geopolitical uncertainties, and a lack of news related to the Bitcoin reserve that the US government is going to create. The global trade situation goes out of control with new tariffs from trade partners may bring major economies into recession.

The geopolitical situation becomes worse due to the US-Houtis conflict, which may lead to a serious escalation in the Middle East. When it comes to the US Bitcoin reserve, according to the latest news, the US government will not buy additional Bitcoins to fund it. They will use Bitcoin that are currently on the balance of the Department of the Treasury. However, the Department of the Treasury is also authorized to create a plan for funding the Bitcoin reserve in the future.

From a technical perspective, Bitcoin is trading below 83,000 and under the SMA50, which means that sellers are controlling the market. The currency pair stays within a narrow range. The support level is at 82,400. In case of escalation in the Middle East or further trade war tensions, Bitcoin may rush to 80,000.