As the NA session begins, the USD is mixed. The US stocks are higher and US yields are higher.
Sentiment improved after Senate Democratic Leader Chuck Schumer backed the Republican stopgap funding bill to prevent a government shutdown, despite party reservations. That is a positive.
The trade/tariff news remains the problem for the economy/markets. Yesterday, Pres. Trump escalated trade tensions by threatening a 200% tariff on European alcoholic beverages in response to the EU imposed a 50% tariff on American whiskey in response to U.S. steel and aluminum tariffs. Investors worry that the dispute could fuel inflation and increase recession risks. Recipricol tariffs will go into effect on April 2 with autos the main target, but according to the Pres. they will be across the board. Buckle up.
In other news Germany, the Green party,CDU/CSU, and SPD has reached a agreement on debt deal and financial package, which has lifted the EURUSD (and European indices). The debt deal is to exempt defense spending from the debt break above 1% of GDP, but includes expanded definition of defense spending.
Technically, the EURUSD moved lower yesterday, dipping below the 100 hour MA in the procecss (blue line). The low price stalled ahead of the 61.8% at 1.08174 the low reached 1.0821 and bounced. Today after a dip in the Asian Pacific session, the price bounced higher and extended back above the 100-hour MA at 1.0875.
EURUSD technicals
IN Japan, Rengo, Japan’s largest labor union, reports an average FY25 wage hike of 5.46%, surpassing 5% for the second year but below the 6.09% demand. The USDJPY was higher going into the report and moved higher to 149.01, but has since rotated back lower and into a swing area support area between 148.56 to 148.77 (see yellow area and renumbered circles on the chart below). That will be close support for the pair in trading today. Move below, and traders will look back toward the 200-hour MA (green line at 148.129). Earlier today, the price moved above that MA and based against the level before moving higher. Stay above, and traders will look toward a break of the 149.00 level to increase the bullish bias and have traders toward the high from Wednesday at 149.14.
USDJPY technicals
The GBPUSD is modestly lower today (-0.06%) and trades within a relatively narrow trading range of 41 pips (that comared to a 83 pip average over the last month or so of trading).
The UK’s January GDP contracted by 0.1% month-over-month, missing the expected 0.1% growth, following a 0.4% increase in December. The decline was primarily driven by weaker industrial and manufacturing output, which fell by 0.9% and 1.1%, respectively, both missing expectations. Construction output remained flat at -0.2%, matching forecasts, while services output grew by 0.1%, in line with expectations. The softer overall reading reflects ongoing weakness in the industrial and manufacturing sectors.
Despite the miss, the lows today have been within a swing area between 1.29065 and 1.2943. In between is the 61.8% of the move down from the September 2024 high. The price action over the 4 trading days has traded above that swing area, but has held above the low of the swing area (mostly – on Tuesday, the price started below that area).
Looking at the hourly chart below, the move above the swing area and staying above is evident. The ups and downs this week, has also brought the 100-hour MA into play. That MA comes in at 1.2932. The price did move below the 100 hour MA and the 61.8% in the European morning session today, but the momentum stalled and the price is currently above both the 61.8% at 1.2922 and the 100 hour MA at 1.2932.
EURUSD technicals on the hourly chart.
Looking around the markets, the US indices are rebounding in early pre-market trading. Yesterday, the Dow industrial average fell -1.30%, the S&P fell -1.39%, and the NASDAQ index fell -1.96%. Today in premarket trading, the:
- Dow industrial average is up 240.43 points
- S&P index is up 51.23 points
- NASDAQ index is up 237.50 point
Looking at the US yield curve, yields are higher:
- 2 year 3.975%, +2.2 basis points
- 5-year 4.064%, +3.7 basis points
- 10 year 4.314%, +3.8 point basis points
- 30 year 4.68%, +4.2 basis points
in the European equity markets, the major indices are higher:
- German DAX, +1.91%
- France’s CAC +1.19%
- UK’s FTSE 100 +0.64%
- Spain’s Ibex +1.15%
- Italy’s FTSE MIB +1.26%
looking at other markets:
- Crude oil is higher by $0.51 or 0.77% at $67.06
- Gold is up nine dollars and $0.98 or 0.23% at $2998.95. The high price today has extended above the $3000 low for the first time rising to $3004.94.
- Silver is up $0.11 or 0.33% at $33.93
- Bitcoin is up $2300 and $83,421
