Key Fundamental Factors:

US Trade Policy:

President Trump temporarily exempts automakers in Mexico and Canada from tariffs for one month.

He is also considering removing tariffs on certain agricultural products from both countries.

Australian Economic Data:

Trade surplus rose to 5,620 million in January (higher than expected).

Exports increased 1.3%, reaching an 11-month high, while imports fell 0.3%.

Building permits surged 6.3%, marking the second month of growth.

GDP growth in Q4 2024 was 0.6% (higher than expected).

US Economic Factors:

The US Dollar (DXY) is at 104.30, struggling due to concerns about slowing growth.

US job market slowdown: ADP reported 77K new jobs in February (far below the 140K forecast).

Traders await Friday’s Nonfarm Payrolls (NFP) report, showing 160K job gains.

US Manufacturing PMI dropped to 50.3 (slightly below expectations).

China’s Economic Impact:

China’s Services PMI rose to 51.4, signaling steady economic activity.

China cleared $530 billion in bad loans and plans to prioritize real estate recovery in 2025.

China targets 5% economic growth for 2025 while stabilizing the stock and property markets.

Geopolitical Risks:

China threatens a strong response to Trump’s tariff hikes, which may affect the Australian dollar due to Australia’s trade reliance on China.

RBA Deputy Governor Andrew Hauser warns that global trade uncertainty is at a 50-year high, which could impact business and investment confidence.

Key Takeaway for Traders:

AUDUSD shows short-term bullish momentum but faces resistance near 0.6380 and 0.6408.

The US Dollar remains under pressure, but economic data (NFP report) could shift sentiment.

Keep an eye on China’s trade policies and US tariffs, as they could influence AUD’s strength.

AUDUSD – D1 Timeframe

The price recently broke below the previous lows on the daily timeframe chart of AUDUSD, followed by a quick retracement. The retracement has now reached the supply zone and is expected to come under bearish pressure soon. Let’s take a look at the price action on the lower timeframe, though.

AUDUSD – H4 Timeframe

The price action on the 4-hour timeframe chart of AUDUSD falls perfectly in line with the bearish sentiment already described above. In addition to the supply zone occurring at the 88% Fibonacci retracement level, there is also a confluence from the SBR pattern, as highlighted in the 4-hour timeframe chart attached above.

Analyst’s Expectations:

Direction: Bearish

Invalidation- 0.64109

Target- 0.62313

Source: ACTIONFOREX

The Euro rose above 1.08 level and hit the highest in four months on Thursday after ECB’s widely expected decision to cut interest rates by 25 bp to 2.5%, in its sixth rate cut since June.

The central bank stated that monetary policy is becoming meaningfully less restrictive and left the door open for further easing, repeating their standard phrase that future action will be depending on the incoming economic data.

The single currency holds in sharp bullish acceleration for the fourth consecutive day, underpinned by weakening dollar and the most significant factor, signals that Germany’s next government is to create a 500 billion euro fund to boost military and revive economic growth of the EU’s largest economy which is in recession for the second year.

The latest sharp rally (EURUSD is on track for the biggest weekly gain since the third week of March 2020) has significantly improved technical picture on daily chart however, overstretched momentum and stochastic indicators suggest that bulls may start losing traction, which would prompt partial profit-taking.

Near-term outlook is expected to remain positive, as the action is underpinned by strongly favorable fundamentals and bullish technical studies, with likely scenario of limited dips (to be ideally contained by 200DMA / broken Fibo 50%) to offer better levels to re-join bullish market for extension towards 1.0872 (200WMA) and 1.0969/1.1000 targets (Fibo 76.4% of 1.1214/1.0177 / psychological) in extension.

Res: 1.0853; 1.0872; 1.0900; 1.0969
Sup: 1.0800; 1.0725; 1.0695; 1.0630

Source: ACTIONFOREX

Key Drivers of NZD Weakness

Outlook and Forecasts

Source: Poundsterlinglive

European financial markets have rallied sharply and German borrowing costs have soared after the country’s prospective leaders announced a historic deal to loosen its “debt brake” rule to boost spending on defence.

The yield – in effect the interest rate – on 30-year German government bonds rose by about 25 basis points to 3.08% in its biggest daily increase since October 1998.

The Dax 30 index, which tracks the largest German companies, rose by 3.6%, powered by industrial stocks. Share prices also leapt in London, Paris and Milan amid investor hopes that a massive boost in European spending on defence and infrastructure would kickstart the region’s ailing economy.

Defence stocks have gained sharply in recent weeks as world leaders scramble to piece together the funding for a vast increase in military expenditure amid mounting concern over Donald Trump’s commitment to European security.

The EU outlined a plan on Tuesday to unlock almost €800bn (£670bn) for defence spending, while the UK government said last week it would raise its spending from 2.3% of GDP to 2.5% by 2027, two years earlier than planned, worth an additional £6bn a year.

Shares in Rheinmetall, the German automotive and arms manufacturer, rose by 7.2% on Wednesday and have rocketed by 99% this year. Britain’s BAE Systems has rallied by 41% so far this year, Italy’s Leonardo is up 73% and Paris-listed Thales has risen by 78%.

The euro rose by 1.5% against the US dollar to about €1.08. The pound also gained against the dollar on a day of dramatic moves in markets, as investors also reacted to the US commerce secretary, Howard Lutnick, suggesting a deal could “probably” be reached to de-escalate Trump’s trade war with Canada and Mexico.

Some analysts said there was a danger of the dollar losing its “safe-haven” status among global investors as Trump’s trade wars rattle the world’s largest economy. “The speed and scale of global shifts is so rapid that this needs to be acknowledged as a possibility,” said George Saravelos, global head of currency research at Deutsche Bank.

In a sea change for economic policy after years of sticking to tough rules on government debt, Germany’s chancellor-in-waiting, Friedrich Merz, said on Tuesday that defence spending above 1% of GDP would be exempt from the country’s debt rule.

Agreed with the centre-left Social Democrats, who are expected to form a coalition with Merz’s Christian Democratic Union (CDU), the plan also includes the creation of a €500bn fund to finance spending on Germany’s infrastructure over the next 10 years. Any lifting of the debt brake must command a two-thirds majority in the Bundestag.

In response, Germany’s biggest construction and engineering companies posted sharp share gains on Wednesday. Cement maker Heidelberg Materials jumped by 17%, industrial services firm Bilfinger leapt by 18% and construction group Hochtief advanced by 15.5%. Engineering and steel firm ThyssenKrupp rose by 13.4%.

Echoing the words of Mario Draghi, the former European Central Bank president during the eurozone debt crisis, Merz said Germany would do “whatever it takes” on defence. Under pressure to raise spending on defence from 2.1% of GDP last year, analysts at Morgan Stanley said the overall size of the German plan could reach more than €1tn.

Holger Schmieding, chief economist at Berenberg Bank, said the plan amounted to a “really big bazooka” with potential to transform Europe’s largest economy. “They are a fiscal sea change for Germany,” he said.

“The extra room for defence spending sends a clear signal to Vladimir Putin and Donald Trump as well as to Germany’s European friends that Germany is serious about defending itself and helping Ukraine.”

Described as “one of the most historic paradigm shifts in German postwar history” by economists at Deutsche Bank, the deal will effectively sideline the constitutional debt brake, or schuldenbremse, for spending on defence.

Introduced in 2009 by Angela Merkel after the financial crisis, the rule, often restricting annual federal borrowing to 0.35% of GDP, had been symbolic of Germany’s strict approach to tax and spending policy.

City analysts said sidelining the rule would be a gamechanger for the country’s economy amid big challenges from collapsing industrial output, weakened by slack demand and competition from Chinese electric vehicle manufacturers.

“Germany was facing a potential growth trajectory heading towards zero over coming years. [The defence and infrastructure boost] catapults growth prospects closer to 1.5-2% for 2027 onwards,” analysts at Bank of America wrote in a note to clients.

The debt-fuelled stimulus package comes with a cost, reflected in a rise in 10-year bond yields to almost 2.7%. However, German borrowing costs still remain significantly lower than in the US and the UK, where yields have reached more than 4%.

Source: Theguardian

“You know what that means for BTC…”

US Dollar Index (DXY) 1-day chart. Source: Cointelegraph/TradingView

“March 25th is the approximate date.”

Risk assets vs. global M2 money supply chart. Source: Colin Talks Crypto/X

The latest data from prediction service Kalshi gives a 71% chance of a Bitcoin reserve this year — the highest-ever odds.

Source: Kalshi

Source: Cointelegraph