Gold Price Corrects Gains While Oil Price Eyes Recovery

The Pound Sterling rises to near 1.2600 against the US Dollar due to positive developments in the Russia-Ukraine peace truce.

Fears of US President Trump’s tariffs on Canada, Mexico, and China loom large.

The BoE is expected to follow a careful and gradual policy-easing approach.

The Pound Sterling (GBP) gains ground against the US Dollar (USD) after a two-day correction and rebounds to near 1.2610 in European trading hours on Monday. The GBP/USD pair bounces back as the risk premium of the US Dollar diminishes on optimism over a peace truce between Russia and Ukraine. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls to near 107.25 from an over two-week high of 107.65 posted on Friday.

Over the weekend, United Kingdom (UK) Prime Minister Keir Starmer said European leaders agreed to present a peace plan to Washington. The meeting between European leaders and Starmer was also attended by Ukrainian President Volodymyr Zelenskyy, potentially a big positive step towards ending the three-year-long war in Ukraine. Technically, signs of easing geopolitical tensions diminish the safe-haven appeal of the US Dollar.

However, investors should avoid betting big against the US Dollar due to looming tariff fears. United States (US) President Donald Trump is poised to slap tariffs on Canada, Mexico, and China for failing to restrict the flow of fentanyl into the US.

US Commerce Secretary Howard Lutnick confirmed over the weekend that the President’s plans of imposing tariffs on Canada and Mexico on Tuesday are on. However, his comments indicated that there is room for negotiation over the degree of tariffs. 

US President Trump threatened to impose a 25% levy on Canada and Mexico and an additional 10% on China. Trump also slapped 10% tariffs on China in the first week of February.

Daily digest market movers: Pound Sterling trades higher on multiple tailwinds

At the start of the week, the Pound Sterling trades higher against its major peers, except the Euro, due to a potential Russia-Ukraine peace truce. Additionally, firm expectations that the Bank of England (BoE) will follow a moderate policy-easing cycle and a likely healthy trade deal between the US and the UK have kept the British currency on the frontfoot.

On Friday, BoE Deputy Governor Dave Ramsden said that the central bank should keep a “careful and gradual” approach to the monetary policy expansion amid uncertainty over the labor market and global trade. Ramsden warned that inflationary pressures are still elevated due to persistent wage growth. “I no longer think that risks to hitting the 2% inflation target sustainably in the medium term are to the downside,” Ramsden said. Meanwhile, trades have fully priced in two interest rate cuts this year.

The meeting between US President Trump and UK Prime Minister Starmer on Thursday didn’t end with a trade deal, but Trump was confident that an agreement could be made "pretty quickly" where tariffs “wouldn't be necessary".

This week, investors will pay close attention to a slew of US economic data, notably on the Nonfarm Payrolls (NFP) data for February, which will be released on Friday. The labor market data will influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook. The Fed is expected to keep interest rates steady in the March and May policy meetings, and there is a 77% chance that it will cut them in June, according to the CME FedWatch tool.

In Monday’s session, investors will focus on the US ISM and revised S&P Global Manufacturing Purchasing Managers Index (PMI) data for February, which will be published during North American trading hours. The ISM Manufacturing PMI is estimated to have grown at a marginally slower pace of 50.8 from 50.9 in January.

Technical Analysis: Pound Sterling finds bids near 20-day EMA

The Pound Sterling movers higher above 1.2600 against the US Dollar on Monday. The GBP/USD pair finds buying interest after a mean-reversion move to the 20-day Exponential Moving Average (EMA) near 1.2560.

The 14-day Relative Strength Index (RSI) falls back within the 40.00-60.00 range, suggesting that the bullish momentum has concluded for now. However, the positive bias remains intact.

Looking down, the February 11 low of 1.2333 will act as a key support zone for the pair. On the upside, the 50% Fibonacci retracement at 1.2765 will act as a key resistance zone.

Source: FXSTREET

The EUR/USD pair attracts fresh buyers at the start of a new week and for now, seems to have snapped a three-day losing streak to over a two-week low, around the 1.0360 area touched on Friday. The momentum lifts spot prices further beyond the 1.0400 mark during the Asian session and is sponsored by a weaker US Dollar (USD).

From a technical perspective, the EUR/USD pair showed some resilience below the 50% Fibonacci retracement level of the rally witnessed in February. The subsequent move above the 38.2% Fibo. level suggests that the pullback from the 1.0525-1.0530 area, or a one-month high touched last week, has run its course. The said area represents the 100-day Simple Moving Average (SMA) and should act as a key pivotal point for short-term traders. 

Meanwhile, oscillators on the daily chart are yet to confirm a positive bias and warrant some caution for bullish traders amid worries about US President Donald Trump's tariff plans. Nevertheless, the EUR/USD pair still seems poised to climb further towards the 1.0450 horizontal support breakpoint, now turned resistance, which coincides with the 23.6% Fibo. level. A sustained strength beyond could lift spot prices to the 1.0500 psychological mark.

On the flip side, the 1.0370 area, or the 50% Fibo. level now seems to protect the immediate downside. Some follow-through selling could drag the EUR/USD pair to the 61.8% Fibo. level, around the 1.0330 region, en route to the 1.0300 mark and the 1.0285 support zone. The downfall could extend further towards the February swing low, around the 1.0210 region, before spot prices drop to the 1.0180-1.0175 region, or over a two-year low touched in January.

EUR/USD daily chart

Source: FXSTREET

Here is what you need to know on Monday, March 3:

The US Dollar (USD) struggles to find demand at the beginning of the week as investors continue to assess the latest geopolitical developments. Preliminary February inflation data from the Eurozone will be featured in the economic calendar on Monday, ahead of the February ISM Manufacturing PMI report from the US. 

US Dollar PRICE Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Euro.

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

US President Donald Trump's meeting with Ukrainian President Volodymyr Zelenskyy turned into an argument late Friday and Trump cancelled the signing of a minerals deal, which could have paved the way to a Russia-Ukraine ceasefire and possibly a truce deal eventually. Over the weekend, Trump reiterated that they will impose an additional 10% tariff on Chinese imports starting Tuesday, as initially planned. Early Monday, Global Times reported that China is evaluating countermeasures in response to additional US tariffs. After reaching its highest level in two weeks near 107.70 late Friday, the USD Index stays on the back foot below 107.50 on Monday.

During the Asian trading hours, the data from China showed that the Caixin Manufacturing PMI improved to 50.8 in February from 50.1 in January. AUD/USD registered losses for six consecutive trading days and lost more than 2% in the previous week. The pair holds steady above 0.6200 in the European morning on Monday.

The Harmonized Index of Consumer Prices (HICP) in the Euro area is forecast to rise 2.6% on a yearly basis in February. EUR/USD trades modestly higher on the day above 1.0400 to begin the European session on Monday after closing in negative territory for two consecutive weeks. 

GBP/USD edged lower on Friday and snapped a three-week winning streak. The pair stays relatively quiet and trades at around 1.2600 on Monday.

USD/CAD gained about 1.7% in the previous week before going into a consolidation phase near 1.4450 on Monday. Trump administration's 25% tariffs on Canadian imports are expected to go into effect on March 4.

USD/JPY holds steady at around 150.50 in the European morning. In the early Asian trading hours on Tuesday, the Japanese economic calendar will feature Unemployment Rate data for January.

Gold lost more than 2.5% and closed a week in negative territory for the first time since late December. XAU/USD clings to modest recovery gains above $2,860 on Monday.

Source: FXSTREET

The meeting between US President Trump and Ukrainian President Zelensky didn’t go as planned—no mineral deal was signed, and the talks ended in a clash. In contrast, Zelensky’s meeting with UK Prime Minister Starmer was more productive. Starmer urged European companies to form a ‘coalition of the willing’ to support Ukraine with military aid and security guarantees. Later, Macron announced plans to pursue a one-month truce.

Overall, tensions between the two continents have worsened. Oil prices initially rose in early Asian trading amid concerns that the Trump-Zelensky conflict could delay any path to lasting peace. However, selling pressure outweighed geopolitical risk perception, as last Friday’s US economic data fueled concerns about slowing growth—Atlanta Fed’s GDPNow tanked to -1.5%!

The EURUSD started the week on a positive note after slipping below its 50-day moving average on Friday.

The European will to stand with Ukraine means more military spending. Increased defense spending from the ‘coalition of the willing’ should provide a short-term economic boost but also accelerate technological advancements in the medium to long run. The whole situation is a wake-up alarm for the sleeping European beauty.

On the budget side, higher spending also means increased borrowing, which could push European yields higher. The latter doesn’t impact optimistic mood among investors this monday morning with DAX futures leading gains. Appetite for the European defense stocks will certainly remain solid. Gold has given back early session gains, while the US dollar is broadly softer even against the Loonie although the US is supposed to go ahead with 25% tariffs on Mexican and Canadian imports, while levies on Chinese products would be doubled to 20%.

Speaking of China, the CSI and HSI kicked off the week on a negative note despite a stronger-than-expected Caixin data that suggested the manufacturing activity in China grew faster than expected in February. Chinese bubble tea giant Mixue made a strong debut in Hong Kong trading—something to take your mind off geopolitics for a moment.
On the data front

Friday’s economic data was bitter-sweet. The core PCE index, the Federal Reserve’s (Fed) favourite gauge of inflation, came in line with expectations. But the combination of higher-than-expected personal income but lower-than-expected – and unexpectedly negative – spending growth in January raised worries regarding US growth prospects. On top, Atlanta Fed’s GDPNow forecast tanked to -1.5% from above 2% printed previously. As such, the US growth expectations are deteriorating – and they are deteriorating fast. The latter could boost the dovish Fed expectations – which could be an encouraging development for risk appetite – but for the Fed to go ahead with further support to the economy, inflation should remain under control. And with tariffs due to materialize starting from this month, controlling inflation won’t be a walk in the park.

Anyway, this week, the market will focus on January employment numbers. A consensus of analyst expectations on the latest Bloomberg survey suggests that the US economy may have added 156K nonfarm jobs in January and slightly slower wages growth. Investors will also be looking at the impact of mass firings at the federal government offices in the coming months. Soft data is good for boosting Fed doves, pushing the yields lower and improving sentiment in risk assets, but if inflation doesn’t allow, the ‘bad news is good news’ trade could be limited.

In Europe

The geopolitical developments are perceived with optimism among investors on hope that the clash with the US will finally awaken the sleeping European economies, shift focus from financial control to more spending without asking too many questions on whether the extra spending is justified – because it is. In the past, war and military spending have accelerated technology advances and served to the broader economy.

On the trade front, the next step in Trump’s tariff threats is the actual implementation, with levies set to increase. The latter will certainly have a negative impact on growth prospects and call for a decent support from the European Central Bank (ECB) to the underlying economies. Here, as well, the inflation’s trajectory is important to assess the extent to which the ECB could ease financial conditions to boost growth. The CPI updates for February released last week pointed at a mixed picture across the major eurozone countries. But the aggregate CPI update due this morning is expected to print a softening headline and core inflation in February. If that’s the case, the impact on the euro is not certain. In one hand, soft inflation numbers back the expectation of a more dovish ECB stance and could weigh on the euro, but on the other hand, the geopolitical tensions boost growth prospects and the idea that monetary and fiscal support would lead to a stronger growth across Europe – and that’s positive for the euro outlook. The combination of deteriorating growth prospects for the US and improved growth prospects for Europe could help the EURUSD regain confidence and appreciate sustainably beyond the 1.06 mark, the major 38.2% Fibonacci retracement on September to January Trump selloff, and reverse the Trump-led bearish trend.

Source: ACTIONFOREX

USD/CAD could retest the “pullback resistance” near the key psychological level of 1.4450.

The bullish outlook remains intact, reinforced by the 14-day Relative Strength Index staying above 50.

The nine-day Exponential Moving Average at 1.4356 may act as the primary support level.

USD/CAD snaps its six-day winning streak, hovering around 1.4440 during Friday’s Asian session. Technical analysis on the daily chart shows the pair holding above the nine- and 14-day Exponential Moving Averages (EMAs), indicating strengthening short-term bullish momentum.

Moreover, the 14-day Relative Strength Index (RSI) remains above 50, signaling a continued bullish sentiment.

The USD/CAD pair is testing the "pullback resistance" near the key psychological level of 1.4450. A decisive breakout above this level could pave the way for a climb toward 1.4793, its highest level since March 2003, reached on February 3.

On the downside, initial support is seen at the nine-day EMA of 1.4356, followed by the 14-day EMA at 1.4334. A break below these levels could dampen short-term momentum, potentially pushing the pair toward the three-month low of 1.4151, recorded on February 14.

A decisive break below the three-month low could drive the USD/CAD pair toward the four-month low of 1.3927, last seen on November 25.

USD/CAD: Daily Chart

Canadian Dollar PRICE Today

The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the weakest against the Japanese Yen.

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).

Source: FXSTREET