Yen Steadies On Hawkish Boj Tone, Usd/jpy Rally Pauses At Key 150 Level

Market Overview

The US Dollar Index (DXY) hovered near 104.311 on Tuesday, showing resilience despite mixed signals from key economic data and ongoing uncertainty surrounding trade policy.

The greenback found moderate support as stronger-than-expected services sector performance offset concerns about manufacturing weakness.

Services Sector Strength Offsets Manufacturing Contraction

The S&P Global US Composite PMI rose to 53.5 in March, recovering from February’s 10-month low of 51.6 and marking the fastest pace of expansion since December 2024.

The Services PMI led the gains, jumping to 54.3 from 51.0—well above expectations.

However, the Manufacturing PMI slipped to 49.8, down from 52.7 and below the forecast of 51.8, indicating a contraction and highlighting uneven momentum across sectors.

Dollar Faces Policy Uncertainty Amid Inflation and Trade Concerns

The dollar faces competing pressures. On one hand, Atlanta Fed President Raphael Bostic noted persistent inflation concerns, signaling a slower pace of rate cuts through 2025.

On the other, potential disruptions from former President Trump’s proposed trade policies have raised investor concerns about economic headwinds.

Fed Chair Jerome Powell’s recent remarks, which pointed to a strong labor market and inflation gradually approaching the 2% target, helped limit downside risks for the dollar.

Traders Eye Inflation Data and Fed Guidance

Looking ahead, market participants are focused on upcoming US economic releases and Federal Reserve commentary for cues on monetary policy.

The Personal Consumption Expenditures (PCE) Price Index, due Friday, will be closely watched as a key inflation gauge.

Additionally, developments in US-China trade negotiations could influence dollar sentiment in the coming sessions.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is holding steady around $104.311, trading just above its pivot point at $104.261. Price action remains constructive, with support from the 23.6% Fibonacci retracement level reinforcing a mildly bullish tone.

The index is also above its 50-day EMA at $103.998, though still under the 200-day EMA at $104.397, which could act as near-term resistance.

A sustained move above $104.903 would strengthen the case for a rally toward $105.429. On the downside, any drop below $104.261 could pull the index back toward support at $103.763 and $103.211.

GBP/USD Technical Analysis

GBP/USD is trading around $1.29223, holding just under its pivot point at $1.29298. The 50-day EMA at $1.29359 is capping upside attempts, adding to the pressure on the pair.

The broader setup remains neutral-to-bearish in the short term, especially as price stays below this dynamic resistance. If buyers manage to reclaim $1.29298 with conviction, the path opens toward $1.29744, followed by $1.30141.

But if the pair fails to break above the EMA zone, downside risks return, with immediate support at $1.28950 and deeper pressure likely down to $1.28602.

EUR/USD Technical Forecast

EUR/USD is hovering near $1.08003 in early trading, struggling to gain traction as it sits just below its pivot point at $1.08079. The pair remains trapped in a downward channel, reflecting a cautious tone in the market.

Price is sandwiched between the 200-day EMA at $1.07854 and the 50-day EMA at $1.08380, suggesting limited momentum in either direction. A clean break above $1.08079 would be needed to shift the near-term bias, potentially opening the door toward resistance at $1.08595.

Until then, bears are likely to stay in control, with immediate support at $1.07643 and further downside risk toward $1.07169. The broader picture favors consolidation unless a clear catalyst breaks the current range.

Source: FX Empire

U.S. President Donald Trump greets members of the audience after signing a proclamation during a Greek Independence Day celebration at the White House on March 24, 2025 in Washington, DC. 

U.S. President Donald Trump's tariffs have so far taken the shape of country-specific, sweepingly reciprocal, targeted at sectors and applicable only to countries with a certain trade relationship with another.

He has also been "flexible" in implementing them — as he remarked Friday on the possibility of doing so — granting last-minute pauses, exceptions to goods under trade agreements and potential reprieves even for across-the-board tariffs.

Markets rallied Monday, driven by Trump's hint that countries could get a "break" from reciprocal tariffs. But it's unlikely to be a sustained upward trend, given the wild swings in the types, and the unpredictable executions, of Trump tariffs.

Strategists often look at technical trends in stocks' movements, such as their 200-day moving average, in an attempt to divine their future. It might be more fruitful, in this political epoch, to shift that scrutiny to Trump, who has alternately caused markets to pop — and plunge — with one pronouncement.

What you need to know today

New Trump tariffs, again
U.S. President Donald Trump said at a Cabinet meeting earlier on Monday he will soon announce tariffs targeting automobiles, pharmaceuticals and other industries, and, at a White House event later the same day, added the lumber and semiconductor industries to his list. Trump also said Monday the U.S. will impose 25% tariffs on countries that buy oil and gas from Venezuela.

Possible 'breaks' for tariffs
Even as Trump said he would impose tariffs on industries, at a White House event Monday, he said he "may give a lot of countries breaks" on the reciprocal tariffs, which are set to take effect April 2. When pressed for clarification on whether sectoral tariffs will also start that day, Trump initially said, "Yeah, it's going to be everything," before adding, "but not all tariffs are included that day."

U.S. stocks shoot up
U.S. stocks jumped Monday on relief that Trump tariffs might not be as severe as expected.  The S&P 500 gained 1.76%, the Dow Jones Industrial Average rose 1.42% and the Nasdaq Composite rallied 2.27%. Tesla shares popped 11.9%, their best day since Nov. 6, 2024, a day after Trump's election victory. Europe's regional Stoxx 600 index dipped 0.13%. Swedish defense firm Saab gained 4.5% after UBS upgraded its stock to buy from neutral.

Hyundai's $21 billion investment in U.S.
South Korean conglomerate Hyundai on Monday announced a roughly $21 billion investment in U.S. onshoring that includes a $5.8 billion steel plant in Louisiana, announced Trump, Hyundai Chairman Euisun Chung and Louisiana Gov. Jeff Landry Monday. The plant is set to hire more than 1,400 employees and will produce steel that will be used by Hyundai's two U.S. auto plants to manufacture electric vehicles.

[PRO] Magnificent Seven rebound?
The performance of the "Magnificent Seven" stocks can serve as a barometer for investor sentiment toward the U.S. market, some analysts think. Their rally on Monday, after a monthslong rout, has generated optimism for a turnaround — but one equity strategist thinks investors shouldn't get their hopes up.

Protesters clash with Turkish anti riot police as they use tear gas and water cannons during a demonstration following the arrest of Istanbul's mayor, in Ankara on March 21, 2025. 

Political and financial turmoil set to dominate Turkey, risking economic stabilization plans

More than 1,100 people have been arrested in Turkey's nationwide protests since demonstrations began on March 19, Turkish authorities said Monday, as political and economic instability grips the nation following last week's arrest of Istanbul Mayor Ekrem Imamoglu.

Analysts expect a prolonged period of volatility for the Turkish lira and the foreign reserves that the country will need to burn through in order to keep it afloat.

Central bank officials spent $12 billion in foreign reserves last week to prop up the lira, the Financial Times reported as of March 21, after the currency hit a record low of more than 40 to the dollar. Markets initially plunged on news of the arrest, and Turkey on Sunday banned short selling and relaxed buyback rules in an effort to bolster stocks.

Source: CNBC

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Panels on the energy transition and all things related, from oil to minerals, kick off the Financial Times Commodities Global Summit this week in Switzerland. German manufacturers weigh in on gas storage plans in Europe. And, coffee is not expected to get cheaper any time soon.

Critical Minerals

Critical minerals are vital for clean energy and the fight for them is intensifying, with US President Donald Trump even evoking wartime powers to produce them. China is the undisputed leader in extracting the minerals, but it is curbing exports in response to US trade tariffs. Other nations joining the race to build up supplies, however, will find extracting and then refining minerals into a usable form is a complex undertaking.

Coffee

“Roasters are struggling,” says Thiago Cazarini, a broker in Brazil’s largest coffee-growing region. The processors who typically take positions in the futures market to protect themselves from price fluctuations changed course when the commodity began rising last year, betting they could secure a better deal later. But supply shortages persisted and prices kept climbing. Coffee drinkers can expect to see the impact of that at the register. Coffee futures rose Monday in New York.

Copper

Copper is flirting with records in New York after hitting $10,000 on the London Metal Exchange, the highest since October. Used in wiring, plumbing and industrial machinery, copper has been flowing into the US at breakneck levels as the Trump administration hints at tariffs on the colorful metal. Traders smell a windfall in arbitrage opportunities, while bulls remain steadfast. Copper rose Monday.

Oil

The US oil industry, the world’s biggest, has undergone a dramatic overhaul over the past 2 1/2 decades as a result of the shale boom. In the mid-2000s, America was a net importer of as much as 14 million barrels a day of crude oil and refined fuels, while today it’s a major supplier to overseas markets. The most-recent government data shows the US just hit a fresh record for shipping the most oil overseas relative to how much it buys. Futures rose Monday.

Gas Storage

Gas inventories are a problem for Europe after a cold winter left reserves low. To ensure it has enough gas to get through the heating season, the European Union is requiring storage facilities to be at least 90% by Nov. 1. Some countries, including Germany, the world’s third largest economy, are pushing to lower the target. A German industry lobby joined the chorus, citing the nation’s high energy prices.

Source: Yahoo Finance

Traders battered by one of the fastest U.S. stock slides on record may be poised for a reprieve.

Equity strategists at firms including JPMorgan Chase & Co., Morgan Stanley and Evercore ISI are advising clients that the worst of the recent downturn is likely behind them, citing metrics from investor sentiment and positioning to favorable seasonality.

Major American stock indexes bounced back Monday after reports that President Donald Trump plans to take a more targeted approach with the tariffs he will roll out on April 2, easing some concerns that his escalating trade war will fan inflation and stall the economy.

Those worries had knocked stocks down sharply since mid-February, sending the S&P 500 Index into its seventh-fastest 10% drop from a record high in nearly a century and erasing over US$5.6 trillion from the index’s market capitalization. JPMorgan said the bulk of that came from a cohort of momentum stocks, the 50 names with strongest price performance in the S&P 500, which erased two years of gains in three weeks. That also eased the crowding in that segment that had built up during the previous rally.

“As a result, the risk of another violent unwind should be low in the short term,” JPMorgan strategists led by Dubravko Lakos-Bujas said in a March 21 note to clients.

On Monday, pockets of the market that were hardest hit recently saw the biggest recoveries, with a guage of so-called Magnificent Seven stocks rising more than 2% during the session.

Morgan Stanley’s Michael Wilson joined Lakos-Bujas in striking a more optimistic tone, indicating that seasonal factors, a falling U.S. dollar, Treasury yields, and ultra-pessimistic sentiment and positioning are paving the way for a “tradeable rally in the near term.” And at Evercore ISI, chief equity and quantitative strategist Julian Emanuel said rhetoric on the economy by the Trump administration “has reset the bar such that sentiment is so negative right now.”

“We think the two steps backward portion we lived through is in the process of resolving itself, and you’re likely to get three steps forward toward higher prices,” he said.

The selloff has left Wall Street conflicted about whether the time has come to buy the dip, however. While strategists see a period of calm ahead, they’ve largely avoided giving clients a resounding all clear to pile into U.S. equities for now.

That’s in significant part because Trump’s planned announcement of universal, reciprocal trade tariffs next month may again alter investors’ expectations about the economic fallout.

Evercore’s Emanuel said it’s the next catalyst for the market. Morgan Stanley’s Wilson says he’s also watching employment and manufacturing data along with earnings revisions as “signposts for a more durable rally.”

At 22V Research, chief market strategist and president Dennis DeBusschere on Monday said that market internals have improved in a way that suggests the U.S. economy is not moving into a recession. The unusually low investor sentiment — given the still solid economic data — suggests “stronger than normal returns” in the one-, three-, and six-month periods if the impact of tariffs wind up being minor. But like others, he’s waiting for more clarity around the levies to firm up his views.

“Assuming tariffs are not a major headwind to growth, fundamental factors should rebound throughout 2025,” he said. But “our conviction that tariffs will not lead to deeply negative outcomes is low, which is why we will wait until the April 2 announcement to press this longer-term view.”

Source: BNN BIoomberg