Forex Today: Markets recovered their optimism, but will it last?

Valeria Bednarik FXStreet

What you need to take care of on Thursday, March 3:

Financial markets shrugged off fears, at least temporarily by the end of Wednesday. Demand for the greenback receded, although it ended the day mixed across the board. It was quite a busy day, with inflation-related concerns temporarily returning to the table.

The EU released the preliminary estimate of its February CPI, which jumped to a record 5.8% YoY. Speculative interest forward bets for an ECB rate hike before year-end, despite policymakers noting that Eastern European developments are sending uncertainty to fresh, unknown levels.

US Federal Reserve chief Jerome Powell testified on the Semi-Annual Monetary Policy Report before the House Financial Services Committee. Powell hinted at a 25 bps rate hike in March, which helped Wall Street rebound, as market participants were betting on a 50 bps rate hike. He also referred to the new levels of uncertainty created by war but repeated that the central bank would do whatever is necessary to maintain price stability, including reducing the balance sheet.

The EUR/USD pair recovered from a multi-month low of 1.1058 and trades around 1.1130 heading into the Asian opening. GBP/USD finished the day with gains around 1.3380 after falling to 1.3270.

The Bank of Canada lifted interest rates by 25bps to 0.50% as expected on Wednesday, adding that it expects it would need to further increase interest rates. The central bank announced it would continue with the reinvestment phase of its balance sheet, maintaining its overall holdings of Canadian government bonds at roughly the same level.

The CAD appreciated against the greenback, with the pair currently trading at around 1.2650. AUD/USD surged to 0.7300, helped by upbeat Australian Q4 GDP figures.

Crude oil prices soared amid the Eastern Europe war. The OPEC+ agreed to raise oil output by 400k BPD in April, but the announcement fell short of cooling prices. The barrel of West Texas Intermediate is currently at around $110.80.

Spot gold retreated from its recent highs but holds on to weekly gains. It is currently changing hands at $1,925 a troy ounce.

Russian attacks on Ukraine persists, although the second round of talks will resume early on Thursday. A ceasefire would be discussed then. Such headline further supported the market’s optimism, despite escalating global tensions.

Bitcoin hits major resistance before BTC begins a 20% price spike

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD looks sidelined around 1.1850

EUR/USD remains on the back foot, extending its bearish tone and sliding towards the 1.1850 area to print fresh daily lows on Monday. The move lower comes as the US Dollar gathers modest traction, with thin liquidity and subdued volatility amplifying price swings amid the US market holiday.

GBP/USD flirts with daily lows near 1.3630

GBP/USD has quickly given back Friday’s solid gains, turning lower at the start of the week and drifting back towards the 1.3630 area. The focus now shifts squarely to Tuesday’s UK labour market report, which is likely to keep the quid firmly in the spotlight and could set the tone for Cable’s next move.

Gold battle around $5,000 continues

Gold is giving back part of Friday’s sharp rebound, deflating below the key $5,000 mark per troy ounce as the new week gets underway. Modest gains in the US Dollar are keeping the metal in check, while thin trading conditions, due to the Presidents Day holiday in the US, are adding to the choppy and hesitant tone across markets.

Bitcoin consolidates as on-chain data show mixed signals

Bitcoin price has consolidated between $65,700 and $72,000 over the past nine days, with no clear directional bias. US-listed spot ETFs recorded a $359.91 million weekly outflow, marking the fourth consecutive week of withdrawals.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.