The US dollar index fluctuates around 104.50, pay attention to the data on initial unemployment claims in the United States

On Thursday, the US dollar index fluctuated narrowly with around 104.50, and market participants are now looking forward to the U.S. personal consumption expenditure data to be released on Friday, which may provide more information on the U.S. rate cut path. This trading day will be released on the final GDP of the US fourth quarter and the number of initial unemployment claims in the United States, and investors need to pay attention.

Analysis of major currency trends

U.S. dollar: As of press time, the US dollar index hovers around 104.56, and the US dollar index (DXY) remained near the 104.30 area during trading on Wednesday. Better-than-expected data on durable goods orders in February showed that avatradescn.combined with hawkish remarks from Fed officials helped the dollar rise slightly. However, momentum indicators remain divergent, suggesting that the upside remains fragile. Technically, the 30-day exponential moving average (EMA) and SMA continue to act as upper resistance. The relative strength index (RSI) appears neutral when avatradescn.combined with the stochastic indicator, although the short-term momentum remains weak. Key resistance levels are at 104.43, 104.47https://avatradescn.com and 104.53, while instant support levels are at 104.09 and 103.84.

Euro: As of press time, the euro/dollar hovered around 1.0753, and the euro/dollar accelerated downward on Wednesday, with a decline exceeding theThe quarter percentage point, slipped below 1.0750 for the first time, the first time since the first week of March. The pair has lost ground for six consecutive trading days, and market concerns about the trade war have worsened, and risk appetite is expected to be further weakened in the day approaching April 2. U.S. GDP growth data will be released on Thursday, but non-preliminary data is unlikely to push too much momentum in any direction. The key U.S. data release this week will be Friday’s core personal consumption expenditure price index (PCE) inflation. Technically, a steady decline for six consecutive days has had an impact on the EUR/USD, with buying falling nearly 2% from its peak of just above 1.0950 last week. Bearish momentum has dominated, and the price trend is ready to launch a new round of impact on the 200-day index moving average (EMA), with the target being around the 1.0700 mark.

GBP: As of press time, GBP/USD hovered around 1.2887. GBP/USD fell sharply on Wednesday, with a drop of one-sixth, falling back below the 1.2900 mark. Market sentiment was volatile due to the new round of tariff threats from US President Donald Trump. Economic data suddenly became trivial as the Trump administration prepares to spark a "they're against all" trade war on April 2. On Wednesday, the UK inflation data was generally lower than market expectations, helping to alleviate market concerns. The next batch of key UK data will be the final fourth quarter of 2024 GDP and retail sales updates on Friday. UK GDP growth is expected to be on par with previous data in the fourth quarter, but retail sales data are expected to shrink slightly in February. Technically, the GBP/USD fell again in mid-week market trading, further dragging down bids away from the last high of nearly 1.3000. Bearish pressure begins to accumulate and the price movement may be ready to rebound downward as buyers lose momentum above 1.2725 near the 200-day index moving average (EMA).

Summary of news from the foreign exchange market

1. Senior EU officials expect Trump's tariffs to be about 20%

According to the Financial Times, the EU's highest trade negotiator Maro??ef?ovi? predicts that US President Trump will impose a tariff of about 20% on the EU next week. The avatradescn.commissioner said the tariffs would be "around 20%" based on his personal assessment after his talks with the U.S. The United States has not stated that there will be any exemptions or exceptions. According to the first official to hear a negotiation briefing, ?ef?ovi? warned U.S. officials that imposing a 20% tariff on goods imported from the EU would be "destructive" to the EU. The U.S. tariff levels will be higher than those in the late 1950sany stage since the founding member states introduced a avatradescn.common trade policy.

2. Japan and Brazil seek cooperation to deal with US policy risks

According to multiple Japanese media reports, in the context of the recent implementation of a series of unilateral policies and the avatradescn.complex and changing international situation in the United States, Japan and Brazil seek strategic proximity, deepen cooperative relations, and respond to US protectionist risks. Japanese Prime Minister Shigeru Ishiba held talks with Brazilian President Lula, who is visiting Japan, in Tokyo on the 26th. Both sides believe that in the context of the avatradescn.complex and changeable international situation, cooperation between the two sides is indispensable, and decided to formulate a five-year action plan with politics, economy, climate change as the main content. Shigeru Ishiba said that Brazil's high-quality biofuels and Japan's high-performance automotive technology are key avatradescn.combinations to achieve carbon neutrality and deserve the joint efforts of the two countries to issue relevant initiatives to the world. Lula said the two countries should be avatradescn.committed to promoting the signing of a avatradescn.comprehensive economic partnership agreement between Japan and the Southern avatradescn.common Market. Lula also hopes that enterprises from the two countries will establish a cooperative relationship and develop together.

3. CBO: If Congress does not take action on the debt ceiling, the United States may face the risk of default in August. According to the Wall Street Journal, the U.S. Congressional Budget Office (CBO) predicted on Wednesday that unless Congress takes action to raise the national debt ceiling, the U.S. government may face the risk of defaulting part of the $36.6 trillion debt in August, or even at the end of May. Before the CBO made a prediction on the “X date” (the date when the Treasury no longer has the ability to repay its debt), the bipartisan policy center estimated on Monday that the United States could face a risk of default sometime between mid-July and early October. The CBO said the X date is "probably" in August or September. But the agency warns that during this period, if borrowing demand exceeds its forecast, “the Treasury resources may run out sometime in late May or June”.

4. Implicit volatility in Europe and the United States has declined. European Central Bank expectations remain unchanged.

Dutch International Group analyst Chris Turner pointed out in a report that the key indicator for measuring expected price volatility, the euro-USD, is declining after high volatility in the first half of March. Data from the London Stock Exchange Group (LSEG) show that the one-month implied volatility of the euro against the dollar is currently at 7.125%, while it had risen above 9% earlier this month. Turner said the stability of the U.S. asset market and "a rethinking on how quickly new fiscal stimulus (Germany) can boost economic growth in the euro zone" have led to a decline in implicit volatility. It is worth noting that during the recent volatility, market expectations for the ECB rate cut have not changed significantly.

5. Analysts: Fiscal pressure, inflation falls hard to change fiscal pressure. Tariffs hinder the process of interest rate cuts. Richard Flax, chief investment officer of Moneyfarm, said in a report that data showing a moderate decline in inflation in the UK in February is unlikely to alleviate fiscal pressure. The UK's annual overall FebruaryInflation fell to 2.8% from 3.0% in January, a drop slightly higher than expected. Flax said the British Chancellor may feel a little relieved by the continued easing of inflation, but this moderate decline will hardly help alleviate fiscal pressure. He also said tariff risks could raise import costs and drive inflation higher, limiting the Bank of England's room for interest rate cuts.

Institutional View

1. Deutsche Bank: If the US economy weakens, the yen may be impacted

CoV's foreign exchange analyst Volkmar Ball said in a report that if the US economy weakens, the yen may be impacted because it may have a negative impact on Japan's current account. He pointed out that Japan's current account is highly dependent on the U.S. economic development. The increase in Japan's current account surplus was driven entirely by initial revenue growth from the United States during the 12-month period between 2021 and the end of September 2024.

2. Goldman Sachs: High inflation raises the threshold for the Federal Reserve's interest rate cut. Economic indicators and inflation expectations become key variables.

Goldman Sachs economists wrote that high inflation and high inflation expectations based on the survey have set higher thresholds for the Fed's possible interest rate cut measures this year. They noted that the survey data became somewhat vague due to the political tendencies of respondents, but these data still cannot be ignored. They added that deteriorating economic indicators still have the potential to prompt the Fed to cut interest rates. They said Fed officials would feel at ease if “market-based inflation avatradescn.compensation shows that inflation upside this year will not last until after 2025.” Furthermore, a weaker economy should cause inflation to drop slightly in the avatradescn.coming years. Data from the Chicago Mercantile Exchange (CME) show that the futures market has differences over whether it will cut interest rates twice or three times this year.

3. Netherlands International: The market underestimates the US reciprocal tariffs. The euro is expected to decline to 1.05 at the end of the second quarter.

Dutch International Group analyst Chris Turner pointed out in a report that the market underestimates the risks posed to the euro by the US reciprocal tariffs that will take effect on April 2. "The EU (led by Germany) has a large trade surplus with the United States, which is likely to become the primary goal of the US government to adjust its global trade policy." Dutch International Group expects that the euro against the US dollar will fall to 1.05 by the end of the second quarter due to tariff measures implemented by the United States.

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