US Economy A Worry For Investors
- Mar 11
- 3 min read
GBP : GBP/USD stable despite US growth concerns
As the US dollar falters due to worries that the US economy may be negatively impacted by tariff policy uncertainties, the GBP/USD pair recovers recent losses and is trading close to $1.2890 this morning. The 4-hour Relative Strength Index (RSI) is still over 50, suggesting that there is no bearish momentum, and the pair is still in the top half of the ascending regression channel. On the downside, $1.2810–$1.2800 is the first area of support, followed by $1.2750 and $1.2720. The levels of resistance are $1.2950 and $1.3000. Short-term market action for GBP/USD may be muted in the absence of high-impact data.
As sentiment was affected by recession fears, the US Dollar Index (DXY), which compares the USD to six major currencies, fell more than 3% last week. The US Consumer Price Index (CPI) data for February is due on Wednesday, while the Bank of England will publish its Quarterly Bulletin for Q1 later today.
EUR : Euro unaffected by German political issues
Ahead of the parliamentary session on March 25, Friedrich Merz, Germany's Chancellor-in-waiting, is facing obstacles in his efforts to get constitutional revisions closer to the debt break. Citing the need for more robust environmental pledges, the Green Party, whose backing is necessary for a two-thirds majority, declared its opposition to the defense budget plan. The news originally caused the Euro to fall, but it soon recovered as CDU officials voiced optimism in achieving an accord and reports indicated that the Greens were still amenable to talks. In the event that the spending plan goes according to plan, markets keep pricing.
The Eurozone's economic schedule is rather light this week, with focus on the peace talks between Russia and Ukraine and political events in Germany. However, news pertaining to the US is probably going to be the main factor driving EUR/USD swings. Policymakers at the European Central Bank (ECB) are also starting to express their opinions after the meeting. Joachim Nagel, the ECB's hawk, stressed on Monday that policy decisions are not being made "autopilot" and that it is still unclear if rate changes would be made in April. Dovish Olli Rehn is expected to talk today and later in the week, a number of other members of the ECB Governing Council will also speak. Although EUR/USD may momentarily surpass $1.0900, US market risks and stronger Eurozone fundamentals point to $1.0700 as a more realistic short-term target.
USD : US Economy a worry for investors
The S&P 500 fell more than 2.5 percent on Monday, bringing a new wave of risk aversion to the start of the week. In contrast to earlier sessions, European markets tracked the US share selloff, which strengthened the dollar's appeal as a safe haven. With JPY, USD, EUR, and CHF rising against high-beta and commodity-linked currencies, this resulted in a traditional risk-off stance in foreign exchange. It's still difficult to find a bottom in US sentiment as investors continue to doubt high equity prices and general macroeconomic circumstances. Although data releases may have a short-term impact on attitude, the US government may eventually need to step in to restore trust.
Although they are probably exaggerated, worries over a possible US recession in the first quarter are increasing market turbulence. The Fed's focus on labor market conditions means that all eyes will be on today's JOLTS job vacancies report. The market may turn its focus to layoff trends and the quits rate, a crucial predictor of future wage growth, even if job vacancies are predicted to have stayed steady in January. There is a chance for higher momentum in the upcoming weeks, even though the dollar is pricing in considerable downside risks. However, until important economic data is provided, a definitive bottom might not be created due to the market's continued volatility.
