Market Volatility as Tariffs Loom and Economic Data Approaches

Markets faced another turbulent trading day as April 2 approaches—the date when the U.S. will implement reciprocal tariffs and a 25% tax on automobile imports announced last week. This news drove gold prices higher, nearing $3,100 per ounce, while concurrently leading to a rally in the Japanese yen (JPY), which halted or reversed its recent weakening trend.

Despite a better-than-expected Consumer Price Index (CPI) reading, the Australian dollar struggled, continuing its descent against many counterparts except for the New Zealand dollar. The outlook for the Australian dollar may clarify following Tuesday’s central bank decision, which is anticipated to hold rates steady at 4.1%.

This upcoming week will also bring significant data releases, such as the ISM Manufacturing PMI numbers and crucial employment statistics. Friday is expected to reveal the Non-Farm Payroll (NFP) data, projecting an addition of 139,000 jobs. Analysts will focus on gauging the euro’s potential strength and the ongoing weakness of the Australian dollar.

Key News Alerts:

• Monday: CNY Manufacturing PMI, EUR – German Prelim. CPI
• Tuesday: AUD – Interest Rate Decision, USD – Manufacturing PMI
• Wednesday: USD – ADP Employment Change
• Thursday: CHF – CPI, USD – Unemployment Claims, ISM Services PMI
• Friday: CAD – Unemployment Rate, USD – Unemployment Rate, NFP

Currency Pairs to Watch

1. EUR/NZD

The EUR/NZD pair has been on an uptrend since late February and is now indicating it may revisit short-term highs. Ideally, the price would first decline toward resistance around 1.89 before bouncing higher.

Current retail sentiment is heavily short at 86%, suggesting a high likelihood of a short squeeze.

EUR/NZD Daily Chart, Source: TradingView

2. AUD/CAD

The AUD/CAD pair has repeatedly failed to break lower and remains steady above support. As the week progresses, attention will be on if a daily close occurs below the crucial level at 0.89700. Such a move could trigger further declines toward 0.89300 and potentially down to 0.88700.

Retail sentiment is notably bullish at 78%, presenting solid potential for a short squeeze.

AUD/CAD Daily Chart, Source: TradingView

Additional Notes:

• AUD/NZD: The pair pulled back as expected, forming a clear higher low. A possible lower high may be next.
• AUD/SGD: Attempted another rally but failed to surpass resistance, indicating potential for further declines.
• AUD/JPY: Continues to struggle at the significant resistance level of 95.230, making it a suitable candidate for shorts targeting stops near 93.100.
• AUD/CHF: Likewise, it failed to reverse once again, suggesting a continuation towards fresh lows.
• CAD/JPY: It may have created a lower high, warranting further monitoring before considering new short positions.
• CHF/JPY: A new higher high was established on the daily chart, but there may be a pullback next week.
• EUR/AUD: The pair recently swung lower before pulling back, potentially targeting the early March high.
• EUR/JPY: It remains range-bound between two key levels at 163.800 and 161.125, requiring a breakout to confirm a new trend.
• GBP/NZD: After testing lows, it is poised to retest the level of 2.27450.
• GBP/JPY: Experienced a rally and established a new high before reversing; though in an uptrend, short-term risks to the downside persist.
• GBP/SGD: Did not reach the 1.71500 support but rebounded, achieving a new yearly high.
• GBP/AUD: Continues in an uptrend after navigating a short-term pullback.
• NZD/JPY: Currently fluctuating between support at 85.200 and resistance near 87. The overall sentiment leans toward the downside.
• SGD/JPY: Rallied but was unable to close above the critical 112.300 level. A significant pullback marked the week’s end, heading towards 111.400. A decisive close below this level is needed for a bearish view.

Disclaimer: The opinions expressed in this article are solely those of the authors and should not be seen as investment advice. Singapore Forex Club does not take responsibility for any financial decisions taken based on the content of this article. Readers are encouraged to use this data for information and educational purposes only.