Weekly Forex Forecast – March 09

I wrote on 2^nd March that the GBP/NZD currency pair would likely fall in value. Unfortunately, it rose in value by 0.71%.

Last week saw several data releases affecting the Forex market:

1. US Average Hourly Earnings – a month-on-month increase of 0.3% as expected.
2. ECB Main Refinancing Rate & Monetary Policy Statement – the rate cut of 0.25% was widely expected, but the ECB cut its growth forecast which could be seen as a small dovish surprise.
3. US Non-Farm Employment Change – this was just a little less than expected.
4. US ISM Services PMI – slightly better than expected.
5. US ISM Manufacturing PMI – almost exactly as expected.
6. Australian GDP – as expected.
7. Swiss CPI (Inflation) – the month-on-month increase was 0.6%, slightly higher than the widely expected 0.5%.
8. US Unemployment Claims – just a little less than expected.
9. US Unemployment Rate – this unexpectedly increase from 4.0% to 4.1%.
10. Canadian Unemployment Rate – this was expected to tick higher, but it stayed at 6.6%.

Last week’s key takeaways were:

1. The data outlined above was inconsequential for the markets, which are much more concerned with the US-centered trade war which seems to be underway without a clear end.
2. The ongoing trade war between the USA on one side and Canada, Mexico, China and potentially the European Union on the other is what has really been driving market movements over the past week. There is no deal in sight and the new tariffs remain in place, causing economic harm to all three countries.
3. It was a bad week for stock markets, especially in the USA, where major indices dropped sharply enough to shake out more trend followers from long positions, with many institutions either reducing or eliminating their exposure. Friday saw some gains, however.
4. Market sentiment is basically in risk-off mode, with commodities and commodity currencies taking a serious beating. Even Gold, which had been holding up relatively well, has not been able to reach a new high.
5. In the Forex market, the Euro made very strong gains, while the US Dollar was weak.
6. There are concerns that the USA may be starting to tip into recession after the Atlanta Fed data suggested GDP could be running at an annualized decline of 2.4%.
7. President Trump announced the creation of a strategic crypto reserve for the USA, also stating he wanted to see stablecoin legislation passed by the end of this summer. This gave crypto a temporary boost, but major cryptocurrencies quickly gave up all gains as it was realized the US government would still not be purchasing crypto.

The coming week has a lighter schedule of important releases, so we are likely to see less volatility in the Forex market over the coming week.

This week’s important data points, in order of likely importance, are:

1. US CPI (inflation)
2. US PPI
3. US Preliminary UoM Inflation Expectations
4. Bank of Canada Overnight Rate & Rate Statement
5. US Preliminary UoM Consumer Sentiment
6. US JOLTS Job Openings
7. UK GDP

For March 2025, I made no forecast, as there were no clear trends at the start of this month.

Last week, I forecasted that the following currency cross would fall in value over the week:

• GBP/NZD – rose by 0.71%

This was not a profitable call.

This week, I forecast that the following currency crosses will fall in value:

The Euro was the strongest major currency last week, while the US Dollar was the weakest, putting the EUR/USD currency pair in focus. Volatility increased last week, with 70% of the most important Forex currency pairs and crosses changing in value by more than 1%. It is likely to remain at a similar level over the coming week, despite the lighter agenda, due to US inflation data due, and the ongoing trade war.

You can trade these forecasts in a real or demo Forex brokerage account.

Last week, the US Dollar Index printed the largest weekly bearish candlestick in almost 2.5 years. The Dollar was the worst performing major currency last week and suffered a big loss, closing back within its dominant recent range and well below its level from 3 months ago, invalidating its former long-term bullish trend. At one point, the price reached a new 4-month low.

These are bearish signs, although there is some lower wick suggesting a little buying at the low.

Global markets have entered a strongly risk-off mode, but the greenback does not benefit because of the uncertain trade war the US is now engaged in against Canada, Mexico, and China, with no end in sight.

Trades taken over the coming week will probably be best positioned against the US Dollar, at least until a deal is announced replacing reciprocal import tariffs involving the USA.

The EUR/USD currency pair made a huge gain over the week, rising by more than 4%, which is unusual. The key driver is certainly the US-centered trade war, which has sent the greenback flying lower, while the…