ATFX Market Outlook 13th March 2025 

ATFX Market Outlook 13th March 2025 

Cooling Inflation Calms Markets, But Trade War Fears Still Loom

Market HighlightU.S. CPI data for February increased by 0.2% month-on-month, marking a slower pace of inflation as falling airfares partially offset the rise in housing costs. The weaker-than-expected inflation reading gives the Federal Reserve more room to maintain interest rates unchanged next week while evaluating the economic impact of ongoing trade tensions. This data contributed to easing the heavy sell-off in equities, with the S&P 500 and Nasdaq closing higher. However, gains were limited by uncertainty stemming from President Trump's escalating multi-front tariff actions. The Dow gained by 0.2%, the S&P 500 rose by 0.49%, and the Nasdaq gained 1.2%. The U.S. Dollar Index traded sideways, hovering near a five-month low. 

Despite trade tensions, the USD rebounded slightly against major currencies as inflation data cooled. The dollar index (DXY) ended a seven-day losing streak, rising by 0.14% to 103.59. Gold prices climbed, bolstered by tariff-related uncertainty and steady expectations for Fed rate cuts amid cooling inflation. Spot gold rose by 0.57% to $2,932.58 per ounce. Oil prices surged by 2% as U.S. inventory data revealed smaller-than-expected crude stockpiles and a decline in refined product inventories. However, fears of economic slowdown and trade concerns continued to dampen sentiment.

Key OutlookAttention now turns to Thursday’s February U.S. Producer Price Index (PPI). The annual PPI has held steady at 3.3% for two consecutive months, marking a two-year high. If it remains elevated, it may suggest a pause in the disinflation trend, potentially reducing the likelihood of Fed rate cuts in the year's first half.

[Financial Data and Events of Significant Concern]

17:00 IEA Monthly Report *** 

18:00 EU Industrial Production JAN ** 

20:30 US Initial Jobless Claims & PPI FEB ***

Tomorrow

15:00 EU GERMANY CPI Final FEB *** 

15:00 GB GDP & Industrial Production JAN ** 

22:00 US Michigan Consumer Sentiment Prel MAR ***

EURUSD

·       Resistance: 1.0932 / 1.0980

·       Support: 1.0856 / 1.0808

The EUR/USD eased slightly from recent highs as buyers took a breather. However, softer U.S. CPI data (Core CPI m/m at 0.2% compared to the 0.3% expected) weakened the dollar's outlook, helping to support the euro overall. This data reinforced market expectations for a dovish stance from the Fed.

GBPUSD

·       Resistance: 1.2986 / 1.3057

·       Support: 1.2873 / 1.2817

GBP/USD remained steady near recent highs after U.S. CPI data was softer than anticipated. Core CPI increased by just 0.2% compared to the 0.3% forecast, while CPI year-on-year slowed to 2.8%. This weaker inflation data slightly pressured the dollar and reinforced expectations for a pause in Fed rates, thereby supporting GBP/USD.

USDJPY

·       Resistance: 148.55 / 148.95

·       Support: 147.48 / 147.16

The USD/JPY pair is edging higher towards 149.00 despite soft U.S. CPI data that would typically weigh on the dollar. This unexpected movement suggests that market positioning or technical factors may be at play, as easing inflation indicated softer inflation and bolstered expectations that the Fed might maintain rates or consider rate cuts in the future, thereby putting pressure on the dollar. Meanwhile, a weaker Japanese yen and rising U.S. Treasury yields could propel the USD/JPY upward.

US Crude Oil Futures (APR)

·       Resistance: 68.17 / 68.51

·       Support: 67.06 / 66.72

Crude oil prices have edged higher, approaching $67.50, bolstered by indications of tighter U.S. supplies and a weaker U.S. dollar. Despite concerns regarding a global economic slowdown and trade tensions, oil prices continue to be supported by supply-side factors and softer U.S. inflation. This keeps the Fed cautious and places additional pressure on the dollar, indirectly supporting the outlook on oil demand.

Spot Gold

·       Resistance: 2956 / 2970

·       Support: 2924 / 2909

Spot Silver

·       Resistance: 33.49 / 33.77

·       Support: 32.86 / 32.58

Gold and silver prices rose following the U.S. CPI data, which indicated softer inflation and bolstered expectations that the Fed might maintain rates or contemplate rate cuts in the future. Spot gold remained above $2,930, while silver soared past $33. Despite a slight recovery in the U.S. dollar, fears of recession and uncertainties surrounding tariffs continued to fuel safe-haven demand for precious metals.

Dow Futures

·       Resistance: 41822 / 42056

·       Support: 41063 / 40833

Despite softer U.S. CPI data, the Dow continued its decline as renewed trade tensions dampened investor sentiment. While cooling inflation supported expectations for a cautious Fed, fears over escalating tariffs and broader economic uncertainty outweighed the positive impact of the CPI. Consequently, market participants persisted in shifting towards safer assets, contributing to the ongoing sell-off in equities.

NAS100

·       Resistance: 19888 / 20141

·       Support: 19297 / 19101

The NAS100 edged higher in response to softer U.S. CPI data. While investors remained cautious, releasing a softer CPI that was softer than anticipated later alleviated fears of rate hikes, thereby supporting equities. Nevertheless, trade tensions continue to constrain broader market gains.

BTC

·       Resistance: 85853 / 88027

·       Support: 80988 / 78777

Bitcoin rose above $81,000 as investors turned to alternative assets due to concerns over tariffs and a potential economic slowdown. Volatile traditional markets drove increased demand for safe-haven crypto assets. Softer U.S. CPI data, with core CPI at 0.2% month-on-month and 2.8% year-on-year, boosted risk appetite and reinforced expectations that the Federal Reserve may keep rates steady, supporting Bitcoin's upward momentum.

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