ATFX Market Outlook 21st March 2025

ATFX Market Outlook 21st March 2025

Middle East Tensions Flare Again: Gold Retreats After Record, Oil Prices Spike

Market HighlightU.S. initial jobless claims rose only slightly last week, suggesting a still-stable labor market in March. However, rising trade tensions and significant government spending cuts have darkened the employment outlook. U.S. equities ended slightly lower on Thursday, fluctuating throughout the session as investors weighed tariff concerns against fresh economic data and the Federal Reserve’s policy stance. The Dow slipped 0.03%, the S&P 500 fell 0.2%, and the Nasdaq lost 0.3%.

The U.S. dollar broadly strengthened on Thursday, following the Fed's earlier indication that it is in no rush to cut rates further this year amid uncertainties around U.S. tariff policy. EUR/USD dropped 0.46% to 1.0852, while GBP/USD declined 0.3% to 1.2966. USD/JPY edged up 0.06% to 148.79.

Gold prices retreated slightly after hitting a record high earlier in the day. However, the precious metal remains bullish, supported by potential Fed rate cuts and ongoing geopolitical and economic uncertainties. Spot gold dipped 0.1% to $3,044.41 per ounce after reaching an all-time high of $3,057.21. Oil prices advanced, buoyed by renewed Middle East tensions after Israel launched a new offensive in Gaza and the U.S. announced new Iran-related sanctions, offsetting pressure from a stronger dollar.

Key OutlookMarkets continue to digest this week’s major central bank decisions. On the data front, attention turns to the Eurozone’s March Consumer Confidence Index, which may indicate signs of improvement in line with recent positive economic indicators. Before the Eurozone data, traders should watch the Canadian retail sales figures, as they could present opportunities to trade the Canadian dollar despite the volatility. 

Key Data and Events Today:

20:30 CA Retail Sales JAN *** 

23:00 EU Consumer Confidence Flash MAR ** 

Key Data and Events Coming Week:

Global Manufacturing & Services PMI on Monday

BoJ Monetary Minutes and US Consumer Confidence on Tuesday

Australia and Great British CPI on Wednesday

US Core PCE Price Index Final Q4 and Weekly Jobless Claims on Thursday

BoJ Summary Opinions, Great British Retail Sales, US February Core PCE Price Index, and US March Michigan Consumer Sentiment Final on Friday

EURUSD

· Resistance: 1.0909 / 1.0932

· Support: 1.0814 / 1.0792

The euro weakened after ECB President Christine Lagarde cautioned that a potential trade war with the U.S. could reduce eurozone growth by 0.5%. However, she downplayed persistent inflation risks and ruled out interest rate hikes, which could limit the upward potential. 

GBPUSD

· Resistance: 1.2997 / 1.3015

· Support: 1.2937 / 1.2918

The Bank of England held rates at 4.50% in March, with most members favouring no change despite slowing inflation and weak growth. Policymakers remain cautious, signalling rate cuts may be delayed even as markets expect easing by mid-year. It could potentially provide a sterling at lower support. 

USDJPY

· Resistance: 149.50 / 149.83

· Support: 148.46 / 148.13

Japan's February inflation remained elevated, with core CPI at 3.0%, indicating a slowdown. This puts pressure on the Bank of Japan to increase interest rates, potentially by May, as robust wage growth supports further inflation. The rate hike expectation could keep USDJPY limited at a resistance level, likely around 150. 

US Crude Oil Futures (MAY)

· Resistance: 69.30 / 69.64

· Support: 67.74 / 67.40

Oil prices are poised for a second consecutive weekly gain as U.S. sanctions on Iran and new output cuts from OPEC+ heighten supply concerns. The sanctions may reduce Iran’s exports by 1 million barrels per day, while seven OPEC+ members intend to implement further reductions through mid-2026, bolstering Brent and WTI. 

Spot Gold

· Resistance: 3061 / 3079

· Support: 3032 / 3018

Spot Silver

· Resistance: 33.79 / 33.92

· Support: 33.35 / 33.21

Gold declined after the Fed maintained interest rates and indicated two cuts in 2025, while a stronger US dollar countered safe-haven demand amid tensions in the Middle East. Although it remains above $3,000, gold faces short-term pullback risks due to economic uncertainty and Powell’s neutral stance. On Thursday, silver prices fell to $33.54, pressured by a stronger US dollar and failing to surpass the $34.00 mark for the second consecutive day. As tensions in the Middle East escalated, the inflow of capital seeking safe-haven assets could increase, which supports the upward potential of gold and silver prices. 

Dow Futures

· Resistance: 42333 / 42701

· Support: 41496 / 41115

The three major U.S. stock indices closed slightly lower as economic uncertainty hindered market rebound efforts. Dow Futures opened lower but briefly reached a one-week high before retreating near the 42,200 level. The 10-day moving average is now crucial support, with trading expected to remain within this range.

NAS100

· Resistance: 19887 / 20141

· Support: 19297 / 19101

Most major tech stocks declined overnight, with only slight gains in Nvidia and Tesla. The Nasdaq rebounded after a weak start but dipped before attaining recent highs, though it remained above the 10-day moving average, which may provide support on a quiet day for U.S. data.

BTC

· Resistance: 86614 / 88522

· Support: 82799 / 80439

Bitcoin surged to $85,900 prior to Trump’s crypto speech but fell by 4% afterwards as his remarks were already factored in. Despite the decline, derivatives data indicates that bullish sentiment remains robust, with more shorts being liquidated than longs, based on the anticipated dollar strength potential, which could exert pressure on BTC. 

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