In the U.S., economic indicators remained stable despite growing trade uncertainties. According to recent data, U.S. job openings slightly exceeded expectations in January, while February’s CPI and PPI readings were softer than anticipated. However, a combination of slowing job growth and rising inflation is expected by midyear, creating a challenging environment for the Federal Reserve.

On the global front, the Bank of Canada lowered its policy rate by 25 bps to 2.75%, with its accompanying commentary leaning slightly dovish. The U.K. economy contracted unexpectedly in January, while initial wage negotiations in Japan signaled positive momentum. Brazil’s latest inflation data reaffirmed persistent price pressures, albeit without any major surprises.

Several key economic events and market trends are set to shape the global financial landscape in the coming week, particularly those related to central bank policies. The spotlight will be on central bank meetings in the U.S., Japan, Brazil, Switzerland, Sweden, Russia, and China.

U.S. Economic Outlook: Navigating Uncertainty

Economic indicators remained stable before recent trade policy shifts. Job openings slightly exceeded expectations in January, and inflation data showed signs of cooling in February. The Consumer Price Index (CPI) rose 0.2%, bringing annual inflation down to 2.8%, while the Producer Price Index (PPI) eased to 3.2%. However, inflationary pressures may persist due to rising tariffs, even as services inflation slows amid moderate wage and rental growth.

Consumers’ inflation expectations have risen, with the University of Michigan’s survey showing a jump to 4.9% in March. Meanwhile, small businesses reported increased pricing plans, signaling potential price pressures ahead. The labor market remained resilient in January, with job openings at 7.7 million and layoffs at historically low levels.

While market uncertainties remain high, all eyes will be on the FOMC meeting this week, including its policy decisions and updated dot plot projections. Given current labor market conditions and inflation trends, we still anticipate two rate cuts this year. However, if higher tariffs and federal workforce reductions weigh on hiring, a third cut in December may become possible, though it remains uncertain for now.

The FOMC held rates steady at its January 29 meeting, citing strong economic conditions and policy uncertainty. Since then, economic activity has moderated, with a gradual cooling in the labor market and weak consumer spending. Despite these shifts, the Fed is expected to remain on hold at its upcoming March 19 meeting, as inflation—though still above target—has eased. Core CPI reached its lowest year-over-year rate since 2021, and Chair Powell has signaled there is no urgency to adjust policy.

The March meeting will also include an updated Summary of Economic Projections. While the median forecast is likely to maintain 50 bps of rate cuts for 2025, the dot plots released before Fed Chair Powell’s press conference will be closely watched. Markets have already priced in a more than 97% probability that rates will remain unchanged, according to the FedWatch Tool. Therefore, the focus will be on FOMC members’ expectations for inflation, interest rates, unemployment, and economic growth for 2025, 2026, and the long run. We anticipate slightly weaker economic growth projections and higher expected inflation, suggesting a more neutral outlook compared to previous estimates. Based on this, we expect the USD to remain strong, while stock markets may face continued pressure in the broader picture.

Beyond the central bank meeting, key economic data releases this week include retail sales, housing market data, and industrial production. Retail sales declined 0.9% in January, marking the sharpest drop in nearly two years. Control group sales—a key GDP measure—fell 0.8%, with autos (-2.8%) and nonstore sales (-1.9%) among the biggest declines. Following a strong holiday shopping season in late 2024, the weak start to the year is expected to be temporary, with retail sales forecast to rebound by 0.7% in February, supported by solid income growth and stable household finances.

On the production front, industrial production rose 0.5% in January, driven entirely by a 7.2% surge in utilities, while mining (-1.2%) and manufacturing (-0.1%) declined. The auto sector was a major drag, with vehicle production falling 5.2%, though manufacturing excluding autos saw a modest 0.2% increase. For February, industrial production is expected to rise 0.5%, though tariff-related uncertainties pose risks to future growth, particularly in sectors reliant on imported inputs.

USD and Wall Street

The Federal Reserve’s decision carries significant weight. While markets have largely priced in the expectation that the Fed will remain on hold, heightened volatility may arise during Chair Powell’s press conference and the release of the Fed’s accompanying statement.

February’s CPI data indicated easing inflationary pressures, yet the ongoing trade tensions pose a risk of reversing this progress. As a result, the Fed may be reluctant to commit to near-term rate cuts. Additionally, the unemployment rate increased from 4.0% to 4.1%, adding another layer of concern for policymakers.

However, the primary challenge remains the evolving tariff landscape, with new tariffs being imposed and rolled back frequently. This uncertainty complicates the Fed’s policy outlook, making a cautious and data-dependent approach more likely.

The US Dollar Index seems to have found some support around the 103 level, making new higher lows and preparing for corrections. If the index can hold the 103.50 level, the next target will be 104, followed by 104.30.

Similarly to the US dollar, the S&P 500 also appears to be due for a correction after the sharp decline in recent weeks. This is especially true if the Fed’s statement and dot plots sound less hawkish. Technically, a recovery above 5,650 could open the doors to 5,750. The key resistance and pivot point currently sits at 5,850. Holding below this level will keep the index in a bearish trend in the bigger picture.

Bank of Japan (BoJ) and JPY Outlook

Japan’s Q4 GDP growth for 2024 was reported at 0.6%, slightly below expectations of 0.7%, but an improvement over the previous quarter’s 0.3%. Looking ahead, market attention will be focused on the BoJ meeting, with Japan’s February CPI data also in the spotlight. Higher inflation could provide support to the Yen, while steady or easing inflation may put downward pressure on it.

The primary event for Japan this week remains the BoJ meeting. The BoJ has adopted a cautious stance on rate hikes, raising rates three times in the past year. This approach has been influenced by factors such as market volatility, concerns over Japan’s economic recovery, and uncertainty surrounding global trade policy under the new U.S. administration. Despite these challenges, Japan’s economic fundamentals suggest further tightening could be on the horizon. Spring wage negotiations indicate that inflation may remain above the BoJ’s 2% target, and with the ongoing recovery, the central bank may feel more confident in pursuing further rate hikes.

We expect the BoJ to keep its policy rate at 0.50% during this meeting. However, we anticipate a shift towards monetary policy normalization, with a 25-bps rate hike in May, followed by another hike in July, bringing the policy rate to 1.00% by Q3 2025.

The probability of this scenario stands at 91.6%. Market participants will closely monitor the accompanying statement for any guidance on future rate hikes, particularly regarding the July meeting, where a 25-basis point hike carries a 42.6% chance. Any indication of a rate hike could provide upside momentum for the Yen, while a dovish tone could lead to weakness in the currency.

We expect the Japanese Yen to benefit from the BoJ’s decision and statement, which may drive a continuation of USDJPY’s current slight downtrend. The next targets for the pair are 146.50 and then 144.50. On the other hand, a recovery above the key pivot at 150.00 could push the pairing higher, with the next resistance levels around 151.30.

Gold

The convergence of various factors points to a complex economic environment in the week ahead. Ongoing trade disputes, particularly those involving U.S. tariffs, continue to inject volatility into global markets. Elevated gold prices and central bank policies are reflective of underlying inflationary pressures that investors are closely monitoring. Gold has recently reached unprecedented levels above $3,000 per ounce, surpassing our expectations, with a notable 2.5% weekly gain. This surge has been driven by factors such as robust central bank purchases, a weakening U.S. dollar, and global economic uncertainties arising from trade tensions. Safe-haven demand, further fueled by President Trump’s near-constant tariff announcements, is expected to help sustain gold’s gains, even if prices experience some resistance to further increases.

U.S. Treasury yields rose as the stock market recovery reduced safe-haven demand for U.S. government debt. The yield on benchmark 10-year U.S. notes rose by 4.2 basis points to 4.317%, from 4.276%, while the 30-year bond yield rose by 2.9 basis points to 4.6248%. The 2-year note yield, which generally moves in line with Federal Reserve interest rate expectations, increased by 7 basis points to 4.023%, from 3.953% late on Thursday. Despite these higher yields, the gold price remains supported, as the risks surrounding gold are lower, with its potential for gains intact.

Major financial institutions, including J.P. Morgan and Goldman Sachs, recommend holding or investing in gold, anticipating further price increases. However, potential overvaluation and shifts in economic conditions could pose risks. From a technical perspective, XAUUSD remains bullish on both the H4 and Daily timeframes, though a correction is possible. Support levels are at 2,960, 2,940, and 2,930 respectively, with testing of these levels before a new bull run likely. Resistance levels are at 3,000 and then 3,020.

WTI Crude Oil Outlook for the Week Ahead

The outlook for WTI crude oil prices in the upcoming week will be shaped by a combination of geopolitical developments, global economic trends, and supply-demand dynamics. Key factors such as ongoing trade tensions, U.S. economic data, OPEC’s production adjustments, and geopolitical risks are expected to influence market sentiment and oil price movement.

Geopolitical factors, particularly the ongoing conflict in Ukraine and U.S. sanctions on Iran continue to exert significant influence on the oil market. Oil prices rose on Friday following the escalation of sanctions by the Trump administration, targeting Iranian oil and shipping, as well as entities linked to Iran’s “shadow fleet” used to circumvent sanctions. Additionally, market participants remain cautious regarding the Russia-Ukraine ceasefire talks, with Russia’s hesitance to commit to a full ceasefire prolonging the uncertainty surrounding global oil supply.

The reduced likelihood of a swift resolution to the Ukraine conflict has raised concerns about the continued disruption of Russian energy supplies, which could provide some upward pressure on oil prices. However, these geopolitical risks are balanced by broader market concerns about potential oversupply, particularly if global economic growth decelerates or if OPEC+ revises its production strategy.

Recent reports from OPEC, the EIA, and the IEA have further shaped market expectations. OPEC maintains a positive outlook for global oil demand, projecting an increase of 1.4 million barrels per day in both 2025 and 2026. This optimism is primarily driven by robust demand from sectors such as air travel and automotive, with expectations for further growth as summer approaches. In response, OPEC plans to raise oil production by 2.2 million barrels per day starting April 1. This decision reflects confidence in the global economy’s capacity to adapt, despite ongoing trade-related challenges, and signals that supply growth may continue to exert upward pressure on oil prices in the medium term.

From a technical perspective, WTI crude oil has demonstrated resilience, gaining 1% at the close of last week. Prices ended at $67.15 per barrel, up 63 cents despite earlier losses. Support levels are identified at $66.65 and $66.00, while resistance is seen near $68.00 and $69.80. A break above the psychological $70.00 level could pave the way for a rally toward $72.00 and potentially $75.00. Conversely, failure to maintain support above $66.00 could trigger a retest of lower price levels.

Bitcoin (BTC) Market Outlook for the Week Ahead

The cryptocurrency market has experienced a significant surge, with Bitcoin (BTC) rising above the critical $84,000 level, even briefly reaching $85,000. This rally has sparked renewed optimism as the market shows signs of recovery, with major institutional players like BlackRock making moves to re-enter space.

While the market sentiment is predominantly bullish, there remains a degree of caution. Recent tariff-related news, particularly surrounding trade tensions, has weighed on the market, but Bitcoin has proven resilient, holding steady at the $80,000 mark despite global economic uncertainties. Signs of progress in trade negotiations could lead to lower prices, but the prevailing sentiment leans toward upward movement.

Recently, Arkham Intelligence reported that BlackRock acquired $25 million worth of Bitcoin from Coinbase Prime. This comes after a period of outflows from Bitcoin ETFs, which has led to a selling trend. BlackRock’s fresh acquisition has provided relief to the market, indicating continued institutional interest despite previous volatility. BlackRock’s confidence in space, especially with its iShares Bitcoin ETF, reflects an increasing belief in Bitcoin’s long-term value.

Fundamentally, we are cautiously optimistic amid geopolitical tensions, which is also confirmed technically. Bitcoin has shown considerable strength, with multiple breaches below the $80,000 level and quick recoveries above that level. If the bullish sentiment persists, there are opportunities for continued upside movement, with resistance levels at $85,950 and then $88,000 before testing the $90,000 level. On the flip side, small dips due to trade news or geopolitical factors remain a possibility, and traders should remain cautious and mindful of support levels at $82,000, $79,700, and $76,600.