Despite slightly positive economic data from the U.S., underlying indicators such as the Leading Economic Index (LEI) have raised concerns, reinforcing market uncertainty. While the Federal Reserve kept interest rates unchanged, it acknowledged growing uncertainty surrounding the economic outlook.

Globally, last week was packed with major central bank policy meetings. The Bank of England, People’s Bank of China, Bank of Russia, South African Reserve Bank, Riksbank, and the Bank of Japan all held rates steady. The BoE remains on track for a potential rate cut in May, while Japan is expected to move toward a rate hike. Meanwhile, the People’s Bank of China signaled plans to cut the reserve requirement ratio and interest rates at an appropriate time to support its foreign exchange market. The Swiss National Bank cut its policy rate by 25 basis points, while Brazil’s central bank raised the Selic rate by 100 basis points, indicating a slower pace of tightening ahead.

This week, the US market will focus on primarily PMI numbers in sync with other countries on Monday, New Home Sales (Tue.), Durable Goods Orders (Wed.), and Personal Income & Spending (Fri.). Beyond the U.S., global investors will also watch the release of PMI data for most developed and emerging economies on Monday. Additionally, central bank decisions from Norges Bank and Banxico are scheduled for Thursday.

With heightened market uncertainty and key economic indicators on the horizon, this week’s data will provide critical insights into global growth trends and monetary policy trajectories.

U.S. Economic Review: February’s Rebound Didn’t Ease Concerns

While economic activity appeared to bounce back in February, the underlying data suggests a slowdown is taking hold. The Federal Reserve left interest rates unchanged at its March FOMC meeting, but Chair Powell highlighted weakening consumer spending. Although the Fed signaled that further easing is on the horizon, it showed no urgency to cut rates. The latest dot plot projections revealed that FOMC members lowered the U.S. economic growth forecast while raising inflation expectations, fueling concerns about stagflation. This announcement reinforced the market’s dovish outlook, increasing expectations for the number of rate cuts by year-end from two to three.

On the fundamental side, President Trump’s call for the Fed to lower rates may have unsettled market participants. Additionally, any indications of further tariffs on U.S. imports could weigh on economic growth prospects.

From a data perspective, economic indicators were somewhat concerning. February’s retail sales showed a rebound, but downward revisions to January’s figures and an overall soft trend suggest that growth is moderating. Housing data also reflected this slowdown—while existing home sales improved, they remained historically weak. Building permits declined despite a rebound in housing starts, with affordability challenges continuing to weigh on single-family construction. However, rental demand has helped stabilize multifamily development.

Meanwhile, industrial production surged in February, driven by a jump in auto manufacturing. However, downward revisions to January’s figures and ongoing concerns over tariffs, capital costs, and labor shortages suggest that this strength may be temporary.

Overall, while headline data showed some improvement, the broader trend indicates that the economy is gradually losing momentum.

U.S. Economic Outlook: End of Q1 2025

As the first quarter of 2025 comes to a close, the U.S. economy faces growing uncertainty, with rising inflation, trade tensions, and weakening consumer confidence fueling concerns about a slowdown.

Trade War and Market Uncertainty

The ongoing trade war remains a key focus, with the “America First” policy review and planned tariff hikes increasing economic uncertainty. Investors remain cautious, and major banks anticipate further tariff escalations, potentially leading to retaliatory measures and economic disruptions.

Recession Risks on the Rise

Economists are increasingly warning of a potential recession, with several indicators flashing red. Goldman Sachs has raised the probability of a U.S. recession within the next year to 20%, while a Bank of America survey found that 55% of fund managers see a trade-war-induced global recession as the top risk. Consumer finances are deteriorating, debt levels are rising, and small and mid-cap stocks have struggled since their November peaks. Additionally, the bond market is signaling stress, with Moody’s reporting a 9.2% default probability for U.S. firms—the highest since the Great Financial Crisis.

Consumer Confidence and Inflation Concerns

Consumer sentiment has taken a hit, with the University of Michigan’s index falling to 57.9 in March, the lowest since November 2022. Inflation expectations have surged, with short-term projections rising to 4.9% and five-year expectations climbing to 3.9%, marking the largest monthly increase since 1993.

Key U.S. Economic Data to Watch This Week

New Home Sales (Tuesday)

January’s new home sales dropped 10.5%, partly due to harsh winter weather and rising mortgage rates. February, however, saw milder conditions and lower rates, leading analysts to expect a rebound, with annualized sales projected at 678K.

Durable Goods Orders (Wednesday)

January saw a 3.2% surge in durable goods orders, driven by record-high industrial supply imports from Canada. However, regional PMI data suggests ongoing weakness in the manufacturing sector. February’s report is expected to show a 1.0% decline in headline orders, indicating a slowdown in momentum.

Personal Income and Spending (Friday)

Consumer spending showed signs of stabilization in February, with retail sales rising 0.2% and the control group measure rebounding 1%. Wage growth continues to support income, which is forecast to rise 0.4%. However, inflation remains a concern, with core price pressures expected to push the deflator up to 2.7%.

USD and Wall Street in the Week Ahead

In the upcoming week, both the U.S. dollar (USD) and Wall Street are set to respond to a mix of economic data releases and policy developments. With the Federal Reserve’s interest rate decision already behind us, the fundamentals will likely be influenced primarily by any unexpected actions from President Trump. However, the Fed policymakers are scheduled to speak in the coming week, and if their tone turns dovish enough, it could put downward pressure on the USD. From a fundamental standpoint, economic data is expected to remain resilient, which bodes well for the U.S. dollar. On the technical front, the USD shows signs of recovery, with strong resistance around 104.40. A break above this level could signal a shift toward a bullish trend, while failure to breach it could maintain the current slight downtrend with ongoing corrections.

Wall Street also faces a week of scrutiny as investors assess upcoming economic data and the potential impact of trade policies. The combination of trade policy uncertainty and key data releases creates a complex environment for stock traders. Investors will need to stay alert, closely monitoring these developments to navigate potential market volatility. Key data points, such as new home sales, durable goods orders, and personal income and spending figures, will offer valuable insights into the health of the U.S. economy. The market remains sensitive to President Trump’s firm stance on tariffs, which continues to fuel concerns about a possible recession. Overall, while slightly positive economic data is expected, it may not be well received in the stock market, particularly when it comes to stock price growth. Technically, the US500 remains bearish, with a short-lived correction that could extend to its 50.0% Fibonacci level at 5,800, though it is unlikely to go much further.

UK and GBP Outlook

The Bank of England (BoE) decided to keep its policy rate unchanged at 4.50%, with an 8-1 vote. While global trade policy uncertainty has risen, the BoE acknowledged stronger-than-expected growth and moderating wage and price pressures, although these remain elevated. The central bank emphasized a gradual and cautious approach to withdrawing monetary policy restraint. While no specific guidance was provided, the BoE’s stance aligns with expectations of a 25 basis point rate cut at the May meeting, which would bring the policy rate to 4.25%.

Looking ahead, the week presents a complex economic environment, with fiscal policy decisions, trade tensions, and key data releases shaping the UK’s economic outlook. Key data to monitor include the UK March S&P Global Flash PMI for Manufacturing and Services on Monday, which will provide early insights into economic conditions amid recent trade policy uncertainties. Additionally, inflation figures for February are scheduled for release on Wednesday, March 26, followed by retail sales, GDP, and trade data for February on Friday, March 28. These reports will offer further insights into the UK’s economic performance amid ongoing fiscal and trade policy challenges.

On Wednesday, March 26, the Office for Budget Responsibility (OBR) is expected to release updated economic forecasts ahead of Chancellor Rachel Reeves’ Spring Statement. These forecasts are anticipated to show a reduction in the 2025 growth outlook, adding complexity to the fiscal landscape. Chancellor Reeves faces pressure due to higher-than-expected public borrowing, which reached £10.7 billion last month, surpassing the £6.6 billion forecast. To address fiscal challenges, she plans to announce over £10 billion in spending cuts during the Spring Statement, including reductions in departmental spending and welfare.

The BoE held rates steady as expected, with its statement suggesting a “gradual and careful” approach to withdrawing monetary policy restraint, which tilted the tone slightly hawkish. However, the bank’s overall stance remains more dovish, signaling potential future easing that could weigh on the pound. Market expectations for a rate cut at the next meeting have grown. On the macro front, key data releases such as the preliminary March PMI figures, January retail sales, and February’s CPI are not expected to support the British pound. If inflation persists or accelerates, it could support the pound, but a slowdown in inflation could lead to further BoE rate cuts, weighing on the currency.

From a technical perspective, GBP/USD is attempting to move lower, particularly below the current level of 1.2920, as confirmed by both RSI and OBV indicators. However, in the broader picture, holding above 1.25 remains bullish for the pair.

Gold Price Outlook for the Week Ahead

Gold has experienced a remarkable upward trajectory recently, reaching a record high of $3,020 per ounce, driven by central bank purchases and escalating geopolitical risks. With analysts forecasting the potential for gold to rise to $4,000 per ounce, the precious metal remains an attractive asset as investors seek safe-haven investments amidst market volatility and inflationary concerns.

The week ahead presents both challenges and opportunities for gold prices. The global economic landscape remains uncertain, with rising inflation, growing consumer concerns, and earnings downgrades expected, particularly due to ongoing tariff taxes and geopolitical tensions. As these tariff policies continue to escalate, the pressure on financial markets could lead more investors to seek the safety of gold.

Market sentiment, as reflected by the Fear & Greed Index, indicates heightened fear. While some believe the market could rally to new all-time highs before a potential crash, the outlook remains volatile. A potential rate cut from the Federal Reserve is likely to impact gold prices, but investors may be caught off guard if Chairman Jay Powell adopts a more hawkish stance, reminiscent of the Paul Volker era.

Gold’s appeal remains robust due to its role as a hedge against inflation and a safe haven during periods of uncertainty. The continued shift away from riskier assets, such as stocks and cryptocurrencies, combined with growing interest in gold miners, could lead to significant institutional investments, similar to the stagflationary period of the 1970s.

Looking ahead, investors should closely monitor upcoming economic data releases and policy decisions that could influence market sentiment. Geopolitical developments, ongoing tariff concerns, and inflationary pressures are likely to support gold prices in the near term. However, any unexpected market movements or policy changes could introduce volatility, offering trading opportunities for those attentive to the market’s dynamics.

From a fundamental perspective, gold continues to shine as a preferred investment, with analysts anticipating continued upward momentum. However, from a technical standpoint, there are signs of a potential correction. The Relative Strength Index (RSI) has dipped below the 50 level, the On-Balance-Volume (OBV) shows reduced investment and money flow into gold, and the price has fallen below the lower band of Andrews’ Pitchfork. A target of $2,960 could be in sight, and a key inflection point will occur if the price falls further or recovers above this level. If gold manages to recover above $2,960, it could potentially resume its bullish trend toward $3,000, and this may set the stage for a further rise toward $4,000 by 2025. As always, vigilant monitoring of global developments remains crucial for navigating the gold market effectively.

Crude Oil Market Overview and Outlook

Brent crude prices have remained within a narrow range this week, with bulls and bears locked in a battle for dominance. A larger-than-expected drop in U.S. distillate inventories, down by 2.8 million barrels, along with rising tensions in the Middle East, have offset the impact of a stronger dollar. However, U.S. crude inventories rose by 1.7 million barrels, surpassing expectations.

U.S. energy firms added oil and gas rigs for the first time in three weeks, with the rig count increasing by one to a total of 593. This marks a 5% decline compared to the previous year. The increase was mainly in gas rigs, while oil rigs decreased to 486. In Oklahoma, two rigs were added, bringing the state’s total to 53—the highest since May 2023.

Geopolitical risks, including new U.S. sanctions on Iran, have briefly driven price increases. These sanctions target individuals and companies linked to Iranian oil, potentially tightening global supply. Additionally, the potential announcement of universal U.S. tariffs on April 2, 2025, could influence market sentiment.

Chevron’s license to operate in Venezuela may be extended, a move that could raise concerns about oversupply. If Chevron’s operations continue, it could offset potential supply shortages in the market.

Despite geopolitical tensions and potential changes in U.S. sanctions, oil prices are expected to remain volatile. Stimulus measures from China and rising geopolitical risks in the Middle East will continue to influence price fluctuations. A balanced supply and demand situation may lead to periods of consolidation in oil prices.

The U.S. Energy Information Administration (EIA) projects that global oil markets will remain relatively tight until mid-2025. This forecast is influenced by reduced crude oil production in Iran and Venezuela. The EIA expects Brent crude oil prices to average $75 per barrel in the third quarter of 2025, with a potential decline to $68 per barrel in 2026 as OPEC+ unwinds production cuts and non-OPEC oil production rises.

Fracking companies, initially optimistic about policy changes under the new administration, are now facing uncertainties. These include concerns about potential layoffs in federal agencies responsible for issuing permits, increased drilling costs due to new steel tariffs, and pressure from the administration on OPEC to increase oil production. These factors may slow drilling activities if prices continue to decline.

Technical Outlook:

From a technical standpoint, Brent crude remains in a range between $66 and $68, with a slight upward trend, forming higher highs and higher lows. The RSI on the H4 chart is approaching the neutral 50 level at 58, suggesting a potential shift in momentum. Resistance levels are at $69.80 and $72.00, while support is at $67.30, $66.50, and $66.00. A breakout above $70 could push prices higher, while a fall below $67 could signal further downside movement.

Bitcoin and Investor Expectations for the Week Ahead

Bitcoin’s price has experienced a decline despite initial gains following President Trump’s recent appearance at a crypto event. While he expressed general support for cryptocurrencies, his speech did not include any new policy announcements, particularly on issues like crypto taxes or debunking, as the market had hoped. As a result, Bitcoin’s bullish momentum quickly faded.

A new cohort of “whale” investors has accumulated over a million Bitcoins since late November, suggesting potential for a price increase. However, on-chain data reveals weakening demand and liquidity, with net capital inflows slowing and long-term holders remaining inactive. This diminishing liquidity and lack of fresh capital indicate that Bitcoin may face challenges in achieving significant price increases in the short term, likely resulting in heightened volatility.

Bitcoin ETF flows turned negative after four consecutive days of inflows, while Gold ETFs have seen positive movement, signaling a possible shift in market dynamics. This reduction in ETF inflows corroborates the trend of weakening demand in the Bitcoin market, raising concerns about broader market risks.

Despite these challenges, analysts remain optimistic about Bitcoin’s outlook. Mike Alfred forecasts that Bitcoin could reach $180,000 in 2025, driven by factors such as the upcoming Bitcoin halving and increased institutional investment.

However, it is crucial to acknowledge the inherent volatility of cryptocurrency markets. Price fluctuations can be heavily influenced by a range of factors, including regulatory developments, market sentiment, and macroeconomic conditions. As such, investors should exercise caution and conduct thorough research before making any investment decisions.

Technical Outlook for Bitcoin

Technically, there are signs that Bitcoin’s corrective phase may be nearing its end. If the price can sustain above the 50% Fibonacci level, around $80K, the next target would be approximately $92K. Should Bitcoin manage to stabilize and trade above this level, it could pave the way for further upside potential.

However, if the price fails to hold above $80K and falls below this key level, it could trigger increased downward pressure, potentially leading to a shift toward lower price levels. This scenario could induce more market fear and volatility in Bitcoin’s price action.