The risk outlook remains uncertain early Tuesday, following a slightly positive end to Q1 2025. Mixed US data, Federal Reserve talks, and ongoing debates about Trump’s trade tariffs are adding to the volatility ahead of April 2’s “Liberation Day.”
Geopolitical risks from the Middle East and Russia, along with caution before Friday’s US jobs report, are also making traders nervous following a weak quarter for equities, the US Dollar, and cryptocurrencies.
Meanwhile, traditional safe havens like JPY and Gold remain strong, but Crude Oil buyers struggle due to concerns over OPEC+ supply and Trump’s "drill baby drill" policy. Political tensions in France, China’s military drills near Taiwan, and discussions about China, Japan, and South Korea challenging US tariffs are weighing on market optimism, despite positive data from China and hopes for easier rates from major central banks.
EURUSD and GBPUSD struggle to gain despite the US Dollar's weakness, influenced by political tensions in France and a disappointing UK BRC Shop Price Index for March, alongside a dovish stance from the ECB and BoE. However, both currencies posted monthly and quarterly gains against the Greenback, despite a weak end to March.
Meanwhile, USDJPY retreats from the previous day's bounce off a week’s low, following quarterly and monthly losses. The Bank of Japan’s Tankan report and comments about possible wage hikes from Japan’s PM Ishiba, combined with positive inflation data and a lower unemployment rate, as well as the BoJ’s potential cut in JGB purchases, put downward pressure on the Yen. The JPY's safe-haven appeal also continues to impress the pair sellers.
The Reserve Bank of Australia (RBA) kept interest rates steady at 4.10% on Tuesday, meeting market expectations. RBA Governor Michele Bullock described the current policy as restrictive to curb inflation, signaling a hawkish stance. This helped AUDUSD recover from a four-week low, posting its first daily gain in three days. Additionally, a strong jump in Australia’s March Manufacturing PMI and stable retail sales supported the Aussie. However, concerns over China’s beef import measures and ongoing geopolitical and tariff issues have created challenges for AUDUSD buyers recently.
China-related concerns, along with broader risk-aversion due to tariff and geopolitical fears, are putting pressure on the New Zealand and Canadian Dollars. As a result, NZDUSD continues to decline, hitting its lowest point since early March, marking its third straight day of losses. Meanwhile, USDCAD is on a four-day winning streak, driven by US-Canada tariffs and political tensions, despite Canada's strong crude oil export performance.
Gold continues to climb for the fourth straight day, reaching new record highs, driven by market uncertainty and the US Dollar's weak performance, pushing traders toward this traditional safe-haven asset. Additionally, rising gold demand from China, India, and Japan has supported prices, with gold hovering around $3,135 after peaking at $3,149 earlier.
Meanwhile, Crude Oil prices surged to a five-week high, driven by the US strike on Iran-backed Houthis and Iran’s warning, alongside concerns over a supply crunch due to sanctions on Russia and Venezuela. However, worries about higher output from OPEC+, Trump’s call for more drilling, and potential lower energy demand from global tariff impacts are weighing on oil buyers.
Bitcoin (BTCUSD) and Ethereum (ETHUSD) maintain their previous day’s recovery, but crypto buyers seem cautious ahead of Trump’s “Liberation Day.” Along with broader risks, industry-specific factors like increased staking flows and fading optimism about Trump’s potential positive measures are adding to the uncertainty. However, it’s worth noting that U.S. senators are preparing to introduce legislation allowing Americans to invest retirement funds in Bitcoin and other cryptocurrencies.
Traders will focus on Eurozone inflation, the US ISM Manufacturing PMI, and JOLTS Job Openings to guide decisions after a volatile end to Q1 2025. Additionally, headlines about Trump’s tariffs and geopolitical tensions involving Russia, Iran, China, and the US will be key for market direction.
The US Dollar is likely to end April 1st on a positive note, driven by market caution, which could pressure major currencies, Crude Oil, and the Antipodeans. However, JPY and Gold may remain strong, while cryptocurrencies and equities could face challenges ahead of Trump’s tariff announcements on April 2 and Friday’s US jobs report.
May the trading luck be with you!
