CB Shifts and Trade Uncertainty Drive Global Asset Moves (02.24.2025)

Global markets are reacting to divergent central bank signals and mounting trade uncertainty. 

The euro rebounded above $1.05 after a strong German election, with investors eyeing further ECB easing. Meanwhile, the yen held near 149 amid hawkish BOJ signals, and gold pushed close to record highs on safe-haven demand driven by US policy concerns. The British pound remains steady at nearly $1.26 on solid economic data, while silver surged to a four-month high due to strong industrial demand and trade tensions.

Euro Climbs Above $1.05 After German Conservatives Secure Election Win

The euro climbed 0.5% to over $1.05 on Monday, near a month-high after Germany’s conservative Christian Democrats won, with exit polls matching expectations. Investors now watch the coalition formation process, as opposition leader Friedrich Merz aims to form one within two months. Strong leadership is seen as crucial for overdue fiscal reforms amid economic stagnation, the Ukraine conflict, and Trump's tariff threats. Meanwhile, Eurozone private sector activity remained steady in February, with the PMI at 50.2, just below the expected 50.5.

Key resistance is at 1.0520, followed by 1.0600 and 1.0650. Support stands at 1.0350, with further levels at 1.0275 and 1.0220.

Yen Steadies Near 149.3 as BOJ Signals Policy Readiness

The Japanese yen traded near 149.3 per dollar on Monday, holding a 12-week high despite local markets being closed. Last week’s rally was fueled by stronger inflation, reinforcing expectations of BOJ rate hikes. BOJ officials signaled readiness to adjust policy as needed, with Governor Kazuo Ueda emphasizing swift market responses if required. Japan’s 10-year bond yield hit a 15-year high, while a weaker dollar added support amid growing US economic concerns.

Key resistance is at 154.90, with further levels at 156.00 and 157.00. Support stands at 149.20, followed by 147.10 and 145.80.

Gold Approaches Record High as Investors Await PCE Data

Gold rose to $2,940 per ounce on Monday, nearing its record high amid strong safe-haven demand. Concerns over Trump’s tariff plans and weaker U.S. business activity increased its appeal. Investors await Friday’s PCE index for clues on Fed policy, while high prices dampen demand in China and India.

Key resistance stands at $2,949, with further levels at $2,975 and $3,000. Support is at $2,880, followed by $2,830 and $2,760.

Pound Holds Near $1.26 as BoE Rate Cut Bets Ease

The British pound held near $1.26, a two-month high, as data reinforced expectations of a cautious Bank of England. Inflation rose to 3%, services inflation hit 5%, and wage growth accelerated in Q4 2024. Retail sales surged 1.7%, leading markets to price in only two BoE rate cuts this year, lowering rates to 4%.

The first resistance level for the pair will be 1.2670. In the event of this level's breach, the next levels to watch would be 1.2720 and 1.2770. On the downside 1.2340 will be the first support level. 1.2265 and 1.2100 are the next levels to monitor if the first support level is breached. 

Silver Rises Amid Tariff Concerns and Inflation Risks

Silver traded near $32.50 per ounce on Monday, a four-month high, as trade and geopolitical tensions fueled safe-haven demand. Trump’s tariff plans on autos, semiconductors, and lumber raised fears of a trade war, while his remarks on Zelenski added to market anxiety. Fed officials signaled caution on rate cuts, citing inflation risks from tariffs.

Technically, the first resistance level will be 33.15 level. In case of this level’s breach, the next levels to watch would be 33.80 and 34.50. On the downside, 31.40 will be the first support level. 30.90 and 30.20 are the next levels to observe if the first support level is breached.