Dollar Decline Drives Gains Across Markets (03.12.2025)

The euro surged past $1.09, driven by deficit spending plans and ECB signals of a less restrictive policy.

The yen strengthened to 147 per dollar as US recession fears increased safe-haven demand, while Japan’s GDP growth slowed. Gold held above $2,910, supported by trade tensions and Fed rate expectations. GBP remained near $1.29, benefiting from dollar weakness and expectations of slower BoE rate cuts. Silver surged to nearly $33 as investors expected a Fed rate cut following weak US economic data.

Yen's Rise and the Risk of Currency Volatility

The Japanese yen strengthened to 147 per dollar on Tuesday, its highest in five months, as US recession fears drove investors to long-term trusted assets. Trump's reluctance to dismiss recession risks, along with trade policy uncertainty, added to yen demand.

Japan's economic outlook weakened as Q4 GDP growth was revised down to 2.2% from 2.8%, reflecting weak private consumption. Despite this, the BOJ is expected to keep rates steady in March, with potential hikes later. Finance Minister Shunichi Kato cautioned against excessive currency volatility amid the yen’s rapid gains.

Key resistance is at 149.20, with further levels at 152.00 and 154.90. Support stands at 147.00, followed by 145.80 and 143.00. 

Recession Fears Support Gold's Stability

Gold held steady above $2,910 per ounce, maintaining a 1% gain. Investor sentiment shifted after Trump reversed his plan to double tariffs on Canadian steel and aluminum, just hours after the announcement. Ontario Premier Doug Ford also paused a 25% surcharge on US electricity exports.

Trade uncertainties and US recession fears continued to support gold, though geopolitical tensions eased as the US restored military aid to Ukraine following a 30-day ceasefire agreement with Russia. Markets now focus on upcoming US CPI data for clues on the Fed’s rate outlook.

Key resistance stands at $2,923, with further levels at $2,955 and $3,000. Support is at $2,860, followed by $2,830 and $2,790. 

Dollar Weakness Supports GBP Near Highs

The British pound held around $1.29, near a four-month high, as dollar weakness persisted on US economic concerns and tariff risks. Sterling was supported by expectations that UK rates will stay higher for longer, with traders pricing in only 52bps of BoE cuts in 2025.

UK’s monthly GDP data for January and the Office for Budget Responsibility’s economic and borrowing forecasts on March 26 are now awaited, which could impact market sentiment.

If GBP/USD breaks above 1.2950, the next resistance levels are 1.2980 and 1.3050. On the downside, support stands at 1.2860, with further levels at 1.2760 and 1.2660 if selling pressure increases.

Fed Expectations Increase Silver Prices

Silver surged to nearly $33 as the US Dollar fell sharply, with the DXY dropping to 103.35, its lowest in four months. Concerns over Trump’s tariff policies and their impact on the US economy fueled the dollar’s decline, supporting demand for silver.

Investors now await US CPI data for February, which could influence Fed rate expectations. A slower inflation rate may increase the likelihood of a May rate cut, with odds rising to 51% from 37% in a day, further supporting Silver’s appeal as a non-yielding asset.

If silver breaks above $32.75, the next resistance levels are $33.15 and $33.80. On the downside, support is at $31.00, with further levels at $30.20 and $29.75 if selling pressure increases.