Euro Slides on Tariff Warnings, Gold Near Record Highs (03.21.2025)

The euro retreated after ECB President Christine Lagarde warned that proposed U.S. tariffs could dent eurozone growth. 

Meanwhile, gold hovered near $3,030 as safe-haven demand remained strong amid rising trade tensions and geopolitical risks. The yen softened after Japan’s inflation data, while the British pound dipped following the Bank of England’s steady rate decision. Silver steadied near $33.20 as markets digested recent volatility and Fed policy outlook.

Lagarde Flags Slower Growth from U.S. Tariffs

The euro fell below $1.085, retreating from its March 18 high of $1.0954, after ECB President Christine Lagarde warned of slower growth risks. Speaking to European lawmakers, she said a proposed 25% U.S. tariff on EU goods could cut eurozone growth by 0.3 percentage points in the first year, or 0.5 points if the EU retaliates. Lagarde added that the main impact would be front-loaded, with limited inflation pressures, suggesting the ECB is unlikely to raise rates in response.

Key resistance is at 1.0860, followed by 1.0950 and 1.1000. Support stands at 1.0800, with further levels at 1.0730 and 1.0670. 

Yen Slips to 149 as Inflation Eases

The yen fell to around 149 per dollar on Friday, ending a two-day rally, after Japan’s core inflation eased to 3% in February from 3.2% in January, still above expectations of 2.9%. This marked the second month of stronger inflation, reinforcing the case for future rate hikes.

Earlier, the BoJ held rates at 0.5% and maintained a cautious stance, citing global uncertainties, particularly rising U.S. tariffs. The bank also reiterated its focus on monitoring currency moves. A stronger U.S. dollar further pressured the yen amid global growth and trade concerns.

Key resistance is at 150.30, with further levels at 152.00 and 154.90. Support stands at 147.00, followed by 145.80 and 143.00.  

Gold Nears $3,030 on Fed Cut Hopes

Gold hovered near $3,030 on Friday, close to record highs and heading for a third straight weekly gain. The rally is driven by dovish Fed signals and strong safe-haven demand. The Fed reaffirmed plans for two rate cuts in 2025 amid rising economic uncertainty, while Powell downplayed Trump’s proposed tariffs as temporarily inflationary but saw no urgency to cut rates.

Geopolitical tensions also supported gold, with Israel escalating operations in Gaza, Hamas striking Tel Aviv and the U.S. continuing airstrikes in Yemen. Markets are also watching the April 2 deadline for Trump’s reciprocal tariffs, fueling trade concerns. Gold is up over 15% year-to-date.

Key resistance stands at $3082, with further levels at $3100 and $3,150. Support is at $3000, followed by $2,980 and $2,916.    

GBP Retreats as BoE Maintains Policy

The pound dipped below $1.30, retreating from a four-month high after the BoE held rates at 4.5% and signaled a cautious approach to easing policy, despite recent inflation progress.

Global trade tensions added pressure, with new U.S. tariffs prompting retaliatory moves and raising inflation risks.

UK data showed weak growth, steady 4.4% unemployment, and wage growth easing to 5.8%, in line with forecasts. In the U.S., the Fed kept rates steady but reaffirmed plans for two cuts this year.

If GBP/USD breaks above 1.3050, the next resistance levels are 1.3100 and 1.3150. On the downside, support stands at 1.2860, with further levels at 1.2800 and 1.2715 if selling pressure increases.

Silver Steadies Near $33.20 After Pullback

Silver hovered near $33.20 on Friday morning after two consecutive sessions of decline. The recent upward momentum, initially fueled by China’s stimulus measures, has temporarily stalled. Nevertheless, the potential for further gains remains intact amid persistent uncertainty surrounding former President Trump’s tariff policies and escalating geopolitical risks. In addition, the Federal Reserve’s soft approach to interest rates, even if temporary, continues to support interest in non-yielding assets like silver.

If silver breaks above $33.75, the next resistance levels are $34.05 and $34.85. On the downside, support is at $33.10, with further levels at $32.50 and $32.15 if selling pressure increases.