Fed Policy, Tariffs, and Data Drive Global Market Shifts (02.17.2025)

Global markets are showing mixed reactions as central bank policies and economic data shape investor sentiment. The dollar steadied after strong U.S. inflation exceeded forecasts, despite Trump’s new tariffs, while the euro remains pressured. 

The yen strengthened on strong GDP and hawkish BOJ expectations, and gold surged toward record highs amid trade concerns and safe-haven demand. The British pound recovered on upbeat UK GDP data, and silver advanced on optimistic Fed rate cut projections and eased tariff fears. Investors now await further economic data and policy signals to chart the next moves.

Fed Outlook Steadies Dollar as Inflation Exceeds Forecasts

The US Dollar initially strengthened on risk aversion after President Trump announced new tariffs, with a 25% duty on all steel and aluminum imports taking effect last Tuesday. Safe-haven demand strengthened the Greenback, but gains faded as weak US data and positive global developments weighed on currency markets. The US CPI for January rose 3.0%, with core CPI at 3.3%, exceeding forecasts and reinforcing expectations that the Fed will keep rates steady longer.

From a technical perspective, the first resistance level is at 1.0515, with further resistance levels at 1.0600 and 1.0650 if the price breaks above. On the downside, the initial support is at 1.0350, followed by additional support levels at 1.0275 and 1.0220. 

Yen Strengthens as Strong GDP Fuels Hawkish BOJ Expectations

The Japanese yen strengthened past 152 per dollar on Monday, marking its third straight gain as strong economic data fueled expectations of a hawkish BOJ stance. Japan’s GDP grew 0.7% in Q4, surpassing forecasts, with annualized growth at 2.8%. While a March rate hike remains uncertain, further increases are expected this year. The yen also benefited from a weaker US dollar amid softening US data and easing trade conflict fears.

The key resistance level appears to be 154.90, with a break above it potentially targeting 156.00 and 157.00. On the downside, 151.25 is the first major support, followed by 149.20 and 147.10 if the price moves lower. 

Gold Nears Record High as Trade Concerns Persist, Fed Rate Cuts in Doubt

Gold held at $2,930 per ounce, set for a seventh weekly gain as trade concerns drove demand. President Trump ordered a tariff review but delayed implementation, easing fears slightly. However, U.S. producer inflation beat expectations, reinforcing views that Fed rate cuts are unlikely soon. Despite this, gold stayed firm, supported by trade uncertainties and a weaker dollar.

The first resistance is at $2,949, with further levels at $2,975 and $3,000 if the price moves higher. On the downside, $2,880 is the first support level, followed by $2,830 and $2,760 if selling pressure increases.

Sterling Strengthens as UK GDP Beats Forecasts, US Retail Sales Disappoint

GBP/USD gained to 1.2585 in early Asian trading on Monday, supported by upbeat UK GDP data and weaker US Retail Sales. US markets remain closed for President’s Day. January retail sales fell 0.9%, the sharpest drop in nearly two years, following a revised 0.7% increase in December and far worse than the expected 0.1% decline. However, retail sales rose 4.2% year-over-year. Meanwhile, UK GDP expanded by 0.1% in Q4 2024, surpassing forecasts, and reinforcing support for the Pound Sterling.

The first resistance level for the pair will be 1.2600. In the event of this level's breach, the next levels to watch would be 1.2650 and 1.2700. 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 Drops Amid Tariff Hike Delay and Stronger U.S. Producer Inflation

Silver, like gold, experienced a relative weakening following the decision to delay tariff hikes. Additionally, the higher U.S. producer inflation above expectations strengthened the dollar, which was a key factor driving sales in precious metals.

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.