Markets Keep Cautious Ahead of Fed (03.19.2025)

Markets remain cautious ahead of the Federal Reserve’s rate decision, with investors closely watching Powell’s speech for policy guidance. 

Gold continues to trade above $3,030 amid safe-haven demand, while silver approaches $34 on rising geopolitical tensions and trade uncertainties. The U.S. dollar holds firm, pressuring EUR/USD lower, while the yen weakens after the BoJ maintained its policy stance. Meanwhile, the British pound slipped as markets await the BoE’s decision on Thursday.

EUR/USD Slips as Dollar Gains Ahead of Fed Decision

EUR/USD slipped to 1.0935 in the Asian session as the dollar rebounded ahead of the Fed’s rate decision. The Greenback gained support after stronger US data, with industrial production rising 0.7% in February, beating the 0.2% forecast.

The Fed is expected to hold rates steady, with focus on Powell’s press conference and the dot plot for policy signals. In Europe, Germany’s parliament approved a major spending plan, unlocking billions for investment to revive its struggling economy.

Key resistance is at 1.0950, followed by 1.1000 and 1.1050. Support stands at 1.0880, with further levels at 1.0800 and 1.0730. 

Yen Extends Losses as BoJ Holds Rates Steady at 0.5%

The yen fell to 149.5 per dollar, extending losses for a fourth session after the BoJ kept rates at 0.5%, as expected. The central bank maintained its growth outlook but noted emerging weaknesses, adopting a cautious stance amid global risks, especially US tariffs.

Investors now await Governor Ueda’s comments for policy clues. Meanwhile, the Reuters Tankan survey showed Japanese manufacturers turning pessimistic in March, while Japan’s trade balance returned to surplus, driven by strong exports.

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.  

Safe-Haven Demand Keeps Gold Near $3,030

Gold held near a record $3,030 as investors sought safety amid geopolitical and trade tensions. Israel launched its deadliest Gaza strike since the ceasefire, calling it "only the beginning.

Putin agreed to halt attacks on Ukraine’s energy infrastructure but rejected Trump’s 30-day ceasefire proposal. Trade tensions persist, with new US tariffs set for April 2.

Markets now await the FOMC decision, with Powell’s speech expected to provide monetary policy insights. Gold has surged over 15% this year.

Key resistance stands at $3045, with further levels at $3100 and $3,150. Support is at $3000, followed by $2,980 and $2,916.    

Pound Slips as Dollar Holds Firm

GBP/USD fell to 1.2990 in the Asian session, erasing recent gains as the dollar held firm with stable Treasury yields. Markets await the Fed’s rate decision, expecting no changes amid inflation and economic uncertainties.

The pound trades cautiously ahead of the BoE’s Thursday announcement, with rates expected to stay at 4.5% in a likely 7-2 split. MPC members Mann and Dhingra are expected to push for a rate cut, having previously advocated for a 50 bps reduction.

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. 

Safe-Haven Demand Lifts Silver to Highest Since October

Silver neared $34, its highest since October, as safe-haven demand rose amid tariff tensions and Fed rate cut expectations. Trump threatened 200% tariffs on EU wines in response to the EU’s 50% tax on U.S. whiskey, while Commerce Secretary Lutnick suggested a recession might be "worth it" for Trump’s policies.

U.S. producer prices were flat in February, and consumer inflation rose just 0.2%, missing forecasts. Jobless claims fell again, signaling a resilient labor market.

If silver breaks above $34.05, the next resistance levels are $34.85 and $35.00. On the downside, support is at $33.80, with further levels at $33.15 and $32.75 if selling pressure increases.