Trade Tensions and Economic Uncertainty Navigate Policy Shifts (02.20.2025)

Global markets remain cautious as central bank policies and trade tensions converge.

The Fed's decision to hold rates amid rising inflation risks, combined with Trump's new 25% tariffs, fuels uncertainty that pressures the euro and supports safe-haven assets. The yen gains on expectations of further BOJ tightening, while gold and silver adjust as investors await key economic data. Meanwhile, GBP/USD stays steady amid diverging US and UK outlooks, highlighting the complex, global landscape shaping asset prices.

EUR/USD Flat as Markets Weigh Fed Outlook and U.S. Trade Policies

EUR/USD traded around 1.0425, while the Dollar Index held near 107 on Thursday as markets assessed FOMC minutes and trade policies. The Fed signaled no rush for rate cuts, citing inflation risks from trade, immigration, and consumer spending. Trump announced a 25% tariff on autos, semiconductors, and pharmaceuticals starting April 2. Markets currently expect one Fed rate cut in 2025, with a possible second.

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 Gains as Trump's Tariffs Stoke Trade War Concerns

The yen surged past 151 per dollar, its strongest in over two months, as trade and geopolitical tensions increased safe-haven demand. Trump's 25% tariffs on autos, semiconductors, and pharmaceuticals fueled trade war fears, while his comments on Ukraine’s Zelenskiy added to uncertainty. Domestically, expectations of further BoJ rate hikes supported the yen, with investors awaiting Friday’s inflation data for policy clues.

The key resistance level appears to be 154.90, with a break above it potentially targeting 156.00 and 157.00. On the downside, 149.20 is the first major support, followed by 147.10 and 145.80 if the price moves lower. 

Gold Retains Strength on Safe-Haven Demand

Gold held above $2,930 per ounce, near record highs, as investors assessed FOMC minutes and trade risks. The Fed signaled the need for more disinflation evidence while warning that tariffs could fuel inflation. Markets expect one rate cut in 2025, with a second possible. Gold's safe-haven appeal stayed strong amid Trump’s 25% tariffs on key imports and uncertainty over US-Russia peace talks on Ukraine. Meanwhile, China kept lending rates unchanged, signaling a cautious policy stance.

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.

GBP/USD Steady at Two-Month High Amid Rising UK Inflation

The British pound held near $1.26, its highest in two months, as traders assessed key economic data. Inflation rose to 3% last month, a ten-month high, surpassing the 2.8% forecast, while services inflation hit 5%, just below the BoE’s 5.2% estimate. With inflation moving further from the 2% target and wage growth accelerating in real terms, markets now expect only two BoE rate cuts this year.

The first resistance level for the pair will be 1.2650. In the event of this level's breach, the next levels to watch would be 1.2700 and 1.2766. 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 Slips as Fed Signals Caution, Trade Uncertainty Persists

Silver dipped to $32.7 per ounce on Wednesday, easing from a three-month high as investors analyzed FOMC minutes and trade tensions. The Fed signaled a cautious approach to rate cuts, while Trump’s 25% tariffs on autos, semiconductors, and pharmaceuticals fueled trade war fears. Markets also watched US-led Ukraine peace talks, which could impact safe-haven demand. Despite the pullback, silver remains supported by strong industrial demand and China’s rapid renewable energy expansion of 357 gigawatts of solar and wind power.

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.