Yen Gains, Gold and GBP Under Pressure (02.28.2025)

EUR/USD fell below 1.04 as US-EU trade risks weighed on the Euro, while the Japanese yen neared a 4% monthly gain on BOJ rate hike expectations.

Gold dipped below $2,860 amid a stronger US dollar, and silver held near $31.7 despite demand concerns. GBP/USD remained under pressure due to uncertainty in the UK trade deal.

EUR/USD Falls Below 1.04 with US Data

EUR/USD extends its decline for a third day, trading near 1.0390 in the Asian session on Friday. The Euro remains pressured as risk sentiment weakens amid renewed US-EU trade tensions. US President Trump signaled potential tariffs on EU goods as early as April, announcing a 25% tariff on European automobiles and other products “very soon.” In response, an EC representative warned of strong, immediate retaliation against any unjustified trade restrictions. 

The risk of a trade conflict adds to the Eurozone’s struggles with weak demand, deepening the Euro’s losses. Meanwhile, the US Dollar remains strong, with the DXY near 107.50 after positive data. On Thursday, US GDP grew 2.3% in Q4 2024, matching estimates, while durable goods orders surged 3.1% in January, beating the 2% forecast and rebounding from December’s 2.2% drop. 

Key resistance is at 1.0450, followed by 1.0530 and 1.0600 as rising US economic strength and escalating trade tensions keep EUR/USD under pressure. Support stands at 1.0350, with further levels at 1.0275 and 1.0220.

Yen Strengthens, Nears 4% Monthly Gain

The Japanese yen strengthened to around 149.4 per dollar, set for a nearly 4% gain in February with strong expectations of further BOJ rate hikes. Despite mixed economic data, Japan’s inflation and wage trends continue to support policy normalization.

Tokyo’s core inflation slowed to 2.2% in February from 2.5% in January but remained above the BOJ’s 2% target for the fourth straight month. Meanwhile, Trump's escalating tariffs pose risks to Japan’s economic outlook, raising caution over further rate hikes. On Thursday, he confirmed a 25% tariff on Mexico and Canada starting March 4, along with a 10% duty on Chinese imports.

Key resistance is at 154.90, with further levels at 156.00 and 157.00. Support stands at 148.60, followed by 147.10 and 145.80.

Gold Shipments to NYC Vaults Surge

Gold traded below $2,860 per ounce on Friday, set for its first weekly loss in nine, pressured by a stronger US dollar as Trump’s tariff agenda looms. On Thursday, he confirmed a 25% tariff on Mexican and Canadian goods starting March 4, with a 10% levy on Chinese imports also threatened.

Investors await PCE price data for policy signals. Despite the pullback, gold remains on track for a monthly gain after record highs, driven by Fed rate cut expectations and increased ETF inflows. Since December, over 600 tons (nearly 20 million ounces) of gold have been moved to NYC vaults with looming tariffs, per the World Gold Council.

Key resistance stands at $2,880, with further levels at $2,917 and $2,949. Support is at $2,830, followed by $2,790 and $2,760.

UK Trade Deal Uncertainty Weighs on Pound

GBP/USD continues to decline, reaching near 1.2580 in early European trading, pressured by uncertainty over potential US trade tariffs. Later, investors will focus on the US PCE Price Index for January.

On Thursday, Trump met UK Prime Minister Keir Starmer and hinted at possible tariffs unless a trade deal is reached within an unspecified timeframe. Market participants will watch for updates, as trade tensions could strengthen the US Dollar and weigh further on GBP/USD.

The first resistance level for the pair will be 1.2680. In the event of this level's breach, the next levels to watch would be 1.2720 and 1.2770. On the downside 1.2500 will be the first support level. 1.2435 and 1.2350 are the next levels to monitor if the first support level is breached. 

Silver Prices React to Copper Tariffs

Silver held near $31.7 per ounce in late February, pressured by demand uncertainties and strong supply. Profit-taking also weighed on prices, though silver remains up about 10% year-to-date.

Hecla Mining reported a 13% increase in 2024 silver output, reaching 16.2 million ounces, the second-highest in its 134-year history. Meanwhile, US silver coin purchases fell 27% year-on-year in January to 3.5 million ounces, the lowest January demand since 2018.

Soft US economic data fueled expectations for Fed rate cuts, supporting precious metals. Investors also monitored trade developments after Trump ordered a probe into copper tariffs to boost US production.

Technically, the first resistance level is 33.15, with the next levels at 33.80 and 34.50 if breached. On the downside, support stands at 31.00, followed by 30.20 and 29.75 if further declines occur.