Yen Weakens on GDP, Gold Rises with Trade Fears (02.18.2025)

The dollar strengthened following hawkish Fed remarks, pressuring EUR/USD and reversing a three-day decline.

The yen weakened as strong Japan GDP data sparked speculation about future BOJ rate hikes. Gold climbed above $2,900 per ounce on trade war concerns, while GBP/USD rose on solid UK GDP and disappointing US retail sales. Silver held above $32, supported by industrial demand and a weaker dollar. Investors now await key economic reports and FOMC minutes for further market direction.

Fed Talk Lifts Dollar, EUR/USD Under Pressure

EUR/USD hovers around 1.0455, while the dollar index rebounded to 107 on Tuesday, snapping a three-day losing streak. The recovery followed remarks from Federal Reserve officials signaling a pause in rate cuts to focus on inflation control. Fed Governor Christopher Waller suggested holding off on cuts unless inflation trends match 2024 levels, while Governor Michelle Bowman stressed the need for more evidence before easing policy. Philadelphia Fed President Patrick Harker also supported maintaining current rates amid economic strength.

Markets now await this week’s FOMC minutes for further rate guidance. Last week, the dollar weakened due to mixed US economic data and reduced tariff concerns. Treasury Secretary Scott Bessent noted that currency manipulation is now a key factor in trade strategy.

Technically, resistance stands at 1.0515, with further barriers at 1.0600 and 1.0650. Support lies at 1.0350, followed by 1.0275 and 1.0220.

Yen Dips After Strong Japan GDP Data

The Japanese yen slipped to around 151.8 per dollar, reversing a three-day rally as the dollar gained strength after Fed officials signaled reluctance to cut rates due to inflation concerns.

Japan’s Q4 GDP grew 0.7% quarter-on-quarter, up from 0.4% and beating the 0.3% forecast. On an annual basis, GDP rose 2.8%, aligning with expectations and improving from 1.7% in Q3. These figures support a more hawkish outlook for the Bank of Japan, though uncertainty remains over a potential rate hike in March, with further increases expected later this year.

Technically, resistance is at 154.90, with further levels at 156.00 and 157.00. Support stands at 151.25, followed by 149.20 and 147.10.

Gold Extends Gains as Trade War Fears Mount

Gold climbed above $2,900 per ounce, extending its gains for a second day as fears of a global trade war fueled demand. Concerns over President Donald Trump’s proposed reciprocal tariffs added to market uncertainty, increasing gold’s appeal. However, hawkish Fed comments capped further gains.

Fed Governor Michelle Bowman reiterated caution on rate cuts due to inflation risks, while Governor Christopher Waller suggested delaying reductions until inflation eases. Investors now await Wednesday’s Fed meeting minutes for more policy insights. Meanwhile, geopolitical tensions persist as markets watch for updates on a potential Russia-Ukraine ceasefire.

Key resistance levels are at $2,949, $2,975, and $3,000. Support is at $2,880, with further levels at $2,830 and $2,760.

GBP/USD Rises on Strong UK GDP

GBP/USD climbed to 1.2595 in early Asian trading on Sunday, driven by strong UK GDP data and weaker US retail sales. January retail sales dropped 0.9%, the steepest decline in nearly two years, after a revised 0.7% rise in December, far below the expected 0.1% dip. However, year-over-year sales grew by 4.2%. Meanwhile, the UK economy expanded by 0.1% in Q4 2024, beating forecasts and strengthening the Pound.

Key resistance is at 1.2600, with further levels at 1.2650 and 1.2700. Support stands at 1.2340, followed by 1.2265 and 1.2100.

Silver Faces Resistance After Recent Rally

Silver remained above $32 per ounce on Sunday after recent volatility, supported by a weaker dollar on soft US economic data and easing global trade war concerns.

On Friday, silver hit a three-month high, driven by strong industrial demand, particularly in electrification and manufacturing. Reports showed China added 357 gigawatts of solar and wind power in 2024, boosting industrial silver use. Meanwhile, India’s Oil and Natural Gas Corp pledged INR 1 trillion for renewable energy, and Indonesia aims to add 17 gigawatts of solar capacity.

Key resistance is at 33.15, with further levels at 33.80 and 34.50. Support stands at 31.40, followed by 30.90 and 30.20.