Daily Currency Update

USD - US Dollar

The week starts quietly as investors, wary from recent data and central bank decisions, await Wednesday's FOMC outcome, likely keeping trading muted. Amidst ongoing geopolitical risks, the USD is slightly up, maintaining its recent sideways trend. This week's Fed communications could significantly impact the USD, especially if it counters the anticipated March rate cut, potentially boosting the USD's value.

CAD - Canadian Dollar

Last week, USD/CAD briefly reached 1.3540, testing significant resistance, before retreating to the lower 1.34 range. Factors like spreads and stock performance have favored the CAD, and with the upcoming Fed decision, these influences are expected to continue. Despite Fed officials deeming March too soon for a rate cut, market expectations remain divided. A neutral stance by the Fed this week, without hinting at an imminent rate cut, could raise US short-term yields and bolster the USD, potentially negatively impacting stocks. Conversely, any indication that a March rate cut is possible would likely lower yields, boost risk appetite, and weaken the USD.

EUR - Euro

The EUR is underperforming today as markets increase their bets on ECB rate cuts, pricing in 26bps for April and 56bps for June. Despite ECB President Lagarde's indication that rate cuts are unlikely before June, VP Villeroy's comments about potential rate cuts at any time this year have spurred speculation. While ECB hawks express caution, market focus remains on dovish signals. A slightly hawkish stance from the Fed could further weaken the EUR.

GBP - British Pound

Sterling remains virtually unchanged in today's trading. With no new data reports from the UK and the currency positioned at the midpoint of its recent trading range (1.2600/1.2825), the situation appears stable. The GBP is facing downward pressure due to consistent short-term BoE rate forecasts contrasted with growing speculation regarding ECB policy