PMI Data, Trade Talks in Focus for Forex Markets This Week
Looking ahead to the coming week: PMI data takes centre stage, while trade negotiations are expected to remain in focus
The US Dollar (USD) struggled to maintain its highs this week, initially gaining support from risk-off sentiment driven largely by political headlines from the Trump administration. However, those gains gradually faded as the week progressed. President Donald Trump continued to criticize the Federal Reserve’s stance on interest rates, despite overseeing one of the world’s strongest economies. While tariff-related inflation concerns resurfaced—particularly around imported goods—other inflation indicators excluding imports helped sustain market confidence.
The US Dollar Index (DXY) failed to break decisively above the 99.00-mark, meeting resistance at the 50-day Exponential Moving Average (EMA) near 98.75. Still, it managed to stay above the 98.00 threshold by week’s end, supported by lingering bullish momentum. With a relatively light economic calendar ahead, attention now shifts to Thursday’s wave of global Purchasing Managers’ Index (PMI) releases.
EUR/USD halted its decline, with the Euro rebounding technically from the 1.1600 level and ending the week around 1.1650. Looking ahead, the European Central Bank (ECB) will release its latest Bank Lending Survey on Tuesday, followed by key pan-EU PMI readings and a rate decision on Thursday. The ECB is expected to hold its main refinancing rate at 2.15% and its overnight rate at 2.0%, as it continues to navigate uneven economic conditions and persistent trade tensions with the U.S.
GBP/USD found support from a technical rebound, bouncing off an ascending trendline drawn from January’s multi-year lows. The pair is now wedged between this rising support and a flattening 50-day Exponential Moving Average (EMA) near 1.3470. For a sustained recovery, Sterling bulls will likely need assistance from broader US Dollar weakness to break higher after weeks of downward pressure.
USD/JPY climbed above the 200-day EMA at the 148.00 level for the first time since falling below it in February. Yen traders remain focused on signs that the Bank of Japan (BoJ) might accelerate rate hikes, though the central bank continues to push back against such expectations—even as inflation remains above target over the long term. Traders will look to the upcoming Tokyo Consumer Price Index (CPI) data due next Friday, with the previous print at 3.1% year-over-year.
AUD/USD also posted a technical rebound this week, bouncing off the 50-day EMA just below the 0.6500 level. While the Australian economic calendar is light, traders will analyze the Reserve Bank of Australia’s (RBA) latest Meeting Minutes on Monday for policy cues. Additionally, RBA Governor Michele Bullock’s speech on Thursday could offer further insights into the central bank’s monetary policy outlook.
Major events to watch this week
