Daily Analysis 12/03/2025

• GBP/USD Price: The GBP/USD pair trades lower in the European session on Wednesday, retreating from a four-month peak reached during Tuesday’s strong rally.
• Technical Signals: Last week’s decisive breakout above the 200-day Simple Moving Average (SMA) remains a key bullish signal, suggesting that the pair’s path of least resistance is to the upside.
• UK Trade Agreement: UK Trade Minister Jonathan Reynolds confirmed that the UK is in talks to negotiate a wider economic agreement aimed at eliminating additional tariffs, which could support the pound.
• US Job Openings: The US JOLTS job openings data exceeded expectations, rising to 7.74M in January and providing some stability to market sentiment.
• US Inflation Data: The US Bureau of Labor Statistics (BLS) is set to release the high-impact Consumer Price Index (CPI) report for February later on Wednesday, which could drive fresh USD volatility.

Closing statement: GBP/USD remains in a bullish setup after clearing key technical resistance, but near-term direction hinges on the outcome of the US inflation data and progress in UK trade negotiations.

• XAU/USD Price: Gold price (XAU/USD) is struggling to hold onto recent gains, pressured by a modest bounce in the US Dollar from multi-month lows and a positive risk sentiment that limits the metal’s upside.
• US Trade Tariffs: The White House confirmed that a 25% tariff on all steel and aluminum imports into the US will take effect on Wednesday, fueling market uncertainty and influencing gold’s appeal as a safe-haven asset.
• Canada's Retaliation: In response to the tariffs, Canada’s Energy Minister Jonathan Wilkinson warned that Canada might impose non-tariff measures, including restrictions on oil exports to the US, if trade tensions escalate.
• Peace Talks: Markets are closely monitoring the outcome of the US-Russia peace talks on Ukraine scheduled for Wednesday. Ukrainian President Zelensky has agreed to a 30-day ceasefire proposal from the US, pending Russia’s acceptance.
• US CPI Report: Traders remain cautious ahead of the high-impact US Consumer Price Index (CPI) data due later on Wednesday, which could influence the Fed’s rate-cut outlook and drive fresh moves in gold.

Closing statement: Gold remains supported by geopolitical risks and trade tensions, but the immediate direction will likely depend on the outcome of the US-Russia talks and the US inflation report.

• Crude Oil Price: West Texas Intermediate (WTI) is trading around $66.30 in early European trading on Wednesday. A firm bearish setup on the daily chart is reinforced by repeated failure to hold above the 10-day moving average and long upper shadows on recent candles.
• Middle East Tensions: A Houthi spokesman stated on Tuesday that they will target any Israeli ship violating the ban on Israeli passage through the Red Sea, Arabian Sea, Bab al-Mandab Strait, and Gulf of Aden, heightening geopolitical risks.
• US Crude Inventories: The American Petroleum Institute (API) reported that US crude stockpiles increased by 4.247 million barrels for the week ending February 28, adding downward pressure on WTI amid oversupply concerns.
• Tariff Policy: US President Donald Trump reversed his decision to double tariffs on Canadian steel and aluminum to 50% on Tuesday, but lingering trade policy uncertainty continues to weigh on market sentiment.
• Growth Concerns: Worries about the global economic impact of Trump’s tariff policies and weaker demand due to slowing growth could keep crude oil prices under pressure in the near term.

Closing statement: WTI faces a bearish technical outlook and rising supply pressure, with geopolitical tensions and trade policy uncertainty likely to influence near-term price action.

• DAX Price: The DAX dropped 1.29% on Tuesday, adding to Monday’s 1.69% loss and closing at 22,621. Early gains were erased after President Trump threatened to impose 50% tariffs on Canadian steel and aluminum imports, fueling trade tensions.
• Auto Stocks: Auto sector losses led the decline, with Daimler Truck Holding plunging 5.34%. Mercedes-Benz Group and Porsche lost 1.94% and 1.73%, respectively, while BMW and Volkswagen also ended the session lower.
• German Fiscal Stimulus: Germany’s fiscal stimulus plans face political resistance, with the Greens opposing moves to loosen the debt brake and a proposed €500 billion infrastructure fund. This could limit support for the domestic economy.
• US Jobs Data: The January JOLTS report showed job openings rising to 7.74 million from 7.508 million in December. However, the February US Jobs Report indicated slowing wage growth and rising unemployment, clouding the outlook for the labor market.
• US Inflation Data: Traders are awaiting February’s US Core Inflation data due on Wednesday. Economists expect the annual core inflation rate to edge down from 3.3% in January to 3.2% in February, which could influence ECB and Fed policy expectations.

Closing statement: The DAX remains vulnerable to trade-related pressures and political uncertainty over German fiscal policy, with US inflation data likely to drive near-term sentiment.