The central banks in the West have contributed to significant volatility in the financial markets during trading on Thursday and this trend continued into Friday (March 21, 2025).
In the early hours yesterday, the Federal Reserve decided to maintain interest rates at 4.25%-4.5% but opened the door for potential cuts, predicting two reductions within the year. Similarly, the Bank of England (BoE) held its interest rate steady at 4.5% while adopting a relatively more hawkish stance.
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In addition, European Central Bank President Christine Lagarde warned that the U.S.-EU trade conflict could lower economic growth in the Eurozone by as much as 0.5 percentage points.
GOLD
Gold prices experienced high volatility after reaching an all-time high of $3,057 per troy ounce on Thursday. Profit-taking activities led Gold to temporarily dip to $3,025 before closing Thursday’s trading at $3,044. Today, Gold has retraced slightly down to $3,027 per troy ounce.
The outlook for Gold remains positive due to the Fed’s expectation of two interest rate cuts this year, alongside decreasing projections for U.S. economic growth. However, given the sharp rise throughout the year and as the weekend approaches, profit-taking activities may continue into today’s European session.
OIL
Oil prices (CLS10) increased by $1.32 to $68.35 per barrel during the trading session on Thursday following U.S. sanctions on oil products related to Iran.
Additionally, renewed Israeli strikes on Gaza after a two-month ceasefire have raised concerns about the re-escalation of conflict in the Middle East, which could disrupt supply.
Such sentiments will likely influence oil price movements during the European trading session.
EURUSD
EURUSD declined by 492 points (49.2 pips) to 1.08533 during trading on Thursday, falling further to 1.08274 by this afternoon. Concerns over a slowdown in the Eurozone economy have spurred profit-taking actions.
With EURUSD still near a four-month high, there is a possibility for further profit-taking in European markets today.
GBPUSD
This currency pair has been dragged down by the drop in EURUSD, closing Thursday at 1.29661. Compared to Wednesday’s close, GBPUSD fell by 368 points (36.8 pips) and continued its decline to 1.29346.
Despite the BoE’s relatively hawkish stance due to rising inflation pressures in the UK, which should positively impact GBPUSD, concerns over a slowdown in the Eurozone add to negative sentiment and trigger profit-taking actions on GBPUSD.
Such actions may continue into the European trading session.
USDJPY
USDJPY slightly increased to 148.771 during Thursday’s session, but today it surged to 149.518. Data released from Japan earlier today reveals that core inflation for February grew by 3% year-on-year (YoY), exceeding the Trading Central forecast of 2.8% YoY but slightly lower than the previous month’s 3.2%.
This release strengthens expectations that the Bank of Japan (BoJ) will raise interest rates again, providing a potential positive impact on the yen. Nonetheless, the upward movement in USDJPY indicates that the U.S. dollar is gaining momentum. This sentiment is expected to carry through into the European trading session.
Nasdaq
The Nasdaq experienced considerable volatility on Thursday before closing down at 19,893. Today’s trading shows further declines, reflecting negative sentiment arising from risks of an economic slowdown in the U.S. and the ongoing trade tensions.
