Market Drivers – US Session: Currency Markets React to Mixed Signals as US PCE Data Looms

The US dollar, often referred to as the Greenback, experienced renewed selling pressure this week, pulling back from its three-week highs. This retreat was driven by a combination of fluctuating US yields, persistent tariff concerns, and growing anticipation for the release of the US Personal Consumption Expenditures (PCE) Price Index on Friday, March 28, 2025. As investors brace for this key inflation indicator, the broader financial landscape remains dynamic, with risk sentiment rebounding and various global currencies responding in kind.

The US Dollar Index (DXY) stepped back from its recent multi-week peaks, buoyed by a notable recovery in risk-oriented markets. The spotlight will undoubtedly fall on the PCE data, a critical measure of inflation closely watched by the Federal Reserve. Alongside it, Personal Income, Personal Spending, and the final Michigan Consumer Sentiment figures will provide additional context for gauging the health of the US economy.

Across the Atlantic, the EUR/USD pair regained some footing, climbing off its recent lows but failing to breach the significant 1.0800 threshold. European markets are focused on upcoming releases, including Germany’s GfK Consumer Confidence survey and jobs report, as well as the Eurozone’s Economic Sentiment, Consumer Confidence, and the European Central Bank’s Consumer Inflation Expectations. These indicators will offer fresh insights into the region’s economic trajectory.

Meanwhile, the GBP/USD pair maintained its sideways trend, successfully reclaiming territory above the 1.2900 level. Investors in the UK are eyeing a busy data calendar, featuring Retail Sales, Current Account figures, Goods Trade Balance, Business Investment, and the final GDP Growth Rate for Q4. These releases will shed light on the British economy’s performance as it navigates ongoing uncertainties.

In Asia, the USD/JPY pair built on Wednesday’s gains, hovering near monthly highs just above 151.00. Japan’s markets will see the release of the Bank of Japan’s Summary of Opinions, alongside Tokyo’s Inflation Rate, Housing Starts, and Construction Orders, all of which could influence the yen’s direction in the near term.

Down under, the AUD/USD pair oscillated around the 0.6300 mark, with weekly gains restrained by the 100-day Simple Moving Average near 0.6330. Australia’s economic docket includes Housing Credit and Private Sector Credit data, both due on March 31, which will provide further clues about the nation’s financial landscape.

On the commodity front, West Texas Intermediate (WTI) crude oil prices snapped a three-day winning streak, retreating from a three-week high above $70.00 per barrel. Tariff-related jitters kept traders cautious, contributing to the pullback. Conversely, precious metals shone brightly amid escalating trade tensions. Gold surged to an all-time high near $3,060 per troy ounce, while silver climbed to multi-day peaks above $34.00 per ounce, underscoring their appeal as safe-haven assets in uncertain times.

As markets head into the final trading sessions of the week, all eyes remain on the US PCE data and its potential to shape expectations for monetary policy and global currency flows. With tariff fears and mixed economic signals in play, volatility is likely to persist across asset classes.