Euro Gain on Merz Win

• The U.S. dollar remains under pressure after the market digested the poor economic indicators from last week.

• The euro gained as the market perceived mitigated political risk in Germany.

• Nasdaq slid by more than 2% last Friday, all eye on Wednesday Nvidias earning report.

Market Summary

The U.S. dollar extended its decline, hitting a new 2025 low, as markets digested weaker-than-expected U.S. economic data last week despite the Feds hawkish tone in the latest FOMC meeting minutes. The fading confidence in the U.S. economy weighed not only on the greenback but also on Wall Street, which slumped further amid renewed tariff threats from the Trump administration, casting a shadow over global markets.

The Dollar Index (DXY) weakened, pressured by gains in G7 currencies, particularly the euro and the Japanese yen. The euro surged after Germany's new conservative leader, Friedrich Merz, secured an election victory, reducing political uncertainty in the Eurozone‘s largest economy. Meanwhile, the Japanese yen strengthened, supported by a continued rise in Japan’s 10-year bond yield, as traders positioned for a potentially more hawkish stance from the Bank of Japan (BoJ).

Looking ahead, markets are laser-focused on Nvidias earnings report due Wednesday, which could provide critical insights into the growth trajectory of the AI sector and its impact on Nasdaq and broader Wall Street sentiment.

Current rate hike bets on 19th March Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (98%) VS -25 bps (2%)

Market Movements

DOLLAR_INDX, H4

The U.S. dollar remains under pressure as investors weigh economic uncertainty and potential new tariffs from former President Donald Trump. Mixed economic data has added to market caution, with a sharp decline in Services PMI (49.7 vs. 53.0 expected) and weaker existing home sales (4.08M vs. 4.13M expected) underscoring economic concerns. However, the dollar found some support from a stronger-than-expected Manufacturing PMI (51.6 vs. 51.3 forecasted).

The Dollar Index is trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum, while RSI is at 30, suggesting the index might extend its losses since the RSI stays below the midline.

Resistance level: 106.55, 107.45

Support level: 105.65, 103.70

XAU/USD, H4

Gold remains range-bound as investors adopt a cautious stance amid mixed market signals. On the bullish side, Trumps tariff uncertainties have dampened risk appetite, leading to sharp declines in high-risk assets like the Dow Jones and Nasdaq. Conversely, the ongoing Russia-Ukraine ceasefire discussions present a bearish case, as reduced geopolitical tensions could weaken demand for safe-haven assets. Traders should closely monitor geopolitical developments and U.S. economic data for clearer directional cues.

Gold prices are trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 56, suggesting the commodity might extend its gains since the RSI stays above the midline.

Resistance level: 2940.00, 2960.00

Support level: 2915.00, 2880.00

EUR/USD，H4

The euro surged as political uncertainty in Germany eased following Frederich Merzs conservative victory and coalition government plans. The underperformance of the far-right AfD further reassured markets, reducing immediate political risks. Despite earlier concerns, the euro has gained over 1% in February. However, longer-term risks remain if economic or immigration policies fail to stabilize growth. Investors will closely monitor ECB policy signals and economic data for further direction.

EUR/USD is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 63, suggesting the pair might extend its gains since the RSI stays above the midline.

Resistance level: 1.0525, 1.0595

Support level: 1.0445, 1.0385

Nasdaq (US100)，H1

The U.S. equity market, including the Nasdaq, came under pressure as a wave of risk-off sentiment swept through financial markets. Recent U.S. economic data fell short of expectations, dampening investor confidence in the strength of the economy. Adding to market jitters, the Trump administration's renewed tariff threats have further weighed on sentiment, fueling uncertainty across global markets. Looking ahead, all eyes are on Wednesday's Nvidia earnings report, which could be a key catalyst for Nasdaq's next move.

The index has slid by more than 2% in the last session and has broken below form the previous slideways range, suggesting a bearish bias for the index. The RSI has dipped into the oversold zone while the MACD has broken below from the zero line, suggesting that a bearish momentum is forming.

Resistance level: 21750.00, 22000.00

Support level: 21500.00, 21230.00