Navigating the forex markets requires staying ahead of critical economic data and geopolitical events. This week, Forex Week Ahead market analysis, all eyes are on US inflation figures and the RBNZ‘s interest rate decision, set against the backdrop of Trump’s new tariffs and rising recession fears. Prepare for potential volatility and make informed trading decisions with our comprehensive analysis.

Key Insights

  • Trump’s tariffs are shaking global markets, increasing recession risks and inflationary pressures.
  • The US CPI data release will be pivotal in shaping Federal Reserve policy expectations
  • The RBNZ is likely to maintain a dovish stance, potentially weakening the New Zealand dollar
  • UK GDP data could offer support to the British pound if it exceeds expectations

Market Overview and Market Drivers

This week promises to be a rollercoaster for forex traders, dominated by the specter of escalating trade wars and crucial economic data releases. President Trump’s unexpected announcement of new tariffs has sent shockwaves through global markets, weakening the US dollar against its major counterparts and triggering a sharp decline in equity markets

The core driver of this market unease is the increased risk of a global recession stemming from these protectionist measures. Economists are now grappling with the potential for “Trumpflation,” where tariffs simultaneously stifle economic activity and fuel inflationary pressures. This creates a complex dilemma for central banks, forcing them to balance supporting growth with controlling inflation.

Adding fuel to the fire is the Atlanta Fed‘s GDPNow model, which is signaling a significant contraction in the US economy. This has intensified recession fears, leading investors to anticipate more aggressive interest rate cuts by the Federal Reserve.

Currencies Analysis

🇺🇸 USD (U.S. Dollar)

The US dollar is currently under pressure due to the uncertainty surrounding Trump’s tariff policies and the potential for a recession. The upcoming CPI data will be critical in determining the Fed’s next move. Higher-than-expected inflation could temper expectations for aggressive rate cuts, providing some short-term support for the dollar. However, the long-term outlook remains bearish if tariffs lead to a deeper economic downturn. The US starts collecting Trump’s 10% tariff, smashing global trade norms impacting global markets. Economists say that President Trump’s wide-ranging new tariffs raise the risk of a recession or stagflation

🇳🇿 New Zealand Dollar (NZD)

The RBNZ’s upcoming interest rate decision is a key event for the New Zealand dollar. The central bank is widely expected to cut rates further, given the dovish tone of its previous meeting and the potential impact of US tariffs on China, New Zealand’s largest trading partner. A clear signal of ongoing monetary easing from the RBNZ could exert additional downside pressure on the NZD. The Reserve Bank of New Zealand will cut interest rates by 25 basis points on April 9

🇨🇳 Chinese Yuan (CNY)

China’s economy faces significant headwinds from the newly imposed US tariffs. The March inflation data will be closely watched for signs of the tariffs’ impact on consumer prices. Retaliatory measures from China could further escalate trade tensions and weigh on the Yuan. Temporary seasonal distortions aside, both CPI and PPI inflation have been too low over the past two years, underscoring the supply and demand imbalance in the Chinese economy.

🇬🇧 British Pound (GBP)

The British pound has shown resilience in the face of global uncertainty. Stronger-than-expected UK data, including Q4 GDP and recent PMI figures, have supported the currency. While the UK is subject to the base 10% US tariff, the Bank of England‘s stance that there is no immediate need for aggressive rate cuts has further bolstered the GBP. Upcoming GDP figures for February will be crucial in determining whether the GBP can sustain its gains.

🇨🇭 Swiss Franc (CHF)

The Swiss franc has emerged as one of the world’s strongest currencies, earning the status of a safe-haven asset. The Swiss franc is likely to remain a safe haven currency sought by investors in times of uncertainty, Swiss National Bank Chairman Martin.

🇨🇦 Canadian Dollar (CAD)

The Canadian dollar is set to edge lower over the coming months as the threat of US trade tariffs remains in place despite an early reprieve. Prime Minister Mark Carney has announced Canada will match Trump’s 25 percent auto tariffs with a levy on vehicles imported from the United.

Upcoming Economic Calendar

April 9, 2025, RBNZ Interest Rate Decision

April 10, 2025, US Core CPI & CPI (March) and US PPI (March)

April 11, 2025, China Inflation Data (March) and UK GDP (February) and US Michigan Consumer Sentiment (April, Prelim)

April 13, 2025, US Retail Sales

The economic calendar is packed this week. US CPI data is the headliner, providing insights into inflationary pressures amid the tariff implementations. Keep a close watch on the RBNZ’s rate decision as it may show market reaction. The upcoming week has a lighter schedule of important events, but the releases are the most important ones in.

📅 Ziwox Terminal, Economic calendar

Pairs of the Week

GBP/USD

Given the mixed signals surrounding the US dollar and the relatively robust UK economy, the GBP/USD pair presents an interesting trading opportunity.

Fundamental Analysis:

The UK’s recent economic data has been surprisingly positive, with Q4 GDP showing moderate growth and March’s composite PMI improving. This suggests that the UK economy is more resilient than initially anticipated. The Bank of England has also adopted a cautious stance, signaling that there is no immediate need for aggressive rate cuts.

However, uncertainties remain, including the potential impact of Trump’s tariffs on global trade and the UK’s economic outlook. The central bank has stressed it will move carefully due to big uncertainties ahead over US trade policy.

UBS sees a changed profile but, for now, is still forecasting that GBP/USD will strengthen to 1.36 at the end of 2025.

Scenario: If the upcoming UK GDP data for February exceeds expectations, it could reduce the odds of a May rate cut by the Bank of England, providing further support for the GBP.

Action: Consider a long position on GBP/USD, targeting a move towards the 1.30 level. Set a stop-loss order to manage risk, as the market might reverse.

Rationale: This trade idea is based on the expectation that positive UK data will outweigh the negative impact of global trade tensions, leading to continued strength in the British pound

Monitor the upcoming economic releases and adjust your strategy accordingly. April has historically been the strongest month for GBP/USD, with the pair seeing an average gain of +0.66% since 1971.

Conclusion

This Forex Week Ahead promises a volatile trading environment shaped by Trump’s tariffs and key economic data releases. Stay informed, adapt to changing market dynamics, and manage your risk effectively. The US isn’t sneezing, the US is hacking off one of its limbs according to UBS Global Wealth Management. Successful SEO leads to high Forex affiliate commissions.

What are your thoughts on the potential impact of tariffs on the forex market? Share your insights in the comments below, and don’t forget to share this post with your fellow traders!

📊Forex live data analysis: Ziwox terminal

Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Trading Forex involves risk, and you should consult with a qualified financial advisor before making any investment decisions.