As we approach the end of March, markets are navigating a tight range, caught between month-end flows and the looming April 2nd tariff decision. Currency markets are generally mixed this morning, reflecting a cautious tone and limited conviction.

Market Overview

• EUR/USD: Down 0.06%, with price action subdued and range-bound. 
• USD/CAD: Lower by 0.06%, nearing its lowest close since February 21st. 
• GBP/USD: The main mover today, down 0.42%, pressured by softer UK inflation data.

Key Drivers

Tariff Uncertainty Locks Markets in Place

• With the April 2nd tariff deadline fast approaching, the market remains tentative and reactive, leading to stalled momentum and tight trading bands.
• A lack of clarity continues to frustrate traders, with few details emerging from policymakers.
• A brief comment from President Trump yesterday noted that Mexico and Canada have "stepped it up a lot"—though context was lacking, markets are hopeful for a more constructive outcome for both countries.

Sterling Slides on Softer UK Inflation

• UK headline inflation eased to 2.8% in February from 3.0% in January, matching the Bank of England’s forecast.
• Core inflation also cooled to 3.5%, while services inflation held steady at 5.0%.
• This supports the BOE's stance of reducing rates “gradually and carefully,” and the market continues to price in one to two rate cuts in 2025.
• The softer data contributed to Sterling's slide this morning.

EUR/USD: Balancing Act Continues

• The euro remains in a buy-the-dip mode, though strong U.S. corporate demand and month-end asset manager flows are expected to support the dollar, potentially capping gains in EUR/USD.
• The pair continues to trade within a well-defined range, awaiting a clearer catalyst.

USD/CAD: Edging Lower in a Tight Band

• USD/CAD is down modestly but on track for its lowest daily close since February 21st, suggesting a slow grind lower.
• While there's no major domestic data catalyst, tariff speculation and USD flows remain the dominant themes.

Looking Ahead

All eyes remain on comments out of the Trump administration regarding tariffs, with the market eager for any hint of future direction. Until then, range-bound trading and choppy flows are likely to persist, driven more by positioning than new data.