In the foreign exchange market for the week that ended on March 9th, the euro and pound rose sharply against the dollar. The yen also strengthened against the dollar as expectations of an interest rate hike by the Bank of Japan (BOJ) mounted.

After the weaker-than-expected U.S. employment figures pushed the USDJPY down to as low as 146.95 yen, the pair rebounded to the 148 yen range based on expectations that the situation in the Russia-Ukraine conflict may improve and reports that the current trade friction may be alleviated.

March 3 (Mon)

Following the heated exchange between U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky this past weekend, European Union leaders announced plans to form a voluntary coalition called "Europe Plus" to bolster Ukraine's security. Accordingly, the euro buying became dominant as German bond yields rose.

The EURUSD rallied from the 1.04 range to touch the 1.05 range. The GBPUSD also reached the 1.27 range. The USDJPY briefly reached the 151 yen range but mostly fluctuated in the lower 150 yen range.

March 4 (Tue)

The USDJPY seesawed throughout the day. President Trump criticized Japan and China for leading their own currencies to weaken and insisted on the possibility of imposing tariffs. After continued yen buying momentum pushed the pair down to the 148.6 yen range, the pair rebounded to the 149.8 yen range as traders bought back the dollar.

The EURUSD fluctuated steadily, rising to the 1.06 range. The GBPUSD also rose to the 1.279 range.

March 5 (Wed)

During the Tokyo trading session, BOJ Deputy Governor Shin'ichi Uchida delivered a speech that came as no surprise. Meanwhile, in the New York session, President Trump addressed a joint session of Congress. However, both had limited impact on the market. The much weaker than expected ADP employment report for February pushed the USDJPY down to the 148.3 yen range.

The German ruling parties agreed to ease government debt limits. Accordingly, German bond yields spiked, fueling the buying momentum for the euro. The EURUSD rose to the 1.079 range, while the GBPUSD reached the 1.28 range.

March 6 (Thu)

The USDJPY briefly rebounded to the 149.3 yen range from the previous day's plunge. However, it fell back to the 147.3 range. In the annual spring wage negotiations, the Japanese labor union demanded a more than 6% wage increase. The highest demand in 32 years fueled speculation of another BOJ rate hike.

As expected, the European Central Bank (ECB) Governing Council cut interest rates by 25 basis points. This announcement lowered expectations for a rate cut before the end of the year. The EURUSD stayed above the 1.08 level, while the GBPUSD hovered around the 1.29 level.

March 7 (Fri)

The USDJPY fluctuated sharply. The pair fell as low as 146.95 yen on the weak U.S. employment data for February. However, the pair then rebounded to around the 148.20 yen level on growing expectations that the situation in the Russia-Ukraine conflict may improve, reports that trade tensions may be alleviated, and Federal Reserve Board (FRB) Chairman Jerome Powell's statement that the central bank would not rush to cut interest rates.

The EURUSD rose to the 1.088 range, and the GBPUSD strengthened to the lower 1.29 range.

March 10 (Mon)

• 23:50 Japan: October-Deceember quarterly real gross domestic product (revised GDP)

March 12 (Wed)

• 12:30 U.S.: February Consumer Price Index (CPI)
• 12:30 U.S.: February Consumer Price Index (CPI core index)

March 14 (Fri)

• 07:00 U.K.: January monthly gross domestic product (GDP, month-on-month data)

The following currency pair charts are analyzed using an overlay of the ±1σ and ±2σ standard deviation Bollinger Bands, with a 20-period moving average.