The Bank of Japan is widely expected to keep the policy rate steady at 0.75% tomorrow. The central bank will also release the quarterly outlook report where inflation is expected to be revised higher, while growth lower due to the US-Iran war. There were some speculations a couple of weeks ago that the BoJ could have hiked already in April, but the macro conditions were never really there. In fact, despite the third consecutive year of wage growth above 5%, inflation hasn’t shown any sign of re-acceleration. On the contrary, it’s been trending downwards since last year.The strong decline in headline inflation in recent months has been attributed to government subsidies for electricity and gas but the Core-Core CPI, which excludes food and energy prices, has been slowing steadily as well. It’s still above the BoJ’s 2% target (currently at 2.4%), but not really screaming for urgent hikes.BoJ Governor Ueda recently said that the US-Iran war could increase inflation but also weigh on growth. Moreover, he added that it’s an extremely difficult challenge to deal with negative supply shocks through monetary policy which impacts primarily demand. This shows that the BoJ is not eager to adjust interest rates at all.Nonetheless, we can expect the central bank to keep its tightening bias but not pre-commit to anything at this point in time. There are some expectations that the BoJ could lay the groundwork for a rate hike in June. It’s more likely they adopt a “wait and see” approach to see how the US-Iran stalemate and the economic data evolves before the next meeting.The market is pricing in a 50% probability of a rate hike in June and a total of 45 bps of tightening in 2026. If we get a clear signal of a June hike, we will likely see a short-term rally in the Japanese yen across the board. On the other hand, a neutral BoJ will likely continue to weigh on the yen.The market reactions will be much stronger in case the BoJ delivers a surprise rate hike tomorrow or closes the door on a June hike. This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source 💡 DMK Insight The Bank of Japan’s decision to maintain a steady policy rate at 0.75% could signal a cautious approach amid rising inflation and geopolitical tensions. With inflation likely to be revised higher, traders should keep an eye on how this affects the yen’s strength against major currencies. If the outlook report indicates a significant inflation uptick, it could lead to volatility in forex pairs like USD/JPY. Additionally, the downward revision in growth forecasts due to the US-Iran war might prompt investors to reassess risk exposure in Japanese assets. Watch for any comments from the BOJ that might hint at future policy shifts, especially if inflation pressures continue to mount. The market’s reaction to the report could set the tone for the yen in the coming weeks, particularly if it breaks key support or resistance levels. Here’s the thing: while the mainstream narrative focuses on inflation, the potential growth slowdown could be a hidden risk that traders need to factor into their strategies. Keep an eye on the quarterly outlook for any surprises that could shake up the market. 📮 Takeaway Watch for the BOJ’s quarterly outlook report; any significant inflation revisions could impact USD/JPY and trigger volatility in the forex market.

It will be a busy week for the FX market in terms of economic events, but it will start slow with nothing significant on the calendar for Monday. That said, the market will pay attention to any developments from the conflict in the Middle East. On Tuesday, the focus will be on the Bank of Japan monetary policy announcement and its core CPI y/y. In the U.S., we’ll get Conference Board consumer confidence and the Richmond manufacturing index. On Wednesday, Australia will release inflation data, the Bank of Canada will hold its monetary policy meeting, and the U.S. will get the highly anticipated FOMC decision. Thursday brings monetary policy announcements from the Bank of England and the European Central Bank. In addition, the U.S. will release its advance GDP q/q, the core PCE price index m/m, the employment cost index q/q and the unemployment claims figures. On Friday, Japan will publish the Tokyo core CPI y/y while in Europe most markets will be closed for Labor Day. At this week’s BoJ meeting, the consensus leans toward further tightening, although analysts note that the backdrop is less straightforward than it was a few months ago. Inflation has started to ease, particularly the headline CPI, but this may be temporary and largely reflective of government energy support measures. Beyond that, underlying price pressures remain a concern. The Bank will continue to monitor wage growth closely. With another round of Shunto negotiations delivering pay increases above 5%, policymakers see stronger evidence that inflation is being supported by sustained income gains rather than temporary factors alone. Economic growth remains modest and appears to be losing some momentum, partly due to energy-related shocks. However, this is not yet seen as a reason to halt tightening. Even though the April meeting could still bring a rate hike, the most likely outcome is that policymakers will keep rates unchanged for now, while maintaining a hawkish tone, as they wait for clearer signals from oil prices, currency movements, and broader financial conditions. Analysts from Wells Fargo expect a rate hike at the June meeting and at least one more until end of the year bringing the rate to 1.25%. However, there are upside risks to that rate level if the yen remains weak or energy costs continue to rise. Conversely, a de-escalation in the Middle East could support a slower pace of tightening. In Australia the consensus for the CPI m/m is 1.3% vs prior 0.0%; for the CPI y/y it’s 4.8% vs 3.7% and the trimmed mean CPI m/m is expected at 0.3% vs 0.2% previously. Inflation data for Australia is expected to run hot with the Middle East tensions remaining the main driver. Even though the effects were limited in the March data, it will be different for this month’s figures and the impulse is still building. The impact will likely be more widespread in the June quarter and over the remainder of the year. Westpac analysts stress that underlying inflation is also holding firm. Trimmed mean CPI is projected near 0.9% q/q, keeping the annual pace in the mid-3% range. While core measures tend to react more gradually, they’re not insulated from rising energy costs, and momentum is expected to strengthen through the second half of the year. In short, Q1 likely marks the beginning of a renewed inflation push rather than the peak and markets are looking for firmer price pressures ahead.The BoC is widely expected to keep rates on hold at this week’s meeting as it balances rising inflation against still-manageable economic conditions. Markets will focus on policymakers’ assessment of the recent pickup in prices, with headline inflation likely to move back above the 1-3% target band in April, driven by higher energy costs. The Bank will need more data before making any policy adjustments and is likely to remain in a wait-and-see mode for now. Energy-driven inflation is largely beyond its control, and given the lag in policy transmission, the focus will remain on the medium-term outlook. As long as core inflation and expectations stay contained, there is scope for patience despite higher fuel costs. Inflation expectations have edged up slightly, but softer core trends provide some offset. Growth remains broadly in line with forecasts, and while the labour market is stabilizing, it is not tight enough to generate significant inflationary pressure. ING analysts expect the BoC to keep rates steady through 2026, though the market is generally pricing a 25bps hike by year’s end. At this week’s meeting, the ECB is expected to keep rates on hold. The decision comes shortly after the release of key data on growth, inflation, and employment. The Bank is likely to adopt a wait-and-see approach before making any further policy moves. As in other regions, higher energy costs in Europe are expected to push up headline inflation. The key question is whether these pressures begin to feed into core prices, although any spillover effects may take time to materialize. On the growth side, Q1 GDP will provide a snapshot of the economy before the surge in energy prices in March. Early indicators suggest that momentum has softened, so after a relatively resilient 2025, this year may be starting on a weaker footing.Turning to the BoE, expectations are for rates to remain unchanged at 3.75%. The Bank is likely to highlight the impact of the energy shock, which is contributing to higher inflation alongside weaker growth. For now, the bar for further tightening remains high. Wage growth is still relatively subdued, and the recent dip in unemployment appears to reflect lower labour force participation rather than a meaningful improvement in hiring, Wells Fargo analysts said. Inflation pressures have picked up, but are largely driven by fuel prices. The recent improvement in activity data may reflect short-term front-loading ahead of expected price increases rather than sustained momentum. Overall, policy is likely to remain on hold through 2026, with rates already close to the upper end of the BoE’s estimated neutral range. Risks remain slightly tilted toward

ECB policymakers have made it quite clear that they are valuing optionality as we approach the next policy decision this week. And markets are also listening, paring back on rate hike pricing with odds of such a move now seen at ~20% only. Those odds do jump back up to ~63% by the time we get to the June meeting though. And for the year itself, traders are pricing in ~58 bps of rate hikes for the time being.That translates to about two 25 bps rate hikes to follow and is the base case scenario that Goldman Sachs is eyeing as well.The firm argues that the ECB will not have much appetite to move this week, considering that Middle East developments remain unresolved. That as policymakers will also want to keep their options open in weighing the second round effects on inflation.”Governing Council members have signalled that they do not need to rush into a decision, and a hold at next week’s meeting is therefore highly likely. That said, the communication has consistently flagged that inflation risks remain to the upside and that the ECB needs to act if signs of inflation persistence emerge.The tone of the press conference is likely to mirror the recent communication, with President Lagarde noting that the Governing Council will watch for second-round effects and stands ready to act to ensure inflation returns to 2% over the medium-term.”On future policy steps, Goldman Sachs sees the ECB delivering two 25 bps rate hikes in the months ahead. The first being in June with the next in September, in bringing the deposit rate back to 2.50%. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight The ECB’s shift towards valuing optionality is a game changer for traders: here’s why. With rate hike expectations dropping to around 20%, traders should recalibrate their strategies. This signals a potential pivot in monetary policy that could impact the euro and related assets. If the ECB opts for a more cautious approach, we might see the euro weaken against the dollar, especially if U.S. economic data continues to show strength. Watch for key technical levels around the EUR/USD pair; a break below recent support could trigger further selling. But don’t overlook the flip side: if the ECB surprises with a hawkish stance, we could see a rapid reversal in sentiment. The market’s current positioning suggests a lot of complacency, so any unexpected moves could lead to volatility. Keep an eye on the upcoming policy decision and the accompanying press conference for clues on future direction. Traders should monitor the 1.05 level closely for potential breakout opportunities or reversals. 📮 Takeaway Watch the ECB’s policy decision closely; a surprise could shift euro dynamics significantly, especially around the 1.05 level in EUR/USD.

I’d be very careful in trying to read the headlines that are doing the rounds at the moment. There are plenty of sources on social media echoing the same headlines that we’ve seen from earlier here:Iran proposes Hormuz deal without nuclear talks in bid to break US negotiation deadlockThe headlines are along the lines of “Iran reopens Strait of Hormuz without nuclear deal”. That is a very dangerous set of words without any context. So, be wary of that just in case.As a reminder, the main point of the story is that Iran is reportedly proposing to offer a concession to the US in “reopening” the Strait of Hormuz with nuclear negotiations set for a later date. The proposal is meant to try and break the deadlock between the two sides now and argues for nuclear talks to only begin but only after the Strait of Hormuz is reopened and the US lifts its naval blockade.This whole thing is likely why Iran foreign minister Araghchi also visited Oman, to seek discussions in managing traffic and safe transit along the waterway.But as a reminder, control over the Strait of Hormuz is still Iran’s number one leverage against the US at this stage. If they are to so easily give that up, they surely know they would be cornered in any negotiations after. As such, don’t expect this “reopening” to be one that sees movement along the strait return to normal.If anything else, we’re likely to only see a more limited “reopening” and a conditional one where ship traffic is allowed to slowly pick up over time. And even then, we surely won’t see traffic return to what it was before the conflict started.In any case, this “reopening” is also conditional on the US lifting its naval blockade. Otherwise, any “reopening” will quickly be off the table like what we saw before. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight With Iran proposing a Hormuz deal outside of nuclear talks, traders should be cautious about how geopolitical tensions might affect oil prices and broader market sentiment. This move could signal a shift in Iran’s strategy, potentially impacting supply routes and global oil markets, especially if tensions escalate. Traders need to keep an eye on oil futures and related equities, as any disruption in the Strait of Hormuz could lead to volatility. Moreover, the echoing of these headlines across social media suggests a potential for overreaction in the markets. If traders are overly influenced by sentiment rather than fundamentals, we might see exaggerated price movements. It’s worth noting that previous geopolitical tensions in this region have led to sharp spikes in oil prices, so monitoring crude oil levels and any related ETF movements will be crucial. As we look ahead, keep an eye on the $80 mark for WTI crude; a breach could trigger further buying or selling pressure. Additionally, watch for any official responses from the U.S. or other nations, as these could significantly sway market dynamics. 📮 Takeaway Monitor WTI crude around the $80 level for potential volatility; geopolitical tensions in the Strait of Hormuz could impact oil prices significantly.

FUNDAMENTAL OVERVIEWGold has been stuck in a consolidation for almost a month now despite lower real yields, looser financial conditions and a weaker US dollar. The main thing that’s been capping the bullish momentum has been the more hawkish Fed’s stance.This is unlikely to change anytime soon as even if the US-Iran war officially ends and the Strait of Hormuz is reopened, the increase in economic activity might keep inflation higher for longer and force the Fed to hold rates steady. Nonetheless, the reopening of the Strait should give the market a boost in the short-term as it would ease some inflation worries and bring back rate cut expectations. After that though, traders will be focused on economic data and the Fed’s stance. GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that gold continues to consolidate amid the US-Iran stalemate. The natural target for the buyers remains the downward trendline around the 5,000 level. If the price gets there, we can expect the sellers to step in with a defined risk above the trendline to position for a drop into the major upward trendline around the 4,200 level. The buyers, on the other hand, will look for a break to extend the rally into the 5,400 level next.GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we can see the price broke above the minor downward trendline that was defining the pullback. The swing level at 4,772 might now act as resistance. The sellers will likely step in there with a defined risk above the resistance to keep pushing into the 4,552 level. The buyers, on the other hand, will look for a break to increase the bullish bets into the 5,000 level next.GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we can see more clearly the recent price action. We might get stuck in range here between the 4,670 support and the 4,772 resistance. The market participants will wait for a breakout on either side to pick a direction. The red lines define the average daily range for today. UPCOMING CATALYSTSTomorrow we get the US Consumer Confidence report. On Wednesday, we have the FOMC policy decision. On Thursday, we get the US Q1 GDP, the US Employment Cost Index and the latest US Jobless Claims figures. On Friday, we conclude the week with the US ISM Manufacturing PMI. This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source

FUNDAMENTAL OVERVIEWOil prices continue to edge higher amid the lack of progress in the US-Iran negotiations and the Strait of Hormuz closure. The latest reports say that Iran proposed to reopen the Strait of Hormuz if the US blockade is lifted and then hold nuclear talks later. Trump has been insisting on reaching a deal before the US blockade is lifted and the US stock markets making new all-time highs almost daily might not change his position. This could prolong the stalemate and keep oil prices supported. CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that crude oil is now trading above the 93.00 resistance zone after the breakout in the final part of last week. We can expect the buyers to continue to step in around the zone with a defined risk below it to keep pushing into the cycle highs. The sellers, on the other hand, will want to see the price falling back below the zone to pile back in for a drop into the 78.00 support next.CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we can see more clearly the recent price action with the bullish momentum increasing after the break above the downward trendline that was defining the pullback into the 78.00 support. The first target for the buyers should be the swing level around the 105.00 handle. That’s where we can expect the sellers to step in with a defined risk above the handle to position for a drop back into the 93.00 support zone. The buyers, on the other hand, will look for a break to increase the bullish bets into new highs.CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, there’s not much we can add here as from a risk management perspective, the buyers will have a better risk to reward setup around the support zone, while the sellers will need a break below the zone to reopen the door for new lows. The red lines define the average daily range for today. UPCOMING CATALYSTSTomorrow we get the US Consumer Confidence report. On Wednesday, we have the FOMC policy decision. On Thursday, we get the US Q1 GDP, the US Employment Cost Index and the latest US Jobless Claims figures. On Friday, we conclude the week with the US ISM Manufacturing PMI. It goes without saying that the focus remains solely on US-Iran headlines. This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source 💡 DMK Insight Oil prices are climbing, and here’s why traders need to pay attention: The ongoing tensions around the Strait of Hormuz are a significant catalyst for rising oil prices. With Iran signaling a willingness to reopen the strait contingent on lifting the US blockade, the situation remains fluid. This uncertainty can lead to volatility in oil markets, making it crucial for traders to monitor geopolitical developments closely. If negotiations stall or escalate, we could see a sharp spike in prices, especially if key technical levels are breached. For instance, if oil breaks above recent resistance levels, it could trigger buying momentum among both retail and institutional traders. On the flip side, if talks progress and sanctions are lifted, we might see a swift correction in oil prices. Traders should keep an eye on the $80 per barrel mark as a psychological level; a close above this could signal further bullish sentiment. Conversely, a failure to maintain this level could lead to profit-taking and a potential pullback. Watch for news updates and be ready to adjust positions based on the evolving situation. 📮 Takeaway Keep an eye on oil prices around the $80 mark; geopolitical developments could trigger significant volatility in the short term.

The broader market mood remains more cautious so far on the day. European indices are lightly changed while S&P 500 futures are down 0.1% with traders and investors still digesting the latest developments from the Middle East.US-Iran talks continue to stall but there is some hope with reports emerging earlier today that Iran might offer up a concession in “reopening” the Strait of Hormuz before sitting down for nuclear talks. However, that seems to be likely contingent on the US also lifting its naval blockade in the meantime.There was a rehash of the headlines just a little over an hour ago here. And that coincides a little with a slight push lower in the dollar, even as broader risk sentiment is keeping more reserved. EUR/USD is now up 0.2% on the day to 1.1745, sticking with the bounce off the 200-day moving average (blue line) from last week:The chart reaffirms that buyers are still trying to force their agenda, defending the key support level above. That comes after a gap to the downside at the open today, in which the pair started off at 1.1690. So, it’s a decent push higher on the session so far.That being said, we are seeing price action now run into some near-term resistance from the 200-hour moving average at 1.1750. So, buyers are not fully in near-term control just yet.Elsewhere, we are seeing more of the same kind of price movements. AUD/USD also opened with a gap lower at 0.7125 but is now trading up by 0.5% on the day 0.7185. There is some key resistance around the region of 0.7187-00 but a firm break there opens up the path to its highest levels since June 2022 next.Meanwhile, USD/CAD is also dropping by 0.4% to 1.3610 – its lowest level in seven weeks. That comes as oil prices continue to stay underpinned with Brent crude (July contract) up 2.6% to $101.70 while WTI crude is up 2.3% to $96.55 on the day.Even precious metals are also looking cautious, with gold down 0.1% to $4,703 and silver down 0.1% to $75.66 currently.As such, it is only the dollar that is acting a little out of sync here considering the movement in other asset classes. That as the market mood remains more cautious but at least not seen that bad considering that US-Iran talks are still not progressing.As a reminder, we’re now nine weeks into the war in the Middle East and the Strait of Hormuz is still in de facto closure. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight Market sentiment is teetering as geopolitical tensions weigh on indices and futures. With European indices showing little movement and S&P 500 futures down 0.1%, traders are clearly on edge. The ongoing US-Iran talks are a significant factor here. If these negotiations continue to stall, we could see increased volatility, particularly in energy markets, which are already sensitive to geopolitical shifts. Keep an eye on crude oil prices, as any escalation could trigger a spike, impacting related equities and ETFs. Here’s the thing: while the mainstream narrative focuses on the immediate impacts of these talks, the broader implications for market stability are often overlooked. A prolonged stalemate could lead to a risk-off sentiment, pushing investors towards safer assets like gold or US Treasuries. Watch for key technical levels in the S&P 500; a break below recent support could signal further downside risk. For now, monitor the news closely—any breakthrough or setback in negotiations could lead to swift market reactions. 📮 Takeaway Traders should watch S&P 500 support levels closely; a break could signal increased volatility as geopolitical tensions persist.

FUNDAMENTAL OVERVIEWUSD:The US dollar has come under renewed pressure despite the lack of progress in the US-Iran negotiations and the Strait of Hormuz closure. What has been weighing on the greenback to start the week was the news saying that Iran proposed to reopen the Strait of Hormuz if the US blockade is lifted and then hold nuclear talks later. This constant push towards a diplomatic resolution instead of another full-fledged war has been supporting the risk sentiment on expectations that a deal would be reached eventually. On Wednesday, we have the FOMC policy decision and although the Fed is expected to keep everything unchanged amid the US-Iran uncertainty, there’s a risk of a more hawkish leaning due to resilient US data and the elevated energy prices. A neutral Fed shouldn’t bring much volatility, but a more hawkish one could give the US dollar a significant boost given the recent selloff.INR:On the INR side, the US-Iran stalemate led to another selloff with the Indian Rupee erasing all the gains since the start of the month. The currency will likely remain under pressure as long as the situation in the Strait of Hormuz remains unresolved. In the big picture, the Indian Rupee remains on a bearish structural trend against the US dollar, so the dip-buyers will likely look for opportunities around strong technical levels to keep pushing into new highs. USDINR TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that USDINR rose back above the upper bound of the channel opening the door for new highs. The buyers piled in on the break targeting a new record high, while the sellers will now need to wait for the price to fall back below the upper bound to regain some control and target new lows.USDINR TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we can see the break of the resistance around 94.00 handle that should now act as support. If we get a pullback, we can expect the buyers to step in around the support with a defined risk below it to keep pushing into new highs. The sellers, on the other hand, will look for a break to pile in for a drop into the 92.00 handle next.USDINR TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we can see the price broke above the minor counter-trendline today. More aggressive buyers might pile in around these levels with a defined risk below the most recent swing low to keep pushing into new highs, although the risk to reward setup would be better around the support. UPCOMING CATALYSTSTomorrow we get the US Consumer Confidence report. On Wednesday, we have the FOMC policy decision. On Thursday, we get the US Q1 GDP, the US Employment Cost Index and the latest US Jobless Claims figures. On Friday, we conclude the week with the US ISM Manufacturing PMI. This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source 💡 DMK Insight The US dollar’s recent weakness is a signal for traders to reassess their positions. With the US-Iran negotiations stalling and the Strait of Hormuz’s closure, the greenback is facing renewed pressure. This situation could lead to increased volatility in forex markets, especially for pairs involving the USD. Traders should keep an eye on geopolitical developments, as any breakthrough in negotiations could quickly shift sentiment and strengthen the dollar. Additionally, the potential reopening of the Strait could stabilize oil prices, which often correlate with the dollar’s performance. Watch for key technical levels around recent lows, as a breach could trigger further selling pressure. Conversely, if the negotiations progress, expect a swift rebound in the dollar, impacting commodities and other currencies. Look out for economic indicators this week, particularly any US data releases that could influence Fed policy. The market’s reaction to these events will be crucial for short-term trading strategies, especially for day and swing traders looking to capitalize on volatility. 📮 Takeaway Monitor USD pairs closely this week; a breakthrough in US-Iran talks could lead to a significant dollar rebound.

Full report hereAccording to the ECB’s latest Survey on the Access to Finance of Enterprises (SAFE), Eurozone companies faced significantly tighter bank lending conditions and a sharp rise in short-term inflation expectations during the first quarter of 2026. Data revealed that a net 26% of firms reported higher interest rates on bank loans, more than doubling the 12% recorded in the previous quarter. Additional financing costs, such as fees and commissions, also surged for 37% of businesses. While the demand for bank loans remained relatively flat, the actual availability of credit deteriorated slightly, leading to expectations that external financing will continue to decline in the coming months. The general economic outlook remains the primary obstacle to securing finance, a concern now cited by over a quarter of the surveyed firms.The report highlights a concerning disconnect between rising costs and corporate profitability. While wage expectations moderated slightly to 2.8%, non-labor input costs (driven largely by energy) are expected to jump to 5.8%. Consequently, firms have raised their selling price expectations to 3.5% for the year ahead. Much of this inflationary pressure is attributed to the ongoing US-Iran war, which has notably increased input cost concerns for firms interviewed later in the survey period. While short-term inflation expectations rose to a median of 3.0%, long-term views remained anchored at the same level, though a growing majority of firms now perceive upside risks to those long-term figures.Despite the tightening financial environment, business sentiment regarding future activity remains cautiously optimistic. Current turnover was broadly unchanged, and profitability continued to slide for a net 16% of companies. However, a net 29% of firms expect turnover to improve in the next quarter, and there is a modest anticipated uptick in investment despite current levels falling below previous forecasts. The ECB has already closed the door for a rate hike in April but the June meeting remains live. The market is currently pricing in a 60% probability of a rate hike in June with a total of 56 bps of tightening expected by year-end. This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source 💡 DMK Insight Tighter bank lending in the Eurozone is a red flag for traders: here’s why. The ECB’s latest SAFE report shows a net 26% of firms are feeling the pinch from rising interest rates. This tightening could signal a slowdown in business investment, which often leads to weaker economic growth. For traders, this means keeping an eye on Eurozone equities and the euro itself, as both could face downward pressure if companies scale back on spending. Moreover, rising short-term inflation expectations complicate the picture, potentially prompting the ECB to maintain or even increase interest rates to combat inflation, which could further strain borrowing conditions. Look for key technical levels in the euro against the dollar; a break below recent support could trigger a wave of selling. Also, monitor related markets like bond yields, which might react to these lending conditions. If yields rise, it could indicate that investors are pricing in a more aggressive ECB stance, impacting both forex and equity markets. Watch for any comments from ECB officials in the coming weeks that might provide clarity on their policy direction. 📮 Takeaway Traders should watch for a potential euro decline if it breaks below key support levels, driven by tighter lending and rising inflation expectations.