Forexlive Americas FX news wrap 26 Feb: Trump tariffs on Canada/Mexico starting soon.

• Major US indices close the session mixed
• Nvidia will announce earnings after the close. What are investors expecting?
• Axios: Trump to continue with the tariffs next week on Canada and Mexico
• Deutsche Bank gives up longstanding bearish bias on the euro
• Crude oil settles down $0.31 at $68.62
• Bitcoin trades to the lowest level since November 11
• Trump terminates Venezuela deal
• US sells 7-year notes at 4.194% vs 4.203% WI
• Fed’s Bostic: Inflation is high, but they have seen a lot of progress
• Trump uses the ‘competitor’ code word for China
• Trump: Wants a balanced budget in reasonably short period of time
• Japan top FX diplomat Mimura: Doesn’t see disparity in FX moves and data
• BOE’s Dhingra: Many of the forces that fuelled trade expansion have diminished
• EIA weekly US crude oil inventories -2332K vs +2605K expected
• US January new home sales 657K vs 680K expected
• US copper tariffs are a bizarre strategy but highlight a real shortage
• Lowe’s highlights sluggish US home-related spending
• Canada January advanced wholesale trade +1.8%
• Full text of the US-Ukraine investment deal released. Includes infrastructure and ports
• ForexLive European FX news wrap: Firmer dollar; stocks up awaiting Nvidia earnings
• US MBA mortgage applications w.e. 21 February -1.2% vs -6.6% prior

There was little in the way of economic data in the North American session. US New home sales fell to an annualized sales pace of 657K vs 680K.

• Single family sales -10.5%
• Months of supply at 9 vs 8 prior
• Prices +3.7% y/y to $446,300

All regions except the west saw large drops in new home sales. Home builders were downcast in the most-recent earnings calls.

Canada wholesale trade rose by 1.8%, while the weekly crude oil data showed an unexpected drawdown of -2332K vs an expected build of 2605K.

• Gasoline +369K vs -849K exp
• Distillates +3908K vs -1488K exp

President Donald Trump held a press conference after his cabinet meeting and after an awkward commentary from Elon Musk wearing his “TECH SUPPORT” t-shirt, the President outlined his economic and trade priorities, emphasizing a commitment to balancing the U.S. budget within a relatively short timeframe—potentially within the next one to two years. He reiterated his stance on tariffs, postponing those on Canada and Mexico until April 2, despite previously stating they would proceed in early March. Trump also signaled upcoming 25% tariffs on European autos and other goods, warning that the EU may attempt retaliation. While asserting that the U.S. does not need Canadian lumber, he suggested that many tariffs would remain in place, though not all.

On China, Trump took a mixed approach, calling the country a competitor while also stressing a strong relationship with President Xi. He expressed a desire for China to invest in the U.S. and reciprocated with U.S. investment in China. However, he did not take a firm stance on whether China should refrain from using force to take Taiwan.

A notable immigration policy announcement involved selling a “Gold Card” for $5 million to attract top-tier workers, a plan Commerce Secretary Lutnick suggested could generate up to $1 trillion if 200,000 cards were sold. Trump also underscored the need to double U.S. energy capacity and announced a partnership with Ukraine on rare earth minerals, though he clarified that the U.S. would not provide security guarantees to Ukraine—leaving that responsibility to Europe, a stance that could disappoint President Zelenskiy.

Later in the day, Axios reported that the White House was going to indeed start 25% tariffs on Mexico and Canada in March afterall. We will believe it when we see it, but for now they are back on.

US yields moved lower today with the 10-year yield moving to the lowest level since December 11. The low yield reached 4.245%. Recall that the high yield back on January 13 reached 4.805%.

The two-year yield is down 2.6 basis points or 4.074%. That represents its lowest level since October 25.

The US treasury completed its coupon auctions for the week by successfully selling seven-year notes at 4.194%. That was -0.9 basis points below the WI level at the time of the auction. All three auctions this week, had a negative tail indicative of strong demand. For the 7 year, the domestic buyers were the more aggressive. For the two and 5-year notes auctioned earlier this week.

In the Forex,

EURUSD: The EURUSD solidified a ceiling between 1.0527 and 1.0532 (three separate highs going back to end of January). The high price today reached 1.0528 before rotating back to the downside. Going into the close, the price is trading between its 200-hour moving average of 1.0472 and its 100 hour moving average 1.0486. Moving outside of those moving averages will shift the bias in the direction of the break.

GBPUSD: The GBPUSD has been trading above and below its 100 day moving average at 1.2847 over the last five trading days. Today the price moved higher and away from that moving average peaking at 1.2715. The current price is back down at 1.2673. The buyers made a play today. The price needs to stay above the 100 day moving average if they are to keep control. If the price moves back below that 100 day moving average, I would expect disappointment and the buyers to turn to sellers.

USDJPY: The USDJPY traded above and below its 50% midpoint September 2024 low at 149.22 for the fourth day in a row. The current prices trading at 149.10 tilting the short-term bias to the downside (below the 50% midpoint level. The 100 hour moving average is higher at 149.552 and will be another upside target that would need to be broken and stay broken, to give the buyers some confidence for more upside probing. Today the price tried to extend above that level but failed. On the downside, the low price from December 2024, came in at 148.64. Getting and staying below that level increases the bearish bias.

For other key technical levels and analysis click here: https://www.forexlive.com/technical-analysis

This article was written by Greg Michalowski at www.forexlive.com.