IC Markets Global – Europe Fundamental Forecast | 26 March 2026
What happened in the Asia session?
Markets react strongly to optimism around a US-proposed 15-point plan for a US-Iran ceasefire, which eased fears of escalation in the Middle East conflict. This led to a sharp drop in oil prices, boosting Asian equities across major indices like Hong Kong’s Hang Seng (+2.8%), South Korea’s Kospi (+2.7%), Japan’s Nikkei 225 (+1.4-2.9%), Australia’s S&P/ASX 200 (+1.9%), and others, with standout performers including AIA Group, SK Hynix, and Tokio Marine Holdings amid reports of Berkshire Hathaway interest.
What does it mean for the Europe & US sessions?
Today’s European and U.S. trading sessions are being shaped by a somewhat de‑escalating U.S.–Iran narrative that is supporting equities and calming oil‑price fears, alongside a fresh wave of inflation and business‑confidence data in Australia, the UK, and Germany that will test the current “soft‑landing with mild inflation” narrative; against this backdrop, traders are watching how durable the risk‑on move is, while positioning for swings in the dollar, long‑dated yields, and energy‑linked currencies as the Fed‑speaker calendar and weekly oil‑inventory data loom in the background.
The Dollar Index (DXY)
Key news events today
Unemployment Claims (12:30 pm GMT)
What can we expect from DXY today?
The US dollar is holding near multi‑month highs versus major currencies, supported by its safe‑haven status amid the ongoing Middle East conflict and still‑relatively‑high US yields after the Federal Reserve signaled only one rate cut in 2026.
Central Bank Notes:
- The Federal Open Market Committee (FOMC) is widely expected to hold the federal funds rate target range steady at 3.50%–3.75% at its March 17–18, 2026, meeting, amid rising oil prices from the US-Israel war against Iran and persistent inflation pressures, delaying any 2026 cuts potentially to September.
- The Committee continues to pursue maximum employment and 2% inflation goals, with the labor market weakening further as nonfarm payrolls declined by 92,000 in February 2026 and the unemployment rate rose to 4.4% from 4.3% in January.
- Officials face tilted risks from geopolitical tensions, elevated oil prices, and sticky inflation, with CPI steady at 2.4% year-over-year in February 2026, headline PCE at 2.8% in January, and core PCE rising to 3.1%.
- Economic activity has cooled after robust Q4 2025 growth of nearly 5%, with the Atlanta Fed GDPNow now estimating Q1 2026 growth at around 2.1%–2.7% amid softer consumer spending and labour data.
- December 2025’s Summary of Economic Projections forecasts 2025 unemployment at a median of 4.5%, 2026 GDP growth at 2.3%, and core PCE at 2.5%, with the dot plot signalling one more cut in 2026 to a median 3.4% funds rate; March updates may reflect softer labor and inflation upticks.
- The Committee maintains its data-dependent stance amid a softening labor market, inflation above target, and new oil shocks, likely holding rates at 3.50%-3.75% with ongoing divisions and possible hawkish dissents on rate cuts.
- The FOMC continues its adjusted quantitative tightening, with Treasury rolloff caps at $5 billion per month and agency MBS at $35 billion per month to ensure ample reserves post-2025 program adjustments.
- The next meeting is scheduled for 28 to 29 April 2026.
Next 24 Hours Bias
Weak Bearish
Gold (XAU)
Key news events today
Unemployment Claims (12:30 pm GMT)
What can we expect from Gold today?
Gold is recovering ground on Thursday, 26 March 2026, trading near 4,500–4,530 USD per ounce after a notable correction earlier in March driven by a stronger U.S. dollar, profit‑taking, and institutional rebalancing. Despite the recent dip, prices are still sharply higher year‑on‑year, reflecting ongoing safe‑haven demand amid Middle East tensions and inflation concerns.
Next 24 Hours Bias
Medium Bullish
The Euro (EUR)
Key news events today
No major news event
What can we expect from EUR today?
The euro is trading in a tight range, supported by an underlying recovery narrative in the euro‑area economy and cautious‑hawkish guidance from the ECB, but restrained by elevated geopolitical risk, delayed EU‑energy‑policy votes, and the ongoing shadow of higher‑for‑longer rate‑path uncertainty.
Central Bank Notes:
- The Governing Council of the ECB is widely expected to keep the three key interest rates unchanged at its 18–19 March 2026 meeting, holding the main refinancing rate at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%. This stance continues to support medium-term price stability, with inflation stabilizing near the 2% target amid resilient growth and balanced risks. Market odds show a 99% probability of no change, reflecting caution over global trade uncertainties and US policy under President Trump.
- Price dynamics remain stable close to the 2% target. Headline HICP inflation eased to around 1.7% in January 2026, with base effects and a strong euro supporting further moderation toward 1.9% for the year. Core and services inflation continue to moderate, bolstered by anchored expectations despite some sticky components.
- Updated Eurosystem staff projections for March 2026 are expected to show headline inflation at 1.9% in 2026, 1.8% in 2027, and stabilizing at 2% by 2028, with balanced risks from trade tensions offset by fiscal support. Recent data revisions have slightly raised prior forecasts, but a stronger euro imports deflationary pressures.
- Euro area GDP growth remains resilient, with Q1 2026 surveys pointing to a 0.3-0.4% qoq expansion, aligning with annual forecasts of 1.2-1.4% through 2027. Public investment in defence and infrastructure, alongside low unemployment, underpins activity despite softer consumption and trade headwinds.
- The labour market stays robust, with unemployment holding near 6.4% at historic lows into early 2026, supported by rising participation and real wage growth. Credit conditions remain supportive for household spending and business investment.
- Business sentiment reflects caution from US tariffs and geopolitical risks, tempered by easing supply chains, a weaker euro aiding exports, and fiscal measures boosting domestic investment.
- The Governing Council will continue its data-dependent, meeting-by-meeting approach, closely monitoring inflation trends, transmission, and external uncertainties without signalling a preset path.
- Balance sheet normalization proceeds steadily, with APP and PEPP reinvestments ended and portfolios reducing at a controlled pace, showing no liquidity strains.
The next meeting is on 30 to 31 March 2026
Next 24 Hours Bias
Medium Bearish
The Swiss Franc (CHF)
Key news events today
No major news event
What can we expect from CHF today?
The Swiss Franc holds firm near recent peaks (USD/CHF ~0.79, EUR/CHF ~0.90) driven by persistent Middle East geopolitical risks boosting safe-haven flows, following the SNB’s March 19 decision to maintain 0% rates while ramping up FX intervention rhetoric to counter excessive gains; low inflation (0.1%) and 1% GDP growth forecasts underscore a cautious outlook, with analysts like Barclays expecting ongoing strength despite potential SNB action.
Central Bank Notes:
- At its monetary policy assessment on 19 March 2026, the Swiss National Bank (SNB) is widely expected to leave the policy rate unchanged at 0%, continuing the extended pause since September 2025, as the Governing Board assesses current settings as adequate to maintain inflation near the target without resorting to negative rates.
- Inflation data since December indicate persistent weakness, with headline CPI hovering around 0% year-on-year through early 2026 and core measures subdued at roughly 0.4%, underscoring limited price pressures and lingering, though contained, deflation risks.
- The SNB’s updated conditional inflation forecast shows minimal change from December, with averages of about 0.2% in 2025 (now complete), 0.3% in 2026, and 0.6% in 2027 under a steady 0% policy rate. However, recent flat CPI readings may slightly lower near-term expectations, preserving scope for further easing if needed.
- Global conditions remain challenging, marked by U.S. tariff escalations under President Trump, subdued external demand, and uncertainties in major export markets such as Europe and the U.S., prompting the SNB to exercise caution despite resilient Swiss domestic activity.
- Sentiment in manufacturing and export sectors stays soft amid franc appreciation and weaker foreign orders, squeezing margins. Yet, overall GDP growth is expected to be around 1.5% in 2026, with unemployment edging up modestly from historic lows.
- The SNB reaffirms its readiness to intervene via rate cuts or FX operations should deflationary pressures intensify, while emphasizing clear communication through detailed meeting minutes and coordination with global partners on currency matters.
The next meeting is on 18 June 2026.
Next 24 Hours Bias
Medium Bearish
The Pound (GBP)
Key news events today
No major news event
What can we expect from GBP today?
The British Pound (GBP) has shown resilience amid volatility, buoyed by recent hawkish signals from the Bank of England (BoE). Following the BoE’s March meeting, where policymakers unanimously held rates at 3.75% but signaled potential hikes to combat inflation risks from Middle East tensions and elevated energy prices, GBP/USD rallied earlier in the week toward 1.3460 before stabilizing around 1.3376-1.3440.
Central Bank Notes:
- The Bank of England’s Monetary Policy Committee (MPC) met on 19 March 2026, maintaining the Bank Rate at 3.75 per cent in a unanimous decision, following the prior narrow 5–4 vote to hold at the 5 February 2026 meeting. This pause reflects a sharp reversal from earlier market expectations of a 25-basis-point cut, driven by a Middle East conflict sparking global energy and commodity price surges. The March meeting did not include a Monetary Policy Report, with the next one due in April.
- Quantitative tightening (QT) proceeds unchanged at the 2025 pace of gilt holdings reductions, maintaining gradual balance-sheet normalization attuned to liquidity conditions and supportive of a restrictive stance amid new shocks.
- Headline CPI inflation faces near-term upside from the energy shock, reversing prior disinflation trends in domestic prices and wages; pre-shock services inflation had eased but now contends with higher utility and input costs, keeping pressures above the 2 per cent target. MPC projections will update in April, but analysts see inflation at 3-4 per cent by the end of 2026.
- UK growth softens further into Q2 2026, with unemployment risks rising amid potential confidence drops, higher precautionary saving, and widening output gaps; regular pay growth had cooled pre-shock but now faces business cost pass-through.
- Global headwinds intensify via Middle East conflict, driving volatile energy/commodity prices and sterling/gilt swings; MPC deems direct shocks manageable if demand weakens sufficiently to limit second-round effects.
- Inflation risks now tilt upside from energy persistence and potential wage/cost embedding, offset by downside from demand slack and job losses; prior balance has shifted amid uncertainty on shock duration.
- The MPC adopts a wait-and-see posture post-shock, with policy deemed somewhat restrictive pre-event; all members are ready to act data-dependently for 2 per cent sustainability, eyeing April for fuller impact analysis and possible easing if disinflation resumes. Governor Bailey’s guidance stresses close monitoring without firm-cut commitments.
- The next meeting is on 30 April 2026.
Next 24 Hours Bias
Medium Bearish
The Canadian Dollar (CAD)
Key news events today
No major news event
What can we expect from GBP today?
The Canadian Dollar weakened against the USD, with USD/CAD trading near recent highs (1.37+ range), driven by declining oil prices as Middle East tensions eased and ongoing U.S.-Canada trade risks, including tariff threats, weighed on sentiment despite constructive bank outlooks for a gradual CAD recovery later in the year amid stabilizing commodities and policy caution.
Central Bank Notes:
- The Governing Council held the overnight rate target steady at 2.25% at its 25 March 2026 meeting, aligning with consensus forecasts and extending the pause in policy adjustments amid balanced risks. The Bank emphasized persistent global uncertainties from Middle East conflicts and U.S. trade policies under President Trump, but affirmed the current stance supports ongoing disinflation without immediate shifts despite elevated energy price volatility.
- U.S. tariff threats and regional geopolitical tensions continue weighing on business sentiment, though Canadian manufacturing PMI has edged higher into expansion territory, with export orders firming on energy demand. Goods exports, led by crude oil, sustained momentum into February, offsetting cautious capex as firms prioritize resilience over aggressive growth.
- Economic growth carried into Q1 2026 at an annualized pace of around 2.2%, building on Q4 2025’s solid performance, fueled by resource exports, government outlays, and manufacturing rebound. February preliminary data points to steady expansion, though winter weather and supply chain frictions modestly curbed potential upside.
- Services sector PMI climbed further above 50, with broad gains in tech, hospitality, and business services; consumer-facing areas showed tentative improvement as real wages rose, though high service costs still restrain discretionary outlays. The Bank sees this diffusion as evidence of rebalancing toward sustainable activity.
- National housing resales ticked up in January-February alongside modest price gains, buoyed by stable rates and improved affordability in select regions, while inventory buildup in urban centers prevents excessive tightening. Officials anticipate continued moderation, aided by prudent mortgage rules amid steady household formation.
- Headline CPI eased to about 2.1% year-over-year in February 2026 estimates, staying within the control band, as core gauges like CPI-trim and median dipped to near 2.7% on softer food and durable goods pressures—despite sticky shelter costs. This reinforces the Bank’s view of inflation sustainably approaching the target.
- Policymakers reiterated that 2.25% remains well-calibrated to anchor 2% inflation and foster adjustment, with no cuts signaled barring downside surprises in growth or prices. Attention now turns to Q2 durability, core inflation persistence, and evolving trade/geopolitical clarity.
- The next meeting is on 23 April 2026.
Next 24 Hours Bias
Wea Bearish
Oil
Key news events today
No major news event
What can we expect from Oil today?
oil markets edged higher with WTI nearing $91 and Brent above $102 as US-Iran war diplomacy faltered, sustaining Strait of Hormuz disruptions and supply risks despite OPEC+ production boosts and strategic reserve releases; BlackRock’s CEO flagged potential $150 spikes and recession fears, capping a month of 40% gains driven by geopolitical premiums
Next 24 Hours Bias
Medium Bullish
The post IC Markets Global – Europe Fundamental Forecast | 26 March 2026 first appeared on IC Your Trading Edge | Official Blog.