Currency Outlook March

The below key drivers are likely to impact investor risk sentiment and FX markets in March:

  • US inflation has been stickier than expected, causing global central banks to push back on timeframes for possible interest rate cuts. The European Central Bank and Federal Reserve have said rate cuts could be considered at their respective June meetings.
  • Inflation in the Eurozone is falling but not enough to offset the disappointing economic conditions. With Germany still in recession, prediction of further contraction is causing concern.

Read on for insights into factors affecting the key currencies, or download as a PDF.

EUR Euro

The euro gained strength after the March US jobs report. The ECB pushed back easing rates until June. Germany’s economy faces recession but the Eurozone services sector could show signs of improvement ahead of Easter.

Eurozone inflation continues to fall back towards its 2% target with March 1st CPI print coming in at 2.6% y/y dropping from February’s reading of 2.8%. The fall wasn’t quite as far as many were predicting but markets still expect the European Central Bank (ECB) to cut rates shortly before the US Federal Reserve and many other central banks.

Following its March 7th interest rate decision, ECB President Christine Lagarde indicated that its June 6th meeting will likely be when it will consider easing policy, pushing back on the idea that April could be when we see its first move.

Away from monetary policy, the health of Germany’s economy continues to be a cause for concern. With Germany’s federal parliament (Bundestag) commenting that it expects the country’s economic contraction to continue into the first quarter of 2024, it looks like the country is pushing into technical recession.

There were some reasons to be positive however as the Flash Services PMI for the entire European bloc came in at 50 when released on February 22nd. This was the first time the sector hasn’t contracted since last July.

EURUSD rallied from a low of around 1.07 in early February to get close to 1.10 after the much-anticipated March 8th US jobs data.
Looking ahead, the market hopes the March 21st PMI numbers may finally see some expansion in the services section ahead of the Easter holidays.

Expected ranges:

  • EURUSD 1.08-1.1130
  • EURGBP 0.8450-0.8620

GBP Sterling

A split Monetary Policy Committee (MPC) interest rate vote saw GBP briefly weaken but strong economic data helped it recover. Expectations suggest BoE to maintain policy until August.

Sterling lost ground in February as the Bank of England’s interest rate decision saw Swati Dhingra of its Monetary Policy Committee (MPC) unexpectedly vote to cut rates despite inflation still being well above its 2% target.

She seemed to believe a cut in rates was warranted despite cost pressures remaining elevated. However, she was the outlier and the message from the remaining MPC members is that we will have to wait a few more months until we see rates cut from their 16-year high of 5.25%.

Her dissent saw GBPUSD drop from close to 1.28 to around 1.25 at the start of the following week. However, the pound soon regained its ground aided by some solid UK data.

February 16th saw January Retail Sales far exceed expectations and February 22nd saw another good Services PMI print of 54.3. GBPUSD continued to rally in early March and hit its highest level since July last year after the monthly US jobs report prompted a further dollar sell off. GBPUSD came close to 1.29 with GBPEUR also rebounding towards the 1.1750 level in the aftermath of the data.

There could be further gains for the pound should the Bank of England (BoE) continue to favour a hold in policy at its March 21st meeting. The messaging from BoE will be key, with expectations that it will wait until August before it decides to reduce borrowing costs. A lot will hinge on the inflation figure but only a major undershoot is likely to change the messaging from officials.

Expected ranges:

  • GBPUSD 1.26-1.31
  • GBPEUR 1.16-1.1830

AUD Australian dollar

The Australian dollar struggled in February due to global rate expectations and lower commodity prices. Uncertain economic outlook may lead to further pressure. Markets are watching for US economic data for guidance on rate cuts.

The Australian dollar underperformed through February amid changing global rate expectations and falling commodity prices.
the AUD track lower through early February, culminating in a break below US$0.6450 following a surprisingly robust US CPI inflation report.

US inflation through January proved stickier than analysts first estimated, forcing markets to push back the timing and trajectory of rate cuts.
The AUD stayed level amid a string of soft data sets through February and a steep decline in key commodity prices and mediocre domestic economic outlook limited Aussie dollar strength.

The Reserve Bank of Australia (RBA) elected to leave rates on hold. With no meeting until the 19th of March, markets were forced to assess local data sets and adjust expectations. A softer-than-expected inflation print coupled with lacklustre Q4 GDP report has silenced calls for one more rate hike and instead brought forward calls for possible rate cuts.

With the economy in per capita recession, pressure for the RBA to loosen financial conditions will only grow as we move through the year.

We expect the AUD will continue to face pressure and likely fluctuate between 0.64 and 0.66 until a clearer path to US rate cuts emerges.

While domestic data and the global growth outlook will play a role in shaping direction, US and global rates will prove critical. Our attentions remain fixed to US activity, labour market and inflation data for any cues as to the timing and trajectory of Federal Reserve policy change.

Expected ranges:

  • AUDUSD 0.6450-0.6700
  • AUDGBP 0.5100-0.5280
  • AUDNZD 1.0600-1.0800
  • AUDEUR 0.5980-0.6100

NZD New Zealand dollar

In February, the New Zealand dollar weakened against the USD and other currencies due to US inflation and lower commodity prices. Uncertainty persists so markets will be focused on the next few months of US data.

The New Zealand dollar underperformed through February giving up ground to the USD and other key counterparts amid changing global rate expectations and falling commodity prices.

The NZD continued to track lower through early February, culminating in a break below US$0.6100 following a surprisingly robust US Consumer Price Index (CPI) inflation report.

Thanks to stickier US inflation than estimated, the timing and trajectory of rate cuts has been pushed back by central banks.

Lacklustre domestic data and a dovish Reserve Bank of New Zealand (RBNZ) have weighed on NZD upside and ensured the currency remains fairly flat. With hopes of another RBNZ rate hike fading, the NZD slid back below 0.94 against the AUD, below 0.57 against the Euro, 0.48 against the GBP and back toward 90 against the yen. Disappointing results after touching decade highs above 93.
We expect the NZD will continue to face near-term downside pressure and will likely fluctuate between 0.60 and 0.62 until a clearer path to US rate cuts emerges.

While domestic data and the global growth outlook will play a role in shaping direction, US and global rates will prove critical. Our attentions remain affixed to US activity, labour market and inflation data for any cues as to the timing and trajectory of Federal Reserve policy change.

Expected ranges:

  • NZDUSD 0.6050-0.6300
  • NZDGBP 0.4750-0.4920
  • NZDAUD 0.9250-0.9420
  • NZDEUR 0.5580-0.5750

USD United States dollar

The US economy remains strong despite inflation pressure. A blowout job report shifted expectations, delaying potential rate cuts. Markets anticipate a rate reduction in June based on recent data trends.

The US economy continues to perform better than many would have expected given the inflationary pressures it has seen over the past couple of years.

February 2nd saw a blowout Non-Farm Payrolls report showing 353k people were added to the workforce for January far exceeding estimations of around 190k. This led to EURUSD to drop from around 1.09 to around 1.0775 by the end of the day as markets pushed back the expected date of when the Federal Reserve (Fed) would start to cut interest rates from their current 5.5%.

Comments made before the Senate on March 6th and 7th, Fed Chairman Jerome Powell stated that the economy was “not far” from reaching a point that justified an interest rate cut. Markets are expecting a 0.25% reduction in borrowing costs at the June meeting.

March 8th saw the much-anticipated monthly US Non-Farm Payrolls data beat expectations. Wage growth eased and the unemployment rate inched up from 3.5% to 3.7%, adding weight to the argument that a rate cut will be seen in June. There is lot of upcoming US data that could influence the date of this decision, like the US CPI and Retail Sales.

The key event this month will be the Fed’s interest rate decision on March 20th with the messaging from Powell in the statement and press conference the main area of focus.

Expected ranges:

  • DXY 1.08-1.1130

JPY Japanese yen

The Japanese yen weakened in February but dropped to a 3-month low, mid-month. The yen could find more support if Bank of Japan gets bullish and the Federal Reverse gets more dovish.

The Japanese yen traded lower again in February but it wasn’t as bad as January. The USDJPY pair reached a 3-month high in mid-February and was comfortably above 150 in the second half of last month.

Domestically in Japan, the Nikkei 225 surged to 34-year high in February and the momentum extended into March where it surpassed 40,000 points for the first time. This was mainly thanks to soaring values from tech companies, rallying US stock market, and a bullish bet on Japan from traders.

At the time of writing, the market is pricing in a 78.9% chance for a 10-basis point rate increase from the Bank of Japan (BoJ) during its March 19 meeting.

In contrast to the booming equity market, Japan fell into recession in February after the preliminary Q4 GDP showed a shrink of 0.4% (annualised). Japan also lost its third-biggest economy status to Germany, from nominal GDP’s perspective.

With such mixed market conditions and the history of BoJ going against market bets on Japan’s monetary policy, it’s too early to call if the yen will potentially be stronger but it is possible to see the JPY unwinding some losses accumulated since the beginning of 2024, should the Fed give more hints on rate cuts that may happen this year.

Expected ranges:

  • USDJPY 143-149

CAD Canadian dollar

The Canadian dollar weakened in February due to changing central bank policies and lower commodity prices. Bank of Canada held interest rates but no insights for future predictions. Upcoming US data could shed more light.

The Canadian dollar underperformed through February amid shifting central bank policy expectations and falling commodity prices.

Stickier-than-expected US inflation prompted investors to push back the timing and trajectory of Federal reserve rate hikes. The Bank of Canada (BoC) elected to leave rates on hold and offered little to drive a change in analyst expectations.

The Loonie fell below US$0.74 and toward lows near US$0.7350 as subdued oil prices kept a cap on gains. While oil prices continue to improve and correct from December lows, they remain well short of the 2023 highs.

Uncertainty surrounding the Chinese and global economic growth outlook and tensions in the Middle East ensured that prices remain soft across key commodities.

Having touched year-to-date lows just above US$0.7350 the CAD has found some support through early March, pushing back above US$0.74 after a string of softer US data sets.

Cracks have begun to appear in the US labour market and consumer sentiment is faltering putting some pressure on the Federal Reserve’s Open Market Committee (FOMC) to cut rates early and opening the door for an extended CAD rebound.

Like most regions, attentions remain affixed to US activity, labour market and inflation data for any cues as to the timing and trajectory of Federal Reserve policy change.

Expected ranges:

  • CADUSD 0.7300-0.7480
  • CADGBP 0.5700-0.5850
  • CADEUR 0.6700-0.6900

SGD Singapore dollar

In February, the Singapore dollar held steady against the US dollar, trading within a narrow range. Mixed domestic economic data and US inflation levels influenced market movements.

February was a steady month for the Singapore dollar with the USDSGD pair mainly traded in a relatively tighter range of 1.34-1.35, and the SGD finished the month only marginally lower.

The consolidation in FX market was largely due to a lack of important economic data release and central bank actions. Having said this, the SGD did drop to a 3-month low in mid-February off the back of still elevated core inflation level in the US.

In February, domestic economic condition printed a mixed picture. Q4 GDP picked up to 1.2% q/q from 1%, but slightly lower than the expected 1.4%. Meanwhile, both headline and core inflation cooled down in January, bringing the headline inflation rate y/y to 2.9%, first time below 3% since Sep 2021.

In March, signals from the Fed will be a key factor to watch as well as local inflation level in Singapore.

Expected ranges:

  • USDSGD 1.3100-1.3500

HKD Hong Kong dollar

In February, the Hong Kong dollar remained stable against the USD but dipped slightly towards month-end. Government measures supported the property market amidst economic challenges. Future strength depends on local economic recovery and Fed’s stance.

The Hong Kong dollar held its strength well in February, only down by less than 0.2% against the USD. It fell to a 4-month low near month end, but the USDHKD pair remained under 7.83 level.

In February, local government released some significant measures to support its property market such as scrapping additional stamp duty for non-permanent residents and easing mortgage lending rules. Against the backdrop of slowing economy where inflation has dropped to sub 2% level (from 2.4% to 1.7%), Q4 GDP q/q was only 0.4%, and PMI remained under 50, these measures were welcomed by the market.

However, the HKD did show a downward trend against the USD despite of the support from still elevated Hong Kong Interbank Offered Rate (HIBOR) rates and rising local stock market, hence whether the local economy can see some signs of bounce back would be one of the main factors that may affect HKD strength in March. But the HKD is unlikely to be under more pressure should the Fed deliver a relatively dovish stance for future interest rate path.

Expected ranges:

  • USDHKD 7.8000-7.8300

IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. OzForex Limited (trading as “OFX”) and its affiliates make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog.

Written by

Jake Trask


As a Senior Corporate Client Manager, Jake and his team manage a diverse portfolio of 250 businesses, offering tailored solutions to meet their varied foreign exchange needs. He enjoys unravelling the complexities of foreign exchange dynamics, constantly striving to provide clients with the most informed insights and strategies to navigate these fluctuations successfully.

Written by

Julia Gao


Fluent in Mandarin and English, Julia brings a profound understanding of market intricacies, client needs, and banking sector dynamics to her role. Her expertise is focused on the primary currencies in the Asia Pacific region, where she provides market insights to her team and a wider audience. She contributes to OFX’s Currency Outlook each month, focusing on currencies such as the Singapore dollar, Hong Kong dollar, and Japanese yen.

Written by

Matt Richardson


As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.