IC Markets Global – Europe Fundamental Forecast | 18 March 2026
What happened in the Asia session?
Today’s Asia session featured hangover effects from the RBA’s hawkish 25bps rate hike to 4.1% (announced March 17), BOJ policy start with steady rates expected, and elevated oil prices over $100/bbl from Middle East tensions, driving volatility in AUD/USD, USD/JPY, crude futures, and gold these instruments saw the sharpest moves as traders weighed inflation risks against growth slowdowns.
What does it mean for the Europe & US sessions?
Escalating Middle East tensions are driving oil prices above $100 per barrel, as Iran’s actions in the Strait of Hormuz and U.S. military responses heighten supply disruption risks and inflation concerns ahead of the Federal Reserve’s two-day meeting starting today. U.S. stock futures are slipping, with the S&P 500 and Nasdaq facing pressure from tech sector declines and broader market worries over energy costs, while recent GDP data showed only 0.7% growth last quarter, missing expectations.
The Dollar Index (DXY)
Key news events today
Core PPI m/m (12:30 pm GMT)
PPI m/m (12;30 pm GMT)
Federal Funds Rate (6:00 pm GMT)
FOMC Economic Projections (6:00 pm GMT)
FOMC Statement (6:00 pm GMT)
FOMC Press Conference (6:30 pm GMT)
What can we expect from DXY today?
The US Dollar traded in a tight range with a slight downward bias, extending losses for a second day as markets awaited the Fed’s policy update amid steady US growth slowdowns and labor stability; Middle East escalations, particularly Iran-related strikes, bolstered its safe-haven appeal despite oil-driven inflation risks pressuring the euro and other currencies, while broader uncertainties around Fed cut timing and global trade probes under President Trump added volatility.
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 near 5%, with the Atlanta Fed GDPNow now estimating Q1 2026 growth at around 2.1%–2.7% amid softer consumer spending and labor 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 signaling 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 Bullish
Gold (XAU)
Key news events today
Core PPI m/m (12:30 pm GMT)
PPI m/m (12;30 pm GMT)
Federal Funds Rate (6:00 pm GMT)
FOMC Economic Projections (6:00 pm GMT)
FOMC Statement (6:00 pm GMT)
FOMC Press Conference (6:30 pm GMT)
What can we expect from Gold today?
Gold prices are trading steadily around $5,000 per ounce on March 18, 2026, amid anticipation for key US economic data like the February PPI and the Federal Reserve’s interest rate decision later today, with markets pricing in a near-certainty of no rate change at 3.50–3.75%. The metal has shown resilience with safe-haven support from ongoing geopolitical tensions, including the Iran conflict, despite a slightly softer dollar and recent profit-taking that pulled prices back from earlier highs near $5,150.
Next 24 Hours Bias
Strong Bullish
The Euro (EUR)
Key news events today
No major news event
What can we expect from EUR today?
The Euro saw modest gains against the US Dollar today, trading around 1.1518-1.1540 amid mixed global cues. This uptick of about 0.11-0.31% from yesterday reflects profit-taking in the Dollar ahead of key US Nonfarm Payrolls data, though broader bearish pressures persist from Middle East tensions and elevated oil prices limiting upside.
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 from March 2026 are anticipated to show headline inflation at 1.9% for 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 maintains resilience, with Q1 2026 surveys pointing to 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 signaling 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 faces a pivotal moment ahead of the SNB’s March 19 meeting, where policymakers are expected to maintain zero interest rates while signaling readiness for FX interventions to counter safe-haven gains driven by the Iran war escalation, which has pushed EUR/CHF to around 0.90 and strained exporters; inflation remains near zero, energy costs are rising, and recent CHF dips against the USD highlight dollar dominance in turbulent markets, keeping traders cautious.
Central Bank Notes:
- At its 19 March 2026 monetary policy assessment, 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 is projected to show minimal changes 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, though recent flat CPI readings may tilt near-term expectations slightly lower, 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 like Europe and the U.S., prompting SNB 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 anticipated at around 1.5% for 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 Pound steadied around 1.3340-1.3350 versus the Dollar, buoyed by dollar weakness and fewer anticipated BoE cuts amid oil-driven inflation pressures from the Iran conflict, though technical supports near 1.3300 cap upside ahead of dual central bank meetings.
Central Bank Notes:
- The Bank of England’s Monetary Policy Committee (MPC) meets on 5 February 2026, with the current Bank Rate at 3.75 per cent following a narrow 5–4 vote to cut by 25 basis points at the 17 December 2025 meeting. Markets now price in around a 70 per cent chance of another 25-basis-point cut to 3.50 per cent, though this hinges on fresh inflation prints and labour data ahead of the decision, positioning this note as pre-meeting guidance. The February meeting will include a Monetary Policy Report with updated forecasts.
- Quantitative tightening (QT) is likely to proceed unchanged, with gilt holdings reductions held at the slower 2025 pace amid ongoing emphasis on gradual balance-sheet normalization calibrated to liquidity conditions. Officials continue to frame the QT path as supportive of a restrictive overall stance.
- Headline CPI inflation stood at 3.6 per cent year-on-year in October 2025, with services pressures easing slowly toward mid-single digits, keeping it well above the 2 per cent target. The MPC’s projections point to inflation hovering near 3 per cent through much of 2026, assuming wage growth moderates further and energy prices stabilize.
- UK growth remains subdued into early 2026, with unemployment edging above 5 per cent on recent three-month averages and regular pay growth cooling to the mid-4 per cent range. These trends signal ongoing labour-market softening, aiding the case for domestic disinflation.
- Global headwinds persist, including tepid world growth and volatile commodities, which could amplify sterling and gilt market swings around the meeting. The MPC views upside shocks to energy or food prices as manageable absent a sustained demand rebound.
- Inflation risks are balanced but tilted: downside from feeble demand and job losses, upside from entrenched services inflation, wage stickiness, and potential labour slack underestimation.
- The MPC enters February with a restrictive but easing-ready posture, favouring data-dependent 25-basis-point steps if disinflation advances, while stressing sustained 2 per cent alignment before deeper cuts. Forward guidance will underscore gradualism, with Governor Bailey likely avoiding firm commitments on pace at the press conference.
- The next meeting is on 19 March 2026.
Next 24 Hours Bias
Medium Bearish
The Canadian Dollar (CAD)
Key news events today
BOC Rate Statement (1:45 pm GMT)
Overnight Rate (1:45 pm GMT)
BOC Press Conference (2:30 pm GMT)
What can we expect from GBP today?
The Canadian Dollar trades steadily near 1.37 USD amid volatility from Middle East tensions, boosting oil prices as a key CAD tailwind, while offset by soft domestic jobs and trade data raising economic slowdown fears. Investors eye upcoming Canadian inflation and housing figures alongside U.S. macro releases, with USD/CAD expected in a 1.36-1.40 band as safe-haven flows and commodity dynamics compete; longer-term.
Central Bank Notes:
- The Governing Council left the target for the overnight rate unchanged at 2.25% at its 28 January 2026 meeting, consistent with market expectations and reinforcing the pause in easing after the December hold. The Bank highlighted ongoing global trade uncertainties, including U.S. policy risks, but noted a steadier external environment with no immediate need for policy shifts amid fragile world demand.
- Uncertainty from U.S. tariffs continues to cloud business confidence, yet Canadian manufacturing PMI and export orders have stabilized further, with backlogs modestly increasing despite restrained investment. Recent data indicate goods exports, particularly energy, provided ongoing support, though firms remain selective in expansion plans.
- Canada’s economy maintained momentum into late 2025 and early 2026, with Q4 GDP estimates around 2.0-2.5% annualised after Q3’s 2.6% rebound, driven by crude oil exports, public spending, and partial service sector recovery. January flash indicators suggest a balanced start to Q1, though weather disruptions slightly tempered output gains.
- Services activity strengthened, with PMI holding above 50 and gains spreading to tech, tourism, and professional sectors; however, consumer services stayed uneven due to persistent high prices curbing non-essential spending despite wage growth. The Bank views this broadening as a sign of structural adjustment progressing.
- Housing markets edged firmer nationally, with resales and prices up modestly in December-January on lower rates and steady demand, though major cities face renewed pressures tempered by strict lending rules and affordability hurdles. The Bank expects this stabilization to persist without overheating.
- CPI inflation held near 2.2% year-over-year in December 2025 and into January 2026 estimates, within the 1-3% band, while core metrics like CPI-median and trim eased toward 2.8%, signalling waning underlying pressures despite shelter and energy volatility. This supports the Bank’s confidence in target convergence.
- Officials reaffirmed the 2.25% rate as appropriate for sustaining 2% inflation and economic adjustment, with no near-term cuts anticipated absent growth or inflation shocks. Focus shifts to Q1 data durability, core trend sustainability, and trade policy clarity.
- The next meeting is on 25 March 2026.
Next 24 Hours Bias
Weak Bullish
Oil
Key news events today
EIA Crude Oil Inventories (2:30 pm GMT)
What can we expect from Oil today?
Oil prices are surging today amid escalating Middle East tensions, particularly around the Strait of Hormuz and Iranian conflicts. WTI crude holds near $96 per barrel, up slightly after a 3% gain yesterday, while Brent trades above $103, driven by Iran’s confirmation of its security chief’s death and ongoing supply disruption fears.
Next 24 Hours Bias
Strong Bullish
