IC Markets – Europe Fundamental Forecast | 13 April 2026
What happened in the Asia session?
Risk‑on but consolidative mode, with markets digesting last week’s sharp rally on the Middle‑East ceasefire while positioning ahead of key China data due Thursday, rather than reacting to new breaking headlines. Asian equities broadly held gains and remained sensitive to the softer‑dollar, lower‑oil backdrop, which has lifted high‑beta currencies such as the AUD, NZD, and select EM‑Asia FX while keeping Chinese‑linked assets on edge ahead of the Q1 GDP and industrial‑production prints.
What does it mean for the Europe & US sessions?
Elevated inflation pressures, stickier‑than‑expected input‑price data, and continued geopolitical risk in the Middle East are all of which are weighing on bond yields and keeping central‑bank‑policy repricing front and center. Markets are also sensitive to any fresh headlines on the fragile ceasefire framework between the U.S. and Iran, since even minor escalations could re‑ignite risk‑off flows and push safe‑havens and oil prices higher again.
The Dollar Index (DXY)
Key news events today
No major news event
What can we expect from DXY today?
The US dollar is consolidating just below the 100‑level on the DXY, caught between residual safe‑haven demand and rising expectations of Fed easing later in the year. Geopolitical uncertainty continues to underpin the dollar, but optimism around de‑escalation in the Middle East and gains in risk‑sensitive currencies such as the Aussie and kiwi have capped fresh upside, leaving the greenback in a cautious, range‑bound posture ahead of key US data and the April FOMC meeting.
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
Medium Bullish
Gold (XAU)
Key news events today
No major news event
What can we expect from Gold today?
Gold is trading in the mid‑4,700s per ounce on Monday, consolidating after a powerful run‑up driven by expectations of Fed rate cuts, a weaker dollar, and ongoing geopolitical risk; while short‑term volatility remains elevated, the year‑to‑date trend is still strongly bullish, with major banks flagging upside potential toward USD 5,000 per ounce this year if policy accommodation and safe‑haven demand persist.
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 broadly positive tactical tone versus the dollar, with many technical views expecting the currency to remain biased higher in the near term, albeit without expecting a runaway rally. Forecaster commentary highlights that the euro’s outlook looks slightly more favorable than the dollar’s, given the current macro backdrop, including still‑elevated oil prices and recent ECB‑policy‑area dynamics, but traders are not calling for a sharp spike into far‑off targets like 1.30–1.35 yet.
Central Bank Notes:
- The Governing Council of the ECB is expected to keep the three key interest rates unchanged at its 29–30 April 2026 meeting, with the main refinancing rate at 2.15%, marginal lending facility at 2.40%, and deposit facility at 2.00%. This reflects an ongoing commitment to 2% inflation stability amid heightened uncertainties from Middle East tensions and US trade policies under President Trump. Market probabilities indicate around 58% odds of no change, though some banks now price in potential hikes due to rising inflation risks.
- Price dynamics show increasing upside pressures, with headline HICP inflation likely around 2.0-2.2% in early 2026, driven by energy costs from Middle East conflicts offsetting euro strength. Core inflation remains sticky but moderating slowly, with projections revised upward to 2.6% for 2026 overall amid hawkish signals from ECB leadership.
- Updated Eurosystem staff projections for April 2026 may forecast headline inflation at 2.1-2.2% in 2026, 1.9% in 2027, and 2.0% in 2028, with upside risks from energy and trade dominating balanced prior views. A stronger euro provides some counterbalance, but recent data revisions highlight persistent pressures.
- Euro area GDP growth holds steady, with Q2 2026 surveys suggesting 0.2-0.3% qoq growth, in line with 1.1-1.3% annual forecasts through 2027. Defence spending, infrastructure, and low unemployment support resilience against trade headwinds and softer external demand.
- The labour market remains tight, with unemployment steady near 6.4%, bolstered by wage growth and participation gains. Supportive credit conditions continue aiding investment and consumption despite global risks.
- Business sentiment is cautious amid US tariffs, geopolitical flare-ups, and supply chain easing; a somewhat weaker euro boosts exports, while fiscal measures aid domestic activity.
- The Governing Council maintains its data-dependent, meeting-by-meeting stance, scrutinizing inflation, transmission, and external shocks without pre-committing to rate paths.
- Balance sheet normalization advances smoothly, with APP/PEPP wind-downs complete and no liquidity issues; banks show ample reserves and stable funding access.
The next meeting is on 29 April 2026
Next 24 Hours Bias
Weak Bearish
The Swiss Franc (CHF)
Key news events today
No major news event
What can we expect from CHF today?
The Swiss franc is trading near multi‑year extremes versus the euro and close to a decade‑high versus the dollar, supported by safe‑haven demand amid ongoing geopolitical and macro uncertainty. The SNB maintains a 0% interest rate and is increasingly relying on FX‑market intervention to limit excessive franc strength, even as Swiss companies and economists expect the currency to remain in demand and structurally firm over the course of 2026.
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
Strong Bullish
The Pound (GBP)
Key news events today
No major news event
What can we expect from GBP today?
The pound sterling is broadly stable but trading in a cautious, risk‑sensitive environment, with GBP/USD hovering around the mid‑1.30s range just under or near 1.34–1.35, supported by a relatively softer US dollar and a continued tilt toward risk‑on sentiment in global markets. The currency is sensitive to upcoming UK‑focused data and sentiment around Bank of England policy, after recent forecasts and commentary have projected GBP/USD in a broad 1.35–1.40 zone for 2026.
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 upwards 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
Weak Bullish
The Canadian Dollar (CAD)
Key news events today
No major news event
What can we expect from GBP today?
The Canadian dollar is holding ground near recent levels, with USD/CAD trading around the 1.38–1.39 area amid a mix of geopolitical relief, relatively firm oil prices, and cautious positioning ahead of key Canadian and US data releases. The loonie has benefited from a less‑risk‑off environment and a softer US dollar, but gains are being capped by concerns about Canadian growth and the Bank of Canada’s policy path, leaving the currency in a range‑bound, moderately positive tone rather than a clear breakout.
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 restrained 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
Medium Bearish
Oil
Key news events today
No major news event
What can we expect from Oil today?
Crude oil prices are sharply elevated on Monday, with Brent near $102 and WTI around $104–105, after a roughly 8% jump at the open as U.S. and Iranian frictions around the Strait of Hormuz escalate. The market is repricing risk on renewed fears of a supply‑side shock, including potential disruptions to Gulf‑based shipping and OPEC‑heavy flows, while the IEA flags that the April supply crunch linked to the Iran conflict could worsen without more strategic reserve releases.
Next 24 Hours Bias
Strong Bullish
