IC Markets – Europe Fundamental Forecast | 28 April 2026
What happened in the Asia session?
U.S.-Iran geopolitical uncertainty, which kept risk sentiment choppy and put the oil market, gold, and broad Asia-Pacific equities in focus. The most visible macro backdrop was the IMF’s April 2026 assessment that Asia is facing an energy shock from the Middle East conflict, with higher oil and gas prices lifting inflation and widening trade gaps.
What does it mean for the Europe & US sessions?
Today’s macro backdrop is defined by lingering U.S.–Iran tensions underpinning higher oil prices, a modest risk‑on tilt in commodity currencies, and a data‑heavy run into the week’s key U.S. labour and inflation releases; traders should enter the European and U.S. sessions focused on intraday data surprises, bond‑market reactions, and any fresh geopolitical headlines that could quickly reprice equities, FX, and commodities.
The Dollar Index (DXY)
Key news events today
CB Consumer Confidence (2:00 pm GMT)
What can we expect from DXY today?
The dollar holds steady but softens slightly amid FOMC event risk, geopolitical uncertainty in the Middle East, and oil-driven inflation pressures that structurally bolster it against peers, with analysts eyeing a potential push higher if Fed rhetoric remains restrictive, positioning it as a key FX mover this week. EUR/USD benefits from USD caution, staying supported near recent ranges.
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
CB Consumer Confidence (2:00 pm GMT)
What can we expect from Gold today?
Gold is trading near fresh record levels around 4,680–4,700 USD per ounce, underpinned by safe‑haven demand, persistent inflation worries, and expectations of gradual monetary easing in key economies. The metal has gained roughly 4% over the past month and around 40% year‑on‑year, with prices broadly supported near current floors despite short‑term volatility and occasional profit‑taking, keeping the medium‑term bias still tilted to the upside.
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 near multi‑week highs versus the dollar, supported by a weaker greenback and improving risk sentiment linked to hopes of de‑escalation in the Middle East and renewed US‑Iran negotiations. The ECB appears content to leave interest rates unchanged for now, but policymakers are closely watching the impact of a stronger euro on growth and inflation.
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 remains resilient near recent highs, buoyed by safe-haven demand amid global uncertainties like U.S. trade policies and Hormuz risks, with USD/CHF hovering beyond mid-0.7800s after a 0.02% daily uptick yesterday. The spotlight falls on Switzerland’s Q1 GDP data release at 08:45 CET, expected to clarify economic momentum and influence SNB outlook, potentially pressuring CHF if growth underwhelms or bolstering it on strong figures.
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 considers current settings adequate to keep 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 pound is currently experiencing heightened market sensitivity as traders prepare for a pivotal “triple central bank week”. With the Federal Reserve expected to provide its rate decision on Wednesday, April 29, followed by the Bank of England (BoE) and the European Central Bank on Thursday, April 30, volatility is anticipated in the coming days.
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 Bearish
The Canadian Dollar (CAD)
Key news events today
No major news event
What can we expect from CAD today?
The Canadian Dollar (CAD), or loonie, showed modest strength against major currencies on April 28, 2026, building on gains from the prior day amid stabilizing commodity prices and mixed economic signals. USD/CAD hovered around 1.3660, testing resistance near 1.3645 after climbing from recent lows, supported by resilient Canadian retail sales data and a constructive outlook for oil despite volatility.
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 29 April 2026.
Next 24 Hours Bias
Weak Bearish
Oil
Key news events today
API Crude Oil Stock (8:30 pm GMT)
What can we expect from Oil today?
Oil remains firmly supported near the upper end of its recent range, with Brent around $108–109/bbl and WTI around $97/bbl, as the Strait of Hormuz stays largely closed and U.S.–Iran negotiations show little breakthrough; the ongoing Middle‑East conflict has pushed prices up over 50% since late February, tightening physical supply, lifting refined‑product costs, and anchoring expectations that even a partial easing of restrictions would trigger only a temporary price correction rather than a full reset to pre‑war levels.
Next 24 Hours Bias
Medium Bullish
