Friday’s session carried a clear month-end message: the US dollar was set for its first monthly gain since October, supported by a mix of geopolitical uncertainty and a market narrative that the Fed remains cautious rather than aggressively dovish.
Reuters highlighted safe-haven dynamics tied to global uncertainty and pointed to a broader environment where relative-rate expectations dominated currency performance. The euro was relatively steady into month-end, while sterling was on track for a notable monthly decline, reflecting both political and rate-path uncertainty.
EUR/USD
Technical Analysis
EUR/USD ended the week in controlled trade, not breaking down, but also not reclaiming upside momentum. The chart behavior looked like a market respecting established boundaries: range adherence over trend extension. When a pair trades like this into month-end, it often signals that larger players are waiting to re-engage in early March rather than force exposure into month-end flows.
Fundamental Analysis
Reuters described the euro as relatively unchanged on the month while the dollar gained modestly overall. That pattern matches an environment where EUR isn’t weak in isolation, rather, USD has found support through macro caution and safe-haven appeal.
GBP/USD
Technical Analysis
GBP/USD stayed heavy into Friday, reflecting persistent selling pressure and weak rally attempts. Technically, this is typical when the market is pricing uncertainty: rallies get sold quickly, and the pair struggles to build higher lows.
Fundamental Analysis
Sterling’s monthly decline was tied to political and rate uncertainty. Reuters noted the pound was down meaningfully over February and referenced political instability narratives (including broader UK political developments) alongside the market’s sensitivity to BoE expectations.
This creates an environment where GBP tends to underperform during risk-off pulses and also fails to rally cleanly even when risk improves, because the market views sterling as carrying additional “headline risk.”
USD/JPY
Technical Analysis
USD/JPY remained sensitive and reactive. The key technical takeaway wasn’t a clean trend day, it was how the pair behaved around elevated levels: tight reactions, quick intraday swings, and cautious follow-through. That profile often appears when positioning is crowded and traders are wary of policy rhetoric.
Fundamental Analysis
Reuters noted that rate differentials and domestic political uncertainty continued to influence the yen, contributing to underperformance even as broader markets steadied. The bigger picture remained intact: USD/JPY still responds most directly to yield signals and JPY-specific confidence.
Market Outlook
The final week of February closed with a clear setup:
- The dollar regains structural support through cautious Fed expectations and risk-aware positioning.
- The euro remains resilient but range-bound, awaiting a stronger catalyst.
- The pound remains vulnerable while politics and rate-path uncertainty persist.
- USD/JPY stays highly reactive, especially with elevated sensitivity near key levels and headline risks.
With month-end flows now cleared, early March liquidity typically reveals whether February’s USD firmness was a temporary positioning effect or the start of a more durable move.
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