FOREX

USD 

The US Dollar gained against the Japanese yen on Friday after Bank of Japan (BOJ) governor Kazuo Ueda said it was too soon to declare victory on inflation, but dipped against the euro after weaker than expected U.S. economic data. The Dollar index reversed earlier gains after the University of Michigan's sentiment survey was weaker than forecast.

Near term fundamentals point to the Dollar Index remaining supported above 103.00 for the time being.

EUR

The Euro initially stumbled after the ECB kept rates steady despite acknowledging cooling inflation, but recovered to log its biggest daily gain against the greenback in about a month. The common currency hit a six-week high against the broadly weak dollar. The European Central Bank cautiously laid the ground to lower rates later this year. While the policymakers did not discuss cuts for this meeting, they are just beginning to discuss the dialing back of their restrictive stance, Lagarde said.

Euro is likely to run into some near term resistance at the psychological barrier of 1.1000.

GBP

The British Pound held steady on Friday, refusing to be swayed by upbeat data on the housing market, with the focus remaining solely on inflation and Bank of England interest rates. Some investors may be adding a little to their sterling holdings ahead of this Wednesday's budget, where finance minister Jeremy Hunt will announce the government's taxing and spending plans.

Sterling may test the support level of 1.2600 with the lack of positive data out of the UK.

CAD

The Canadian Dollar edged higher against its U.S. counterpart on Friday, clawing back some of its weekly decline, as domestic data showed manufacturing activity moving closer to stabilizing and ahead of a Bank of Canada interest rate decision this week. The Canadian central bank is expected to leave its benchmark interest rate on hold at a 22-year high of 5% on Wednesday but then move to cutting in June, according to a Reuters poll.

USDCAD seems to have solid resistance at 1.3600, which should hold if dollar finally begins its weakening trend.

XAU

Gold started March on a positive note, with prices rising to a two-month high on Friday after muted economic data hardened expectations of a U.S. interest rate cut by June. Gold is seeing some upside as the market is convinced that the Fed will ease its monetary policy by midyear, lowering the opportunity cost of bullion.

Gold may see some profit-taking at these high levels, but should find support at 2040.