Five Currency Pairs You Should be Watching in March 2025 and Why

With the third month of the year underway, the market has already shown some interesting developments in 2025.

As always, here are five currency pairs to watch in March 2025, alongside some technical and fundamental analysis points to consider this month.

Posting moderate gains in February’s trading, EUR/USD will likely remain at the center stage in the next thirty days, as market speculation on the future of tariffs and interest rate decisions looks set to continue.

• Tariffs: An economic tool proven divisive in recent years, tariffs are synonymous with the campaign and policy of 47th President Donald Trump. While some view tariffs as a means to protect domestic industry and address an ever-expanding trade deficit, others vote that tariffs will encourage tit-for-tat trade wars and worsen inflation, driving up prices for American businesses and consumers.

However, the future of US-EU trade relations remains unclear.
Trump has recently committed to a 25% tariff on European imports, with more details to follow in the coming weeks. As expected, the European Commission has responded in kind, vowing to act “immediately against unjustified barriers to free trade,” signifying the fledgling stages of a trade war between the two regions.

• Interest rates: In a return to regularly scheduled programming, the topic of interest rates continues to reign supreme over EUR/USD markets in 2025. With most of the market predicting the Fed will maintain rates in their March meeting, this month’s focus will likely be on the ECB, with their likely next action more unclear.

With a mix of commentary from policymakers, both suggesting that the ECB should not “sleepwalk” into rate cuts while simultaneously having a “clear-cut case” for cutting rates, markets will be keenly watching how the ECB votes in its upcoming decision.

• At the time of writing, EUR/USD trades around ~1.04200. Having gained ground from 26-month lows made in early January, euro-dollar will need to find support around 1.3000 or risk a further move down.
• Using the Average True Range (ATR) on the daily timeframe, EUR/USD continues to trade at a heightened level of volatility. When managing risk in March and otherwise, traders should consider current market conditions, especially when placing take profit and stop loss levels.

The European Central Bank is expected to meet in Frankfurt on March 6th to discuss monetary policy.

While the maintenance of rates at ~2.9% is possible, any further cuts to rates from the ECB will likely introduce euro-dollar selling pressure.

Amongst some of the most important dates in March, the 19th will see the Federal Reserve meet in Washington to vote on monetary policy.

Albeit more of a foregone conclusion that the likes of ECB this time around, we can expect markets to be volatile in the hours surrounding the event. If the Fed decides to leave rates unchanged, as is widely expected this month, this could cause the euro to weaken versus the dollar.

Performing well in last month’s trading and 2025 so far, traders would be well advised to keep an eye on the Japanese yen this month, especially considering USD/JPY currently trades at a key level of support on the daily timeframe.

• Safe-haven status: While the yen’s status as a so-called ‘safe-haven’ currency is not secret, when it is compared to the dollar, another ‘safe-haven,’ an interesting dynamic emerges.

With a recent ISM report showing worsening conditions in the US manufacturing sector, it would appear that markets are at least somewhat fearful of an economic slowdown in the United States, compounded by uncertainty surrounding trade tariffs.

As such, some questions are to be raised about how the dollar and the yen compare as ‘safe-haven’ currencies in the current trading landscape.

• Diverging monetary policy: The current dynamic between the Bank of Japan and the Federal Reserve can be explained in a single sentence: The Bank of Japan and the Federal Reserve currently maintain increasingly divergent stances on monetary policy.

Having maintained ultra-low and even negative interest rates for some years previously, the current policy divergence is unique to yen-pairs like USD/JPY, with most other major central banks looking to cut rates rather than raise them.

As the perception of the yen on the global currency stage continues to change, admittedly, the yen will need to overcome some hurdles - especially when considering the yen traded at all-time lows versus the greenback less than a year ago.

With a Bank of Japan rate decision expected the day before the Fed’s decision this month, markets will be keen to watch how the next chapter of this story unfolds.

Read more: Understanding how Japan intervenes in the FX market

• As of March 3rd, USD/JPY currently trades at a level of previously held support on the daily timeframe. If price can break above 151.000, USD/JPY can be expected to rally further, with a first target of 154.000.
• Despite losing some ground recently, dollar-yen remains in an uptrend on the daily timeframe and higher. USD/JPY still has some distance to fall before the health of the current rally can be called into question.

With the schedule of such events relatively irregular, Bank of Japan Governor Ueda is due to make a speech on March 4th.

During the speech, traders will look for any commentary to suggest the next move of the Bank of Japan, with any suggestions of further rate hikes in their March decision likely to introduce some USD/JPY selling pressure.

Scheduled for March 18th, the Bank of Japan is expected to meet in Tokyo to vote on monetary policy.

Happening less than twenty-four hours prior to the Fed’s decision on March 19th, markets will likely remain volatile in the hours surrounding the event, with any reduction of the interest rate differential between the two banks likely to work in the yen’s favor, all things consistent.

When trading USD/CAD in February, the flavor of the month has undeniably been that of Trump tariffs, a trend which looks set to continue into March 2025.

Tariffs: Having seen a turbulent start to the month, USD/CAD traders enjoyed an active month of trading in February. While last month saw tariff negotiations between the two nations rumble on, March 2025 has seen the conclusion of matters, with a 25% tariff imposed on Canadian imports to the United States. Canada has since retaliated with a like-for-like 25% tariff on US imports.

With renewed fears of a full-blown America-Canada trade war, recent developments are a far cry from what we saw at the start of February when Trump agreed to a one-month deferral of any tariffs on Canadian imports to display cooperation between the two nations.

The outcome, at least market-wise, has been decidedly clearer: a weaker Canadian dollar and some harsh selling of world equities as tariff uncertainty sets in.

Oil markets: In perhaps the most well-known currency correlation, the value of the Canadian dollar is positively correlated with that of world oil prices.

Read more: How Key Market Correlations Affect Your Trading

On the back of global trade concerns, OPEC+ decisions, and a potential glut in supply, oil currently trades at monthly lows and has some distance to fall if support can be broken.

As such, USD/CAD traders should keep oil pricing in sight this March.

• At the time of writing, USD/CAD currently trades at highs not seen since the 2020 market crash. If trade relations between the United States and Canada worsen, we can expect the markets to become more risk-averse, likely offering some bullish momentum to USD/CAD.
• When analyzing USD/CAD on the monthly timeframe, the ADX indicator is rising in value. Taken at face value, this could suggest some long-term USD/CAD buying pressure.

As the last key economic data release before the all-important rate decision on March 12th, Statistics Canada is expected to release employment numbers on March 7th.

With a steady rise in the Canadian unemployment rate since early 2023, a further increase would only solidify the case for rate cuts from the Bank of Canada.

With recent tariffs weighing negatively on the Canadian dollar, the Bank of Canada will have an important decision on March 12th.

Amongst increasing bets of yet another cut this year, any further cuts to the main funds rate by the BoC will likely offer some support for the current bull trend, especially considering the Fed is predicted to maintain rates this month.

With volatile market conditions expected in the hours surrounding the event, traders would be well-advised to practice tight risk management with a pre-determined exit strategy.

With discussions surrounding the Ukraine peace deal perhaps more prevalent than ever, EUR/GBP is another currency pair to watch in the next thirty days of trading.

Ukraine: With recent meetings of European leaders hitting the headlines globally, the Ukraine-Russia conflict remains a key geopolitical risk that weighs on currency markets globally.

In the case of EUR/GBP, we can expect positive developments to generally strengthen the euro relative to the pound, boosting consumer confidence in the eurozone while reducing political uncertainty. The opposite can be said if peace discussions are to break down, with the pound likely to strengthen over the euro.

With the recent return to the White House questioning the current status quo of how the United States supports Ukraine, EUR/GBP remains susceptible to market volatility.

• Having been in steady decline since early 2023, EUR/GBP currently trades at three-month lows, with some space to fall if currently held support around 0.82300 can be broken.
• Using the Bollinger bands on the daily timeframe, EUR/GBP currently trades towards the bottom of its current range. When taken at face value, this could suggest that EUR/GBP needs to consolidate towards the basis line before a further move down.

Eurostat is expected to release the latest inflation figures for the eurozone on the first trading day of the month.

A higher-than-expected result will likely cause the euro to rally versus the pound, as markets will re-adjust expectations for rate cuts by the European Central Bank.

Scheduled for Monday March 24th, S&P Global is expected to release manufacturing PMIs, a key metric in measuring business conditions.

Following a better-than-expected February result, if data shows that this trend will continue, we can expect some EUR/GBP buying pressure.

Despite a weaker dollar, the Turkish lira remains at record lows, with current market conditions suggesting this is not likely to change any time soon.

Although the lira’s decline is not unique to March 2025, recent commentary from Turkish central bank officials suggests that there will be fewer interventions going forward, with Deputy Governor saying there is “no problem” with the lira’s current valuation.

Read more: Historical Central Bank and Government Currency Interventions: Why and when have they happened?

With inflation only recently falling shy of 40% and a current interest rate exceeding 45%, the chaos surrounding the lira looks set to continue.

USD/TRY currently trades at around 36.4408, an all-time high. With a potential for less intervention from Central Bank of the Republic of Türkiye in the future, the lira could be more volatile in the months to come.