When Central Banks and Inflation Drive the Game
February 2024 reminded traders that macroeconomics still rules the markets.
From the Bank of Japan hinting at the end of negative interest rates to a hotter-than-expected U.S. inflation report, volatility returned across forex and global assets.
“This month showed how quickly sentiment can turn,”
explains Kaito Müller, senior forex trader at Nexa Level X.
“Every central bank comment or CPI release created chain reactions across all major pairs.”
Bank of Japan Shakes the Yen Market
Early in the month, the Bank of Japan suggested that its ultra-loose policy might be approaching an end.
Even without an actual rate hike, the market reacted immediately — JPY strengthened sharply, with USD/JPY falling from 149.50 → 147.10 in just a few sessions.
“It was a perfect reminder of how expectations move faster than actions,” says Kaito.
“Once the market smells change, algorithms follow instantly.”
Müller capitalized by shorting USD/JPY after confirming technical rejection near the 149.40 resistance — securing a +2.3 % gain on that position.
U.S. Inflation Surprise and Dollar Strength
Mid-February, the CPI report came in higher than expected (+0.4 % m/m), forcing investors to rethink their expectations for Fed rate cuts.
The U.S. dollar index (DXY) rebounded from 102.8 to 104.1, pushing EUR/USD and GBP/USD lower.
“The dollar comeback was clean and fast,” notes Kaito.
“Whenever data challenges the ‘rate-cut’ narrative, USD gains traction — especially against the euro.”
His tactical short in EUR/USD between 1.0870 and 1.0805 delivered another controlled profit before the pair stabilized.
Oil and Commodities: The OPEC+ Effect
OPEC+ extended its production cuts through Q2 2024, driving Brent crude back above $83.
This strengthened oil-linked currencies like the CAD and NOK while weakening the USD/CAD pair to around 1.3450.
“Energy remains the invisible driver of forex,” explains Müller.
“Whenever OPEC speaks, commodity currencies listen.”
Crypto Joins the Macro Party
In crypto, the second wave of institutional inflows into spot Bitcoin ETFs lifted BTC above $52,000 and boosted market confidence.
However, after the U.S. inflation report, the short-term rally paused — showing how traditional data now directly affects digital assets.
“The lines between crypto and macro are gone,” says Kaito.
“Bitcoin trades like a high-beta risk asset now — it reacts to inflation and policy, just like stocks or forex.”
Kaito’s Key Takeaways
Anticipate, don’t react — by the time news hits, smart money has already moved.
Watch central bank tone shifts, not just their actions.
Risk management beats prediction — volatility rewards discipline.
Follow correlation webs: JPY, USD, and commodities are all connected through macro sentiment.
Outlook for March 2024
Müller expects short-term volatility to remain elevated:
JPY strength could continue if BoJ confirms policy adjustments.
USD will stay sensitive to inflation and Fed signals.
Commodity currencies may outperform if oil prices remain stable.
“The market doesn’t sleep — it adapts,” he concludes.
“February’s lesson is clear: the best traders aren’t fortune-tellers, they’re fast learners.”
