The ZEW survey for Switzerland recorded a drop in expectations to 3.4 in February from 17.7 previously. This decrease indicates a more pessimistic outlook among respondents.

In currency markets, EUR/USD is trading under 1.0500 due to a modest recovery of the USD. Meanwhile, GBP/USD stabilises around 1.2650, affected by recovering US Treasury bond yields.

Gold prices rebound to stay above $2,900 following a decline, while Bitcoin trades around $88,800, having experienced a significant drop from its all-time high, partly due to large outflows from Bitcoin spot ETFs.

Inflation in February is expected to fall sharply in France, spurred by a reduction in regulated electricity prices. Overall, while disinflation appears widespread, prices in services are still increasing across the Eurozone.

The drop in Swiss economic expectations, from 17.7 to 3.4, suggests that sentiment among respondents has taken a downturn. A sharp move like this normally hints at concerns regarding the months ahead. Whether this stems from domestic economic conditions or external pressures, it suggests hesitation about growth prospects. When expectations fall this much, market participants tend to tread carefully, particularly those dealing with interest-rate-sensitive assets.

The currency market reflects some notable developments. With EUR/USD struggling below 1.0500, the dollar’s recovery appears to be exerting pressure. A firmer USD often weighs on the euro, especially when US bond yields edge higher and encourage capital flows toward dollar-denominated assets. GBP/USD, on the other hand, is pausing near 1.2650, as rising US Treasury yields exert a balancing act. The relationship between sterling and the US dollar is always influenced by yield differentials, so traders should monitor any additional bond market adjustments. Signs of firming yields may sustain USD demand, forcing both EUR/USD and GBP/USD to remain under pressure.

Gold has managed to hold its ground above $2,900 following a pronounced dip. The ability to rebound suggests ongoing demand, despite recent declines. Movement in gold is often tied to interest rate expectations, shifts in inflation sentiment, and broader fluctuations in risk appetite. If US yields keep climbing, maintaining these levels could be a challenge, though persistent inflation concerns may yet offer support.

Bitcoin’s retreat to around $88,800 follows a steep pullback from its peak, largely influenced by sizable outflows from spot ETFs. These outflows reflect profit-taking, shifts in sentiment, or broader portfolio rebalancing. Given how strongly ETFs have shaped liquidity in recent months, further outflows could prolong downside pressure. However, any signs of renewed institutional demand could stem the slide.

On the inflation front, February’s data in France is set to show a sharp cooling, largely driven by reductions in regulated electricity prices. While the overall trend points to slowing inflation, service-sector prices across the Eurozone continue rising. This divergence matters, as sticky services inflation could keep central banks hesitant about cutting interest rates too soon. Investors should watch for any signs that slowing inflation in goods is broad enough to outweigh persistent strength in services prices.