The report examines the key developments from President Trump's initial weeks in office, revealing potential shifts in international trade relations and market responses. The European Union may find itself next in line for tariffs as Trump considers further trade actions. Meanwhile, the President appears to have less leverage over China compared to the first trade war, which is stirring renewed fears and influencing market trends.
Safe-haven investments like gold are seeing increased interest as concerns over a renewed US-China trade conflict grow. The gold price is benefiting from these safe-haven flows, supported by the possibility of further rate cuts by the Federal Reserve. On the technical side, the Relative Strength Index (RSI) on the daily chart indicates that gold is slightly overbought, suggesting that bullish traders should exercise caution.
In currency markets, the British Pound (GBP) has garnered fresh demand, allowing it to reclaim the 1.2500 level against the US Dollar (USD). Similarly, the Euro (EUR) is holding onto recovery gains near 1.0400. The EUR/USD pair is buoyed by a positive shift in risk sentiment and weakened US Dollar strength. Uncertainty surrounding Trump's tariff policies and anticipated Federal Reserve rate cuts are contributing factors to the Dollar's struggles.
Current market dynamics indicate that the US Dollar is facing challenges in attracting buyers. This weakness is partly due to ongoing tariff uncertainties and expectations of future Fed rate cuts, which are also providing support for the XAU/USD pair, highlighting gold's appeal as a safe investment.
Looking ahead, market participants are keeping an eye on upcoming US economic data releases, including ADP employment figures and ISM Purchasing Managers' Index (PMI) data. These releases are expected to provide further insight into the health of the US economy and may influence market movements.