President Donald Trump's initial weeks in office have sparked significant economic discussions, with trade tariffs at the center of global attention. The European Union may soon find itself as the next focal point of Trump's tariff strategies, prompting concerns across international markets. Meanwhile, Trump's leverage over China appears diminished compared to the first trade war, casting new dynamics in global trade relations.
Investors are urged to tread carefully in this risk-on environment, as the overbought Relative Strength Index (RSI) suggests potential market volatility. The US Dollar (USD) has struggled to attract buyers, largely due to widespread expectations of Federal Reserve rate cuts. These rate cut bets have further undermined the USD, impacting its strength in the international currency markets.
The Euro faces its own challenges, weighed down by President Trump's trade tariffs and a dovish European Central Bank (ECB). However, the sustained weakness of the USD provides some support for the EUR/USD pair, which consolidates near its weekly high. In contrast, the GBP/USD pair maintains strong momentum, extending above the 1.2500 mark.
Gold prices have experienced a surge, as investors seek safe-haven assets amidst uncertainties surrounding Trump's trade policies. The XAU/USD pair benefits from the USD's persistent weakness, drawing considerable interest from market participants. Simultaneously, the EUR/USD pair's performance is bolstered by the ongoing challenges faced by the USD.
Looking ahead, the US ADP Employment Change and ISM Purchasing Managers' Index (PMI) data are anticipated to provide further insights into the health of the US economy. These indicators are crucial for shaping future monetary policy directions and investor sentiment.