EUR/USD and GBP/USD found themselves under pressure during Friday’s European trading session. The EUR/USD pair dipped below the 1.0400 level, while the GBP/USD extended its drop below 1.2600. This movement comes amid growing concerns over tariffs and inflation, causing a stir across European markets.
The increased demand for the US Dollar, considered a safe haven, has been a significant factor in this currency shift. Concerns over tariffs, particularly those linked to policies from US President Trump, have driven investors towards the stability of the US Dollar. This trend has exerted pressure on risk-sensitive currencies like the Pound.
Disinflation trends are becoming more pronounced, but service prices continue to rise rapidly in France and other parts of the Eurozone. Despite this, inflation likely eased in February, especially in France, largely due to a substantial reduction in regulated electricity prices.
Investors are keeping a close eye on crucial economic data releases. The upcoming US PCE Price Index is expected to provide direction for traders seeking meaningful impetus. Meanwhile, German and US inflation data are also anticipated, with market participants eager for insights into future economic conditions.
In Germany, upbeat Retail Sales and Import Prices data failed to boost the Euro significantly. The market's primary focus remains on inflationary pressures and geopolitical uncertainties. Gold prices have attracted sellers for the second day in a row, with sliding US bond yields doing little to support the precious metal amid a broadly stronger US Dollar.
The risk-off mood has contributed to the challenges faced by the Euro and Pound in the current trading environment. The British Pound, despite prudent commentary from the Bank of England, remains weighed down by tariff uncertainty. This uncertainty further underscores the US Dollar's appeal as a reliable safe-haven asset.