The EUR/USD and GBP/USD currency pairs experienced downward pressure in Friday's European trading session, with the euro slipping below 1.0400 and the pound falling beneath 1.2600. Market participants are closely monitoring these developments amid growing concerns over inflation and global economic trends. The strengthening US Dollar, perceived as a safe-haven asset, has been a key factor driving these currency movements.
In France and the wider Eurozone, disinflation is gaining traction despite persistent price hikes in services. Recent data suggests that inflation may have eased in February, driven in part by a significant reduction in France's regulated electricity prices. However, the EUR/USD remains under pressure due to increased demand for the US Dollar, spurred by concerns over tariffs.
Traders are eagerly awaiting the release of the US PCE Price Index, German, and US inflation data, which are expected to provide further market direction. The uncertainty surrounding US tariffs imposed by President Trump continues to weigh heavily on the Pound, exacerbating its weakness against the resilient US Dollar. This comes despite cautious commentary from the Bank of England.
In addition to currency pressures, the gold market is also feeling the impact of a stronger US Dollar. The precious metal has attracted sellers for the second consecutive day, with the risk-off sentiment and declining US bond yields offering little support. Meanwhile, positive German Retail Sales and Import Prices data have failed to bolster the Euro, reflecting ongoing market caution.
The EUR/USD pair's position below 1.0400 marks a crucial support level, while the GBP/USD's descent past 1.2600 underscores similar concerns for sterling. As traders navigate these turbulent markets, all eyes remain on upcoming economic reports, particularly the US PCE inflation data, which is anticipated to offer meaningful insights into future market trends.