In a volatile European session on Friday, the EUR/USD pair faced pressure as it traded below the 1.0400 mark, while GBP/USD extended its decline below 1.2600. The heightened demand for the US Dollar, driven by tariff concerns, undermined both pairs. Tariff uncertainty, stemming from policies under US President Trump, cast doubts on the global trading environment, further impacting the risk-sensitive currencies.
The increased haven demand for the US Dollar has put both the Euro and the British Pound on the defensive. Investors are flocking to the safety of the US Dollar amid rising global trade tensions. The unsettled atmosphere surrounding tariffs continues to weigh heavily on market sentiment, making the currently stable US currency more attractive.
Concurrently, the German economy reported encouraging figures with upbeat Retail Sales and Import Prices data. However, these positive indicators failed to bolster the Euro, as broader market anxieties overshadowed economic optimism. Inflation trends in Europe also showed signs of easing in February, notably in France due to a significant reduction in regulated electricity prices. Despite this disinflationary trend, rapid price increases persist in the services sector across the Eurozone.
On the commodities front, gold prices witnessed a two-day consecutive decline, attracting sellers amid the robust US Dollar. The risk-off sentiment and declining US bond yields have done little to support the precious metal, which traditionally serves as a safe haven during uncertain times.
Looking ahead, traders have their sights set on upcoming inflation data from Germany and the United States. The US PCE Price Index is anticipated to provide further insight and momentum in the trading sessions to come. Market participants will closely monitor these figures to gauge future economic directions and currency valuations.