The currency market experienced notable shifts on Tuesday as the EUR/USD pair rose by 0.8%, and the AUD/USD pair consolidated its recovery from a multi-year low. These movements come amid ongoing global trade tensions, with the US-China trade war driving investors towards safe-haven assets such as gold. On the same day, gold prices soared to a record high of $2,845, reflecting heightened market anxiety.
The US Dollar faced downward pressure due to falling US Treasury bond yields, which significantly impacted its performance. The Euro's value was heavily influenced by overall market dynamics and the impending US Non-Farm Payroll (NFP) figures, adding an element of uncertainty to its trajectory. Meanwhile, the upbeat market mood worked against the safe-haven appeal of the US Dollar, providing a boost to the Australian Dollar, or Aussie.
Despite the positive sentiment surrounding the Aussie, it encountered headwinds from the Federal Reserve's hawkish pause and expectations of a rate cut from the Reserve Bank of Australia (RBA). These factors tempered the AUD/USD pair's recovery, even as it benefited from broader market optimism.
In a related development, President Donald Trump agreed to postpone the implementation of 25% tariffs on Canada and Mexico by one month. Originally set to take effect on June 10, this delay followed discussions with his counterparts on Monday. This move aims to ease trade tensions with neighboring countries while negotiations continue.