The EUR/USD currency pair to came under pressure, staying depressed below the 1.0800 level during Wednesday’s European trading session. Our most recent demand for the US Dollar comes from traders reacting to President Trump’s most recent tariff threats. This sudden spike in demand has led to a strengthening of the Euro. Financial markets are reeling from an extraordinary economic backdrop. Business and consumer surveys are looking to judge where the US economy is headed.
Traders remain on pins and needles processing these developments. Consequently, the EUR/USD has been the market’s bellwether – thus far continuing its losses through 1.2900 during the European session. What’s made matters worse are the dovish sounds coming from the European Central Bank (ECB). That adds extra weight on the duo as we enter a week with crucial US economic data updates and Fed Chair Powell’s testimony expected later this week.
Gold prices are doing exceptionally well compared to this financial development. As of Wednesday, they’re tantalizingly close to $3,020. Following a brief selloff on Monday morning, gold has rebounded significantly, putting it back in the green for the week.
And on the other side of the Atlantic, the United Kingdom’s Office for National Statistics (ONS) reported that annual Consumer Price Index (CPI) inflation has eased. It fell to 2.8% in February, down from 3% in January. This cooling of inflation numbers is being watched very carefully, of course, because it could set the stage for a major shift in monetary policy.
As the week progresses, a big focus for market participants will be the Core Personal Consumption Expenditures (PCE) index. In fact, this index is the Federal Reserve’s favorite measure to track inflation. We’ll be back later this week with updated information. Aside from that, it has the potential to be one of the most informative glimpses into the future of US economic policy.