The EUR/USD exchange rate held just above 1.2900 in Tuesday’s European trading. Traders will be looking to US macroeconomic data and guidance from the US Federal Reserve for fresh direction. I know the market is spooked these days. Lack of clarity around US tariff policies and US-Russia negotiations continuing over a potential peace agreement for Ukraine has contributed to this uncertainty.
The gold price rose, snapping a three-day losing streak as the US Dollar weakened. Analysts hailed this surge in gold value on predictions that the Federal Reserve will soon return to cutting rates. Market conditions are unclear because of US tariffs and the potential outcome of US-Russia talks. Looking ahead, one must only hope that the EUR/USD pair is not caught in similar purgatory.
And, as always, market participants are waiting with bated breath for the next German IFO survey. They hope it will provide useful perspectives on the economic outlook. During much of the European morning on Tuesday, the EUR/USD pair continued this sideways trend, trading back near the 1.0800 level. At the same time, alternative business and consumer surveys are being watched like hawks to gauge the future path of the US economy.
Here’s what to look for in the US data calendar and coming from the Fed themselves. Agents are especially eager to see the Core Personal Consumption Expenditures (PCE) Index, the Fed’s favorite inflation gauge, which will be released later this week. The escalation of geopolitical tensions and heightened economic uncertainty has led to an overall risk-off sentiment, further driving currency flows and exchange rates.