EUR/USD managed to defend its position above the 1.2900 level in Tuesday’s European morning. Market participants were focused on US macroeconomic data due this week and speeches by US Federal Reserve officials, in search of new direction for the currency pair. The nervous trading landscape is due to ambiguities concerning US tariffs. Traders are similarly highly focused on the likely result of US-Russia discussion of what a Ukraine peace deal would look like.
The market's downbeat mood contributed to the EUR/USD's struggle to break out of its sidetrend, hovering around 1.0800 in the European morning. On the other hand, gold prices rose slightly – breaking a three-day declining streak – as a result of a softer US Dollar. The increase in gold prices was further accelerated by a negative risk sentiment. On top of that, speculation has been rampant that the Federal Reserve will soon restart its rate-cutting cycle.
Particularly attractive to investors will be the German IFO survey, which may give a new primary lead on the underlying economic picture in Germany. Closely watched business and consumer surveys should provide more insight into the path of the US economy. The Federal Reserve is waiting to see if inflation cools, with their primary focus on Core PCE. This indicator has new data scheduled to be released later this week.
The ambiguity about US tariffs, plus continued US-Russia talks over Ukraine, has kept traders on the edge. The muted US Dollar contributes to this uncertainty as once again, investors are on guard. At the same time, speculators are keenly awaiting US data releases and Fed commentary for clues regarding the trajectory of US monetary policy.