EUR/USD managed to stay above 1.0800, trading in the green throughout the American session on Thursday. As the currency pair started moving upward, it displayed bullish momentum. This increase was driven by persistent, bullish US Dollar weakness, initiated by the Trump administration’s re-introduction of tariff threats. These events have brought the US economic slowdown story back into focus.
The recent announcement of US auto tariffs for Japan and European nations has only added to the US Dollar’s difficulty in finding demand. This has had a marked effect on EUR/USD’s ability to maintain its gains and keep pushing higher towards the 1.0800 handle. Continued tariff bravado further hangs over the US economy like the sword of Damocles. They are stoking panic about a downturn that might damage the currency far worse.
Even with the weakness in the US Dollar, these rising US Treasury bond yields are spilling over and affecting other markets. Yields continue to rise, which appears to be putting a lid on XAU/USD’s upside. Today, after a recent sharp correction, it’s trading at around $3,040. The relationship between Treasury yields and the direction of currency movements depicts the complicated story at work within our financial markets.