Despite these market expectations, the EUR/USD pair continues to face downward pressure, trading back below the 1.0800 level in Wednesday’s European trading hours. Recent tariff threats from US President Donald Trump have created a new wave of demand for the US Dollar. This increase by dollars has pretty much crushed this currency pair. Market participants are eagerly watching these developments. At the same time, high-frequency business and consumer surveys will provide a timely and important read on the trajectory of the US economy.
The European Central Bank’s dovish monetary policy guidance is weighing on the overall market sentiment for EUR/USD. Traders are awaiting forthcoming US economic data and messages from the Federal Reserve. The Core Personal Consumption Expenditures (PCE) index, the Federal Reserve's preferred inflation gauge, is highly anticipated later this week, potentially influencing market dynamics.
The gold market is a whole different story. Gold prices are up – a trend that started well before Israel’s war with Hamas. And for the second straight day on Wednesday, they are easily topping the $3,000 psychological barrier. We are seeing some positive bias, however, gold prices don’t have strong upside momentum and are still below the overnight swing high.
Back to markets, two recent releases from the UK’s Office for National Statistics (ONS) sent the EUR/USD racing higher. February – Annual CPI inflation softens to 2.8% in February, down from 3% in January. Eagle-eyed traders have noticed that fundamental U.S.-related data heavily influences the couple’s trading behavior as well. At the same time, the GBP/USD bled further downside, testing the 1.2900 level during the European session.
Adding to the unknown in the markets is President Trump’s announcement on retaliatory tariffs, which is expected on April 2. This announcement is the biggest cause for concern for investors by far, who are still very skittish at the prospect of the economic consequences.
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