The EUR/USD faced downward pressure, trading in negative territory below 1.0500 on Wednesday. The uncertainty surrounding the Trump administration's trade policy has heavily weighed on the pair, preventing it from gaining a stable footing. Meanwhile, the risk mood has favored the US dollar, making it challenging for the EUR/USD to regain its lost traction.
Inflation trends played a role in the currency market dynamics, as inflation likely eased in February. This was particularly evident in France, where a significant reduction in regulated electricity prices was observed. While investors closely monitor these developments, they also eagerly await insights from Federal Reserve (Fed) and Bank of England (BoE) officials for further guidance.
The EUR/USD's struggle is compounded by a decent rebound in the US dollar, supported by recovering US Treasury bond yields, which have capped the pair's upside potential. Despite Tuesday's gains, the EUR/USD has failed to sustain momentum, remaining in negative territory.
On the commodities front, gold prices experienced a decline, returning to the sub-$2,900 region on Wednesday. This trend continued from Tuesday's pullback, as a stronger US dollar contributed to the decline. Mixed US yields have also played a part in this downward movement, while steady expectations around the White House's trade policy added further pressure on gold prices.
The GBP/USD displayed more stability, holding steady near 1.2650 on Wednesday. Investors are observing these currency pair movements amid global economic uncertainties and policy shifts.