The Euro encountered turbulence in the European trading session on Friday, driven by upbeat German economic data that failed to impress, and increased demand for the US Dollar amid tariff and geopolitical concerns. The EUR/USD pair hovered near 1.0400, while market participants kept a close watch on the upcoming US Personal Consumption Expenditures (PCE) inflation data set to be released later in the day. The views and opinions expressed in this article are solely those of the authors and do not reflect the official policy or position of FXStreet.
Germany reported positive retail sales and import prices, yet these did little to bolster the Euro. Instead, the currency was undermined by a heightened demand for the US Dollar, which is traditionally regarded as a safe-haven currency during times of uncertainty. This demand was fueled by US President Trump's confirmation of 25% tariffs on Canada and Mexico, effective March 4, alongside an additional 10% levy on Chinese imports.
Investors' attention remained focused on the US PCE Price Index data for January, which was due at 13:30 GMT. The core PCE Price Index, excluding volatile food and energy prices, is expected to increase by 0.3% on a monthly basis. Both German and US inflation data were eagerly anticipated, given their potential implications for monetary policy and market dynamics.
Meanwhile, a risk-off mood prevailed in financial markets. Sliding US bond yields were insufficient to support gold prices, which witnessed selling pressure for the second consecutive day amid the broad strengthening of the US Dollar. The precious metal's appeal diminished as investors sought refuge in the more stable greenback.
Tariff uncertainties also weighed heavily on the risk-sensitive British Pound, which struggled against the robust US Dollar. Despite prudent commentary from the Bank of England (BoE), it had a negligible impact on bolstering the Pound's strength against its American counterpart.