The EUR/USD currency pair gained traction and traded positively near 1.0850 on Monday, buoyed by improved investor confidence in the Eurozone. Meanwhile, gold struggled to maintain its footing, trading in negative territory close to $2,900. The market remained cautious as investors held back from making significant moves, choosing instead to await further developments concerning the Trump administration's tariff policy.
Investor sentiment around the Euro received a boost after the Eurozone Sentix Investor Confidence data for March showed a significant improvement. The index rose to -2.9 from February's -12.7, reflecting increased optimism about the region's economic outlook. This positive sentiment contributed to the EUR/USD's upward momentum, as it traded steadily in positive territory.
Gold, on the other hand, faced challenges as it failed to hold ground and traded lower. The precious metal's struggles were further compounded by US inflation figures set to impact the market significantly. Although consumer price inflation initially came out strong at the start of 2025, there are indications that price growth has cooled in February.
The moderation in consumer price inflation is likely due to a giveback in certain categories that saw a surge in January. Analysts estimate that while headline CPI rose by 0.25%, the core index advanced modestly by 0.27% in February. These figures suggest that inflationary pressures may be easing somewhat, despite not fully reflecting the effects of tariffs.
Investors are particularly focused on the Trump administration's tariff policy and its potential implications for the market. Many are refraining from taking large positions until there is more clarity on this front. The anticipation of further developments has kept market participants cautious, adding an element of uncertainty to the trading landscape.