In the early weeks of President Donald Trump's tenure, significant economic shifts have unfolded, with global markets reacting to potential policy changes. The European Union has emerged as a possible target for Trump's tariff policies, while Trump's leverage over China appears reduced compared to the first trade war. Amid these developments, market analysts are urging caution in a risk-on environment, with indicators such as a slightly overbought Relative Strength Index (RSI). Meanwhile, the British pound has shown renewed strength against the US dollar, regaining the 1.2500 level during the European session on Wednesday.
The Federal Reserve's rate cut expectations have weakened the US dollar, providing further support to the XAU/USD pair. A positive shift in risk sentiment, coupled with sustained US dollar weakness, has bolstered this pair. However, market participants are advised that this analysis does not constitute investment advice. Neither the author nor FXStreet holds registered investment advisor status.
Attention is turning to upcoming data releases, particularly the US ADP and ISM PMI reports, which are anticipated to influence market directions. The Euro has edged higher against the US dollar, trading near 1.0400 after experiencing modest gains on Tuesday. Concurrently, gold prices have attracted safe-haven flows amid concerns about potential trade tariffs from Trump's administration.
The article reflects the author's perspectives and does not necessarily align with FXStreet's official policy or stance, nor that of its advertisers. The evolving risk sentiment has generally shifted positively, yet market participants should proceed with caution given the current economic landscape.