Market dynamics shifted this week as speculation concerning potential Federal Reserve rate cuts undermined the US Dollar (USD), while simultaneously lending support to the XAU/USD pair. Amidst these developments, President Donald Trump announced a one-month delay on the imposition of 25% tariffs on Canada and Mexico. This decision followed discussions with his Canadian and Mexican counterparts on Monday, reflecting a temporary reprieve amid ongoing trade tensions.
In the currency markets, the EUR/USD pair consolidated within a narrow range near its weekly high. The downside of the Euro remained cushioned, largely due to persistent USD selling. However, concerns over Trump's trade tariffs continued to weigh on the Euro, further compounded by the European Central Bank's dovish stance, which capped gains for the currency pair.
Gold prices witnessed an uptick as investors sought safe-haven assets in response to escalating fears surrounding the US-China trade war. The precious metal attracted flows amid increased market volatility and uncertainty, providing a hedge against potential economic disruptions.
Meanwhile, the GBP/USD pair struggled to build on its recent strong gains. The USD's inability to attract buyers, amidst heightened expectations of Fed rate cuts, added pressure to the currency pair's performance.
Market analysts noted that the Relative Strength Index (RSI) on the daily chart of these assets is slightly overbought, signaling a need for caution among bullish traders. This technical indicator suggests that while current trends may persist, there is potential for market corrections should conditions shift.
It is important to note that neither the author nor FXStreet are registered investment advisors, and this article is not intended to serve as investment advice. Investors are encouraged to conduct their own research and consult with financial advisors before making investment decisions.