In a volatile trading session on Friday, global markets experienced significant fluctuations after the European Central Bank (ECB) cut policy interest rates by 25 basis points. This decision was widely anticipated and contributed to a notable dip in the EUR/USD pair, which fell below 1.0400 during the European session. Meanwhile, US President Donald Trump's renewed tariff threats have kept investors on edge, leading to increased demand for safe-haven assets like gold, which reached an all-time high of $2,800.
The financial markets reacted swiftly to the ECB's rate cut, as it sought to provide economic stimulus amid slowing regional growth. The move put additional pressure on the Euro, with traders closely monitoring the currency's performance against the US Dollar. Despite this, the GBP/USD pair remained steady, trading slightly above the key support level of 1.2400, even as the US Dollar's demand surged.
President Trump's tariff rhetoric continued to impact market dynamics. His intentions to impose 25% tariffs on Canada and Mexico from Saturday were reiterated, causing traders to assess the potential consequences on international trade relations. Additionally, Trump warned of imposing 100% tariffs on BRICS nations if they attempt to replace the US Dollar with a new currency.
"We are going to require a commitment from these seemingly hostile countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US Dollar, or they will face 100% tariffs." – Donald Trump
The US Dollar Index (DXY), a measure of the dollar's value against a basket of six major currencies, traded close to its weekly high of 108.20. This reflects the currency's strength amid ongoing geopolitical uncertainties and investor preference for safe-haven assets. Regional inflation data from Germany also played a role in the market's movements, as cooling inflation in January weighed on the Euro.
Gold prices surged to an unprecedented peak of $2,800 during the European session, underscoring investor anxiety over potential trade disruptions and economic uncertainties. The increased demand for gold as a safe-haven asset highlights ongoing concerns about the global economic outlook.
Despite the heightened tension surrounding trade tariffs and currency volatility, the Pound Sterling traded in a narrow range against the US Dollar. The pair's resilience can be attributed to a combination of subdued US Dollar price action and stabilizing risk sentiment among traders who continue to digest President Trump's latest tariff threats.
As markets absorb these developments, attention turns to upcoming economic indicators. The release of US Personal Consumption Expenditures (PCE) data later in the American session is expected to provide further insights into consumer spending patterns and inflation trends in the United States.