The US Dollar remained broadly subdued as global markets absorbed a series of economic developments on Friday. With regional inflation cooling in Germany, the EUR/USD pair experienced renewed selling pressure, dropping below 1.0400 during the European session. Meanwhile, the European Central Bank (ECB) cut interest rates by 25 basis points, signaling a continued rate cut cycle. In contrast, gold prices soared to a fresh all-time high of $2,800, driven by heightened demand for safe-haven assets amid geopolitical tensions and trade tariff threats from US President Donald Trump.
Risk sentiment appeared to stabilize despite the subdued US Dollar price action. The cooling of Germany's inflation exerted downward pressure on the Euro, contributing to the EUR/USD pair's decline. This development coincided with the ECB's decision to reduce interest rates again, a move that further weighed on the currency pair and underscored the ECB's commitment to its rate cut strategy.
The gold market, however, painted a different picture. As geopolitical tensions and trade uncertainties persisted, investors turned to gold as a refuge, pushing its price to a record peak. The demand for gold, often seen as a safe-haven asset, was reinforced by President Trump's tariff threats, which are currently being evaluated by market participants.
In the currency markets, the GBP/USD pair maintained a narrow trading range above 1.2400 during the European session. Traders awaited the release of US PCE data, hoping for insights that could influence future market movements. Despite the narrow trading range for GBP/USD, the overarching theme in currency markets was the reaction to ECB's rate cuts and the cooling inflation in Germany.