The European Central Bank (ECB) has reduced its policy interest rates by 25 basis points, adding another turn to the ongoing rate cut cycle. This decision reverberated through the markets on Friday, as the ECB aims to tackle regional inflation challenges. Meanwhile, the GBP/USD currency pair remained stable, trading narrowly above the 1.2400 mark during the European session. On the geopolitical front, US President Donald Trump's proposed trade tariffs continue to impact investor sentiment, further influencing currency pairs and commodity markets.
Gold prices have reached a new all-time high, touching $2,800, as geopolitical tensions fuel demand for safe-haven assets. The precious metal is set to continue its upward trajectory, attracting investors looking for stability amid market uncertainty. Traders are also closely monitoring the upcoming release of US Personal Consumption Expenditures (PCE) data. Anticipation of this data release has left the US Dollar largely subdued, with risk sentiment across markets beginning to stabilize.
In the foreign exchange market, the EUR/USD pair is experiencing renewed selling pressure, declining below 1.0400 as regional inflation in Germany showed signs of cooling in January. This easing of inflationary pressures weighed heavily on the currency pair, contributing to its downward movement. Despite these challenges, the ECB remains committed to its rate cut strategy to support economic growth and stabilize inflation levels within the eurozone.
As traders prepare for the US PCE data release, they are bracing for potential shifts in market dynamics that could influence both currency and commodity prices. The subdued action of the US Dollar reflects cautious optimism as investors assess potential impacts from domestic economic indicators and global geopolitical developments.