Uncertainty looms over the European Union's impending measures as former U.S. President Donald Trump prepares to enact 25% tariffs on Canada and Mexico next Tuesday. Meanwhile, the EUR/USD pair holds a rebound, trading above 1.0400 early Monday, buoyed by a combination of factors affecting global markets. Concerns surrounding Trump's tariff plans and the potential onset of a global trade war are bolstering commodity prices, including gold, which experienced positive traction amid modest U.S. Dollar weakness.
In the currency markets, upbeat Chinese Purchasing Managers' Index (PMI) data is supporting risk sentiment, putting additional pressure on the U.S. Dollar. The EUR/USD pair remains afloat ahead of crucial EU inflation data, suggesting a cautious market stance. The Euro has also firmed up in response to Europe's renewed efforts towards peace in Ukraine, offering further support to the currency.
Gold prices have gained momentum as investors adjust their positions in light of the weakening U.S. Dollar and anticipations of further rate cuts by the Federal Reserve. The XAU/USD pair benefits from these bets, with investors eyeing potential monetary policy shifts that could impact the greenback's strength.
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