The financial markets experienced significant volatility on Tuesday as the US Dollar gained strength following the implementation of President Trump's tariffs on China. In response, China introduced its counter-tariffs, escalating trade tensions between the two economic giants. This escalating trade war has incited fears, leading to pronounced impacts on US policies and global markets.
In early European trading, the EUR/USD currency pair traded with notable losses near 1.0300, reflecting the market's apprehension towards potential US tariffs on the Euro area. Similarly, the EURCAD pair exhibited a strong downward trend, suggesting a cautious outlook among investors. The AUD/USD pair paused its recovery at around 0.6200, as aggressive rate cut bets by the Reserve Bank of Australia (RBA) added pressure on the Aussie currency.
Gold prices managed to consolidate their recent gains, achieving a record high on Monday. However, rebounding US bond yields and a modest uptick in the US Dollar have limited further gains for the commodity. Meanwhile, XRP investors have realized nearly $2 billion in profits over the past three days due to Trump's tariffs on Canada, Mexico, and China. Yet, XRP's weighted sentiment and funding rates have plunged to significant low levels, indicating a potential bottom for the cryptocurrency.
The trade war has injected uncertainty into the market, prompting investors to remain wary of further developments. The potential for US tariffs on the Euro area adds to the already tense atmosphere. The Euro, like the Australian Dollar, may lose momentum towards the end of the month, as suggested by emerging monthly candlestick patterns. Furthermore, the imminent release of New Zealand's unemployment rate on Tuesday at 22:45 CET is anticipated to influence market dynamics.