The EUR/USD currency pair came under pressure in the downside on Thursday with prices dropping below the key round number of 1.1300 during early European markets. This steep decline is a reflection of the increasing demand for the US Dollar. Expectations of new bilateral trade agreements with China and the United Kingdom are boosting this sentiment.
As the day moved on, the US Dollar continued to pick up momentum, helping to fuel the EUR/USD pair’s losses. The expectation of an impending announcement from US President Donald Trump regarding a trade deal with the UK heightened market optimism and influenced investor behavior.
Donald Trump’s announcement is scheduled for 14:00 GMT at a news conference in Washington, where he is anticipated to reveal details of the trade agreement. Market participants are watching this closely, as it could have a major effect on currency valuations and risk appetite worldwide.
All of these trade negotiation fears have pumped up risk sentiment even more, adding to the US Dollar’s sharp bullish momentum. Traders have reacted positively to any whiff of news pointing towards agreements in the House and Senate, creating a changed market environment.
Along with this process playing out in the currency market, prices of gold have been signaling this change. On Thursday, gold bounced back from its session low. Even so, it made a less than 1% correction, correcting up to $3,343.
“Gold adds to the prior’s day correction, slipping less than 1% to $3,343 at the time of writing on Thursday as risk sentiment improved, with United States President Donald Trump expected to announce a trade deal agreement with the United Kingdom (UK) at a news conference at 14:00 GMT in Washington.” – Source
The deeper implications of Trump’s announcement reach further than any short-term market response. Now, analysts are aflutter, imagining the positive effect of fruitful trade negotiations. They agree that these discussions can improve economic cooperation and foster a more stable and productive global economy.