The US Dollar continues to falter amid rising fears of an impending recession, with investors expressing concern over the economic impact of President Trump's tariffs. On Tuesday, the EUR/USD reached fresh multi-month highs, trading above 1.0900 during the American session. Meanwhile, Gold reversed its downward trend from Monday, climbing to trade above $2,910. Simultaneously, the GBP/USD maintained its positive trajectory, trading above 1.2900.
The current economic climate, shaped by apprehensions over the Trump administration's trade policies, has left investors wary of potential repercussions. The risk of the US economy veering into recession has further compounded these anxieties. As a result, the US Dollar has struggled to regain footing against major currencies, inadvertently supporting the XAU/USD pair. This environment has allowed the Euro to capitalize on potential fiscal developments in Germany, further bolstering its strength against the US Dollar.
In the midst of these dynamics, the Euro found additional support from reports that Germany's Green Party anticipates securing a spending deal within the week. This prospect has further buoyed investor confidence in the Eurozone's economic outlook, providing momentum for the EUR/USD pair. The Euro's advance against a weakened Dollar underscores market sentiment leaning toward European stability amidst US economic uncertainties.
Gold's resurgence above $2,910 highlights its appeal as a safe-haven asset in times of financial instability. The precious metal's upward movement is partly attributed to the ongoing pressure on the US Dollar. Investors have turned to Gold as a hedge against potential market volatility driven by the current geopolitical landscape and economic uncertainties.
Simultaneously, the GBP/USD's performance above 1.2900 reflects a broader trend of strength among major currencies relative to the US Dollar. The British Pound's gains come amid a backdrop of cautious optimism regarding potential economic outcomes in Europe and beyond.