The average trade-weighted tariff on imports in the United States has gone up nearly fourfold. This increase is a direct outcome of the tariff increases implemented during the Trump administration. Overall, the changes have increased tariffs by an estimated 5.5 to 6.0 percentage points. They are now close to the historic highs we’ve only witnessed together in the wake of the Second World War. This is a noteworthy change against the general backdrop of the US Dollar’s weakening. Increasing trade tensions are causing global markets to wobble. Buyers are taking a wait-and-see approach. They are looking ahead to Germany’s preliminary inflation data and further Trump announcements on the reciprocal tariffs front.
Across the Forex market, the EUR/USD currency pair is recovering slightly on the day. It is flatlining just above 1.2950 as of the European morning session on Monday. These advances notwithstanding, the duo continues to remain under 1.0850. Market participants are taking a step back due to the overbought conditions on the daily chart. Given conditions like these, it seems the time is ripe for caution among optimistic traders as they address a fragile landscape of market volatility.
Net, Gold has continued to attract these safe-haven flows for the third day in a row. Investors are looking for calm in the storm as trade tensions escalate. The yellow metal takes on additional luster as the market begins to price in expected rate cuts from the Federal Reserve. This expectation adds even more upward pressure on the US Dollar.