The Euro retreated from its multi-month high against the US Dollar on Tuesday, as the EUR/USD pair struggled to maintain its bullish momentum. Earlier in the day, the pair had climbed above 1.0950 but faced challenges due to a risk-averse market atmosphere. Meanwhile, the US Dollar made a strong comeback, buoyed by upbeat local data and a souring risk mood in anticipation of key central bank meetings later this week.
Fitch Ratings also released a Global Economic Outlook (GEO) report on Tuesday, lowering its economic growth forecast for the United States. The report and geopolitical tensions further influenced currency markets, with gold reaching new record highs and the British Pound losing traction.
EUR/USD Retreats as USD Gains Momentum
The Euro's recent ascent against the US Dollar was short-lived as the EUR/USD pair retreated from its multi-month high set earlier in the day. The pair had managed to surpass 1.0950 but succumbed to a risk-averse market atmosphere, which supported the US Dollar.
The USD benefitted from positive local economic data and a prevailing cautious sentiment in global markets ahead of this week's key central bank meetings. These factors contributed to the USD's strong comeback and posed challenges for the Euro's upward trajectory.
The market's focus on risk aversion hindered the EUR/USD pair’s ability to sustain its bullish momentum, ultimately leading to a retreat in its value.
Fitch Ratings' Economic Forecasts Impact Markets
Fitch Ratings published its Global Economic Outlook report on Tuesday, adjusting its projections for the United States. The agency lowered the US economic growth forecast to 1.7% from December's estimate of 2.1%. Additionally, Fitch cut the 2026 growth projection to 1.5% from 1.7%.
Fitch also provided a global perspective, stating that they expect world growth to decelerate to 2.3% this year, down from 2.9% in 2024. This revision reflects anticipated economic challenges on a global scale.
The revised forecasts by Fitch Ratings contributed to market uncertainty and were reflected in currency and commodity movements on Tuesday.
Gold Surges Amid Geopolitical Tensions
Gold continued its rally, reaching a new record high above $3,030 during the American session on Tuesday. The precious metal benefitted from escalating geopolitical tensions, which drove investors towards safe-haven assets.
The heightened demand for gold underscored investor concerns amid an uncertain global economic environment and looming geopolitical risks.
The British Pound also experienced fluctuations on Tuesday, as the GBP/USD pair lost its traction and declined toward 1.2950. This decline followed an earlier ascent to levels above 1.3000, marking its highest point since early November.