The lack of major tariff updates from US President Donald Trump put pressure on US Dollar bulls, despite tough rhetoric against Europe, China, Canada, and Mexico. Additionally, hopes for more stimulus from China, Trump’s infrastructure spending plans, and strong earnings from Netflix and United Airlines helped lift equities and boosted riskier assets against the Greenback. It’s worth noting, however, that hawkish bets on the Federal Reserve (Fed) put a floor under the US Dollar as traders look ahead to updates from Trump and key data/events this week.
Amid these plays, the US Dollar Index (DXY) hits a two-week low, while Gold stays strong at its highest level since November.
EURUSD and GBPUSD fluctuate at two-week highs, while USDJPY rebounds within its weekly range.
AUDUSD and NZDUSD retreat after an early-week surge, and USDCAD shows slight gains after reaching its highest level since March 2020.
Crude Oil faces pressure for a fifth straight day, crypto markets pause, and equities inch higher in a quiet trading session.
EURUSD stays steady at a two-week high as buyers reassess trade-related factors after a two-day rally. Mixed ZEW Survey data for Germany and the Eurozone, along with European Central Bank (ECB) officials resisting significant rate cuts, support the Euro ahead of today’s speech from ECB President Christine Lagarde.
Alike its European counterpart, the GBPUSD reached a two-week high after two days of gains, though it posts mild losses by press time. The Cable pair reflects growing expectations of Bank of England (BoE) rate cuts and concerns over the UK’s economic transition following Tuesday’s mostly negative employment report.
Meanwhile, USDJPY traders face uncertainty ahead of Friday's Bank of Japan (BoJ) policy announcement, with mixed sentiment and a lack of major data from the Asian major adding to the caution.
Despite the US Dollar bulls’ struggle, the Australian, New Zealand, and Canadian Dollars give up early-week gains due to weak commodity performance and trade war concerns. Mixed inflation data from New Zealand, sentiment reports from Australia, and lower Crude Oil prices—Canada’s key export—further challenge AUDUSD and NZDUSD buyers, while supporting USDCAD.
Market uncertainty drives buyers toward gold as central banks prepare for rate cuts and China plans to increase fiscal stimulus. This, along with the US Dollar’s struggles, lifts XAUUSD to its highest level since November 2024, marking a third consecutive day of gains.
Meanwhile, Trump’s push for more oil drilling and rumors of OPEC+ increasing supplies in 2025 weigh on crude prices, which have dropped for five straight days. A cautious mood ahead of today’s US oil inventory data, however, challenges energy bears.
An absence of a major crypto announcement from the Trump administration weighs on Bitcoin (BTCUSD) and Ethereum (ETHUSD) after two days of gains. Adding to the pressure is the market’s typical "buy the rumor, sell the fact" behavior.
While the economic calendar is relatively light, ECB President Lagarde’s speech, US crude oil inventory data, and Canada’s industrial production figures may provide some action for momentum traders. However, the spotlight remains on the Trump administration's moves.
Lagarde’s expected optimism could challenge EURUSD sellers, but Trump’s potential tariff threats might support the US Dollar and pressure the Euro. Meanwhile, a likely rise in US oil inventories, dovish Bank of Canada sentiment, and geopolitical tensions surrounding Canada could push USDCAD toward its highest level since March 2020.
Gold is likely to stay on buyers’ radar, while USDJPY could remain under pressure amid expectations of a hawkish BoJ.
May the trading luck be with you!
