Equity markets have had another tough session as Trump’s latest tariffs on steel and aluminum imports came into force. The retaliation has begun, with the European Union launching countermeasures on American goods worth €26 billion.
Away from the 'tit for tat' politics, we have data releases, including the US CPI inflation report. This could be the first real test for EUR/USD bulls.
The market consensus suggests that the US inflation trend will ease slightly to 0.3% month-over-month, down from 0.5% prior. Even data in line with expectations hints that the Fed is likely to be cautious about cutting rates as much as the market currently expects. That said, investors have clearly shifted their focus to US growth risks. If US inflation data come in strong and the market chooses to overlook the implications for Fed policy, the momentum driving EUR/USD higher could find fresh incentive in the near term.
The more recent disruptor has come from Germany, where news of increased fiscal spending could shift the trajectory of German and Eurozone growth into a new gear. Last month, Germany’s ZEW indicator improved at the fastest pace in two years on growing optimism.
Market-wise, Bitcoin fell 1.7% to $81,357.60, while Ether dropped 4.3% to its lowest level in more than 16 months. The yield on 10-year Treasuries declined two basis points to 4.26%. Spot gold was little changed at $2,912 per ounce, and West Texas Intermediate crude rose 0.2% to $66.36 a barrel.
