The EUR/USD pair hit 1.1897 on Monday, a fresh low for the year, when the Eurozone Retail PMI for April has failed to meet estimates. With the Germany’s production data and trade surplus announcing today, affecting the pair if they manage to meet or exceed expectations. However, the US Dollar remains strong as this week as we get the release of April inflation numbers. The expectation is for US inflation to have risen by 2.5% in the month of April, and this will keep the dollar in the spotlight in the near-term as the bullish breakout from the past few weeks has continued in a rather noticeable manner.
The USD/JPY is rebounding in the late Asia session, recovering from a slip into 108.85 on a small giveback in the US Dollar action, but the pair has rebounded to trade back into the 109.00 handle ahead of the European session. Markets are still also focused on the US-China trade negotiations, which have so far yielded little results, and traders are increasingly aware that the clock is ticking thanks to the US’ self-imposed deadlines on when the next round of tariffs will come into effect.
The GBP/USD managed to hold steady against the US Dollar through Monday’s trading, while on Tuesday the pair has returned flat on the day, trading near 1.3556. Market analysts expect no change from BoE, compared to several days ago where the forecast was titled in favour of a rate hike. The decision will be released on Thursday with the minutes and the Quarterly Inflation Report.
Oil prices hold near their highest level since November 2014 on fears US President Trump will withdraw from Iran deal. Renewed sanctions on Iran – the world’s fifth-largest producer of crude oil in 2017, will likely tip the scales in favour of oil bulls, led to further supply tightening. Trump is expected to announce the decision on the nuclear deal at 18:00 GMT today.
Gold is retreating into recent lows near 1,310.00 as the US Dollar begins to resume its upward march. Dollar-denominated assets such as gold are sensitive to moves in the dollar – a gain in the dollar makes gold more expensive for holders of foreign currency and thus decreases demand for the precious metal. The US dollar is having the most negative impact on prices. Since mid-April, the dollar has been immensely supported by a sudden downturn in global economic data, specifically in Europe which has left the US economy the last man standing regarding economic growth.