Market Overview
- The forex market witnessed significant movements, primarily driven by escalating trade tensions between the US and its trading partners, particularly the EU and China.
- The EUR/USD pair showed strength, rising by 0.52% following the EU Commissioner's announcement of a strategic response to US tariffs.
- Despite a contraction in Germany's industrial sector, the Euro remained resilient, gaining 0.51% against the USD.
- The Japanese Yen faced selling pressure amidst a risk-off environment and recession fears, while Gold rebounded from a three-week low during the Asian session.
- The Indian Rupee was under pressure due to Trump's trade tariffs, with investors expecting a rate cut by the RBI.
- The NZD/USD pair weakened due to China imposing a 34% tariff on US imports in response to Trump's tariffs.
Fundamental Analysis
- Major economic events included announcements from central banks and data releases.
- The Bank of Japan maintained a positive assessment for all nine regions in Japan despite concerns about the impact of trade policies on output and profits.
- The People's Bank of China reported an increase in China's state Gold reserves for the fifth consecutive month.
- Ukrainian President Zelenskyy reported that Russian military attacked an energy facility in Kherson, causing Gold prices to dip by 1.92%.
Technical Analysis
- EUR/USD traded at 1.1010, showing an increase of 0.52% following EU Commissioner Séjourné's announcement regarding EU's response to US tariffs.
- USD/JPY faced bearish pressure with resistance near 147.70 and support levels at 146.00 and below due to reduced BoJ rate hike bets and aggressive Fed rate cut expectations.
- Gold (XAU/USD) rebounded from a three-week low during the Asian session due to factors like increased Chinese gold reserves and bets on aggressive Fed rate cuts.
- GBP/USD rebounded from a one-month low during the Asian session, supported by divergent Fed-BoE policy expectations.
Conclusion
- The market outlook remains uncertain due to escalating trade tensions and fears of a global recession.
- Investors are advised to monitor key economic data releases and central bank statements for potential trading opportunities.
- Safe-haven currencies and Gold could offer potential investment opportunities amidst the current risk-off environment.
