🔽 USDJPY falls as investors seek refuge in safe assets

The Japanese yen (JPY) advanced towards approximately 143.500 on Monday, marking its third consecutive session of gains.

👉 Possible effects for traders

The rally in the Japanese yen was driven largely by renewed concerns over protectionist policies after former U.S. President Donald Trump threatened to double tariffs on steel and aluminium imports towards 50%, effective 4 June. These developments reignited fears of a broader trade conflict, prompting investors to reduce positions in riskier assets and seek stability in traditional safe havens like the yen.

The tariff announcement had immediate sectoral implications, putting pressure on Japanese steelmakers. JFE Holdings and Kobe Steel saw increased investor caution due to their potential exposure to the U.S. market and rising input costs. However, Nippon Steel remained relatively resilient, buoyed by Trump's favourable comments on its proposed merger with U.S. Steel—an endorsement that provided some insulation from the broader industry headwinds. Meanwhile, escalating U.S.–China tensions added to global uncertainty, with Beijing firmly rejecting Trump's claim that it had violated a recent trade agreement signed in Geneva.

USDJPY fell during Asian and early European trading hours. Today, market participants will closely monitor the U.S. ISM Manufacturing Purchasing Managers' Index report at 2:00 p.m. UTC. A higher-than-expected reading may push USDJPY higher, while softer data will put additional bearish pressure on the pair.

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📊📊Euro holds firm amid escalating trade tensions

Today, the euro (EUR) has risen by 0.29% as escalating trade tensions have weighed on investor confidence.

👉 Possible effects for traders

The euro's rise followed former U.S. President Donald Trump's announcement that tariffs on steel and aluminium imports would be doubled towards 50% starting June 4. The announcement renewed fears of a protracted trade conflict. Meanwhile, Beijing has strongly rejected Trump's accusations that China violated a trade agreement struck last month in Geneva. The conflict cast doubt on the immediate prospects for diplomatic engagement between the two largest economies.

Despite the renewed tension, National Economic Council Director Kevin Hassett suggested that a meeting between Trump and Chinese President Xi Jinping could still occur this week, leaving the door open for dialogue. Meanwhile, markets are focusing on several key U.S. economic indicators, with particular focus on Friday’s nonfarm payrolls report. The report could provide critical insights into the economic implications of changing trade dynamics. The data will also help determine whether the recent pressure on the U.S. dollar is transitory or marks the beginning of a broader reassessment of U.S. economic risks.

Today, traders should closely monitor developments surrounding U.S. trade tariffs and the peace negotiations between Russia and Ukraine. The U.S. will release several economic reports that may increase volatility. ISM Manufacturing Purchasing Managers' Index (PMI) will come out at 2:00 p.m. UTC and may affect the euro. Key levels to watch are resistance at 1.13500 and support at 1.11400.

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📊📊Gold rebounds on new tariff threat

The gold price (XAU) fell by 0.86% on Friday as resilient U.S. economic data weakened the appeal of safe-haven assets, even as geopolitical and trade tensions escalated.

👉 Possible effects for traders

Markets reacted strongly after former U.S. President Donald Trump announced a planned increase in tariffs on steel and aluminium imports from 25% towards 50% starting 4 June. The move reignites concerns over a global trade war, particularly as legal challenges to Trump's previous tariff actions continue to unfold. An appeals court recently allowed the lawsuit to proceed, overruling an earlier decision by the Court of International Trade to pause the tariffs. This has added legal uncertainty to the economic situation.

Adding to the market volatility, Trump accused China of breaching a tariff ceasefire brokered in early May. Beijing denied the accusation, alleging reciprocal U.S. violations. Meanwhile, geopolitical risks surged after a Ukrainian drone strike reportedly destroyed over 40 Russian military aircraft, prompting a retaliatory missile and drone barrage. The escalation occurred just ahead of scheduled peace negotiations in Istanbul, heightening further uncertainty in markets grappling with rising protectionism and legal ambiguity surrounding U.S. trade policy.

XAUUSD rose above $3,320 during Asian and early European trading sessions as Trump's new tariff threat spurred demand for safe-haven assets. Today, investors should await comments from Federal Reserve Chair Jerome Powell at 5:00 p.m. UTC for more clues on the U.S. interest rate path.

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📊 GBP rises as tariff worries resurface

The British pound (GBP) rose 0.66% against the U.S. dollar (USD) on Monday, driven by rising U.S.–China trade tensions and new metal tariff announcements.

👉 Possible effects for traders

U.S. President Donald Trump revealed plans to raise tariffs on steel and aluminium imports from 25% towards 50%. The announcement drew a swift backlash from Beijing, which vowed to retaliate with countermeasures. These developments increased investor concerns over global trade disruptions, boosting demand for safe-haven assets. It also put downward pressure on risk assets across sectors exposed to global manufacturing and commodities.

Meanwhile, growing optimism over the U.K. economy supported the British pound. The International Monetary Fund (IMF) revised its 2025 gross domestic product growth forecast from 1.1% towards 1.2%, citing strong consumer demand and resilient investment. However, the IMF urged Chancellor Rachel Reeves to uphold fiscal discipline ahead of the 11 June Spending Review. Inflationary pressures persist, with grocery prices climbing 4.1% year-on-year in May—the highest since early 2024—prompting consumers to shift to cheaper alternatives. In response, markets have scaled back expectations for rate cuts, pricing in just 40 basis points of easing from the Bank of England by year-end.

GBPUSD rose during the Asian session but fell during the early European trading session. U.S. JOLTS Job Openings data, due at 2:00 p.m. UTC today, may influence monetary policy expectations and trigger volatility in GBPUSD. Numbers exceeding the forecast may lower the probability of a rate cut by the Federal Reserve, pushing GBPUSD down towards 1.34500. Lower-than-expected results will confirm a loosening U.S. labour market, lifting GBPUSD above 1.35600.

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📊 EURUSD rallies on escalating trade tensions

The euro (EUR) rose by 0.84% against the U.S. dollar (USD) on Monday.

👉 Possible effects for traders

'The DXY (U.S. Dollar Index) fell faster than we had anticipated in our year-ahead outlook, reaching our year-end target of 101.00 last month. We think that this weakening trend continues, and we now forecast the DXY to fall an additional 9% over the next 12 months to 91.000, with USD weakness most pronounced against its safe-haven peers—EUR, JPY, and CHF', Morgan Stanley analysts said in their mid-year outlook.

On Monday, China's Commerce Ministry dismissed the recent U.S. accusation of a breaking trade truce as groundless. Officials pledged strong but unspecified countermeasures to protect national interests—signalling a firm stance amid escalating tensions. U.S. Treasury Secretary Scott Bessent tried to calm markets on Sunday, stating that a call between President Trump and Chinese President Xi Jinping was likely imminent. He expressed confidence that the dispute 'will be ironed out', offering a potential diplomatic path to de-escalation.

EURUSD fell during Asian and early European trading sessions. Today's market focus is the U.S. JOLTS Job Openings report at 2:00 p.m. UTC. Stronger-than-expected figures could delay the Federal Reserve's rate cuts, pushing EURUSD below 1.13500. Conversely, lower-than-expected results may weaken the U.S. dollar and lift EURUSD above 1.14500.

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📊 Gold prices start new rally

The gold price (XAU) surged by 2.5% on Monday, climbing above $3,370 and reaching its highest level in over three weeks. The surge was driven by rising demand for safe-haven assets amid growing geopolitical and economic tensions.

👉 Possible effects for traders

Meanwhile, the U.S. dollar (USD) declined by 0.7%, enhancing the metal's appeal for international buyers and adding momentum to the upward move. With markets already on edge, gold's traditional role as a hedge against volatility and currency weakness returned to focus. Strong risk-off sentiment lifted XAUUSD higher, fuelling bullish momentum.

Investor concerns intensified following U.S. President Donald Trump's announcement of a tariff hike on steel and aluminium imports, doubling existing rates towards 50%, starting 4 June. The tariff threat reignited fears of a broader trade war, especially after Trump accused China of violating a recent truce—an allegation Beijing quickly denied. The escalating conflict between the world's two largest economies deepened uncertainty around global trade policy. As a result, investors sought safety, boosting demand for gold as a hedge against rising uncertainty.

XAUUSD fell during Asian and early European trading sessions. Today, the main focus is on the U.S. JOLTS Job Openings report at 2:00 p.m. UTC. The data may affect investors' interest rate expectations and trigger volatility in XAUUSD. Higher-than-expected figures may lower the probability of an interest rate cut by the Federal Reserve, potentially pushing XAUUSD below $3,340. Conversely, weaker data would confirm that the U.S. labour market is loosening, increasing the probability of a rate cut later this year and pushing XAUUSD above $3,400.

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📊 Australian dollar strengthens despite weak GDP

The Australian dollar (AUD) gained 0.51% on Tuesday as a weaker U.S. dollar (USD) helped offset disappointing domestic Gross Domestic Product (GDP) figures.

👉 Possible effects for traders

Australia's economy expanded by just 0.2% quarter-on-quarter in Q1 2025, marking the slowest growth in three quarters and falling short of the 0.4% forecast. On an annual basis, GDP rose by 1.3%, below the expected 1.5%. Weaker-than-expected figures strengthened expectations of further monetary easing by the Reserve Bank of Australia. Futures pricing now indicates an 80% probability of an additional rate cut at the July meeting.

Adding to market uncertainty, U.S. President Donald Trump's latest tariffs on steel and aluminium officially take effect on 4 June, exacerbating tensions with key trading partners. Relations between Washington and Beijing remain fragile, with both sides accusing each other of breaching the terms of their recent trade agreement. Investors are now closely watching for a potential meeting between Trump and Chinese President Xi Jinping later this week, which could lead to either a diplomatic resolution or a further escalation.

AUDUSD fell during Asian and early European trading hours. Today, the main focus is on two U.S. macroeconomic reports: ADP Employment at 12:15 p.m. UTC and ISM Services Purchasing Managers' Index (PMI) at 2:00 p.m. UTC. A higher-than-expected number will pressure AUDUSD lower, while softer data may support the pair.

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📊 Softer-than-expected inflation data pressures euro

The euro (EUR) fell by 0.64% against the U.S. dollar (USD) on Tuesday after eurozone inflation came in slightly below expectations.

👉 Possible effects for traders

A report showed that eurozone consumer prices rose by 1.9% year-over-year in May, falling just under the 2% market forecast. Weaker-than-expected data heightened expectations that the European Central Bank (ECB) will deliver a 25-basis-point rate cut later this week. With inflation now below the ECB's target and signs of a cooling economy, markets view this move as a final cut before the central bank pauses its easing cycle to reassess incoming economic data.

At the global level, the Organization for Economic Cooperation and Development (OECD) revised its global economic outlook, projecting GDP growth to slow from 3.3% in 2024 towards 2.9% in 2025 and 2026. The downgrade reflects growing concerns over escalating trade tensions, which the OECD warns could further undermine business investment, distort supply chains, and fuel inflationary pressures. All these challenges may complicate the path forward for both monetary and fiscal policymakers worldwide.

EURUSD remained unchanged during Asian and early European trading sessions. Today, the main focus is on the U.S. macroeconomic reports: ADP Employment at 12:15 p.m. UTC and ISM Services Purchasing Managers' Index (PMI) at 2:00 p.m. UTC. Stronger-than-expected figures may provoke a downward correction in EURUSD. Conversely, weaker-than-expected results may lift the pair towards 1.14500.

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