Financial markets began the European trading session on a more stable note on Monday (May 26, 2025), following significant movements earlier in the morning. The statements made by President Donald Trump regarding trade negotiations with the European Union remain a major driver of market movements.
As previously mentioned in the Macro Overview, last Friday, President Trump threatened to impose a 50% import tariff on the EU due to stalled trade talks. He even intended to implement this tariff starting June 1. However, Trump softened his approach on Sunday, announcing a delay in the tariff increase until July 9, allowing both parties more time to reach a trade agreement.
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This sentiment, especially if there are any new updates, is expected to influence market movements throughout the evening trading session.
GOLD
Gold (XAUUSD) prices continued to decline at the start of the European trading session, dipping to a daily low of $3,323.69 per troy ounce. Compared to the close on Friday, gold has dropped over $34 or 340 pips.
Trump’s decision to postpone the EU import tariff hike until July 9 is exerting pressure on gold prices. With additional time for negotiations, there is hope that the U.S. and EU will finalize a trade deal.
As a result, riskier assets with higher yields, like stocks, are becoming more attractive to investors, while gold, traditionally a safe haven asset, is losing its appeal.
This sentiment is likely to continue affecting market movements during tonight’s trading session.
OIL
Oil prices (CLS10) have shown little movement at the beginning of the European trading session, trading in the range of $61.48 – $62.12 per barrel. The upcoming OPEC+ meeting this week is a major focus for traders.
The oil cartel plans to increase production by 411,000 barrels per day starting in July, which is generating negative sentiments in the oil market.
EURUSD
The EURUSD currency pair retraced its earlier gains after rising to 1.14188. Market sentiment for this pair remains positive as the dollar faces significant pressure following Moody’s downgrade of the United States’ credit rating.
Moreover, Trump’s extension of trade negotiations between the U.S. and EU has further bolstered positive sentiment for EURUSD. Both factors are expected to exert influence over market movements tonight.
GBPUSD
Similar to EURUSD, this currency pair has seen a correction at the start of the European session after nearly reaching 1.36000, the highest level since February 2022.
The pound is gaining positive sentiment from a series of economic data releases from the UK, including strong retail sales and accelerating inflation.
Conversely, the dollar is pressured by concerns over the potential increase in U.S. debt and fiscal deficit. This issue was highlighted by Moody’s when downgrading the United States’ credit rating.
Such sentiments are likely to influence the market during tonight’s trading session.
USDJPY
USDJPY has rebounded, approaching a daily high of 143.080 at the onset of the European trading session after dropping to 142.226 earlier this morning.
Prior to today, USDJPY saw declines in 7 out of the last 9 trading days, totaling over 6,000 points (600 pips). This downward trend underscores the significant pressure faced by the U.S. dollar, particularly due to the credit rating downgrade by Moody’s.
Additionally, President Trump’s proposed tax and spending legislation risks exacerbating U.S. debt and fiscal deficits. This situation may cast a negative shadow over USDJPY for the evening trading session.
Nasdaq
The Nasdaq index rallied at the beginning of the European trading session, reaching a daily high of 21,285. Compared to Friday’s close, Nasdaq gained 333 index points.
The positive sentiment for Nasdaq is attributed to Trump’s decision to delay the hike in import tariffs from the EU until July 9, allowing both parties additional time to negotiate a trade deal. This optimism is expected to influence Nasdaq’s movements during tonight’s trading session.
