The volatility in the financial markets that followed the inauguration of Donald Trump as the 47th President of the United States persists during the European trading session on Wednesday (January 22, 2025). One major catalyst for this volatility is Trump’s announcement to increase import tariffs by 25% on goods from Canada and Mexico, and an additional 10% on imports from China starting February 1.
This situation could lead to further significant movements in the US trading session tonight.
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GOLD
Price Surge for Gold (XAUUSD) has continued at the start of the European trading session, hitting a mark of $2,762.23 per troy ounce. This price point is the highest since November 1 and is approaching the all-time high of $2,790 per troy ounce reached on October 31.
Trump’s proposed tariff hikes could spark a second trade war, which, if it occurs, may have detrimental effects on the global economy, resulting in an increased demand for Gold as a safe haven. This sentiment is likely to influence Gold’s movement later tonight.
OIL
Oil prices (CLS10) reversed course and climbed to $76.37 per barrel after previously dipping to $75.26 per barrel. The oil prices had already fallen for four consecutive days, indicating a potential rebound due to short covering activities.
However, the sentiment surrounding oil remains negative as Trump plans to boost domestic oil production, which could lead to an oversupply situation. This development has potential implications for a further drop in oil prices during tonight’s trading.
EURUSD
The EURUSD pair rebounded to 1.04574 at the beginning of the European trading session after dipping to 1.03923 earlier. This rebound came after European Central Bank (ECB) Governor Christine Lagarde indicated that there would be no 50 basis point cut in interest rates.
This sentiment is likely to guide the EURUSD movements during tonight’s trading.
GBPUSD
Similarly to the EURUSD, this currency pair also rebounded to 1.23758 at the start of the European session after being at 1.23113. The relatively low level of GBPUSD triggered buying activity, particularly after the average wage data from the UK showed an increase.
This could influence the Bank of England (BoE) not to lower interest rates in early November. This sentiment is expected to continue affecting GBPUSD during tonight’s trading session.
USDJPY
The USDJPY retraced some gains after previously reaching a daily high of 146.111. The Yen is performing robustly as the Bank of Japan (BoJ) is anticipated to raise interest rates this week.
This situation means that USDJPY is likely to experience significant volatility with wide ranges during the European session. Traders awaiting clarity from the BoJ could result in further volatility for USDJPY, potentially leading to price pressures in tonight’s trading.
Nasdaq
The Nasdaq index rose at the start of the European trading session, hitting a daily high of 21,906. The Nasdaq showed more stability than it did on Tuesday when it dropped over 300 index points.
Trump’s delay in signing the executive order to raise import tariffs provided a positive sentiment for stock indices, including the Nasdaq.
Before it is officially signed, there is hope that the tariff increases will not be aggressively implemented, as there may be bilateral negotiations aimed at avoiding a trade war. This sentiment is likely to impact Nasdaq’s movements during tonight’s trading.
