The US dollar has struggled to gain traction as the European trading session begins on Tuesday (July 22, 2025). This reflects the ongoing pressure on the dollar caused by escalating trade war risks.
With less than two weeks until President Donald Trump’s import tariff policies take effect, trade negotiations with several key partners have yet to show any tangible progress. In fact, the European Union is preparing to raise retaliatory tariffs against the US if a trade agreement isn’t reached by August 1.
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This sentiment is likely to continue affecting market movements this evening, alongside remarks from Federal Reserve Chairman Jerome Powell at 7:30 PM WIB. If Powell signals a more cautious approach to interest rate cuts due to rising inflation in the United States, it could potentially shift market direction.
GOLD
Gold prices (XAUUSD) have seen a correction to $3,383.32 per troy ounce at the start of the European session after a sharp rise earlier this week that brought it back to the $3,400 level.
Increasing trade war risks are prompting traders to turn to Gold as a safe haven asset once again. However, Powell’s speech is also drawing significant attention. Should Powell indicate a more conservative stance on interest rate reductions, Gold could face downward pressure.
Prolonged high interest rates may negatively impact Gold, as US Treasury yields, also considered safe havens, would remain elevated, making Gold, which does not yield returns, less attractive.
OIL
Oil prices (CLS10) fell by $0.74 to $65.02 per barrel at the beginning of the European trading session. Oil received negative sentiment after market participants noted that EU sanctions on the Russian oil industry had minimal impact on global supply reductions. Additionally, the trade war risks could suppress global economic growth, adversely affecting Oil demand.
The pressure on Oil may increase further if Powell hints at keeping interest rates higher for an extended period, raising concerns about a slowdown in the US economy and consequently affecting Oil demand.
EURUSD
EURUSD climbed to 1.17094 at the start of the European trading session, marking a rise of 158 points (15.8 pips) compared to Monday’s close. The direction of this currency pair could reverse if Powell signals a more cautious approach to interest rate cuts.
In the previous Fed monetary policy meeting, several officials expressed concerns over inflation risks in the U.S. resulting from Trump’s import tariff policy.
If Powell, as the chief leader, indicates the same, it could create positive sentiment for the dollar, putting pressure on EURUSD.
GBPUSD
GBPUSD rebounded to 1.34993 at the start of the European trading session after previously trading as low as 1.34615. The pair is currently overshadowed by negative sentiment surrounding the deteriorating UK economy in Q2, along with predictions that the Bank of England (BoE) will cut interest rates soon.
Thus, if Powell suggests a more cautious approach to rate cuts, GBPUSD may be further pressured.
USDJPY
USDJPY trimmed its earlier gains after reaching a daily high of 147.946. The political situation in Japan remains uncertain following the recent election, which has imparted negative sentiment on the yen.
As noted in the previous Macro Overview, the coalition led by Prime Minister Shigeru Ishiba lost its parliamentary majority in last weekend’s elections, although he has vowed to continue governing.
Negative sentiment for the yen is generally favorable for USDJPY, especially if Powell indicates a more cautious stance on interest rate cuts.
Nasdaq
Profit-taking has led to a decline in Nasdaq at the start of the European trading session, reaching a daily low of 23,268. Earlier this week, Nasdaq hit an all-time high of 23,423, prompting profit-taking ahead of Powell’s speech.
If Powell suggests that elevated interest rates will be maintained longer, profit-taking may continue.
