The financial market experienced significant volatility during trading on Tuesday, driven by concerns over an expanding trade war and indications of a weakening U.S. economy.
Yesterday, the Conference Board reported a consumer sentiment index for February at 98.3, a steep decline from the previous month’s 104.1. A reading below 100 suggests that consumers in the U.S. are pessimistic about economic conditions, which could signal a decrease in spending. This clearly impacts the slowing economic growth in the U.S.
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This sentiment is likely to continue influencing market movements throughout the European trading session on Wednesday (February 26, 2025), alongside the release of German consumer sentiment data at 14:00 WIB. The forecast in Trading Central indicates that German consumer sentiment for this month is -21, an improvement from -22.4 last month.
GOLD
Gold fluctuated by more than $65 (or 650 pips) during Tuesday’s trading, eventually closing at $2,914.58 per troy ounce. In comparison to Monday’s closure, Gold fell by over $37 due to profit-taking activities.
Nonetheless, the outlook for Gold remains positive due to the heightened risks from the broader trade war and signs of an economic slowdown. This morning, Gold rebounded, trading at $2,930.11 per troy ounce. This sentiment is expected to continue affecting Gold’s movements during the European trading session.
OIL
Increasing signs of an economic slowdown in the U.S. caused Oil prices to plummet by $1.81, settling at $69.08 during Tuesday’s trading, marking the lowest level in two months.
The consumer pessimism in the U.S. signals a potential decline in spending, which could hinder economic growth. As a result, the demand for Oil may decrease. This negative sentiment is likely to impact trading in the European session.
EURUSD
EURUSD rose by 478 points (47.8 pips) to 1.05133 in Tuesday’s trading, approaching a one-month high. Signs of a deteriorating U.S. economy have placed pressure on the U.S. dollar, while the ongoing trade war risks with Europe continue to loom over the euro. This makes the movement of this currency pair highly volatile, as evidenced by a afternoon dip to 1.04910.
During the European session, if the German consumer sentiment data exceeds forecasts, EURUSD could gain additional positive sentiment.
GBPUSD
Similar to EURUSD, this currency pair rose by 427 points (42.7 pips) to 1.26644. During today’s trading, GBPUSD dropped to 1.26356, indicating that sentiments surrounding the trade war still have a significant impact.
In the European session, GBPUSD’s movements are likely to mirror those of EURUSD, suggesting a potential rebound if the German economic data yields positive sentiment for EURUSD.
USDJPY
USDJPY exhibited considerable volatility within a range of 148.563 – 150.300 during Tuesday’s trading. It closed at 148.992, down 683 points (68.3 pips) compared to Monday’s close.
USDJPY even touched a four-month low. This low position prompted short covering activity, causing the price to rise to 149.629 by this afternoon. Such activity may continue into today’s European session.
Nasdaq
The Nasdaq index dropped by 232 points to 21,195 in Tuesday’s trading, pressured by signs of a slowing U.S. economy and growing trade war risks.
The Nasdaq has now declined for five consecutive days, totaling 1,029 index points lost, and the negative sentiment is expected to linger.
