The President of the United States, Donald Trump, announced that a trade agreement with several key trading partners, including Europe, is expected in the coming days. This statement comes on the heels of a trade agreement reached with Japan.
His remarks have improved market sentiment, although caution persists. This is partly due to the absence of any signals from the European Union indicating an impending trade deal. In fact, some EU nations, including Germany, are now showing support for the use of the Anti-Coercion Instrument (ACI) should no agreement be reached before August 1.
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As previously highlighted in the Macro Overview, the ACI is referred to as a “trade bazooka,” intended as a last-resort measure in response to the import tariffs imposed by Trump. If invoked, the EU could implement additional import tariffs, restrict certain exports, suspend market access rights, and take other targeted trade measures.
The uncertainty surrounding the potential trade agreement will likely continue to influence financial market movements during trading on Wednesday (July 23, 2025) this evening. Additionally, the release of the US existing home sales data at 21:00 WIB is also anticipated. Forecasts from Trading Central indicate that existing home sales for June may show a -0.7% month-on-month (MoM) decline, compared to a previous increase of 0.8% MoM.
GOLD
Gold (XAUUSD) prices have been moving sideways within a range of $3,316 to $3,438 per troy ounce at the start of European trading, following three consecutive days of gains. Trump’s assertion of reaching a trade agreement in the near term has capped Gold price increases.
The US is still engaged in negotiations with the EU, Canada, and Mexico, which are its primary trading partners. There have been no positive signals from any of these parties, leading to cautious market behavior. The US dollar has not been able to recover as traders await clarification on Trump’s statements. If the dollar continues to weaken and the actual existing home sales data is released lower than the forecast, Gold may receive positive sentiment.
OIL
Oil prices (CLS10) fell in early European trading, hitting a daily low of $64.76 per barrel. The decline in Oil prices is primarily due to concerns over reduced demand if trade tensions resurface, potentially slowing global economic growth.
The release of US Oil stock data at 21:30 WIB could drive Oil prices later this evening. Last week, US Oil stocks were reported to have dropped by 3.9 million barrels; if tonight’s data shows another significant decrease, we could see a positive sentiment towards Oil.
EURUSD
EURUSD dipped in early European trading, reaching a daily low of 1.17272. This marks a 245-point (24.5 pip) decline compared to Tuesday’s close.
The drop results from profit-taking after three consecutive days of gains. Market participants are still awaiting confirmation regarding a potential trade agreement between the US and the EU, making EURUSD movements highly dynamic.
Economic data from the US later this evening will also impact movement; if released lower than forecasted figures, there is a chance EURUSD may receive some positive sentiment.
GBPUSD
GBPUSD saw an increase of 208 points (20.8 pip) to 1.35487 at the start of European trading. This upward movement of the currency pair indicates ongoing US dollar weakness, as market players wait for clarity on trade agreements between the US, the EU, Mexico, and Canada.
If no deal is reached, there is a potential risk of trade wars which could adversely affect the US economy. Consequently, the dollar remains under negative sentiment, especially if tonight’s existing home sales data is released below the forecast of -0.7%.
USDJPY
USDJPY has reversed direction early in European trading, nearing its daily low of 146.196 after previously rising to 147.210. The yen is currently experiencing positive sentiment following the US trade agreement with Japan.
With this agreement, the import tariff from Japan has been reduced to 15%, down from the previous rate of 25%. This trade deal could also strengthen Japanese Prime Minister Shigeru Ishiba’s position after his party lost a majority in Parliament last weekend.
The positive sentiment for the yen puts pressure on USDJPY, which could increase if US economic data released tonight comes in worse than the forecasts.
Nasdaq
The US trade agreement with Japan has led to a rise in Nasdaq during European trading, reaching a daily high of 23,282. Additionally, market players are looking forward to the release of Alphabet’s earnings report, the parent company of Google.
Optimism regarding solid earnings may provide positive sentiment for Nasdaq, as Alphabet is the seventh largest company by market cap on Nasdaq.
