U.S. President Donald Trump instigated significant market movements at the start of trading on Monday (July 7, 2025). Despite facing criticism that his policies would increase the fiscal deficit and national debt, Trump went ahead and signed a law for tax cuts and spending reduction. Long-term impacts on the economy are expected to be negative.
In addition, Trump has pushed back the deadline for trade negotiations from the original date of July 9 to August 1. This extension allows trading partners, including the European Union, the largest partner, to continue discussions and momentarily avoid higher import tariffs.
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Such sentiment is likely to influence market movements during the European trading session, in addition to the release of economic data from the Eurozone. Here are updates from Trading Central:
- Germany’s industrial production data (month-on-month/May); forecast -0.6% versus the prior -1.4%.
- Eurozone retail sales (year-on-year/May); forecast 1.7% against the previous 2.3%.
GOLD
Gold prices (XAUUSD) plummeted by nearly $32 or 320 pips during today’s trading, dropping to $3,305.22 per troy ounce. The decline is attributed to improved consumer sentiment in the U.S. following Trump’s postponement of the trade negotiation deadline.
This delay broadens the chances of reaching an agreement and averting trade wars. As a result, Gold’s attractiveness as a safe haven diminishes, leading to potential pressure in the European trading session.
OIL
Oil prices (CLS10) fell by nearly $1 to $65.52 per barrel in the morning session before gradually recovering some losses. Prices were impacted after OPEC+ decided to increase production by 548,000 barrels per day starting in August, surpassing the predicted increase of 411,000 barrels per day.
This decision could boost global supply, creating a negative sentiment for oil.
EURUSD
EURUSD saw a slight increase in trading last Friday, reaching a peak of 1.17903 this morning before dropping back to 1.17633. The trade deadline postponement provided positive sentiment; however, the pair’s proximity to levels not seen since September 2021 makes it vulnerable to corrections.
During the European session, EURUSD could encounter profit-taking if German and Eurozone data come in lower than forecasted.
GBPUSD
GBPUSD ended the previous Friday unchanged and has decreased by over 340 points (34 pips) to 1.36113 today. This depreciation stems from ongoing fiscal and political uncertainties in the UK that have been escalating since last week.
Consequently, UK bonds have faced selling pressure, affecting GBPUSD. Instability arose after the Labour Party rejected the government’s proposed welfare reforms. Speculation regarding the future of Finance Minister Rachel Reeves has also surfaced. This sentiment is expected to continue influencing market movements during the European trading session.
USDJPY
USDJPY declined during trading last Friday and continued downwards this morning to 144.223 before rebounding to 145.073.
This movement illustrates that while the U.S. dollar is under pressure due to the recently passed tax cuts and spending legislation, Trump’s delay in the trade negotiation deadline has allowed for a rebound.
The positive sentiment derived from Trump’s decision to extend the deadline to August 1 is expected to impact USDJPY movements during the European session.
Nasdaq
The Nasdaq index fell over 150 points last Friday, while this morning it briefly rose by 118 points to 23,023, nearing its all-time high of 23,100 reached the previous Thursday.
Investor sentiment improved following Trump’s announcement of the delayed trade negotiation deadline, which is likely to provide a positive outlook for the Nasdaq in the upcoming European trading session.
