The President of the United States, Donald Trump, has instituted a 100% import tariff on foreign films, reigniting concerns about a potential escalation in trade wars. This sentiment influenced market movements early last week, alongside the release of the US purchasing managers’ index (PMI) for services by ISM at 51.6 in April, surpassing the forecast by Trading Central of 50.3, indicating a robust economy.
This sentiment continued to affect trading during the European session on Tuesday (May 6, 2025).
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GOLD
Gold (XAUUSD) prices soared by more than $92 or 920 pips during Monday’s trading, reaching $3,333.41 per troy ounce. Today, Gold has further climbed to $3,386.88 per barrel, driven by increased demand for safe havens.
This sentiment is expected to impact Gold’s movements in the upcoming European trading session.
OIL
Oil prices (CLS10) fell by $1.18 to $57.21 per barrel after nearing the lowest levels seen in over four years.
Today, Oil has bounced back to about $58.12 per barrel; however, this rise appears to be precarious, mainly due to a prevailing negative sentiment from OPEC+ regarding increased production in June.
EURUSD
EURUSD rose slightly to 1.13119 during Monday’s trading after reaching a daily high of 1.13649. The increase was largely attributed to the risks associated with escalating trade tensions. Nevertheless, the release of US PMI services data caused it to relinquish some gains.
In today’s European trading session, the upcoming release of the Eurozone producer price index (PPI) at 4:00 PM WIB could potentially drive EURUSD movement. The forecast in Trading Central suggests that PPI in March grew by 2.4% year-on-year (YoY), which is lower than the forecast of 3% YoY in Trading Central.
If the data is released below the forecast, it could put pressure on EURUSD.
GBPUSD
GBPUSD increased by 231 points (23.1 pips) to 1.32924 on Monday. Similar to EURUSD, this currency pair experienced a sharp rise before retracing after the release of US PMI services data.
Today, GBPUSD is trading with volatility within the range of 1.32598 – 1.33051, indicating that market participants are awaiting developments in the trade war. There is a potential for GBPUSD to face negative sentiment if EURUSD comes under pressure again.
USDJPY
USDJPY fell more than 1,300 points (130 pips) to 143.660 during last week’s early trading. However, it has since rebounded to 144.273, indicating a tug-of-war in sentiment.
The risks associated with escalating trade tensions are applying pressure to USDJPY; however, positive sentiment stems from the release of US PMI services data that exceeded forecasts. The services sector is a cornerstone of the US economy, and thus an expansion (above 50) reduces recession risks.
This sentiment will continue to affect USDJPY movements during the European trading session.
Nasdaq
The risks associated with the trade war have led Nasdaq to experience profit taking, resulting in a decline of 157 points to 20,041 at the start of last week. Nasdaq had soared to a five-week high on Friday. Therefore, the negative sentiment from the trade war risks remains likely to trigger additional profit taking.
