The US dollar posted a small decline against most major currencies on Tuesday as reflected by a 0.11% drop in the USDX on the iFOREX trading platform. Investor caution is rising over concerns that the retaliatory tariffs expected from the U.S. on April 2nd might destabilize global trade and the broader economy. Reports from the Wall Street Journal suggest a potential shift in U.S. tariff strategy, moving away from broad industry-wide measures to target countries with significant trade deficits with the United States.
Elsewhere, February saw a smaller-than-anticipated increase in U.K. inflation, offering some respite for Chancellor Rachel Reeves as she geared up for her final Spring Statement to parliament. The annual consumer price inflation rate climbed to 2.8%, a decrease from January's 3.0% and below forecasts, though still significantly above the Bank of England's 2.0% target. On a monthly basis, the rate rose by 0.4%, contrasting with January's 0.1% fall The UK 100 has been trading moderately higher this week and remains just below its all-time high of 8,899 GBP reached earlier this month.
Energy prices continued their recent upward trend. Both WTI and Brent crude oil benchmarks reached monthly highs due to supply concerns. These concerns were fueled by increased U.S. efforts to limit oil exports from Venezuela and Iran. Additionally, a larger-than-anticipated decrease in U.S. crude inventories provided further support. However, gains were capped by an agreement between Russia and Ukraine to temporarily halt strikes on oil refineries, oil and gas pipelines, and nuclear power stations.
Wall Street sentiment shifted back to positive in the past week, with the main U.S. indices erasing part of the losses seen earlier this month. The move is mainly driven by investor speculation that President Trump would moderate his tariff policies to minimize their economic repercussions while markets are also reacting to a tech sector rally spearheaded by Tesla. Economic indicators showed Investors also grapple with a further decline in consumer confidence, which hit its lowest point since early 2021. During the week, quarterly earnings reports are anticipated from BOC Hong Kong ADR and Lululemon Athletica and Walgreens Boots.
Leading cryptocurrencies Bitcoin and Ethereum are up over 4.5% as of Wednesday at 07:30 AM GMT, reflecting positive sentiment also seen on Wall Street. This upward movement is largely due to substantial transfers originating from the defunct Japanese crypto exchange Mt. Gox, coupled with reports indicating expectations of a moderate approach to new trade tariffs by U.S. President Donald Trump, set to be imposed on April 2. Simultaneously, BlackRock is extending its cryptocurrency presence by launching its Bitcoin exchange-traded product (ETP) in Europe, marking its initial crypto expansion beyond North America.
For Wednesday, attention will likely turn to Core Durable Goods Orders, EIA Crude Oil Inventories and speeches from FOMC Members Kashkari and Musalem. Later this week, some price action is anticipated upon the release of Thursday’s U.S. GDP and Pending Home Sales and Friday’s Core PCE Price Index the Fed’s primary gauge of inflation.
EUR/USD
The EUR/USD pair has slowed its recent descent but remains under pressure, marking its fifth consecutive day of losses.
On Tuesday, the U.S. Conference Board (CB) reported a rise in one-year consumer inflation expectations, which climbed to 6.2% in March from 5.8% in February. Persistent concerns over high prices, particularly for essential household goods such as eggs, continue to weigh on sentiment. Additionally, inflationary risks stemming from tariffs imposed during the Trump administration remain a key issue.
Further fueling economic concerns, Moody’s issued a stark warning on Tuesday, citing a "deterioration" in the U.S.'s fiscal strength. The ratings agency highlighted mounting challenges in managing U.S. debt and projected a prolonged decline in fiscal stability.
Looking ahead, market participants will be closely watching the release of U.S. Durable Goods Orders later today. The data could provide further insight into the health of the U.S. economy and influence near-term market movements.
WTI Oil
Oil prices traded between gains and losses on Tuesday and managed to end the session with minor gains as a temporary maritime and energy truce between Russia and Ukraine helped ease supply concerns, countering the impact of potential U.S. tariffs on countries purchasing Venezuelan crude.
The United States brokered agreements with both Ukraine and Russia to halt attacks on maritime and energy targets, with Washington pledging to push for the easing of certain sanctions on Moscow.
Meanwhile, supply concerns resurfaced after former President Donald Trump threatened tariffs on countries importing oil and gas from Venezuela.
Adding to geopolitical tensions, the U.S. introduced fresh sanctions last week aimed at curbing Iranian oil exports.
Looking ahead, OPEC+, the coalition of the Organization of the Petroleum Exporting Countries and its allies, including Russia, is expected to proceed with plans to increase oil output for a second consecutive month in May.