The EUR/USD pair is holding near last Friday’s levels around 1.1676 as the market stays cautious ahead of pivotal macroeconomic data and ongoing trade negotiations. Investors remain reluctant to initiate new positions until more clarity emerges regarding the evolving tariff situation between the US and its partners.
Trump Tariffs and Eurozone Sentiment Shape Forex Flows
President Donald Trump extended the moratorium on increased "reciprocal" tariffs from July 9 to August 1, sending formal notifications to trading partners. The new tariffs, potentially raising export duties by up to 30%, could still be revised if “mirror” countermeasures are implemented. EU officials, led by Ursula von der Leyen, have outlined two counter-sanction packages covering €21 billion and €72 billion worth of US goods, with the hope of reaching a last-minute compromise.
Market focus for Monday will be on Spain’s June CPI data (expected monthly rise from 0.1% to 0.6%, annual at 2.2%) and ZEW’s economic sentiment index for July (projected at 37.8 vs 35.3). Key US CPI figures will follow at 14:30 (GMT+2), with market expectations for monthly inflation to climb from 0.1% to 0.3% and annual from 2.4% to 2.6%. These outcomes could become crucial arguments for the Fed to maintain elevated borrowing costs.
Forex GBP/USD: Weak Data Drags Sterling Lower
The pound is under renewed pressure, trading near 1.3474 after disappointing macro data. The UK economy grew just 0.1% in May, with manufacturing (-0.9%) and construction (-0.6%) sectors showing notable declines. Industrial production also contracted more than expected, and NIESR GDP projections for June suggest only a 0.2% uptick, below earlier forecasts.
US inflation data, set for release at 14:30 (GMT+2), is likely to reinforce dollar strength if CPI surprises to the upside. The NY Fed’s Empire State Manufacturing Survey could offer moderate support to the greenback, despite ongoing economic headwinds.
NZD/USD: Kiwi Stalls Despite Mixed Data
The NZD/USD pair is consolidating near 0.5980 as traders parse mixed economic releases from New Zealand and China. While electronic card retail sales in NZ fell -0.4% y/y, Chinese export and import data exceeded forecasts, boosting trade balance to $114.77B. New Zealand’s manufacturing PMI rebounded to 48.8, but strong US budget data (June surplus of $27B vs expected deficit) provided fresh support for the US dollar.
Markets remain watchful for updates from the US administration on tariffs, with the implementation date now pushed to August 1. Trump has warned that any reciprocal measures from trade partners will trigger equivalent US tariff adjustments.
USD/JPY: Dollar Advances as Japan Data Disappoints
USD/JPY is testing 147.40, its highest since late June, as Japanese industrial production fell -0.1% m/m and capacity utilization dropped. Geopolitical headlines, including Trump’s proposal for tariffs on nations trading with Russia, are adding to market volatility, with some reports suggesting potential duties of up to 500%.
The US-Japan trade deal remains elusive after seven rounds of talks. Market participants are now focused on upcoming US CPI and PPI prints, which will inform the Fed’s policy stance amid ongoing political pressure for monetary easing.
XAU/USD: Gold Maintains Bullish Momentum, Tests $3358
Gold (XAU/USD) continues to edge higher, now testing resistance at $3358.25. Market participants await US inflation data, with expectations for both headline and core CPI to accelerate to 0.3% m/m and 2.6–2.9% y/y. Strong labor data and persistent inflation expectations have forced markets to scale back immediate Fed rate cut bets, though further policy adjustments remain possible later in the year.
Tariff risks and shifting monetary expectations are driving renewed interest in safe-haven assets. Market focus will remain on political developments in Washington and global trade headlines.