Market mood is cautious at the start of the week as investors face policy confusion and rising geopolitical risks. Uncertainty around U.S. President Donald Trump’s trade actions persists even after the Supreme Court struck down his tariff regime introduced under the International Emergency Economic Powers Act.
Tensions with Iran are adding to volatility. Reports from The New York Times say Trump is weighing limited airstrikes on assets linked to the Islamic Revolutionary Guard Corps, nuclear sites, and missile systems. If pressure fails, broader action targeting Supreme Leader Ali Khamenei could be considered.
Axios reports that U.S. and Iranian officials are scheduled to meet in Geneva on Thursday to review Tehran’s proposal to revive nuclear diplomacy, with Washington expecting a draft plan by Tuesday. Officials describe this round as potentially the last chance before any large-scale U.S.-Israeli military move. Oil markets are carrying a $6–7 geopolitical premium tied to these risks, though some traders doubt action during the Olympics, which end Sunday.
Asian trading was thin due to market holidays in Japan and mainland China, amplifying price swings. Japan returns Tuesday after a long weekend, while China reopens following the Spring Break and Lunar New Year holidays.
Recent U.S. data added to policy uncertainty. Fourth-quarter advance Gross Domestic Product (GDP) rose 1.4%, below the 3.0% forecast. December Personal Consumption Expenditures inflation came in at 2.9%, slightly above the 2.8% estimate. The Atlanta Federal Reserve Gross Domestic Product Now model shows first-quarter growth at 3.1%. The University of Michigan consumer sentiment index printed 56.6 against expectations of 57.3. The February Manufacturing Purchasing Managers Index was 51.2 compared with 52.6 projected. Federal Reserve official Logan said tariff developments have increased inflation uncertainty. With softer growth and firm inflation, markets now see less than full pricing for action at the July Federal Reserve meeting, leaving the Federal Open Market Committee in a wait-and-watch stance.
On the fiscal side, U.S. Treasuries face pressure due to the possibility of large tariff refunds, though any rollback in trade barriers could later give the Federal Open Market Committee room to consider rate cuts.
China’s Commerce Ministry said it is reviewing the court ruling and urged the removal of unilateral measures, including reciprocal and fentanyl-related tariffs, ahead of a possible early-April meeting between Donald Trump and Chinese President Xi Jinping.
European Central Bank President Christine Lagarde warned on Face the Nation that fresh uncertainty over U.S. trade policy could disrupt companies and consumers, stressing the need for clarity.
Canada’s December retail sales fell 0.4%, slightly better than the expected 0.5% decline.
The U.S. Dollar Index remains under pressure for a second day. EUR/USD rose above 1.18 after German Chancellor Friedrich Merz said the court ruling could reduce tariff strain on Germany, and French Trade Minister Olivier Forissier noted that the European Union is in active talks and retains countermeasures. USD/JPY dropped toward 154.00 after Liberal Democratic Party tax chief Itsunori Onodera criticized the U.S. tariff situation. Other major pairs are mixed, with GBPUSD firmer, AUDUSD and NZDUSD softer, and USDCAD little changed.
Safe-haven demand lifted gold to a three-week high and silver to a two-week high. Crude oil moved lower despite supply concerns, as traders balanced demand worries from tariffs against the restart of U.S.-Iran discussions. An Iranian official said an interim deal is possible and that U.S. firms could join Iranian energy projects as contractors.
Digital assets weakened sharply. Bitcoin fell below $65,000 amid reports of liquidation flows near $200 million. Equities edged lower despite Friday’s strong Wall Street finish.
Improved sentiment around U.S. President Donald Trump’s tariff stance, along with remarks from German Chancellor Friedrich Merz, helped EURUSD build on Friday’s rebound as the U.S. Dollar weakened.
GBPUSD is also higher for a second straight session after last week’s losses, supported by the softer USD tone.
In contrast, USDJPY ended a three-day rally and pulled back from a two-week high, even with markets closed in Japan. Investors shifted toward traditional safe-haven assets such as gold, silver, and the Japanese Yen amid the absence of major data or events, ongoing uncertainty over U.S. tariffs, rising U.S.-Iran conflict risks, and hawkish concerns surrounding the Bank of Japan.
Most major currencies are gaining on the softer U.S. Dollar, but the Australian Dollar and New Zealand Dollar stay weak due to fragile market sentiment and China’s week-long holidays.
Mixed Canadian inflation data and lower crude oil prices, Canada’s main export, are restricting downside in USDCAD and keeping trading quiet.
Even stronger-than-expected New Zealand Retail Sales failed to lift NZDUSD, as negative sentiment continues to weigh on the pair.
West Texas Intermediate crude oil starts the week lower, falling for a second straight day, as worries about possible U.S. and Israeli strikes on Iran fail to outweigh demand concerns.
Market pressure is rising from uncertainty over U.S. President Donald Trump’s tariffs, the possibility of Russia returning more supply to global markets, and a gradual output increase from the Organization of the Petroleum Exporting Countries and its allies (OPEC+). A recent build in U.S. crude inventories has also added to the weakness in black gold.
As investors move toward safe-haven assets and the U.S. Dollar weakens, Gold climbed to a three-week high, and Silver advanced to a two-week peak.
The rally was further supported by technical breakouts, with Gold clearing the $5,100 level and Silver moving above the $85.00 mark, adding fresh momentum to both precious metals.
Bitcoin (BTC) and Ethereum (ETH) started the week lower, with intraday losses reaching around 4% by press time. Analysts point to long liquidations and month-end positioning as the main drivers, while risk aversion and recent technical breakouts also played a role.
In the Asia-Pacific region, shares drifted downward early Monday, even though Japan and China were on holiday, keeping volatility low. Regional markets largely ignored Friday’s strong Wall Street close, weighed down by the same risk factors affecting cryptocurrencies.
Monday’s calendar is light, with only the Chicago Federal Reserve National Activity Index and Factory Orders scheduled for release. But the lack of data doesn’t guarantee calm trading, even with holidays in Japan and China, as markets remain focused on headlines about U.S. President Donald Trump’s rejection of the Supreme Court ruling on his tariff powers. Rising concerns over a potential U.S. strike on Iran, alongside ongoing negotiations, could also fuel volatility.
The U.S. Dollar is retreating despite Trump’s tariff authority being challenged and weak sentiment. Traders will likely look for clues from the Federal Reserve on its next moves, with mid-tier U.S. data providing hints. If the numbers suggest further rate cuts, the Greenback could rebound, putting pressure on major currencies, the Australian and New Zealand Dollars, and cryptocurrencies. Crude oil may see short-covering amid supply concerns, while Gold and Silver could remain supported as investors seek safe-haven assets.
May the trading luck be with you!
