US President Trump’s change of stance on firing Fed Chair Powell and his more positive tone on trade talks with China sparked market optimism late Tuesday. This helped riskier assets and the US Dollar, while haven assets like Gold, JPY, and CHF pulled back.
Trump stated he doesn’t intend to fire Powell and that trade talks with China were going well, boosting market sentiment despite the IMF cutting global growth forecasts. The US Dollar rose sharply, ignoring weak US economic data and reports that the US trade deals with major trading partners aren’t imminent.
Against this backdrop, the US Dollar Index (DXY) bounced off a 37-month low, posting its biggest daily gain since November 2024, though it lacked momentum early Wednesday. The Dollar’s rebound pressured major currencies and commodities on Tuesday. Still, Wednesday’s moves helped the Antipodean currencies recover and supported crude oil, even as Gold continued its pullback from a record high. Further, EURUSD, GBPUSD, and USDJPY all saw gains for the Greenback, though traders are staying cautious ahead of April’s PMI data from key economies.
The US Dollar’s bounce, combined with dovish comments from ECB President Lagarde and weak Eurozone Consumer Confidence, put pressure on EURUSD ahead of the April PMI data for Germany and the EU. As a result, EURUSD remains under pressure going into Wednesday’s European session after reversing from its highest level since November 2021 the previous day.
Like EURUSD, GBPUSD shows slight losses while holding off a retreat from a seven-month high. The Pound reflects the US Dollar’s rebound, with Bank of England policymaker Megan Greene citing global factors to maintain a cautious tone.
Meanwhile, USDJPY rises after recovering from a seven-month low, despite no immediate US-Japan trade deal. The Yen pair overlooks the BoJ’s hawkish stance and Japan’s looming economic talks with the US, instead reflecting the weak Japan April Manufacturing PMI.
While the US Dollar's rebound paused buying in AUDUSD and NZDUSD the previous day, optimism around the US-China trade deal and stronger oil prices helped the Australian, New Zealand, and Canadian Dollars regain some momentum heading into Wednesday’s European session. However, weaker Aussie PMI and disappointing New Zealand Credit Card Spending test AUDUSD and NZDUSD buyers, while USDCAD remains under pressure after a two-day decline.
Gold prices continue their retreat for a second day, extending losses from an all-time high amid mixed market sentiment. Despite the US Dollar’s rebound and technical corrections, hopes for higher demand from China and India and uncertainty around the US trade deal and global growth keep XAUUSD buyers hopeful.
Meanwhile, easing trade tensions and a surprise drop in US crude oil inventories per the API’s weekly survey helped WTI crude prices rise. This rally ignored the stronger US Dollar, expectations of higher OPEC+ output, and the IMF's downbeat economic forecasts, as traders await PMIs and weekly official US oil inventory data.
Bitcoin (BTCUSD) and Ethereum (ETHUSD) show mild gains at multi-day highs after a strong rally, fueled by broad market optimism, Trump’s comments, and technical breakouts. On-chain data and ETF flows also support the recoveries of both cryptocurrencies ahead of key PMIs.
Trump’s shift on trade, politics, and support for Powell sparked market optimism and the US Dollar’s bounce, but his unpredictable nature means any negative comments could trigger US Dollar selling and push EURUSD and Gold higher. However, mixed PMI data could limit movements in major currencies and commodities, unless traders focus more on Trump’s statements than the economic data.
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