Market sentiment weakened on Tuesday as traders reconsidered the risk-positive news surrounding the Ukraine-Russia ceasefire deal and Canada-Mexico tariffs. Caution grew ahead of Wednesday's FOMC meeting, especially after disappointing US retail sales and the NY Fed manufacturing index. The end of the Israel-Hamas ceasefire and rising US-Iran tensions added to the uncertainty.
Gold hits a new all-time high above $3,000 as traders seek safer assets, while the US Dollar Index (DXY) rebounds from a two-day losing streak. Crude Oil holds Friday’s gains amid concerns over Middle East oil supplies, but cryptocurrencies remain under pressure due to record outflows and reduced optimism following Trump’s influence.
Despite positive news from Germany and the UK, the US Dollar’s bounce tests EURUSD and GBPUSD buyers. The USDJPY, however, continues a three-day rally to a two-week high, supported by Japan intervention concerns and slight market optimism. AUDUSD and NZDUSD hover near weekly highs, while USDCAD rises from a weekly low, ignoring stronger Crude Oil prices and hopes of no major US tariffs on Canada and Mexico.
The market consolidates ahead of Wednesday’s Federal Reserve policy announcement, boosting the US Dollar. This puts pressure on EURUSD after its two-day rally, despite Germany's progress on debt restructuring, and causes GBPUSD to retreat from its highest level since November. However, USDJPY continues to rise for the third day, reaching a one-week high as traders question Japan’s market intervention. Japan’s Finance Minister Katsunobu Kato’s cautious comments and expectations for the Bank of Japan to maintain current rates also support the USDJPY move.
AUDUSD posts its first intraday loss in three days, pulling back from a three-week high as traders reassess China-linked optimism and weigh cautious remarks from Reserve Bank of Australia’s Sarah Hunter. Similarly, NZDUSD retreats from a three-month high, ending a two-day rally, as concerns over New Zealand's economic transition and potential rate cuts from the Reserve Bank of New Zealand resurface.
USDCAD rebounds from a one-week low, ending its two-day losing streak, as the market consolidates ahead of today's Canada CPI and Wednesday’s FOMC meeting. It’s worth noting, however, that White House comments hint at a softer tariff stance on Canada and Mexico, supporting the Canadian Dollar (CAD). Additionally, rising Crude Oil prices, driven by Middle East tensions, bolster the CAD, given oil’s importance as Canada’s key export.
Gold extends its rally to a fresh all-time high near $3,017, fueled by trader anxiety, central bank buying, and a breakout above an 11-month resistance around $3,000. The bullion ignores a mild US Dollar rebound, as dovish Fed concerns persist amid soft US data.
Meanwhile, WTI Crude Oil holds onto a three-day winning streak despite mixed market sentiment. Escalating geopolitical tensions—including the breakdown of the Israel-Hamas peace talks, US warnings to Iran, and OECD’s projection of rising global risks—support oil prices. However, OPEC+ supply increase talks, Trump’s push for higher output, and demand concerns from major consumers limit upside potential.
Bitcoin (BTCUSD) and Ethereum (ETHUSD) retreat after Monday’s rebound, pressured by record ETF outflows, fading institutional interest, and declining trading volume. Despite the Trump administration’s pro-Bitcoin stance and MicroStrategy’s aggressive BTC holdings, crypto markets remain under pressure.
Tuesday brings a data-heavy session with Canada’s CPI, US housing and industrial production figures, and Eurozone ZEW sentiment set to drive market moves. Rising crude oil prices and weak US data challenging Fed hawks could pressure USDCAD unless Canadian inflation disappoints.
Meanwhile, most major currencies may retreat—except USDJPY—while Antipodeans and cryptocurrencies could extend losses if market sentiment remains fragile. Gold, however, is likely to stay firm ahead of Wednesday’s FOMC decision.
May the trading luck be with you!
