Investors seem to have understood that Donald Trump tends to follow a pattern of making two steps forward and one step back when it comes to his economic and geopolitical strategies. This pattern is particularly evident in his unprecedented pressure on key economic partners, which has caught the attention of financial markets.

Just as markets began to calm on Wednesday following the release of the U.S. inflation report—showing a greater-than-expected slowdown in inflation both annually and monthly—Trump issued a warning about potential additional tariffs on European goods. This came in response to retaliatory measures from the EU and Canada regarding existing U.S. trade barriers.

Commerce Secretary G. Lutnick also indicated that Trump would impose protective trade measures on copper, similar to the actions taken previously with steel and aluminum imports. He reiterated that mutual tariffs are set to take effect next month, further contributing to uncertainty in global markets.

The inflation report initially lifted investor sentiment, fueling hopes that the Federal Reserve, observing slowing inflation growth, might decide to cut interest rates. This temporarily supported local stock indices, but the effect was short-lived. However, the impact of tariffs has yet to materialize, and inflation may rise again in the coming months.

Amid such extreme uncertainty regarding the U.S. economy and geopolitical developments, gold has regained demand, surging toward its recently reached high and trading above $2,940.00. The U.S. dollar resumed its decline, though it remains above 103.00 on the ICE index. This is mainly due to the euro losing its upward momentum after a significant recent rally, given its substantial weight in the dollar's basket of major currencies.

What to Expect from the Markets Today?

Considering the current situation, where the main newsmaker remains the U.S. president, we can expect continued negative trends in U.S. stock markets, pressure on the dollar in the Forex market, and consolidation within wide sideways ranges in the cryptocurrency market. Given the ongoing uncertainty surrounding the outcome of Trump's trade wars, investors are unlikely to react fully to economic data releases. Under different circumstances, such data would have triggered the active buying or selling of assets in financial markets.

Forecast for the Day:

EUR/USD – The pair is losing its bullish momentum after reacting to news from the EU and Germany. A drop below 1.0870 could lead to a corrective decline to 1.0780.

GBP/USD – The pair is also losing its upward momentum. A fall below 1.2945 could trigger a corrective decline to 1.2865.