Euro approaches four-year peak before Lagarde's remarks
The euro rose in European trade on Tuesday on track for the third straight profit against the dollar, while trading near four-year highs as the dollar weakens after US President Trump’s constant attacks against Fed Chair Jerome Powell.
Now investors await European Central Bank President Christine Lagarde’s remarks for more clues on the future path of European interest rates.
The Price
The EUR/USD price rose 0.25% today to $1.1541, with a session-low at $1.1481.
The euro rose 1.1% on Monday against the dollar, the second profit in a row amid a loss of confidence in the dollar.
US Dollar
The dollar index fell 0.2% on Tuesday on track for the third straight session, and is about to hit three-year lows at 97.92 against a basket of major rivals.
A New Attack
Trump called Powell “big loser” and “Mr Too late”, and called on him and the Fed once more to cut interest rates.
The White House said it’s considering ways to fire Fed Chair Jerome Powell after Trump expressed urgent desires to terminate him due to disagreements about monetary policies.
Such news continues to rattle the markets, which depend heavily on the independence of the Federal Reserve from any political interference as a pivotal mainstay in the global financial system.
Lagarde
ECB President Christine Lagarde is scheduled to speak to CNBC later today and discuss the latest developments in the eurozone and the US tariff crisis.
Last week, Lagarde said that tariffs represent a shock, but their impact on inflation remains unclear.
She said the picture might not become clear by the next policy meeting in June, as the 90-day pause on tariffs would still be in place by then.
European Rates
Reports showed that some ECB officials see a high probability of a rate cut in June.
Markets are pricing in a 60% chance of an ECB rate cut in June.
Yen about to trade above 140 for first time in 2025
The yen rose in Asian trade on Tuesday against major rivals, extending gains for the third straight session against the dollar, and hitting a fresh seven-month high, while about to trade above 140 yen per dollar for the first time this year on haven demand.
US President Donald Trump continued his attack on Fed Chair Powell and demanded an urgent interest rate cut, while publicly considering ways to fire Powell and restructure the central bank.
The Price
The USD/JPY price fell 0.55% today to 140.09, the lowest since September 2024, with a session-high at 141.17.
The yen rose 0.9% against the dollar on Monday, the second profit in a row on concerns about the Fed’s independence.
A New Attack
Trump called Powell “big loser” and “Mr Too late”, and called on him and the Fed once more to cut interest rates.
The White House said it’s considering ways to fire Fed Chair Jerome Powell after Trump expressed urgent desires to terminate him due to disagreements about monetary policies.
Such news continues to rattle the markets, which depend heavily on the independence of the Federal Reserve from any political interference as a pivotal mainstay in the global financial system.
Bank of Japan
The Bank of Japan is widely expected to maintain interest rates unchanged at the 30-April meeting, and will likely note that new US tariffs won’t hurt the cycle of higher wages and inflation, necessary for rate hikes.
As the trade war escalates: How to invest in gold?
Gold rallied to fresh record highs on Monday past $3400 for the first time in its history, as the dollar weakened and concerns about the economic impact of the US-China trade war grew, sending investors towards safe havens.
Spot gold prices rose 2.6% to $2415 an ounce as of 10:46 GMT, ith a record high at $3424.
Dollar’s Weakness Underpins Gold
The US dollar weakened sharply after fresh criticism by Trump towards Fed Chair Jerome Powell, hurting investors confidence, and in turn underpinning gold prices.
As tariff jitters and doubts about the stability of the US financial status grow, the haven demand on gold is likely to surge as well.
Gold surges over $700 in 2025
Gold is up over $700 so far this year, managing to pass $3300 on Wednesday and then adding $100 in a few days.
Several analysts expect the gold’s rally to peter out pretty soon with a likely peak rapidly approaching.
Minerals Market: Gold Leads
Silver rose 0.2% to $32.66 an ounce.
Platinum rose 1% to $957.15.
Palladium fell 3% to $934.34.
Powell Rattles the Markets
Fed Chair Jerome Powell warned last week that US tariffs could slow down growth and lead to higher prices for consumers, after chaos engulfed the financial markets.
Gold has thus become the final haven for many investors and the most bought asset in the world in a very short amount of time.
Historic Similarity
Analysts compared gold’s rally this year to the rally that happened during the Iranian Revolution in the late seventies, when prices surged by 120% between November 1979 and January 1980.
Gold passed $3000 for the first time ever last month amid concerns about the global trade war and as a haven against inflation.
Trump’s Tariffs
The Trump administration imposed upwards of 245% tariffs on Chinese imports, while imposing 10% base tariffs on all other countries around the world.
Trump said the aim is to bring manufacturing back to America and collect billions of dollars from tariffs, reducing the pressure on income taxes.
Factors Behind Gold’s Rise:
1- A weaker Dollar
The dollar index hit three-year loss amid rising risks with investors fleeing US assets while the Fed heads towards monetary easing measures.
A stronger euro also impacted the dollar, which in turn boosted gold prices.
2- Geopolitical risks, due to Trump’s aggressive tariff policies and unpredictable moves.
3- Stagflation Concerns
Investors are increasing concerns about a devastating combination between stagnation and inflation in upcoming months.
4- Lower Interest Rates
As global central banks cut interest rates worldwide, gold’s attractiveness is boosted compared to yielding assets.
5- Increasing purchases by global central banks.
6- A rebound in Exchange-Traded Funds based on gold, chief of which is the SPDR Gold Trust, the world’s biggest.
Risks
Gold is still burdened by the US 10-year treasury yield, which is standing at 2.15%, the highest since September 2023.
Despite the Fed starting the cycle of rate cuts, real yields continued to be stubborn, which weighs on gold prices.
Bitcoin expands gains to three-week high as the dollar plunges
Bitcoin rallied on Monday on track for the third straight profit, hitting a three-week high and approaching the $90,000 barrier once more.
It comes as the dollar tumbled against main rivals with investors losing confidence in US assets due to concerns about the independence of the Federal Reserve.
The Price
Bitcoin rose 3% at Bitstamp today to $87,765, the highest since April 2, with a session-low at $85,134.
Bitcoin rose 0.2% on Sunday, marking the second profit in a row.
The cryptocurrency added 1.8% last week, the second weekly profit in a row as global corporations continued to expand their bitcoin holdings.
Crypto Market Value
The market value of cryptocurrencies rose by over $75 billion today to a total of $2.850 trillion.
The Dollar
The dollar index fell 1.5% today to three-year lows at 97.92 against a basket of major rivals.
It comes as investors' confidence deteriorates once more in the US economy due to perceived US government interference in the Federal Reserve.
The White House said it’s considering ways to fire Fed Chair Jerome Powell after Trump expressed urgent desires to terminate him due to disagreements about monetary policies.
Such news continues to rattle the markets, which depend heavily on the independence of the Federal Reserve from any political interference as a pivotal mainstay in the global financial system.