Global markets have been under considerable pressure as trade tensions and tariff announcements by United States President Trump collide with mixed economic data from both the United States and Europe, as investors brace for further volatility ahead of key economic releases during the week.
Euro Under Pressure
The EUR/USD pair has been under selling pressure for a second consecutive week, ultimately ending little changed at around 1.082.
The U.S. Dollar’s safe-haven appeal has been curtailed by concerns over tariffs and tepid U.S. economic data, leaving the pair in tight range.
President Trump’s tariff moves, including fresh 25% levies on vehicles and auto parts, have raised concerns for the Eurozone, given that the U.S. is one of its largest trading partners.
European Central Bank officials, such as Pierre Wunsch and Christine Lagarde, have warned that escalating tariffs could complicate monetary policy and potentially force further rate cuts, adding to market uncertainty.
Australian Dollar Faces RBA Decision
The AUD/USD pair is awaiting signals from the Reserve Bank of Australia (RBA), which is expected to maintain its cash rate at 4.10% in April.
While a hawkish tone from RBA Governor Michele Bullock could support the currency, any indication of a dovish shift in policy - should policymakers signal a future easing of restrictions in response to global trade uncertainties - could drag the Aussie lower.
Technical levels suggest that the pair may struggle to hold its advance from its monthly low, though a period of consolidation appears likely as it tracks a flattening 50-day simple moving average.
Cable Taut Despite Economic Uncertainty
The Pound Sterling has hovered near its multi-month highs, with GBP/USD closing last week at 1.293 despite a volatile week marked by mixed U.K. economic data and ongoing tariff concerns.
Sterling initially saw gains supported by robust U.K. services PMI data; however, a mid-week sell-off occurred when U.K. inflation cooled more than expected, sparking speculation about a potential Bank of England rate cut in May.
The Office for Budget Responsibility’s revision of the 2025 growth forecast added to the uncertainty, although a surprise rise in U.K. retail sales and a weakening U.S. dollar later in the week helped Sterling recover toward its opening level.
Yen Gains After Tokyo CPI Report
Meanwhile, the USD/JPY pair reversed its earlier gains after touching a multi-week high, as the Japanese Yen benefitted from strong inflation readings in Tokyo.
Tokyo’s headline Consumer Price Index (CPI) rose to 2.9% in March, with core figures exceeding the Bank of Japan’s target, fueling expectations for further rate hikes.
Heightened trade tensions and risk-off sentiment have boosted safe-haven flows into the Yen, prompting traders to retreat from the U.S. dollar.
Key Economic Events for the Week Ahead
Monday: South Korea’s industrial production, Japan’s industrial output and retail sales, China’s NBS PMI, Germany’s retail sales, and inflation figures from Italy and Germany. The U.S. Dallas Fed Manufacturing Index will also be released.
Tuesday: Global manufacturing PMIs, Japan's unemployment rate and Tankan survey results, and South Korean export figures will be closely watched. The Reserve Bank of Australia will announce its interest rate decision, and the Eurozone will release inflation and unemployment data. In the U.S., the ISM Manufacturing PMI and JOLTS job openings will be key indicators.
Wednesday: South Korea will publish inflation figures, ASEAN and India will release manufacturing PMI data, and Brazil will report industrial production. In the U.S., the ADP employment change and factory orders will offer insights into labour market conditions and business activity. Additionally, Trump’s upcoming ‘Liberation Day’ tariffs could trigger further market volatility.
Thursday: Australian and Canadian trade balances, U.S. trade data and the ISM Services PMI.
Friday: China, Hong Kong, Indonesia, and Taiwan's markets will be closed on a public holiday. Germany’s factory orders, the Eurozone construction PMI, and Canada’s unemployment rate. The U.S. will publish its highly anticipated non-farm payroll report, unemployment rate, and average hourly earnings data.
