US dollar under pressure before Fed's meeting
The US dollar fell in European trade on Tuesday against a basket of major rivals, extending losses for the third straight session amid renewed concerns about a US recession due to President Trump’s tariffs.
Later today and tomorrow, the Federal Reserve’s policy meeting is expected to provide clues on the path ahead for US interest rates.
The Index
The dollar index fell 0.35% today to 99.50, with a session-high at 100.10.
On Monday, the index lost 0.25%, the second drop in a row on profit-taking away from a three-week high at 100.38.
Trump’s Tariffs
On Sunday, Trump announced a 100% tariff on movies made abroad, but didn’t reveal the mechanism of collecting the fees, and on Monday, he announced plans to impose tariffs on pharmaceuticals in the next two weeks.
The Fed
Today, the Federal Reserve will convene and discuss monetary policies, expected to hold interest rates unchanged.
The Fed’s monetary statement and Chair Powell’s subsequent press conference will likely provide clues on the path ahead for policies.
US President Donald Trump continued to pressure Powell to cut interest rates, however he said won’t fire him before the end of term in May 2026.
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in May stood at just 8%.
The odds of such a cut in June stood at a healthier 65%.
Goldman Sachs said in a memo that Fed officials would like more evidence from the labor market and other sectors before deciding to cut interest rates, with the bank expecting three 0.25% rate cuts in July, September, and October.
Gold reaches two-week high before Fed's meeting
Gold prices rose in European trade on Tuesday on track for the third straight profit in a row, hitting a two-week high and about to trade above $3400 once more as the dollar declines against major rivals.
Later today and tomorrow, an important Federal Reserve’s policy meeting is expected to provide clues on the path ahead for US interest rates.
Prices
Gold prices rose 1.6% today to $3387 an ounce, with April 22 highs at $3334.
On Monday, gold rose 2.9%, the second profit in a row, and the largest since April 21 on strong haven demand.
The Dollar
The dollar index fell 0.1% on Tuesday on track for the third loss in a row against a basket of major rivals.
It comes amid profit-taking away from three-week highs while traders shun new positions before more developments in US-China trade talks.
The Fed
Today, the Federal Reserve will convene and discuss monetary policies, expected to hold interest rates unchanged.
The Fed’s monetary statement and Chair Powell’s subsequent press conference will likely provide clues on the path ahead for policies.
US President Donald Trump continued to pressure Powell to cut interest rates, however he said won’t fire him before the end of term in May 2026.
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in May stood at just 8%.
The odds of such a cut in June stood at a healthier 65%.
Goldman Sachs said in a memo that Fed officials would like more evidence from the labor market and other sectors before deciding to cut interest rates, with the bank expecting three 0.25% rate cuts in July, September, and October.
SPDR
Gold holdings at the SPDR Gold Trust fell 4.87 tons yesterday to a total of 939.39 tons, the lowest since April 9.
Euro gains ground amid thin trading
The euro rose in European trade on Tuesday against the dollar on track for the third straight profit in a row amid renewed inflationary pressures on the European Central Bank’s policymakers, which hurt the odds of an ECB rate cut in June.
Later today, the Federal Reserve’s policy meeting will commence and will likely provide clues on the path ahead for US interest rates this year.
The Price
The EUR/USD price rose 0.1% today to $1.1327, with a session-low at $1.1279.
The pair rose 0.15% on Monday away from a two-week trough at $1.1265.
European Rates
Earlier data showed eurozone inflation passed estimates in April, renewing pressures on ECB policymakers.
Eurozone’s consumer prices rose 2.7% in April, up from a 2.4% rise in March, and passing estimates of a 2.5% increase.
Following the data, the odds of an ECB 0.25% interest rate cut in June fell from 60% to 50%.
Now traders await a batch of data and remarks by ECB officials this week to gather more clues.
The Fed
Today, the Federal Reserve will convene and discuss monetary policies, expected to hold interest rates unchanged.
The Fed’s monetary statement and Chair Powell’s subsequent press conference will likely provide clues on the path ahead for policies.
US President Donald Trump continued to pressure Powell to cut interest rates, however he said won’t fire him before the end of term in May 2026.
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in May stood at just 8%.
The odds of such a cut in June stood at a healthier 65%.
Yen resumes losses with eyes fixed on Fed
The yen fell in Asian trade on Tuesday on track for a loss against the US dollar after a two-day hiatus, while moving towards three-week lows once more, amid intensive US-Japan trade negotiations.
Later this week, an important Federal Reserve’s policy meeting is expected to provide clues on the path ahead for US interest rates.
The Price
The USD/JPY price rose 0.4% today to 144.27, with a session-low at 143.55.
The yen rose 0.9% on Monday against the dollar away from a three-week low at 145.92.
The yen was boosted by haven demand amid concerns about a US recession this year.
Trade Talks
The US refused to exempt Japan from the reciprocal 10% tariff in addition to the country-specific tariff of 14% according to latest sources.
US Treasury Secretary Scott Bessent told Japanese negotiators the Trump administration might be willing to reduce the company-specific tariff as part of the negotiations.
Japan is seeking to remove the reciprocal tariffs completely, in addition to 25% tariffs on auto products, steel and aluminum.
Japan is one of the first countries that sought quick negotiations with the US on the tariff crisis.
The Fed
Today, the Federal Reserve will convene and discuss monetary policies, expected to hold interest rates unchanged.
The Fed’s monetary statement and Chair Powell’s subsequent press conference will likely provide clues on the path ahead for policies.
US President Donald Trump continued to pressure Powell to cut interest rates, however he said won’t fire him before the end of term in May 2026.
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in May stood at just 8%.
The odds of such a cut in June stood at a healthier 65%.