Fawad Razaqzada

In Europe, concerns about US tariffs, a struggling Eurozone economy and political uncertainty in France and Germany are continuing to hold back risk assets. France's CAC index is now nearly 6% lower on the year. The DAX forecast is also far from bullish, with a key drag being the European auto sector’s reaction to potential tariff threats.

Gold analysis: After the big sell-off on Monday, I will try to examine what this means for gold in terms of direction in the near-term outlook, purely from a technical point of view.

The slight cooling of the so-called "Trump Trade," i.e., with a strong dollar cooling as we have seen thus far in the week (except against CAD and CNH that were hit by Trump’s tariff threat overnight), may not last long. But today, the euro is finding itself on the front foot amid the relief bounce that commenced from end of last week from severely technical oversold levels. While the recovery may end up lasting for a while, the EUR/USD outlook remains modestly bearish.

Already lower on the day thanks to the risk on rally as traders reacted positively to Donald Trump’s choice of Scott Bessent for Treasury Secretary, gold took another dive lower in the last hour.

The slight cooling of the so-called "Trump Trade," characterised by a strong dollar (and a Bitcoin rally), may not last very long. For now, though, traders are adjusting their expectations somewhat and scaling back hopes for aggressive tax cuts and tariff hikes. It is far too early for us to drop out bearish EUR/USD forecast.

Caught in the middle of an outperforming US and underperforming Chinese equities, European markets rallied last week despite fresh concerns about the eurozone economy. While the selling has been contained to the euro so far, should recession worries intensify then we could see the stock market also respond negatively, putting the DAX outlook on a negative watch.