Trade Tensions Easing: U.S. Agreements with China and the U.K.

In a notable shift, the United States has reached significant trade agreements with both China and the United Kingdom. The U.S.-China deal follows productive negotiations in Geneva, aiming to reduce tariffs that had escalated to 145% on Chinese goods and 125% on U.S. imports. While specific details are pending, both nations have expressed optimism about stabilizing trade relations.

Simultaneously, the U.S. finalized a comprehensive trade agreement with the U.K., reducing tariffs on British car exports to the U.S. from 27.5% to 10% and eliminating tariffs on steel and aluminium. The deal also introduces reciprocal, tariff-free trade in beef and ethanol, signalling a potential model for future U.S. trade negotiations.

*Trump made a direct announcement about stocks which could give us a bullish outlook for the coming weeks.

European Union’s Stance: Potential Sanctions on Russia

At a summit in Kyiv, European leaders threatened new sanctions against Russia, including a permanent block on the Nord Stream 2 gas pipeline, if Moscow fails to agree to a proposed 30-day cease-fire in its ongoing conflict with Ukraine. The EU’s firm stance underscores the geopolitical tensions influencing global markets.

🇬🇧 U.K. Economic Indicators: Business Activity Declines

In April 2025, U.K. business activity declined for the first time since October 2023, with the services sector—comprising three-quarters of the U.K. economy—hit hard by global tariff impacts. The S&P Global U.K. Services PMI dropped to 49.0, signalling contraction, as exports plummeted at the fastest rate since February 2021.

U.S. Dollar Fundamental Analysis

Current Outlook: Mixed Signals Amid Trade Developments

The U.S. dollar has experienced fluctuations amid recent trade developments. While the dollar found support following the announcement of trade deals with China and the U.K., concerns persist regarding its long-term strength. The dollar index (DXY) has declined nearly 9% since President Trump’s return to office, influenced by frequent shifts in tariff policies and economic uncertainties.

 Federal Reserve’s Position: Cautious Approach to Interest Rates

The Federal Reserve has maintained interest rates steady, expressing concerns about the U.S. economy, particularly the risk of stagflation—concurrent high inflation and unemployment. Chair Jerome Powell emphasized the need for more economic data before adjusting policy, indicating a cautious stance amid trade policy impacts.

 Inflation Trends: Anticipated Rise in U.S. Inflation Data

The key economic release in the upcoming week will be U.S. inflation data for May. According to the latest S&P Global U.S. PMI output price data, inflationary pressures intensified at the start of the second quarter, partly attributed to rising U.S. tariffs. Official data will be closely watched for confirmation of this trend.

Technical analysis:

Once again, our eyes are   peeled on EURUSD, and the bias stays the same, as we know that the US dollar is gaining strength and we continue to be bullish based on economic data aswell as technical. In the past 2 weeks we have held the 1.12662 area, but after trump spoke, price aggressively broke through that area which we can assume can potentially be a liquidity grab of all the buy orders that have been placed above this level.  We don’t know where the bottom is of this new short term bear trend so it’s imperative that we wait for confirmation of a reversal instead of speculating where the bottom is. If we continue to sell, we could potentially shift into some sell setups following the trend and following the news.

Market implications and potential market shifts for the coming weeks: 

• Currency Pairs: The U.S. dollar’s performance will be influenced by upcoming inflation data and Federal Reserve policy decisions. Traders should monitor USD pairs for potential volatility.
• Commodities: Tariff developments and geopolitical tensions may impact commodity prices, particularly in energy markets.
• Equities: Positive trade developments have buoyed investor sentiment, but ongoing economic uncertainties warrant cautious optimism in equity markets.