Eurozone, UK and US Flash Manufacturing and Services PMIs, Autodesk Earnings

The EUR/USD pair climbed for the third consecutive session on Wednesday, breaking above the 1.1300 level as market sentiment shifted away from the US Dollar. The move followed a sharp selloff in US Treasury markets, where yields on 20-year bonds surged past 5%, leading to diminished demand in a mid-session auction.

Investor caution was further fueled by concerns surrounding US fiscal policy. The federal government is on track to pass President Donald Trump's sweeping tax and budget legislation, which proposes significant cuts to key services and a marked reduction in federal tax revenues. Analysts project the plan could add as much as $4 trillion to the national deficit over the next decade—a striking contrast to Trump's campaign pledge to reduce government debt.

Looking ahead, market attention turns to today's Purchasing Managers’ Index (PMI) releases. In Europe, both services and manufacturing PMIs are expected to post modest gains, with the services reading forecast to rise to 50.3 from 50.1 and manufacturing to 49.3 from 49.0. In the US, manufacturing PMI is expected to slip slightly to 50.1 from 50.2, while services PMI is anticipated to remain steady at 50.8.

Gold prices climbed more than 0.5% on Wednesday as investor anxiety surrounding the US tax bill vote and rising geopolitical tensions in the Middle East fueled safe-haven demand.

Investors are closely watching the potential passage of President Donald Trump’s tax-cut legislation, which the Congressional Budget Office (CBO) estimates could increase the US national debt by nearly $3.8 trillion over the next decade.

While the bill’s passage could provide a lift to US equities, its impact on the US Dollar is less clear. The Greenback has struggled following Moody’s recent downgrade of US government debt, which sparked a broad USD sell-off.

In addition to fiscal uncertainty, heightened geopolitical risk—particularly in the Middle East—has bolstered gold’s appeal. This comes even as US-China tensions show signs of easing, with both nations agreeing to reduce tariffs for 90 days as part of renewed trade negotiations.

Looking ahead, traders will monitor a slate of key economic indicators and central bank commentary, including speeches from Federal Reserve officials, Flash PMI data, housing market figures, and weekly Initial Jobless Claims.

Oil prices edged lower on Wednesday, reversing earlier gains after Oman's foreign minister confirmed that a new round of nuclear negotiations between Iran and the United States is scheduled to take place later this week.

Earlier in the session, oil prices had been buoyed by a CNN report citing U.S. intelligence sources indicating that Israel may be preparing to strike Iranian nuclear facilities. While the report noted no final decision had been made by Israeli leadership, the news briefly added a geopolitical risk premium to the market.

Iran, a key member of OPEC and the bloc’s third-largest producer, remains a critical component of global supply flows. Any potential military escalation involving Israel could significantly disrupt Iranian exports. However, the announcement of renewed diplomatic efforts between Tehran and Washington quickly tempered market anxiety.

Meanwhile, bearish U.S. inventory data added further pressure to oil prices. According to the Energy Information Administration (EIA), domestic crude stockpiles rose by 1.3 million barrels last week. Gasoline inventories increased by 800,000 barrels, while distillate stocks climbed by 600,000 barrels—surprising markets that had expected draws across the board.

U.S. equity markets closed sharply lower on Wednesday, as surging Treasury yields and renewed concerns over economic stability rattled investor confidence.

Bond markets were under significant pressure, with yields on U.S. Treasuries spiking following weak demand in a 20-year note auction. The poor bid-to-cover ratio fueled fresh selling in sovereign debt and heightened investor concern over the broader economic outlook.

Markets remain on edge after Moody’s downgraded the U.S. credit rating last week, citing ballooning national debt and persistent policy uncertainty. Adding to the tension, lawmakers in Washington are preparing to vote on President Donald Trump’s ambitious tax and spending bill, which could add between $3 trillion and $5 trillion to the nation’s $36.2 trillion debt load, according to independent estimates.

In tech, Alphabet advanced more than 2% following the launch of several new AI-driven products, reinforcing its competitive push in the artificial intelligence space.

Conversely, Microsoft  slipped after revealing that nearly 400,000 Windows devices had been compromised by the Lumma malware strain, raising concerns about cybersecurity vulnerabilities.