German ZEW Economic Sentiment, US Core CPI, BOE Gov Bailey Speaks

The EUR/USD pair opened the new trading week on a weaker footing, ending the session with losses of 1.18%. A late-day recovery helped the euro pare some of its losses, with the pair climbing back toward 1.1100.

Investor attention now shifts to the US Consumer Price Index (CPI) report for April, set to be released on Tuesday. Markets are expecting headline CPI to rebound to 0.3% month-over-month from a previous decline of 0.1%, while core CPI is also forecast to rise to 0.3%, up from 0.1%. Despite these projected monthly gains, year-over-year figures for both headline and core inflation are anticipated to remain unchanged.

In other macro developments, US-China trade negotiations offered a temporary boost to risk sentiment after both countries agreed to pause the implementation of steep, triple-digit tariffs. However, the US’s unique “reciprocal” tariff framework remains scheduled to resume in 90 days, keeping trade tensions in the background.

Later in the week, attention will turn to Europe. Final German Harmonized Index of Consumer Prices (HICP) data is due Wednesday, though revisions to preliminary estimates are not expected. On Thursday, traders will be watching closely as preliminary Eurozone Gross Domestic Product (GDP) data is released. In US, April’s Consumer Price Index (CPI) report is due later today, followed by the Producer Price Index (PPI) and Retail Sales data later in the week.

Gold prices faced sharp losses on Monday as investor risk appetite improved in the wake of a weekend breakthrough in US-China trade talks.

Markets responded positively after Washington and Beijing announced a 90-day easing of tariffs, following high-level discussions held in Switzerland. According to a joint statement, the US agreed to reduce tariffs from 145% to 30%, while China cut duties from 125% to 10%. The de-escalation in trade tensions lifted equities on Wall Street and weighed heavily on safe-haven assets like gold.

Gold's downturn deepened amid a strengthening U.S. Dollar and climbing Treasury yields. Shifting expectations around Federal Reserve policy also weighed on bullion, as traders reduced the likelihood of a third rate cut this year.

Looking ahead, market focus turns to a slate of key U.S. economic data. The Consumer Price Index (CPI) for April is scheduled for release on Tuesday, followed by the Producer Price Index (PPI) and Retail Sales figures later in the week.

Oil prices climbed on Monday, settling at their highest levels in two weeks after the United States and China agreed to temporarily ease tariffs—raising optimism that the prolonged trade dispute between the world’s two largest economies may be approaching resolution.

The easing of trade tensions fueled rallies across global equity markets and sent the U.S. dollar and crude prices higher, driven by hopes that improved relations between the world’s top oil consumers could support global economic growth and, in turn, oil demand.

U.S. Federal Reserve Governor Adriana Kugler noted that progress in trade talks could reduce the need for monetary easing, applying some pressure to crude in early trading. Lower interest rates typically support oil demand by stimulating economic activity.

Production disruptions and export adjustments also lent support to oil markets. Norway’s Equinor announced a temporary halt at its Johan Castberg oilfield in the Arctic Barents Sea for repairs. Meanwhile, Iraqi crude exports were projected to fall to around 3.2 million barrels per day in May and June, marking a notable drop from earlier months.

Geopolitical factors remain in focus. Ongoing U.S.-led negotiations with Iran could pressure crude prices if a nuclear agreement leads to the easing of export sanctions on Iranian oil. Similarly, U.S.-brokered peace efforts between Russia and Ukraine could pave the way for lifting sanctions on Moscow—potentially unleashing more Russian supply onto global markets.

U.S. equity markets soared on Monday, with all three major indexes posting their strongest daily gains since early April, as investors welcomed a temporary easing of trade tensions between the United States and China. The US 500 closed at its highest level since early March, lifting market sentiment and risk appetite across sectors.

The breakthrough came as Washington and Beijing agreed to a 90-day reduction in tariffs. The U.S. will lower duties on Chinese goods to 30% from 145%, while China will cut tariffs on U.S. imports to 10% from 125%. The truce has raised hopes that the world's two largest economies may be on a path toward resolving their prolonged trade conflict.

Apple jumped 6.35% on reports that it may raise prices for its upcoming iPhone lineup.

With more than 90% of S&P 500 companies having reported results, the earnings season is winding down. Walmart is among the few remaining large-cap names set to report later this week.

Attention now shifts to the Federal Reserve, with several officials—including Chair Jerome Powell—scheduled to speak.