Trump Eases Europe Trade Fears, Markets Await US PMI Data

The EUR/USD pair extended its advance for a second consecutive session, climbing more than 0.6% on Thursday as the US Dollar retreated despite the release of solid US economic data. Improved risk sentiment, sparked by US President Donald Trump stepping back from tariff threats against Europe, supported demand for the shared currency.

The Euro’s rally comes even as US macroeconomic indicators remained firm. Wall Street was on track to close the session higher, underpinned by robust third-quarter 2025 GDP growth and resilient labor market data. The stronger data, alongside a steady inflation reading, effectively ruled out the possibility of a Federal Reserve rate cut at its January meeting.

In the Eurozone, the latest European Central Bank (ECB) meeting minutes reinforced confidence that inflation is on track to return to the central bank’s 2% medium-term target. Policymakers broadly agreed that underlying inflation indicators remain consistent with this objective, while acknowledging that economic growth, although resilient, is still vulnerable to geopolitical risks.

Adding to the positive tone for the Euro, reports indicated that European Union officials are planning to revive a previously stalled trade agreement with the United States, with a vote on ratification expected, according to sources cited by Bloomberg.

Looking ahead, traders will monitor HCOB Flash PMI data from France, Germany, and the wider Eurozone, along with remarks from ECB President Christine Lagarde. In the United States, attention will shift to S&P Global Flash PMIs and the final reading of the University of Michigan Consumer Sentiment survey.

Bitcoin is trading around $89.500 level  on Friday, rounding off a weak week as easing geopolitical tensions and a large corporate purchase failed to revive demand for cryptocurrencies. Lingering caution across global markets, combined with renewed geopolitical risks, continued to weigh on sentiment.

During the Asian session, risk appetite remained subdued ahead of a Bank of Japan policy meeting, while comments from US President Donald Trump warning of possible military action against Iran further dampened investor confidence.

Safe-haven assets, including gold and other precious metals, surged to fresh record highs amid rising demand for physical assets, leaving Bitcoin trailing traditional stores of value.

Bitcoin was on track to post a weekly decline of roughly 5%, having reversed earlier gains sparked by a softening in Trump’s rhetoric toward Greenland earlier in the week. Prices drifted back toward one-month lows, highlighting the market’s fragile tone.

The cryptocurrency drew limited support from Strategy Inc, which disclosed a $2.1 billion Bitcoin purchase. While the firm remains the largest corporate holder of Bitcoin, its aggressive accumulation strategy has increasingly become a source of concern for markets, particularly as Bitcoin’s price continues to underperform.

Oil prices edged higher during Asian trading on Friday after US President Donald Trump signaled the possibility of military action against Iran, heightening concerns over potential supply disruptions in the Middle East.

Despite some pullbacks earlier in the week, crude benchmarks were on track for a fifth consecutive weekly gain, supported by expectations of improving global demand and an increased geopolitical risk premium amid elevated global tensions.

Speaking to reporters aboard Air Force One on Thursday, Trump said the United States had naval forces moving toward Iran, warning Tehran against killing protestors or reviving its nuclear program.

Media reports indicated that an aircraft carrier and several destroyers were expected to arrive in the Middle East in the coming days, raising market concerns about renewed military confrontation in the region.

Iran is one of the largest oil producers within the Organization of the Petroleum Exporting Countries (OPEC) and a key supplier to China, the world’s largest oil importer. Any escalation involving US military action could significantly disrupt Iranian oil exports and tighten global supply.

For the week, oil prices were up between 0.6% and 0.8% following volatile trading, as markets also assessed shifting US policy signals related to Greenland. Additional support came from mildly upbeat economic data out of China and the International Energy Agency’s decision to raise its 2026 oil demand forecast. Prices also benefited from bargain hunting after crude’s sharp underperformance in 2025.

US stocks closed higher on Thursday, marking a second consecutive session of strong gains, as a rally in technology shares—led by Meta Platforms—and easing geopolitical tensions lifted investor sentiment. The major indexes had already rebounded sharply on Wednesday after suffering their steepest decline since October in the prior session, as concerns over geopolitical risks began to fade.

Technology stocks outperformed, with Meta Platforms Inc jumping more than 5% after Jefferies reiterated the stock as a top pick, citing an attractive risk-reward profile and the company’s strength in artificial intelligence. Alibaba shares also moved higher following a Bloomberg report that the Chinese tech giant is planning to list its AI chip unit, T-Head. Elsewhere, Procter & Gamble pared earlier losses to finish higher after posting second-quarter net sales of $22.21 billion, slightly below consensus estimates, while organic revenue growth came in flat.

Overall, earnings released over the past week have pointed to continued corporate resilience amid a still-solid US economic backdrop. The reporting calendar remains heavy next week, with results due from major technology names including Microsoft, Meta Platforms, and Tesla.

The Federal Reserve is scheduled to meet next week, with markets widely expecting policymakers to leave interest rates unchanged, despite renewed pressure from the White House to cut rates.

Recent US economic data has reinforced the view that the economy remains in good shape. Weekly initial jobless claims rose by just 1,000 to 200,000 in the week ended January 17, below forecasts for 210,000, signaling ongoing strength in the labor market. Meanwhile, third-quarter US gross domestic product expanded at an annualized pace of 4.4%, beating expectations and accelerating from the previous quarter’s 3.8% growth rate.

Investors are now turning their attention to November core personal consumption expenditures (PCE) inflation—the Federal Reserve’s preferred inflation gauge—for further clues on the outlook for US interest rates.