U.S. Core CPI, Federal Budget Balance, Oracle Earnings

The EUR/USD pair remained largely unchanged on Tuesday ending the session with minor gains as investors stayed on the sidelines ahead of key macroeconomic events. Market participants are closely monitoring the ongoing U.S.-China trade discussions in London, as well as the release of U.S. inflation data, both of which could shape the pair’s near-term direction.

Talks between Washington and Beijing entered their second day, with U.S. President describing progress as “good.” However, optimism among investors remains tempered, with the negotiations failing to lift overall risk sentiment. Despite this, speculation that both sides could find common ground has provided modest support to the U.S. dollar.

In Europe, investor sentiment showed signs of improvement. The Eurozone’s Sentix Investor Confidence Index turned positive in June for the first time this year, rising to 0.2 from -8.1 in May and -19.5 in April. This uptick, coupled with commentary from European Central Bank (ECB) officials, has contributed to renewed interest in the euro.

ECB Governing Council member Yannis Stournaras highlighted the stabilizing effect of consistent EU policy on eurozone assets. Elsewhere, ECB’s Boris Vujcic noted the uncertainty surrounding the inflationary impact of U.S. tariffs, indicating the bank may wait for updated projections. Comments from President Christine Lagarde suggesting that interest rates are near the end of their easing cycle have added to bullish euro sentiment.

Looking ahead, traders are focused on Wednesday’s U.S. Consumer Price Index (CPI) report. As investors await fresh catalysts, the EUR/USD remains in a consolidation phase, with upcoming inflation data, ECB commentary, and wage growth figures likely to dictate the next directional move.

Gold prices posted minor gains on Tuesday, rebounding from a session low near $3,300 as optimism surrounding U.S.-China trade negotiations lifted investor sentiment.

Risk appetite improved following renewed discussions between U.S. and Chinese officials in London, which market participants interpreted as a positive step toward easing trade tensions.

On the macroeconomic front, sentiment among U.S. small businesses improved notably. The NFIB Optimism Index rose to 98.8 in May from 95.8 in April, surpassing its long-term average and ending a four-month decline. Business owners cited easing concerns over policy and economic uncertainty—though tariffs remain a top issue.

Markets are closely watching CPI figures, which are expected to show signs of sticky inflation—possibly limiting downside for gold.

Heightened geopolitical tensions are also providing underlying support. President Trump warned that Iran is becoming more aggressive in nuclear talks, while Russia claimed territorial gains in Ukraine’s east-central region—developments that could increase safe-haven demand for gold.

Oil prices pulled back on Tuesday retreating from multi-week highs as investors reassessed the global demand outlook. The dip comes as markets digested the preliminary outcome of key U.S.-China trade talks in London, which could influence long-term energy demand trends.

U.S. and Chinese officials concluded two days of negotiations in London on June 10–11, culminating in a framework designed to revive the Geneva truce and ease tensions around export controls.

Under the tentative framework, China agreed to ease curbs on rare-earth and magnet exports, while the United States will scale back select export controls related to semiconductors and advanced technologies.

Despite optimism surrounding trade, attention quickly turned back to fundamentals. The U.S. Energy Information Administration (EIA) on Tuesday revised its 2024 global oil demand forecast downward by 200,000 barrels per day, citing weaker-than-expected consumption in developed economies.

Adding a layer of complexity, the American Petroleum Institute (API) reported that U.S. crude inventories fell by 370,000 barrels for the week ending June 6. This contrasts sharply with analysts’ expectations for a 700,000-barrel increase, offering a bullish surprise ahead of the official EIA weekly report due Wednesday.

While easing geopolitical tensions offered brief support, oil markets remain caught between optimism over trade diplomacy and caution around slowing global demand. Investors will closely watch the upcoming EIA inventory figures and further details on the U.S.-China agreement for clearer direction.

U.S. stocks advanced on Tuesday, buoyed by renewed optimism over a potential U.S.-China trade breakthrough, following upbeat comments from Commerce Secretary Howard Lutnick. Market participants also looked ahead to key inflation data that could shape expectations for Federal Reserve policy.

Trade discussions between the U.S. and China, which began Monday in London, appeared to make progress, with Secretary Lutnick stating the meetings were “going well.” Talks could extend into Wednesday if needed, he added, signaling a constructive tone.

Markets welcomed the positive rhetoric, as investors remain hopeful that the dialogue will further deescalate tensions following the mutual reduction of tariffs announced in May. Key sticking points in the negotiations include China’s restrictions on rare earth exports and U.S. export controls on semiconductor technology.

With little economic data on Tuesday’s calendar, market attention is firmly on today's Consumer Price Index (CPI) report. Analysts expect the data to show rising inflationary pressures, especially as import costs rise under tariffs introduced by President Donald Trump.

Following Friday’s strong jobs report, expectations are that the Federal Reserve will keep rates steady in the 4.25% to 4.50% range through June and July meetings.

In corporate news, Apple Inc.closed slightly higher following its annual Worldwide Developers Conference, where it unveiled new AI-powered features, including real-time call translations. However, investor response was muted amid expectations for more substantial AI innovation. McDonald’s Corp. declined over 1% after Redburn Atlantic downgraded the stock to “sell,” citing waning foot traffic and concerns over the long-term effects of GLP-1 obesity treatments on customer behavior.