Trump Delays EU Tariffs to July Amid Hopes for New Trade Talks

Trump delays 50% EU tariffs to July 9 after von der Leyen call; markets steady, DXY dips, gold supported, AUD and NZD rally.

Markets entered the new trading week on a steadier note after U.S. President Donald Trump announced a delay to the threatened 50% tariff on European Union goods. The tariff, originally set to take effect on June 1, will now be postponed to July 9, giving both sides more time to negotiate. This decision followed a Sunday call between President Trump and European Commission President Ursula von der Leyen, where Trump noted that von der Leyen “wants to get down to serious negotiations.”

The news of the delay was received positively across major markets. U.S., European, and Japanese equity futures rose modestly in early Asian trading hours, while demand for the dollar continued to weaken. The U.S. Dollar Index (DXY) slipped further toward the 99 level, pressured by growing concerns about U.S. debt sustainability and credit outlook.

Trump Delays EU Tariffs to July Amid Hopes for New Trade Talks

With U.S. markets closed for Memorial Day and U.K. markets shuttered for the Spring Bank Holiday, market activity was subdued but stable. Spot gold prices edged slightly lower from Friday’s close of $3,357.90/oz to below $3,350, but the precious metal remains well supported amid lingering macroeconomic uncertainty. Gold gained nearly 5% last week.

In the currency markets, risk-sensitive currencies continued to benefit from dollar weakness:

• AUD/USD extended last week’s 1.6% rally, trading above 0.6500.
• NZD/USD gained further after a 1.9% surge last week, testing the 0.6000 threshold.
• GBP/USD, despite thin liquidity due to the U.K. holiday, climbed steadily toward 1.3550 after breaking through 1.3500 last week.
• USD/JPY floated around 142.80, paring some of last week’s 1.8% decline as safe-haven flows receded.

The Euro (EUR) saw renewed interest ahead of a speech by ECB President Christine Lagarde later in the day, where she may address the EU’s stance on trade negotiations. The EUR/USD pair maintained a bullish tone, underpinned by optimism that cooler heads may prevail in transatlantic trade talks.

Meanwhile, the Swiss franc (CHF) and Japanese yen (JPY)—both traditional safe-haven currencies—saw a slight pullback from last week’s gains as geopolitical tensions eased temporarily.

Dollar Outlook: Downward Bias as Trading Volumes Thin

With the U.S. observing Memorial Day, traders expect trading volumes to drop significantly after the European session ends. The greenback continues to face heavy pressure, and unless a surprise occurs, analysts anticipate the DXY will break below the 99 mark during the Asia session. Market participants will remain cautious ahead of key U.S. data releases later in the week and the Fed’s June policy meeting.

The Federal Reserve’s most recent policy statement on May 7 signaled a cautious stance amid rising risks to both inflation and employment. The Fed slightly raised its core PCE inflation projection for 2025 to 2.5%, partly due to tariff-related pressures, and lowered its GDP growth forecast to 1.7%. It is likely to keep rates unchanged until at least the next meeting on June 17–18.

Commodity Watch: Gold Holds Steady Despite Tariff Delay

Gold, which surged nearly 5% last week, dipped slightly below $3,350/oz in early trading but remains well supported by structural demand and persistent inflationary concerns. While the temporary easing in trade tensions may dent immediate safe-haven demand, uncertainty around global policy responses and monetary easing continues to provide a bullish undertone for precious metals.

Currency Summary – 24-Hour Outlook

• USD: Medium Bearish – Tariff delay and Memorial Day lull likely to suppress dollar demand.
• Gold (XAU): Weak Bullish – Minor pullback expected; underlying support remains firm.
• AUD/NZD/GBP: Medium Bullish – Broad dollar weakness and positive risk sentiment supportive.
• JPY/CHF: Weak Bullish – Safe-haven demand eases, but underlying concerns remain.
• EUR: Medium Bullish – Markets await Lagarde’s remarks; potential for constructive trade dialogue.
• CAD: Medium Bullish – Strong retail sales and oil-linked optimism continue to bolster the Loonie.

As global markets absorb the latest shift in U.S. trade rhetoric, attention will now turn to upcoming central bank speeches and macroeconomic data, with volatility likely to return mid-week once full liquidity is restored.

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