Against the backdrop of yesterday’s announcement of a 90-day pause on previously imposed tariffs by the Trump administration, volatility in the currency markets has sharply increased again. European currencies, such as the Swiss franc, euro, and pound, continue to test recent extremes, awaiting the release of inflation data from the US.

The events of this week are heightening uncertainty among investors, who are striving to adapt to new economic conditions. The introduction of the tariff pause came as an unexpected move, which temporarily eased tensions in the global markets. However, it remains unclear how this will affect the long-term prospects for currency pairs such as EUR/USD and GBP/USD.

In the face of instability, market participants continue to seek ways to minimise risks and protect their investments. Today's core consumer price index (CPI) data may provide further clues about the impact of Trump’s tariff policy on the US economy and, in general, on the currency markets.

EUR/USD

Last week, buyers of the EUR/USD pair managed to break through a series of key resistances at 1.1100–1.1000 and recorded the highest level of the year at 1.1145. Following news of tariffs being imposed on the European Union, the pair lost over 200 pips and tested an important range of 1.0900–1.0870. Yesterday, there was a resumption of the upward momentum, and the pair tested recent extremes again at 1.1100. Technical analysis of EUR/USD suggests potential strengthening of the pair towards 1.1145, provided it can settle above 1.1000. A drop below 1.0870 could lead to a retest of 1.0800.

Upcoming events that could significantly impact the movement of EUR/USD:

• Today at 11:00 (GMT+2): Industrial production volume in Italy
• Today at 12:15 (GMT+2): Speech by ECB Governing Council member Tuominen
• Today at 15:00 (GMT+2): Speech by Claudia Buch, Vice-President of the German Bundesbank
• Today at 15:30 (GMT+2): US Core Consumer Price Index (CPI)

GBP/USD

The losses in GBP/USD after testing 1.3200 amounted to more than 400 pips. The announcement of a 90-day pause on the action of the imposed tariffs allowed buyers of the pair to find support at 1.2700 and form a reversal pattern, the "bullish harami", on the daily timeframe. Technical analysis of GBP/USD suggests a potential rise towards 1.2900–1.2870.

The following events may influence GBP/USD pricing in the upcoming sessions:

• Today at 11:30 (GMT+2): Bank of England’s Credit Conditions Survey
• Today at 13:00 (GMT+2): PCSI Index by Thomson Reuters/Ipsos
• Today at 16:00 (GMT+2): Speech by Bank of England representative Briden
• Tomorrow at 09:00 (GMT+2): UK Gross Domestic Product (GDP)

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