In April, the number of building permits in the United States dropped sharply from a 1.6% increase to a -4.7% decrease. This shows a slowdown in construction activity during this time. The EUR/USD currency pair fell to a three-day low of about 1.1130, driven by the strength of the US Dollar as inflation expectations increased. GBP/USD also fell to 1.3250 for similar reasons, with a stronger US Dollar fueled by rising consumer inflation expectations.

Gold Price Movement

Gold prices fell below $3,200, reversing earlier gains. The US Dollar’s resurgence and easing geopolitical tensions contributed to this drop, making it a challenging week for gold, which faced its largest weekly loss of the year. Ethereum rose above $2,500, nearly doubling since early April. The recent ETH Pectra upgrade led to over 11,000 EIP-7702 authorizations, increasing its use. Meanwhile, President Trump’s trip to the Middle East in May 2025 resulted in significant deals aimed at strengthening US trade and tech exports. These initiatives are viewed as efforts to fix trade imbalances and enhance US leadership. April’s economic indicators were telling, showing a clear shift in sentiment. The sharp decline in building permits indicates a significant pullback in construction activity in the US. This change signals that decision-makers are hesitant to invest in long-term projects, likely due to rising capital costs or worries about future demand. This situation points toward a shift in short-term investment preferences. Given this context, reactions in the foreign exchange market were expected. The decline of EUR/USD to 1.1130 and GBP/USD to 1.3250 reflects a broader move toward the Dollar, driven by heightened consumer inflation expectations. When these expectations rise, traders often adjust their positions, anticipating that the Federal Reserve may maintain higher interest rates for a longer period. This naturally attracts more investments into the Dollar. Moving forward, what the Federal Reserve might do next will be increasingly tied to domestic economic signals. Keeping a close eye on US inflation and employment might provide a strategic advantage. The strength of the Dollar impacts many areas, which will continue to influence asset pricing in the short term.

Commodity Market Dynamics

Commodities also experienced movement. Gold’s sharp decline below $3,200 indicates renewed risk appetite, especially as some geopolitical tensions eased. The strength of the Dollar contributed to the sell-off in gold, making it costlier in other currencies. This weekly loss is the worst of the year. Compared to previous volatility cycles, the current situation suggests that metal markets may react more than follow a specific trend. While traditional assets showed some volatility, the digital market behaved differently. Ethereum’s rise above $2,500, almost doubling since early April, was driven by real market activity rather than mere speculation. The Pectra upgrade resulted in over 11,000 EIP-7702 authorizations, indicating strong user and developer engagement with the new protocol changes. This level of adoption reflects confidence in Ethereum’s usefulness. On the policy front, the May 2025 Middle East visit resulted in significant long-term commercial agreements focused on enhancing trade and technology ties. From our perspective, these initiatives are long-term strategies designed to shift the balance in favor of the US. They aim to stabilize current imbalances and extend economic influence. Although these results may take time to become visible in the markets, the agreements show clear intentions for future growth. What does all this mean for traders? It suggests avoiding a linear narrative. The balance between Dollar strength driven by inflation and the easing of geopolitical tensions could create opportunities for strategic entries or short-covering rallies, depending on how positions are managed. Technology continues to show upward momentum, especially where upgrades enhance functionality. Assets sensitive to interest rates are reacting swiftly to inflation data, requiring quicker adjustments rather than a wait-and-see approach. In summary, monitoring how real economic data aligns with policy discussions is crucial. It’s important to act on discrepancies before a general consensus forms. Things may not remain stable for long. Create your live VT Markets account and start trading now.

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