After a notably volatile week on global markets, investors had little respite over the Easter weekend. Markets reopened on Monday sharply lower following fresh controversy involving President Trump, who publicly criticised Federal Reserve Chair Jerome Powell for refusing to lower interest rates at his request. Trump’s demand for immediate rate cuts seems driven by his desire to boost a stock market recently battered by his aggressive trade tariffs. However, Wall Street has clearly signalled its disapproval, pushing back against Trump’s attacks and underscoring the importance of central bank independence.
Monday’s trading saw significant declines across major indices: the Dow Jones dropped 2.5%, the S&P 500 lost around 3%, and the Nasdaq Composite was hardest hit, down over 3.3%. Former investor favourites, including Tesla and Nvidia, saw steep declines, highlighting just how deeply sentiment has soured. Meanwhile, the U.S. Dollar fell to multi-year lows against most major currencies, and investors continued to seek safety in gold, driving prices to record highs once again.
Given this severe market reaction, it’s increasingly likely Trump will need to moderate his rhetoric or clarify his position on tariffs and Fed policy to restore some stability in the short term. Markets clearly remain sceptical that the Federal Reserve will yield to political pressures—any resolution will likely come from the White House rather than the central bank.
Looking ahead, despite this being a shortened four-day trading week, it’s unlikely that volatility will ease. Tuesday is relatively quiet from a data standpoint, but we’ll see Eurozone consumer confidence data, which is forecast to come in lower than previously. Given the strong momentum currently underpinning the Euro—especially with EUR/USD trading comfortably above 1.15—a slightly weaker confidence reading is unlikely to significantly dent Euro strength. Later in the day, the U.S. releases the Richmond Fed Manufacturing Index, expected to remain in negative territory, adding further downward pressure to the already weakened Dollar.
Wednesday brings the release of Flash PMI data from the EU, UK, and the U.S. All three regions are expected to show weaker figures compared to previous months, reflecting broad-based economic challenges. Because the declines appear widespread, currency markets may remain relatively stable unless there are significant surprises in either direction. However, investors should remain cautious, given that current market sentiment remains sensitive to even minor economic shifts.
On Thursday, investors will closely watch the weekly U.S. jobless claims data. Expectations are for a modest increase, further confirming a deteriorating employment landscape amid the negative economic impact of ongoing tariff uncertainty. A sustained rise in unemployment claims will likely exacerbate concerns about the U.S. economy and add more downward pressure on the Dollar. Until we see clear signs of resolution between Trump’s administration and the Fed—or clarity on the tariff issue—the Dollar may continue its recent slide.
Finally, the week wraps up on Friday with key UK retail sales figures, expected to show a decline, likely due to the poor weather conditions experienced last month. Unless we get an upside surprise here, Sterling may face additional selling pressure heading into the weekend, particularly if broader market sentiment remains cautious.
With another week of potential volatility ahead, staying informed and proactive with your currency transactions is crucial. If you’d like to discuss your FX strategy or require assistance navigating the current market conditions, please feel free to contact me.