Forex Today: US trade issues and geopolitical tensions lead to a rocky beginning of the week

What to Know on Monday

As we begin the week on February 23rd, financial markets are experiencing some volatility. Investors are currently digesting the latest news regarding the U.S. trade policies and geopolitical issues. Without any significant data being released today, many will be closely monitoring these developments.

The Supreme Court recently ruled against the tariffs set by President Trump’s administration, stating that the president went beyond his constitutional authority by using the International Emergency Economic Powers Act (IEEPA) for unilateral tariffs. In response, Trump signaled intentions to explore different legal avenues to impose additional tariffs, specifically citing the National Security Treaty under Section 301 of the Trade Act of 1974. Over the weekend, he announced an immediate increase in global tariffs from 10% to 15%, warning that more taxes could follow.

In light of this, China’s Ministry of Commerce called on the U.S. to remove unilateral tariffs against its trading partners, emphasizing their commitment to safeguard China’s interests.

The U.S. dollar index fell slightly during trading on Friday but managed to end the week positively. As of Monday morning, it remains under bearish pressure, hovering just under 97.50, down over 0.3% for the day. Wall Street reacted favorably to the Supreme Court’s decision, closing positively before the weekend, but this morning saw U.S. stock index futures dip by about 0.6-0.8% in Europe.

Additionally, Iran and the U.S. are set to hold a third round of nuclear discussions in Geneva on Thursday. Reports indicate that Trump may consider targeted strikes as a tactic to motivate Iran towards a deal, and further military action could be on the table if necessary later this year. After a more than 5% increase last week, West Texas Intermediate crude oil has retracted, trading at $65.70 and down approximately 1% today.

Meanwhile, gold is thriving in this uncertain market environment, reaching its highest level since late January, trading above $5,100.

The euro against the U.S. dollar opened the week positively, trading around 1.1820, up over 0.3% today. The German IFO sentiment data is set to release later in the European Economic Calendar.

After a rough end to the previous week, GBP/USD has regained some ground, trading over 1.3520. On the other hand, USD/JPY continues to struggle despite previous gains, trading lower around 154.50.