The Eurozone Economic Sentiment Indicator was registered at 96.3 in February, surpassing the forecast of 96.
EUR/USD and GBP/USD remain affected by the strengthening US Dollar amid uncertainties surrounding tariffs from US President Trump. Gold prices have also decreased, reaching a ten-day low at nearly $2,880 due to confusion regarding tariff applications.
In February, inflation in France is expected to decline sharply, primarily due to a significant reduction in regulated electricity prices. Disinflation trends are emerging, yet prices for services continue to climb in both France and the wider Eurozone.
A reading of 96.3 for the Eurozone Economic Sentiment Indicator suggests a slight improvement in business and consumer confidence over February, exceeding the expected 96. This is not a dramatic shift but does indicate that optimism is somewhat higher than analysts had anticipated. While this figure remains below 100—traditionally the threshold between pessimism and optimism—it does suggest a stable if restrained, economic environment.
Speculation over potential US tariffs is clearly weighing on the euro and the pound. The stronger American currency continues to dictate movements in both pairs, reflecting investor caution about potential trade restrictions. In times of uncertainty, markets generally favour the currency perceived as a safer option. This explains why both the euro and sterling have struggled to gain any momentum even with better-than-expected data in some areas.
Gold, often turned to as a hedge against uncertainty, has failed to hold higher levels. Prices dropping to a ten-day low suggests a shift in sentiment, possibly due to traders reassessing risks connected to trade policy. If US tariffs turn out to be less restrictive than feared, gold could struggle further as money flows towards risk assets instead. For now, the confusion surrounding potential duties appears to be pushing investors away from safe-haven assets.
Inflation data out of France indicates that cost pressures are easing, mostly due to a drop in regulated electricity prices. However, this masks the fact that service prices are still rising, which has implications for consumer spending and monetary policy decisions. The same pattern can be seen across the Eurozone—overall inflation appears subdued, but service-related expenses continue to climb. If this divergence continues, it may complicate efforts to gauge the true strength of inflationary trends.
For traders dealing in derivatives related to European assets, these developments provide both risks and openings. Currency markets remain highly sensitive to political risk, meaning any fresh trade policy announcements could trigger sudden shifts. At the same time, inflation-linked products may require closer attention given the divergence between headline inflation and underlying price pressures. Those monitoring gold should be cautious, as fluctuating trade policy expectations will likely drive volatility.
