Spring Bank Holiday in the UK/Memorial Day in the US will keep action limited

It is Spring Bank Holiday in the UK and Memorial Day holiday in the US. Peace to those that died in the fight for freedom and to their families.

Today, the USD moved lower but has since retraced the declines to start the NA session.. The US banks, stock and bond markets are closed but Canada is open. The forex market never sleeps (it may rest though). The price action is likely to be somewhat limited in the forex.

A snapshot of the USD to start the session now shows a mixed picture. The greenback is lower vs:

• EUR -0.11%
• GBP -0.17%
• CAD -0.16%
• AUD -0.20%
• NZD -0.37%

and is higher vs:

• JPY +0.28%
• CNF +0.17%

Pres. Trump over the weekend eased fiscal policy (at least temporarily) vs Friday by extending a reprieve to the EU for tariffs to 50% tariffs to July 9, 2025. On Friday, he said he “recommended” a greater tightening of fiscal policy by adding a 50% tariffs starting June 1. Meanwhile, the Fed remains on hold as tariff policy and budget policy is being enacted around them and they wait for the dust to settle on inflation and growth.

Fed’s Neel Kashkari (a 2026 FOMC voter) on Sunday emphasized that uncertainty is a major concern for both the Federal Reserve and U.S. businesses. When asked whether the Fed could adjust rates by September, he said “anything is possible,” indicating a cautious stance. He noted that the central bank is currently in “wait and see” mode and described the economic impact of new tariffs as stagflationary—combining stagnant growth with inflation

Regarding the EU, the Trump reaction on Friday was due to limited progress on trade negotiations. IN addition,

• • The EU has prepared a €21 billion counter-tariff package targeting American goods

  • Negotiations are ongoing to prevent a full-scale trade conflict

• Prospects: Italy’s Economy Minister expressed optimism that a U.S.–EU trade accord will mirror the recent U.S.–UK deal.

Trump today said that countries “all over the world” wanted to make trade deals with the US. There were no trade deals made last week despite comments from the week before that there would be more deals coming.

Recall on May 14, the US and China agreed to ease the “embargo” where tariffs were imposed on trade up to 145%..

• Terms:

  • Both nations agreed to reduce tariffs imposed during the trade war by 115% for a 90-day period (so that would be August 12)

  • China suspended a 34% retaliatory tariff and other non-tariff measures

  • A 10% tariff remains in place on certain goods

• Purpose: Aimed at de-escalating trade tensions and fostering a more stable economic relationship

President Trump visited Saudi Arabia from May 13 to May 14, 2025, as part of his four-day Middle East tour that also included Qatar and the United Arab Emirates. While there:

• Saudi Arabia pledged to invest $600 billion in the United States, focusing on sectors like energy, defense, technology, and infrastructure. This commitment was formalized during the U.S.–Saudi Investment Forum in Riyadh.
• The U.S. agreed to sell Saudi Arabia an arms package worth nearly $142 billion, encompassing tanks, combat ships, missile defense systems, and cybersecurity technology. This deal is considered the largest defense cooperation agreement between the two nations.
• President Trump and Crown Prince Mohammed bin Salman signed an agreement to enhance cooperation in key sectors, including energy, mining, and defense, signifying a deepening of economic and strategic ties

In addition, Saudi Arabia launched “Humain,” a state-backed AI company, partnering with U.S. tech firms:

• Nvidia: Agreed to supply at least 18,000 GPUs to Humain.

• AMD: Committed to a $10 billion investment in joint AI infrastructure projects.

• Amazon Web Services: Plans to establish a $5 billion AI Zone in Saudi Arabia.

President Trump formally accepted a luxury Boeing 747-8 aircraft from the Qatari government during his May 2025 visit to the Middle East. Valued at approximately $400 million, the jet is intended to serve as a temporary replacement for Air Force One. The Pentagon confirmed that the aircraft was accepted in accordance with federal regulations and will undergo modifications to meet presidential transport standards.

This article was written by Greg Michalowski at www.forexlive.com.