Forex Today: US tariff headlines limit USD upside ahead of key inflation data

Here is what you need to know on Friday, May 30:

The US Dollar (USD) struggles to gather strength against its rivals following Thursday's volatile action as investors assess the latest headlines surrounding tariffs. The US economic calendar will feature Personal Consumption Expenditures (PCE) Price Index data, the Federal Reserve's preferred gauge of inflation, for April on Friday.

The USD outperformed its rivals early Thursday after the Court of International Trade announced that US President Trump's 'Liberation Day' tariffs will be blocked from going into effect. Later in the day, mixed macroeconomic data releases and the Court of Appeals for the Federal Circuit's decision to reinstate tariffs during the review process caused the USD to lose its strength. Moreover, US Treasury Secretary Scott Bessent said on Thursday that trade talks between the US and China are "a bit stalled" and added that finalizing a deal will likely require direct involvement of President Trump and Chinese President Xi Jinping. Finally, the Wall Street Journal reported that the Trump administration is considering allowing tariffs of up to 15% for 150 days.

Meanwhile, the Federal Reserve (Fed) released a statement late Thursday, noting that Fed Chairman Jerome Powell met with President Trump and told him that the monetary policy will be set based on trackable data for the economy. After losing about 0.5% on Thursday, the USD Index clings to small recovery gains at around 99.50 in the European morning on Friday and US stock index futures trade modestly lower on the day after Wall Street's main indexes registered marginal gains on Thursday.

The data from Germany showed earlier in the day that Retail Sales declined by 1.1% in April. This reading came in worse than the market expectation for a 0.2% increase. Later in the European session, Germany's Destatis will publish preliminary regional and nation-wide Consumer Price Index data for May. After closing in positive territory on Thursday, EUR/USD seems to have entered a consolidation phase at around 1.1350 early Friday.

Following a sharp decline in the Asian session, Gold reversed its direction and closed higher on Thursday. XAU/USD struggles to keep its footing and retreats to the $3,300 area in the European morning on Friday.

GBP/USD stays relatively quiet below 1.3500 after posting small gains on Thursday. Bank of England (BoE) Governor Andrew Bailey noted late on Thursday that the primary drivers behind the BoE's main reference rate remains the economic needs of the United Kingdom (UK), not external drivers such as the Trump administration's tariff policies.

USD/JPY made a sharp U-turn after setting a new two-week high above 146.00 on Thursday and ended up losing about 0.5% for the day. The pair stays under modest bearish pressure and trades below 144.00 to start the European session.