Following the sustained selling pressure at the beginning of the week, EU emission allowances (EUAs) recovered noticeably on Tuesday. The upward movement was apparently driven by positive geopolitical signals, which provided some relief among market participants. In particular, the US government's announcement of its intention to reduce tariffs on Chinese goods had a supportive effect and led to a comparatively slight increase in EUA prices. Wednesday began with a significant upward movement and continued with an almost linear price increase of EUR 2.50. The limited supply on the primary market - only one auction has been held so far this week - is likely to have added to the bullish market sentiment.

The relative strength of EUAs on Tuesday could also indicate buying activity by institutional investors who may be speculating on a bottoming out. The partial recovery on the equity markets - typically more risk-averse investments - also points to an increasing risk-on behaviour among investors.

The EUAs were surprisingly robust on Tuesday in an environment characterised by geopolitical uncertainties. Supported by positive signals from the USA, a limited auction offer and speculative buying by institutional players, prices rose significantly. Whether this trend can continue remains to be seen in view of global developments and the general market situation.