The US Dollar Index (DXY) dropped to five-week lows, dipping below 99.00. This decline is linked to unpredictable US trade policies. On Tuesday, the focus will shift to key US economic indicators: the Consumer Confidence from the US Conference Board, Durable Goods Orders, House Price Index, and the Dallas Fed Manufacturing Index. Additionally, Fed’s Kashkari will be speaking. EUR/USD rose to multi-week highs above 1.1400, fueled by optimism in trade. Key upcoming releases include Germany’s GfK Consumer Confidence, Economic Sentiment for the Euro Area, the final Consumer Confidence report, and the Consumer Inflation Expectations survey.

Exchange Rate Movements

GBP/USD approached 1.3600, benefiting from USD weakness. The only relevant UK release is the CBI Distributive Trades survey. USD/JPY gained some strength after touching monthly lows around 142.20. Japan’s Foreign Bond Investment data and Consumer Confidence figures are due on May 29. AUD/USD rose above 0.6500 but fell back slightly, with traders awaiting the RBA’s CPI Indicator and Construction Work Done data on May 28. WTI oil prices slid towards $61.00 per barrel, and Gold dropped to about $3,320 per ounce, reacting to Trump’s prolonged EU trade discussions. Silver faced selling pressure near $33.00 per ounce as the week started. The US Dollar Index’s recent fall below 99.00 is mainly due to inconsistent trade policy coming from Washington. This situation has led to adjustments in many USD pairs. As the week progresses, we expect several important economic events from the US—especially consumer sentiment and durable goods orders—to create short-term movements in trading. Kashkari’s comments may shed light on the Federal Reserve’s discussions about inflation and future policy directions. The euro’s rise above 1.1400 indicates improved sentiment due to lowered trade tensions and a better economic outlook in parts of the eurozone. With Germany’s consumer confidence data and eurozone sentiment indicators set to be released soon, any positive surprises could strengthen the euro further. However, changes in sentiment often have little impact on large institutional trading strategies unless they indicate a significant shift in spending or investment.

Commodity Price Fluctuations

Sterling’s rise toward 1.3600 was mainly due to dollar weakness, rather than strong domestic data. With only a minor UK retail survey expected, trading strategies involving sterling may need to focus more on technical analysis than on news. This suggests that traders should pay close attention to short-term trigger levels and manage their stops carefully, as macroeconomic influences appear limited for now. In Tokyo, the yen briefly recovered against the dollar after reaching monthly lows. Upcoming Japanese data, particularly on foreign investment, may reveal essential trends that could affect JPY trading. However, consumer figures might not provide much clarity unless there’s a surprising change from previous results. The Australian dollar held steady above 0.6500 before sliding a bit, likely due to cautious positioning ahead of the Reserve Bank’s CPI indicator and quarterly construction data. These reports are crucial for shaping interest rate expectations, which may lead to significant market reactions. We should be ready for volatile movements if the data deviates from expectations. In the commodities market, oil prices experienced a decline, nearing $61.00 due to ongoing trade negotiations between the US and EU. Unresolved tariffs and trade deals are impacting energy demand expectations. Precious metals saw similar weakness. Gold fell to around $3,320 per ounce, while silver faced renewed selling around $33.00. These drops indicate a shift towards riskier assets and less demand for safe havens. We’re monitoring movements driven by volatility in asset pricing and relationships between different commodities. Those involved in derivatives should be aware of changes in implied volatility and shifts in positions that may come from broader trends rather than individual asset performance. Not all economic data is equally relevant, but some reports may significantly impact future expectations. Create your live VT Markets account and start trading now.

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