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In April, retail sales in Mexico fell to -1%, down from 0.5% the previous month.
Mexico’s retail sales fell by 1% in April, down from a previous growth of 0.5%. This drop indicates a slowdown in the country’s retail activity.
Meanwhile, the EUR/USD currency pair remains strong above 1.1500, rising to around 1.1550. This increase comes amidst changes in the US Dollar and ongoing geopolitical uncertainties.
Markets react to US involvement in the Iran-Israel conflict, strengthening the USD.
The USD has increased in value against the JPY, AUD, and NZD due to the US’s involvement in the Israel/Iran conflict. Here are the percentage changes of the USD against major currencies:
– EUR +0.50%
– JPY +1.18%
– GBP +0.54%
– CHF +0.1%
– CAD +0.41%
– AUD +1.15%
– NZD +1.24%
US stocks have seen little movement as the market assesses recent events. The Dow Industrial Average fell by 43.82 points, the S&P decreased by 1.09 points, while the Nasdaq rose by 8.01 points. In the US debt market, yields have dropped, with the 2-year yield at 3.903%, the 5-year at 3.950%, the 10-year at 4.369%, and the 30-year at 4.887%.
Market Reaction To Geopolitical Uncertainty
In other markets, crude oil rose by $0.74 to $74.58, and gold increased by $7.55 to $3,379.21. Bitcoin climbed by $286, reaching $101,301, with a weekend high of $103,387 and a low of $98,240. This data shows how the market is reacting to geopolitical uncertainty, mainly from recent tensions in the Middle East. The dollar’s rise against most major currencies indicates a higher demand for safety. Historically, when uncertainty grows and US interests are even slightly involved, the dollar strengthens as traders seek liquidity and stability. The yen, Aussie, and kiwi have fallen back. These currencies are particularly sensitive to risk and commodity influences, both of which are currently disrupted. The percentage gains reveal that the dollar moved significantly, especially against currencies closely tied to global risk or commodity exports. The 1.24% increase against the New Zealand dollar illustrates how quickly funding currencies can change when volatility rises. Similarly, the 1.15% shift against the Australian dollar highlights how fast capital can move when commodity ties alter economic expectations. These changes aren’t just quick reactions; they reflect a larger shift in sentiment related to uncertainty. The equity market’s stable performance shouldn’t be seen as indifference. Instead, it shows a pause — a wait-and-see attitude. The Dow’s slight dip and the S&P 500’s minimal change suggest that risk levels are stable, with no sign of forced selling. Even the Nasdaq’s small gain indicates that technology and growth stocks aren’t being heavily sold. These movements are intentional. Yields are falling, indicating changing expectations and bids for safety rather than inflation fears.Impact On Yields And Commodities
The yield on the 2-year Treasury is now below 3.91%, and the 10-year yield is under 4.37%. This downward trend is significant. When long-term debt yields fall, it often signals that aggressive monetary tightening expectations are diminishing. Fewer traders now expect the Federal Reserve to raise rates soon. Instead, bond buyers are confident that inflation might remain under control or be influenced by geopolitical and growth issues. In the commodities market, crude oil has gained slightly, rising by seventy-four cents. While some expected a larger increase due to recent headlines, this suggests that supply isn’t drastically threatened yet, and demand outlooks might limit price rises. The rise in gold, over seven dollars, reflects a typical reaction as traders seek safe-haven assets during uncertain times. Bitcoin’s increase above $101,000 indicates a trend where some investors view decentralized assets as a safe store of value, despite their volatility. For traders involved in derivatives related to rates, FX, and commodities, this adjustment period presents opportunities. Clear direction is evident in FX, especially against currencies sensitive to risk and trade flows. While yields are declining, they aren’t collapsing, allowing for short-term strategies while preparing for future monetary adjustments. Keep an eye on how closely the bond market follows geopolitical events. This asset class often reacts more predictably. If tensions persist, front-end yields may drop further, resulting in wider curve spreads. It’s important to see if lower yields correspond with ongoing strength in gold or if energy markets respond in time. Pricing remains adaptable but controlled. This is an ideal scenario for those navigating the market with clear strategies and responsive timing. For now, let equities drift and focus on positioned trades with clearer catalysts. Create your live VT Markets account and start trading now.The Japanese yen unexpectedly weakens, falling 1.2% against the US dollar, reports Scotiabank
The Japanese Yen has dropped by 1.2% against the US Dollar, coming close to its lowest level since early April. This decline happens in a climate of risk aversion, where the Swiss Franc only slipped 0.1% against the USD, showing some strength.
Concerns persist in the market about the Bank of Japan’s dedication to policy normalization. Recent meetings have indicated a careful approach to adjusting their balance sheet, which may create future risks regarding rate changes.
Economic Data from Japan
Recent economic data from Japan shows some positives. The manufacturing index has risen above 50, indicating growth, while the services index is at 51.5, suggesting moderate expansion. Still, doubts about central bank policies are affecting the Yen’s performance. Currently, the Yen is under selling pressure, and that pressure seems likely to continue. This 1.2% drop is not just a random event. It comes with muted responses from safe-haven currencies like the Swiss Franc, which has only dropped slightly by 0.1%. This suggests that markets are selective about where to invest. The strength of the dollar isn’t broad; it’s focused. A lot of this situation stems from the messages from the Bank of Japan. Their recent meetings have shown a cautious approach. They admit that moving away from very loose policies is necessary, but the changes are slow and limited. Traders dissecting these communications see more hesitance than decisive action, especially regarding balance sheet reduction. This has created a gap between what people expect and what’s actually happening. As long as this gap exists, the Yen may keep facing downward pressure. On the surface, Japanese macro data appears supportive. A manufacturing PMI above 50 typically signals growth, and a services index of 51.5 suggests moderate expansion as well. Normally, these indicators would support the currency. However, right now, expectations about policy are overshadowing domestic performance. Rate differences, especially compared to the US, are influencing behavior more than local economic data.Investment Strategies in a Volatile Market
In summary, higher time-frame traders should pay attention. The sensitivity to central bank messages is crucial at this moment. Clarity—or lack thereof—about interest rate paths could heavily impact currency pairs involving the Yen. With inflation still below that of western countries, there’s potential for divergence. Therefore, caution is advised if your positioning relies too much on short-term data. Instead, it may be more beneficial to observe how markets react to policy inertia. If future policy discussions or speeches suggest even a slight increase in urgency, that could change the expectations for volatility. In relation to other assets, there might be short-lived changes in equity correlations or carry trades affecting Yen flows. However, these are likely to occur only if there’s a broader shift in risk sentiment. Right now, it appears that expectations for interest rates are having a greater impact than growth data or stock market volatility. Observing central bank communication—every statement and pause—can be beneficial in the current environment. Some currency pairings, especially against higher-yielding currencies, may experience sharp adjustments if the situation changes. Create your live VT Markets account and start trading now.Crude oil prices stay stable despite rising tensions, waiting for signs of de-escalation or disruptions
The crude oil market is holding steady, even after recent U.S. military actions against Iran. Traders seem to expect that tensions will ease, making it unlikely that the Strait of Hormuz will close. After an initial price spike from Israel’s attack on Iran, the market stabilized, wiping out gains from the U.S. strikes over the weekend.
Current trading actions indicate that traders are not overly worried about the conflict impacting oil supply. The main concern currently is the status of the Strait of Hormuz. Prices will likely stay the same unless clear signs emerge of reduced conflict or disruptions to oil exports through the Strait.
On the daily chart, crude oil prices failed to break a major trendline and have filled the initial opening gap. Prices are oscillating between a support level of 72.00 and a resistance level of 78.00. This range may continue unless there are strong indicators of decreased tensions or export disruptions.
The 1-hour chart shows limited movement within this range, with buying interest around the 72.00 level pushing prices higher. Sellers will need to push prices below 72.00 to trigger a significant drop towards 65.00.
Despite ongoing geopolitical tensions, the oil market has shown surprising resilience, staying in a defined channel. The expected knee-jerk reactions to military actions did not last long, and any increased activity was quickly absorbed by the market, indicating traders are comfortable that supply won’t be disrupted soon.
Current watched levels remain unchanged. Prices gravitate around previously tested levels, with buyers frequently entering around 72.00. This level now acts as a reliable floor; only sustained selling pressure with increased volume is likely to break it. Sellers are interested but lack momentum. Until this level is convincingly broken, it is viewed more as an opportunity for traders rather than a risk.
Daily price actions suggest a tendency to focus on fundamental data rather than headline risks. Short-term spikes caused by breaking news are seen as temporary, and traders are likely to fade rallies as long as supply flows remain uninterrupted. A significant move past 78.00 could lead to repositioning, but without new catalysts indicating supply issues or diplomatic progress, it’s likely to revert. The technical ceiling remains respected, where long positions show little interest and short positions gain confidence.
We anticipate ongoing oscillations. Late last week, the market tested the upper limit but couldn’t hold above it, causing prices to revert towards the midpoint. This mid-range action will continue unless new information prompts a reassessment of the current situation.
The shorter hourly timeframe adds clarity. Buying activity is predictable and appears reliably near the 72.00 mark, without extending far during daily trading. While these bounces are opportunistic, they lack deeper conviction. If this pattern continues, it may attract trend-followers who like this kind of mechanical trading. However, if buyers cannot reclaim the upper edge of the channel soon, this upward movement could fade. A drop below 71.80 with volume would signal a possible shift in trader sentiment.
While geopolitics remain in focus, the consistent technical structure is providing clearer direction. We’ve only seen slight deviations from the range, all of which have been reversed quickly. Unless there are significant changes in shipping or regional flows, most trading will continue to rely on short-term positions rather than strong directional beliefs.
For those monitoring the spreads, no significant shift has emerged that would lead to a reassessment of directional trends. Structural backwardation remains but hasn’t intensified enough to indicate inventory problems or rapid drawdowns, suggesting supply chains are operating without disruption from a price perspective.
Volatility remains low. A move outside this calm environment could trigger broader repositioning, especially from those who have been countering movements within the range. However, such strategies have been effective so far unless there’s a structural issue, which has not yet occurred.
With this in mind, we are positioning ourselves near the boundaries with tighter risk limits, focusing only on moves that show confirmed breakout signals through flow or volume. Patience is running low among traders, but maintaining discipline is key in this kind of environment.
Scotiabank strategists say the Pound Sterling underperformed as the US Dollar strengthened.
Pound Sterling is currently weak, down 0.5% against the US Dollar. This drop coincides with the US Dollar’s strong performance compared to other G10 currencies.
Recent PMI data shows that the manufacturing sector improved, beating expectations, while services performed as anticipated. Both sectors are close to the 50 mark, indicating limited growth or shrinkage.
Market Outlook And Risks
This week has few data releases, with CBI sentiment data scheduled for Tuesday. Forward-looking statements carry risks, so it’s essential to do thorough individual research before making any decisions. There is no guarantee that the information provided is free from errors or is up to date. All investments involve risks, including the possibility of losing all your money. The views mentioned may not represent official policies or positions. Links in the articles may lead to external content, which the author is not responsible for. No business relationships or compensations are disclosed. The article is not personalized advice, and the author takes no responsibility for losses or damages resulting from errors or omissions. Neither the author nor the publisher are registered investment advisors, and none of the content should be taken as investment guidance.Impact Of Economic Indicators
Despite the Bank of England suggesting patience before possible rate cuts, Sterling has not gained significant support. The recent 0.5% drop against the US Dollar highlights the currency’s struggles amidst strong Dollar performance, driven by steady risk sentiment and a solid US economy. This week’s manufacturing data showed a slight positive shift, with the sector exceeding expectations, indicating some stability in production. Services performed as forecasted but did not provide much upward momentum. Both sectors are close to the neutral 50 mark on the PMI scale, showing no clear signs of expansion or recession—essentially stagnant. These economic indicators suggest that volatility levels may stay low unless new factors emerge. With limited high-tier UK data available this week, market movements may be heavily influenced by external events. As focus shifts to the CBI industrial trends data on Tuesday, we could see more significant reactions due to the sparse calendar. Comments on monetary policy or unexpected geopolitical events might also gain more attention in thin markets. As we face a time when Sterling shows little strength against global challenges, especially compared to the Dollar, it’s crucial to be flexible in short-term positioning. Options may indicate sideways movement, while risk premiums on short-term hedges are likely to remain low unless they spike due to sudden changes in rate expectations. We closely monitor implied volatility across different timelines, and recent trends show that markets are not anticipating strong moves in GBP. This could change quickly with forthcoming US data that may spark new speculation about the Fed’s direction. Currently, market spreads indicate a moderate defensive stance rather than an aggressive one, with a slight preference for downside protection reflecting the weaker Sterling. Traders with leveraged positions should be cautious of liquidity drops or rapid repricing, especially in cross-currency pairs, where movements can affect technical barriers. There’s ongoing discussion in the swaps market about discrepancies in forward rates influencing cross-border hedges; this trend could keep GBP/USD around current levels if domestic momentum remains weak. Next week’s wage data may become significant if the market views it as a signal for policy changes. However, without major data coming soon, overnight risks seem priced in; gamma trades straddling current levels could be appealing for those ready to accept lower volatility. For positioning, while major currencies seem range-bound, focusing on relative rate expectations and short-term yield differences is key. One-week risk reversals currently offer limited premiums for upward bets, indicating that sentiment is somewhat negative for Sterling but without strong conviction. Timing of entries is crucial during these short stretches, especially when macro catalysts are limited. Create your live VT Markets account and start trading now.The dollar strengthened as markets evaluated the implications of Iran-Israel tensions for global trade.
The US dollar gained during European trading, despite unchanged interest rate expectations. Meanwhile, the Israeli military started strikes on Tehran, impacting oil transport as tankers moved away from the Strait of Hormuz. Russia noted that US actions have increased the number of parties involved, and Iran warned of consequences.
Market responses varied. The dollar strengthened, but the New Zealand dollar struggled. European stocks and S&P 500 futures fell slightly, while US 10-year bond yields rose a bit. Gold prices increased by 0.3%, and oil prices initially jumped before stabilizing. Bitcoin saw a small rise of 0.3%.
Market Stability Amidst Geopolitical Tensions
Despite rising tensions, the market stayed stable as trading resumed. Initial global reactions saw oil prices spike before settling during European hours. US futures rose briefly before steadying, while European indices dipped slightly. Oil prices were volatile, hitting over $77 before settling around $73.75. Concerns lingered about Iran disrupting operations in the Strait of Hormuz, but immediate threats seemed to diminish. Currency markets showed dollar strength, as the yen, euro, pound, and commodity currencies responded to changes in the US dollar’s exchange rate. The market is focused on the conflict while anticipating potential trade tensions. This situation suggests that the market is now better at managing geopolitical risks, even with dramatic headlines. With interest rates from the US Federal Reserve unchanged, the strong dollar mainly reflects a demand for safety rather than shifts in monetary policy. Similar trends have occurred when risk appetite weakens and energy prices fluctuate: cautious positioning, temporary gains for safe-havens, declines in cyclical currencies, and fragile stock momentum. In the oil market, traders initially factored in a worst-case scenario for disrupting the Strait of Hormuz. However, calmer estimates emerged as shipping data indicated no immediate issues, beyond fleet repositioning. Prices peaked and then corrected, demonstrating how quickly panic can subside when supply routes remain clear. Markets will react to headlines, but they won’t hold onto those reactions unless real outcomes develop.Bond Yields and Equities Reaction
Bond yields ticked up slightly, likely due to caution in fully reversing risk-off behavior without clearer developments. The modest rise in ten-year notes doesn’t indicate a full return to growth or inflation fears, but rather a pause as cash markets evaluate risks. Equities also dipped slightly in the US and Europe, not due to data changes but simply from hesitance. The market isn’t in a panic; it’s more about waiting. S&P futures wobbled before stabilizing, implying that the market considers these events as possibly short-term unless new information changes that. This is a chance to reassess positions that may overreact to short-term fears at the expense of longer-term balance. Gold rose slightly, in a typical move to hedge against uncertainty, but it didn’t get the kind of significant support seen in broader market distress. Its 0.3% gain mirrored risk-off currency movements. Similarly, Bitcoin rose a bit but not enough to suggest a major shift away from traditional markets. This indicates a market that’s alert, but not shaken. This situation should be viewed as fluid; calmness doesn’t mean complacency—it shows calculation. The oil pullback and balance in equities indicate traders are waiting for new information before making further commitments. This favors short-term strategies in FX and index options, allowing us to benefit from price movements without directional exposure. In the currency market, we observed a consistent strengthening of the dollar, mainly as risk-sensitive pairs like NZD and AUD weakened first during rising tensions. Interestingly, the euro and pound showed less sensitivity than anticipated, likely due to stable rate differentials and regional confidence. This suggests the market isn’t quite ready to unwind recent carry trades. As for positioning, flows continue to treat these shifts as tactical, not strategic. There’s no rush into cash or widespread de-risking of carry positions. Thus, option buyers can take advantage of pricing fluctuations while managing directional uncertainty. Right now, the key takeaway is that markets are very responsive to headlines but tend to dismiss them unless deeper issues emerge in the underlying data. This means that short-term reactions to events are often fleeting, unless they indicate something more significant, like trade restrictions or changes to global shipping routes. No clear confirmations of these have emerged yet, although discussions are increasing. Next week brings new purchasing manager indices and bond auctions in Europe and the US. Any rise in conflict concerns will have to compete with data that reflects core economic strength. We are positioning accordingly: monitoring short-term volatility while tempering medium-term rate expectations unless demanded by more data. Timing these moves will be crucial—better hours than weeks. Create your live VT Markets account and start trading now.Geopolitical tensions rise, leading to a nearly 1% drop in GBP/USD and a continued weak outlook
GBP/USD is under pressure after falling nearly 1% last week and trading below 1.3400. Geopolitical events are driving safe-haven flows that could keep affecting the pair’s performance.
The US Dollar gained strength amid rising concerns about tensions in the Middle East, especially following US strikes on Iranian nuclear sites. This contributed to the bearish trend for GBP/USD.
Pound Sterling’s Recovery
Last week, the Pound Sterling made a late recovery, even though it hit new monthly lows. Ongoing geopolitical issues in the Middle East and trade uncertainties shaped market behavior. The Dollar’s rise was fueled by safe-haven demand and a tough stance from the Federal Reserve, which strengthened the USD against the GBP throughout the week. The recent decline in GBP/USD, dropping below 1.3400 after a fall of nearly 1%, mirrors overall market reactions to escalating global tensions. This fall was connected to the movement toward riskier assets like the Dollar, which typically increases in uncertain times. Although the Sterling showed a slight recovery late in the week, the overall trend indicates that sellers are still in control. Increased tensions in the Middle East have unsettled investors. After confirmed US military action against Iranian nuclear sites, global markets moved towards risk aversion. In such situations, the US Dollar often emerges as a safe bet, not because of strong economic data, but due to its perceived safety during times of instability. This dynamic was evident as the Dollar gained momentum, pressuring GBP/USD lower.The Fed’s Influence
The Federal Reserve’s stance plays a crucial role too. The US central bank has maintained a strong position on interest rates, providing solid support for the Dollar. This means that the currency pairing is influenced more by macro and geopolitical factors than by relative economic data. This is important in markets where derivatives trading relies on clear risks and policies. In the near term, focusing on implied volatility in the options market has proven helpful. We’ve noticed it steadily increasing, suggesting that participants are preparing for potential price swings. There’s a growing preference for USD call options over GBP, indicating a market bias towards USD strength. Looking at interest rate expectations, the advantage currently lies with the Dollar. Forward rates suggest fewer expected rate cuts from the Fed this year compared to the Bank of England. This rate differential helps stabilize USD assets during tense periods and remains an important factor for tracking medium-term flows in currencies and interest rates. On the tactical side, forward hedging costs are widening, particularly at the front end. This is typical during times of increased macro risks. Volatility impacts execution pricing, which, if not managed, can lower expected performance. We’re adjusting our models to consider a broader range of short-term price shifts than we did earlier this quarter. The general trend shows a move towards safer investments, with a retreat from those more reliant on yield rather than risk protection. Unfortunately, under the current pressures, the Pound seems to fall into the latter category. Additionally, CME futures positioning indicates a net short position in GBP, which continues from previous weeks but isn’t extreme yet. This leaves room for adjustments if unexpected positive data emerges from the UK—but only if those results are clear enough to mitigate broader risk concerns. Observing daily realized volatility in GBP/USD shows an increase compared to earlier this month. This affects rolling strategies and should be considered for gamma exposure when managing short-dated options leading up to G7 central bank meetings. Using non-directional strategies around these dates can offer a better structure, particularly with skew trends favoring USD strength. Risk reversals reflect this bias but are more moderate compared to last quarter’s spikes, indicating some caution. We’re also monitoring cross-asset behaviors. Equity markets, particularly in Europe, have reacted similarly to GBP/USD movements, especially when significant Middle East news breaks. This leads to notable effects in correlation hedging, as Delta One products increasingly respond to FX shifts rather than just isolated equity news. Overall, current levels below 1.3400 are technically fragile. The pair is testing crucial previous support levels from December, and a clear break lower could risk deeper moves towards 1.3200 unless there’s a change in geopolitical narratives or a significant shift in rate expectations. Short-term relief might occur if headlines improve, but for now, focusing on positioning, open interest changes, and gamma-weighted strategies offers a clearer path than making pure directional bets. Create your live VT Markets account and start trading now.Dollar rises in European trading due to geopolitical tensions and fluctuating oil prices
The dollar is gaining strength today, even as markets approach the ongoing Iran-Israel conflict with caution. Oil prices are steady at $73.90 after initially rising to $77. S&P 500 futures are also up by 0.2%, recovering from earlier losses during Asian trading.
In currency movements, EUR/USD is down 0.5% to 1.1465, and USD/JPY has increased by 1.2% to 147.83. The dollar’s strength is evident as AUD/USD falls 1.0% to 0.6381. Geopolitical tensions might be driving traders to adjust their dollar positions, especially after the dollar showed some weakness earlier.
For AUD/USD, the inability to break through the 0.6500 level is now drawing attention to the 100-day moving average at 0.6360. Staying above this level can keep a positive outlook, but falling below it may lead to a more negative view.
Geopolitical issues often have a short-term impact on the market. Eventually, attention will shift back to trade negotiations, with a deadline approaching on July 9 for current deals, although an extension seems likely. Future focus might change to policy inconsistencies and tariff challenges in the US, which could influence the dollar’s strength.
The earlier analysis highlights a temporary market reaction to outside uncertainties. The dollar’s recent gains partly stem from a cautious global market. While the Iran-Israel tensions have increased demand for safe-haven assets, the drop in oil prices suggests initial panic has eased. Oil has fallen back below $74 after spiking to $77, indicating supply concerns might not be as urgent as first thought. Rising US equity futures support this view.
In currency terms, these movements contribute to broader dollar strength. The euro has noticeably declined by about 0.5%, and the yen continues to weaken, allowing USD/JPY to rise significantly. In the Asia-Pacific, the Aussie dollar has dropped by another 1.0%. The common trend is that traders are moving away from short dollar positions, which is boosting demand for the dollar overall.
With AUD/USD, the 0.6500 resistance remains strong, preventing any further upward movement. This puts focus on the 100-day moving average near 0.6360, which is now crucial to watch. A drop below this level could suggest buyer hesitation, leading to a more negative interpretation. This technical setup gives a clearer view for short-term strategies.
Looking beyond reactions to new events, the same underlying issues remain. The July deadline for trade negotiations is more than just a date; it could redirect broader market influences. While extensions are common, what’s important to track is the substance and coherence of these policies. Trade disagreements and possible tariff barriers will have noticeable effects on monetary strategy.
The focus now shifts from foreign news to local policy issues. If political decisions show inconsistent signals, especially in fiscal matters, we might see a change in how yield differentials affect currency levels. This would impact the rationale for holding dollar positions and could shift risk appetites across derivative markets.
In terms of strategy, we are tightening stop-losses and allowing positions to react more naturally to unexpected US data and policy statements from Washington. Price movements around key technical levels are becoming increasingly significant, suggesting that the time for loose positioning has passed, at least temporarily. Aligning short-term biases with data-driven entries will be essential. Any discrepancies between messages from executive and legislative leaders will have real consequences. The key now is to balance quick reactions with clarity, avoiding distractions from headlines that don’t alter the market’s trajectory.
Scotiabank strategists report Euro declines 0.5% against US Dollar due to USD strength
The Euro has weakened, dropping 0.5% against the US Dollar. This shows a mixed performance among G10 currencies as the USD strengthens. Recent PMI reports indicate some pressure on the Euro. Manufacturing held steady at 49.4, just shy of the 49.7 forecast. Meanwhile, the services sector made a slight gain from 49.7 to reach 50.0, aligning with expectations.
Market attention is now on upcoming German IFO figures and inflation data from France. Current expectations suggest that the European Central Bank may ease rates by 20 basis points by year-end.
Technical Indicators For EUR/USD
Technical indicators for EUR/USD show a weakening bullish sentiment, with fading momentum and an RSI near 50. Key levels to watch include the 50-day moving average acting as support at 1.1364. Short-term support is expected around 1.1420, while resistance is seen above 1.1520. In other news, Gold has fallen below $3,400 per troy ounce. This drop is attributed to the strong USD and ongoing geopolitical tensions. These tensions, especially in the Middle East, are impacting energy markets and could affect critical sea routes. The Euro has retreated against the Dollar, down by 0.5%, which places it in the middle of the G10 currencies. This indicates that the Euro is not alone in its decline, but it is noticeably influenced by the strength of the Dollar. Recent economic data can shed light on this movement. The services sector has barely reached neutral while manufacturing has missed estimates slightly. Overall, these PMIs suggest sluggish performance with no immediate signs of improvement. Looking ahead, eyes are on macro data from Germany and France. If the German IFO readings show weaker business sentiment, it could reflect growing uncertainties. Similarly, inflation data from France is critical. A larger-than-expected drop in inflation could further impact monetary policy expectations and weaken the Euro sentiment.Market Expectations And Policy Easing
Currently, market expectations indicate a modest 20 basis points reduction in policy by the ECB by the end of the year. This could change with new data. Any changes in inflation or sentiment indicators could influence ECB decisions, especially if growth continues to lag. From a technical perspective, the EUR/USD price action appears softening in the short term. Standard indicators like the RSI suggest that momentum is declining. With the RSI near 50, the pair is in a neutral zone, indicating indecision rather than strength. Daily support levels are just below 1.1420, with the 50-day moving average around 1.1360. If these levels break, further declines may occur. Resistance is around 1.1520, which would require the Euro to strengthen or the Dollar to weaken to challenge. Meanwhile, the Gold market tells a different story. Its drop below $3,400 per ounce is more than just a correction; it shows that safe-haven demand is waning and the Dollar is regaining dominance. Commodities priced in Dollars react to currency movements, and the strong Dollar has increased pressure on Gold. This weakness coincides with rising geopolitical tensions affecting energy prices, especially concerning supply risks through critical waterways in the Middle East. These disruptions may stimulate changes in commodity markets and inflation expectations if they persist or expand. In terms of action, the combination of weak Euro data, changing ECB rate expectations, and technical softness suggests that a careful strategy is needed for positioning — particularly with Dollar pairs or Gold involved. Upcoming European macro releases could lead to quick changes in direction, especially if they diverge from forecasts. Traders should also consider shifts in sentiment. Those with active positions must carefully analyze support and resistance levels. With momentum indicators in a neutral state and macro data closely watched, staying rigid with positions may not yield the best results. It’s a time for cautious adjustments tied to specific levels and news developments. This isn’t a period for expecting smooth market movements. Create your live VT Markets account and start trading now.US Dollar strengthens while Pound Sterling drops to around 1.3370 amid US-Iran tensions
The Pound Sterling (GBP) has dropped to around 1.3370 against the US Dollar (USD) during the European trading session. This decline comes as demand for the US Dollar rises amid increasing tensions between the United States and Iran.
The US Dollar Index (DXY) has reached a three-week high near 99.40, fueled by a flight to safe-haven assets. Iran has threatened retaliation following a US attack on its nuclear facilities, raising geopolitical risks.
