EURUSD
- EUR/USD saw a marginal increase of 0.02% to $1.0735, remaining near its 2-month low and finding support at the key level of 1.0700.
- The U.S. dollar remained strong on Monday, driven by growing expectations of additional interest rate hikes from the U.S. Federal Reserve. However, the announcement of a finalized debt ceiling deal reduced some of the safe haven demand for the dollar.
- There are no major risk events expected from the Euro Area or the UK for the rest of the week, but Euro Area inflation data is scheduled to be released on Thursday, June 1.
- Due to the holiday, European banks will be closed, resulting in lower anticipated volatility in the markets today.
- Traders will be monitoring the developments in EUR/USD closely, as the pair continues to navigate key support levels and factors such as interest rate expectations and market sentiment.
| SMA (20) | Falling |  |
| |
| RSI (14) | Neutral | |||
| MACD (12, 26, 9) | Slightly Falling | |
Closing statement: With limited risk events and the observance of a holiday impacting market activity, investors will be focused on Euro Area inflation data and developments in EUR/USD as they assess the potential impact of future rate hikes and the resolution of the U.S. debt ceiling situation.
GBPUSD
- GBP/USD experienced a slight decline of 0.03% to $1.23391, hovering just above the support level provided by the 100-day moving average around 1.2300.
- The U.S. dollar index showed a marginal increase of 0.03% to 104.25, remaining close to the two-month high of 104.42 reached last week.
- With the upcoming Non-Farm Payrolls (NFP) report this week, there is a possibility of a retracement on the Dollar Index (DXY) as traders await the job data. A positive rally could lead to a resumption of USD buying and a return of strength for the U.S. dollar later in the week.
- U.S. President Joe Biden and House Speaker Kevin McCarthy reached an agreement on the budget, which includes suspending the $31.4 trillion debt ceiling until January 1, 2025. Biden stated that the deal is ready to be presented to Congress for a vote.
| SMA (20) | Slightly Falling | |
||
| RSI (14) | Neutral | |||
| MACD (12, 26, 9) | Slightly Falling | |
Closing statement: As GBP/USD remains near the 100-day moving average, market participants will closely monitor the upcoming NFP report and its potential impact on the U.S. dollar. Additionally, the finalized budget agreement regarding the debt ceiling could influence market sentiment as investors assess the implications for the U.S. economy and the currency market.
GOLD
- Gold prices continued their decline on Monday, extending a three-week period of losses, as the dollar gained strength due to strong inflation data and increased expectations of more interest rate hikes by the Federal Reserve. Additionally, concerns about a U.S. debt default eased, further impacting gold prices.
- Recent data released on Friday revealed higher-than-expected consumer spending in the U.S. during April, along with an uptick in inflation, indicating a resilient economy.
- Money markets are currently pricing in a 62% probability of a 25-basis points rate hike by the Federal Reserve in June, compared to approximately 26% chance just a week ago, as indicated by the CME FedWatch tool.
- The outlook of rising interest rates negatively affects non-yielding assets like gold, as it increases the opportunity cost of holding such assets.
- Given these factors, gold faces downward pressure as the dollar strengthens and the potential for higher interest rates looms.
Closing statement: As gold prices continue their downward trajectory, market participants closely monitor the interplay between inflation data, interest rate expectations, and the strength of the U.S. dollar, as these factors significantly influence the outlook for the precious metal.
CRUDE OIL
- Last week, both Brent and Crude oil prices experienced gains of over 1%, marking a second consecutive week of increase.
- On Monday, crude oil prices climbed as U.S. leaders reached a preliminary agreement on the debt ceiling, alleviating concerns of a potential default in the largest global economy and oil consumer. However, the gains were limited by apprehensions regarding further interest rate hikes.
- Analysts suggest that the temporary resolution of the debt ceiling issue has relieved pressure in the markets, leading to a rally in risk assets, including crude oil.
- Market participants will closely monitor manufacturing and services data from China, the largest importer of oil globally, for insights into economic growth and oil demand. Additionally, U.S. nonfarm payroll data, set to be released on Friday, will provide further indications of economic conditions and their impact on oil demand.
- As the week progresses, developments in these key economic indicators will be crucial in shaping market sentiment and influencing crude oil prices.
| SMA (20) | Slightly Falling | |
|
| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: With the temporary debt ceiling deal offering some respite, the focus now turns to data from China and the U.S., as investors seek signals regarding economic growth and oil demand. The market remains attentive to these factors as they play a pivotal role in determining the future direction of crude oil prices.
DAX
- European shares recorded gains on Monday as investors found relief in a potential deal reached by U.S. lawmakers to raise the debt ceiling, mitigating concerns of a default.
- The DAX 40 index experienced a four-day losing streak last week, dropping close to its early May low at 15,659. However, it rebounded strongly on Friday and continued the upward trend on Monday.
- This morning, the euro zone stocks index rose by 0.4%, with notable gains seen in the region's banking sector.
- Trading volumes remained light as markets in the United States, the UK, and several European countries were closed due to the holiday.
- Overall, the market sentiment was buoyed by the progress in the U.S. debt ceiling negotiations, contributing to the positive performance of European shares.
| SMA (20) | Neutral | |
| RSI (14) | Slightly Rising |
|
| MACD (12, 26, 9) | Neutral |
Closing statement: The tentative deal to raise the U.S. debt ceiling provided a sense of relief among investors, leading to a rebound in European shares. While trading volumes were subdued due to the holiday, the positive sentiment driven by the debt ceiling progress supported the overall performance of the market.