Important calendar events
The dollar was under pressure from signs of cooling inflationary pressures last week, and the dollar index dropped to an annual low below 98.0. U.S. Treasury yields also declined, putting pressure on the dollar, as the US 10-year bond yield dropped from 4.49% to 4.36%.
US inflation data came in softer than expected last week, raising market expectations of Fed rate cuts and weakening the dollar. US CPI clocked in at 2.4% Year-on-Year in May, missing forecasts of 2.5%. Monthly CPI rose by just 0.1% against 0.2% expected. Core CPI, which excludes food and energy, held steady at 2.8% annually, missing estimates of 2.9%. Monthly core CPI rose by 0.1%, far softer than the 0.3% forecast.
The inflation slide intensified after the release of US PPI (Producer Price Index) data on Thursday. US PPI grew by just 0.1% in May versus 0.2% expected. Annually, PPI increased by 2.6% in May, just above April’s 2.5% reading. Core PPI, which excludes food and energy, rose by 0.1% in May, which was much softer than the 0.3% expected. Core PPI dipped to 3% year-on-year from 3.1% previously.
The Federal Reserve kept interest rates unchanged in a target range of 4.25% - 4.50% at its May policy meeting. Fed officials remain cautious, adopting a wait-and-see approach before committing to any policy shift.
Fed Chair Jerome Powell has struck a slightly hawkish tone. Last week’s mild inflation print, however, ramped up rate cut expectations. A June rate cut is effectively off the table, but the odds of a September cut jumped above 80%, while expectations for a cut in July also rose.
This coming week, all eyes will be on the Fed rate decision on the 18th. While the odds of a rate cut are practically zero, the dollar is still expected to experience increased volatility as markets will focus on Powell’s post-meeting remarks for forward guidance. In addition, the Fed’s Dot Plot will be updated at the June meeting, which summarizes policymakers’ projections of interest rates for the remainder of the year and into 2026.
The US economy contracted by 0.2% in Q1 of 2025, marking its first quarterly decline in three years. This slight drop, revised from an earlier estimate of a 0.3% contraction, was primarily driven by the economic disruptions caused by President Donald Trump’s trade policies, causing a record surge in imports ahead of anticipated tariff hikes, which widened the trade deficit.
Global trade war concerns have been causing turmoil in markets. Investor confidence is low, raising the appeal of safe-haven assets. US–China trade tensions are easing, however, providing support for the dollar. Representatives of the two countries have been meeting in the past week and, reportedly, some progress has been made towards reaching a trade agreement.
EUR/USD skyrocketed to 1.163 last week, its highest level since September 2021. If the EUR/USD pair declines, it may find support at 1.006, while resistance may be encountered near 1.200.
The Euro benefited from the dollar’s decline last week, and EUR/USD rose to multi-year highs. The ECB delivered another rate cut at its June meeting, lowering its main refinancing rate for the eighth consecutive time. ECB policymakers reduced the benchmark interest rate by 25 basis points to 2.5%. ECB President Christine Lagarde emphasized a data-dependent approach moving forward. ECB policymakers have expressed a cautious approach regarding future rate cuts and are moving towards policy normalization.
Last week, Lagarde delivered a hawkish speech that bolstered the Euro, signaling that the central bank’s easing cycle may be coming to an end. Lagarde and other ECB policymakers have recently emphasized that inflation is moving toward the central bank’s 2% goal. At the same time, however, ECB members remain cautious, warning of risks from global trade tensions.
The widening policy divergence between the ECB and the Fed has been working in the euro’s favor. With the Fed still cautious on cutting rates despite softer US inflation, and the ECB having already delivered its first rate cut in June, markets are now pricing in a slower and more limited easing path for the ECB.
Eurozone GDP for the first quarter of 2025 was revised upward to reflect 0.6% expansion, up from 0.3% previously, beating the 0.4% consensus. The upward revision highlights resilience amid global trade headwinds.
Eurozone Headline CPI rose 2.2% year-on-year, while Core CPI increased by 2.7%, both aligning with previous estimates and market forecasts. This suggests stabilizing inflationary pressures, giving the ECB some leeway in its monetary policy decisions.
GBP/USD surged to a three-year high of 1.364 last week but pared gains later in the week, closing near 1.355 on Friday. If the GBP/USD rate goes up, it may encounter resistance at 1.400, while support may be found near 1.313.
The Sterling came under pressure last week with the release of disappointing UK GDP data. UK GDP contracted by 0.3% in April, sharply missing estimates of a 0.1% drop. The UK economic outlook is declining, marking the steepest economic contraction in 18 months. Quarterly GDP data, however, has been more upbeat. The British economy grew by 0.7% in Q1 2025, outperforming forecasts of 0.6% growth and marking the fastest growth among G7 nations.
The Sterling also weakened last week after the release of the UK labor report, as easing wage pressures and rising unemployment reinforced BOE rate cut expectations. On Tuesday, a steep decline of 109,000 payroll positions—the largest drop since May 2020—carried unemployment to near four‑year highs and intensified markets’ bets on further rate cuts. The UK Unemployment rate rose to 4.6% annually in April, up from 4.5% previously. Wage growth slowed to 5.3% year-on-year, missing market estimates of 5.5%. Markets are currently pricing in approximately 48 bps of BOE cuts by year-end, up from 39 bps before the release.
The BOE reduced its key interest rate by 25 basis points to 4.25% in May, the lowest level in over two years. The decision, made with a narrow 5-4 vote margin, reflects concerns over slowing growth and persistent inflationary pressures and indicates policy uncertainty.
BOE Governor Andrew Bailey emphasized a cautious approach moving forward, citing global uncertainties and the need to balance inflation control with economic support.
This week, markets will focus on the BOE rate decision on the 19th. BOE rate cut expectations rose to two rate cuts within the year after the release of the British GDP data last week, with a possibility for the first one at this week’s meeting. Should the Bank strike a dovish tone, highlighting cooling activity and labor weakness, the pound would likely dip. Conversely, a more balanced or hawkish pause could prop up the Sterling.
British headline inflation surged to 3.5% year-on-year in April, up from 2.6% in March and surpassing forecasts of 3.3%. The hotter-than-anticipated inflation data have dampened hopes for rate cuts shortly, with markets currently pricing in only one additional cut in 2025.
USD/JPY traded sideways last week, oscillating around the 144.4 level. If the USD/JPY pair declines, it may find support at 141.9. If the pair climbs, it may find resistance at 148.7.
The Yen has traded with renewed volatility, influenced by both domestic bond-market dynamics and global trade shifts. An upward GDP revision offered some support to the Yen last week. Japan's economy remained stagnant in the first quarter of 2025, exceeding the anticipated 0.2% decline. On an annualized basis, GDP shrank by 0.2%, compared to -0.7% in the previous reading. The BOJ may delay interest rate hikes further to support the country’s weakening economy, especially if trade tensions rise.
The BOJ left interest rates unchanged at its policy meeting in April at 0.50%. The BOJ’s slightly more cautious tone on growth and inflation reinforced the view that any further tightening is likely to be gradual.
BOJ Governor Kazuo Ueda acknowledged that while inflation remains above target for now, weaker external demand and recent trading developments have complicated the outlook. Ueda emphasized the need for flexibility moving forward, suggesting that the BOJ is not in a rush to adjust its policy settings further.
Markets anticipate that the BOJ will raise interest rates at least one more time this year. The BOJ is expected to raise interest rates by approximately 75 basis points in the next two years, which will bring the central bank’s peak rate to 1.25%.
Looking ahead to this week’s rate decision on the 17th, markets currently give above 90% odds of no change. The BOJ is expected to keep its policy settings unchanged this week and continue tapering bond purchases at its current pace. A dovish outcome—highlighting continued caution on policy tightening—would likely weaken the Yen. Conversely, any hawkish stance, such as faster tapering or hints at a sooner-than-expected rate hike, could boost the Yen.
Tokyo Core CPI for May rose by 3.6% year-on-year, up from April's 3.4%, surpassing market forecasts of 3.5% and marking the highest level since January 2025. National Core CPI also rose to 3.5% in April from 3.2% in March, exceeding expectations of 3.4% growth.
Gold prices were bullish last week, rising to $3,440 per ounce. If gold prices rise, they may encounter resistance at $3,497 per ounce, while if gold prices decline, support may be encountered near $3,120 per ounce.
Gold prices climbed steadily last week, riding a wave of geopolitical crisis, softer US inflation data, and shifting Fed rate cut expectations.
Geopolitical tensions in the Middle East spurred safe-haven demand last week, pushing gold prices higher. Reports that US personnel were being evacuated from the embassy in Iran boosted gold prices early in the week. Middle East tensions spiked after Israel performed airstrikes on Iran’s nuclear and missile facilities on June 13, boosting safe-haven demand. Investors rushed to safety as the Israel–Iran crisis escalated further, with Israel targeting over 100 sites and Iran promising retaliation.
Gold saw heavy inflows into ETFs and futures, with traders piling into long positions as yields fell and risk sentiment turned sour. Gold prices are rapidly approaching their recent all-time highs and are likely to hit new historical highs this week.
In addition, gold prices jumped last week in response to cooling US inflation. May’s headline CPI rose by 2.4% Year-on-Year in Ma,y versus 2.5% anticipated. Monthly CPI rose by just 0.1% against 0.2% expected. Core CPI, which excludes food and energy, held steady at 2.8% annually, missing estimates of 2.9%. Monthly core CPI rose by 0.1%, far softer than the 0.3% forecast.
Global trade war concerns have been raising the appeal of safe-haven assets. Trump’s tariffs are likely to raise global inflation and lower the economic outlook, promoting a risk-averse sentiment. Last week, however, global trade war concerns eased on reports that talks between the US and China are progressing and the two parties have reached a temporary trade truce.
Gold prices have typically been directed by the dollar’s movement, as the competing dollar typically loses appeal as an investment when the dollar rises. The dollar was under pressure from signs of cooling inflationary pressures last week, and the dollar index dropped from 99.1 to 98.1. U.S. Treasury yields also declined, putting pressure on the dollar, with the US 10-year bond yield dropping from 4.49 to 4.36%.
Gold prices are supported by rising Fed rate cut expectations. The Federal Reserve kept interest rates unchanged in a target range of 4.25% - 4.50% at its May policy meeting. Fed officials remain cautious, adopting a wait-and-see approach before committing to any policy shift.
Fed Chair Jerome Powell has struck a slightly hawkish tone. Last week’s mild inflation print, however, ramped up rate cut expectations. A June rate cut is effectively off the table, but the odds of a September cut jumped above 80%, while expectations for a cut in July also rose.
This coming week, all eyes will be on the Fed rate decision on the 18th. While the odds of a rate cut are practically zero, markets will focus on Powell’s post-meeting remarks for forward guidance. In addition, the Fed’s Dot Plot will be updated at the June meeting, which summarizes policymakers’ projections of interest rates for the remainder of the year and into 2026.
Oil prices skyrocketed last week, and WTI prices surged above the $73.0 per barrel level. If oil prices retreat, they may encounter support near $55.6 per barrel, while resistance may be found near $80.0 per barrel.
Oil prices were driven upwards last week by a mix of renewed Middle East tensions and lower-than-expected US crude oil inventories.
Reports of a partial evacuation of the US embassy in Iraq and fresh uncertainty around Iran nuclear talks raised supply concerns early in the week. The escalation of the crisis between Israel and Iran, with Israel launching targeted airstrikes on Iranian military and nuclear sites on June 13, drove oil prices further up. The strike, which was part of a broader operation involving over 100 targets, sparked fears of a broader regional conflict, even an all-out war between Israel and Iran, sending oil prices higher.
Concerns of potential supply disruptions across the Strait of Hormuz are pushing oil prices up. While the strait remains open for now, there are fears of an Iranian blockade. This could cause severe disruptions in the oil supply and distribution chain, potentially blocking off about 20% of the world’s oil supply.
At the same time, the US Energy Information Administration (EIA) reported a 3.6 million barrel draw in US crude inventories for the week to June 6, against expectations of a more modest 2.4 million barrel draw.
Oil prices are kept in check by high central bank interest rates. The Federal Reserve kept interest rates unchanged in the target range of 4.25% - 4.50% at its May policy meeting. Fed Chair Jerome Powell has struck a slightly hawkish tone. Last week’s mild inflation print, however, ramped up rate cut expectations. A June rate cut is effectively off the table, but the odds of a September cut jumped above 80%, while expectations for a cut in July also rose.
This coming week, all eyes will be on the Fed rate decision on the 18th. While the odds of a rate cut are practically zero, markets will focus on Powell’s post-meeting remarks for forward guidance. In addition, the Fed’s Dot Plot will be updated at the June meeting, which summarizes policymakers’ projections of interest rates for the remainder of the year and into 2026.
Bitcoin price rose to $110,500 early last week but deflated later in the week, dropping to $105,000. If BTC price declines, support can be found at $100,100, while resistance may be encountered at $111,875.
Ethereum surged to $2,875 early last week but dipped to $2,540 later in the week. If the Ethereum price declines, it may encounter support near $2,380, while if it increases, it may encounter resistance near $2,875.
Crypto markets experienced high volatility last week due to a mix of macroeconomic data and risk sentiment shifts.
Positive US–US-China trade Talks in London lifted sentiment across global markets, boosting cryptocurrencies early last week. Softer-than-expected US inflation data initially boosted crypto markets last week, with BTC briefly pushing past $110,500 as traders eyed a more dovish Fed outlook. However, geopolitical concerns, especially escalating tensions between Israel and Iran, triggered a risk-off sentiment that drove traders away from high-risk assets.
The Israel–Iran conflict escalated last week, with Israel launching airstrikes on Iranian nuclear and military sites. In retaliation, Iran launched missile attacks on Israeli cities, resulting in civilian casualties. These developments triggered a broad risk-off sentiment across global markets. Cryptocurrencies experienced a sharp decline, with Bitcoin falling below $103,000 as investors sought traditional safe-haven assets like gold.
Cryptocurrency prices are affected by central banks’ interest rates. High interest rates stifle economic growth, putting pressure on crypto markets. The Federal Reserve kept interest rates unchanged in a target range of 4.25% - 4.50% at its May policy meeting.
Fed Chair Jerome Powell has struck a slightly hawkish tone. Last week’s mild inflation print, however, ramped up rate cut expectations. A June rate cut is effectively off the table, but the odds of a September cut jumped above 80%, while expectations for a cut in July also rose.
This coming week, all eyes will be on the Fed rate decision on the 18th. While the odds of a rate cut are practically zero, markets will focus on Powell’s post-meeting remarks for forward guidance. In addition, the Fed’s Dot Plot will be updated at the June meeting, which summarizes policymakers’ projections of interest rates for the remainder of the year and into 2026.
BTC/USD 1h Chart
ETH/USD 1h Chart
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Written by:
Myrsini Giannouli
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