Important calendar events
The dollar edged lower last week, and the dollar index dropped from 101.9 to 100.1. U.S. Treasury yields remained steady, with the US 10-year bond yielding approximately 4.45%.
At its May policy meeting, the Federal Reserve kept interest rates unchanged at a target range of 4.25%—4.50%. The decision to keep interest rates steady for a third consecutive time came amid persistent inflationary pressures and an uncertain economic outlook. Fed officials remain cautious, adopting a wait-and-see approach before committing to any policy shift.
Fed Chair Jerome Powell struck a slightly hawkish tone in his post-meeting remarks. Powell emphasized that price stability is not yet assured and that the central bank needs greater confidence that inflation is moving sustainably toward its 2% target. Powell hinted that, while rate cuts are still possible later in the year, their timing and scale will be dictated strictly by incoming data.
Softer-than-expected inflation readings last week reignited expectations of a more dovish Federal Reserve stance. Fed rate cut expectations went up, as easing inflationary pressures may encourage the Fed to start lowering interest rates. Market odds of a June rate cut remain close to zero, but rate cut expectations in July rose above 60% compared to just 30% the week before.
U.S. inflation data surprised on the downside last week, putting pressure on the dollar. Consumer Price Index (CPI) rose 0.2% in April, falling short of the 0.3% expected. Headline inflation cooled to 2.3% year-on-year, the lowest since February 2021. Core CPI, excluding food and energy, also rose by 0.2% month-over-month against 0.3% anticipated, and stood at 2.8% year-over-year.
US Producer Price Index (PPI) fell by 0.5% in April, defying expectations of a 0.2% increase. This decline, primarily due to a drop in service prices, suggests easing inflationary pressures. US annual PPI inflation eased to 2.4% in April against 2.5% expected. In addition, Core PPI, which excludes food and energy, contracted by a staggering 0.4% in April, falling short of the 0.3% growth anticipated.
U.S. retail Sales slowed down in April, with a modest increase of 0.1%, after rising by 1.7% in March. This points to cautious consumer spending amid economic uncertainties. Core retail sales, which exclude the sale of automobiles, rose by just 0.1% in April after rising 0.8% in March, falling short of the 0.3% growth anticipated. The disappointing retail sales figures contribute to concerns about consumer demand, further supporting the case for potential monetary easing by the Fed.
Unemployment claims for the week ended May 10 remained unchanged at 229K, aligning with market expectations.
The US economy contracted by 0.3% in Q1 of 2025 against an expansion of 0.2% anticipated. The US economy had expanded by 2.4% in the final quarter of 2024, following a 3.1% expansion in the third quarter of 2024.
Global trade war concerns have been causing turmoil in markets. Investor confidence is low, raising the appeal of safe-haven assets. US President Donald Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries.
Last week, however, the US and China agreed to a 90-day suspension of most tariffs. The US reduced tariffs on Chinese goods from 145% to 30%, while China lowered tariffs on U.S. imports from 125% to 10%. This truce has improved market sentiment, though underlying trade tensions persist.
In the week ahead, markets will remain focused on global trading developments as these are likely to affect risk sentiment and are potential drivers of all dollar-related assets.
In addition, key US economic indicators released this coming week are likely to influence the dollar's performance. Manufacturing and Services PMIs for May are scheduled to be released on May 22, providing insights into business activity across sectors. These figures are closely watched as they can signal shifts in economic momentum, potentially impacting Federal Reserve policy expectations and, consequently, the dollar's strength.
EUR/USD traded sideways last week, oscillating around the 1.117 level. If the EUR/USD pair declines, it may find support at 1.006, while resistance may be encountered near 1.157.
The ECB delivered another 25-basis-point rate cut at its April meeting, lowering its main refinancing rate to 2.40%, down from 2.65%. This decision marked the seventh rate cut within a year, bringing the ECB’s interest rate to its lowest point in over two years. The central bank is intensifying its efforts to support economic growth in a fragile environment.
ECB President Christine Lagarde once again emphasized the need for a data-dependent policy going forward, keeping all options open. Lagarde described the economic outlook as highly uncertain, pointing to ongoing trade disruptions and tightening financial conditions as key risks. Expectations of further ECB rate cuts are on the rise, as policymakers aim to counteract slow economic growth in the Eurozone.
The Euro faced downward pressure last week following the release of disappointing GDP figures for the first quarter of 2025. Eurozone Flash GDP data showed a quarterly growth of 0.3%, down from the initial 0.4% estimate. This modest expansion, while outperforming the 0.3% contraction of the US economy, highlighted the Eurozone's sluggish economic growth.
The Eurozone labor market, however, remained resilient, with employment rising by 0.3% quarterly against expectations of 0.1% growth, the strongest uptick in a year.
German ZEW Economic Sentiment Index surged to 25.2 in May from -14.0 in April, surpassing expectations of 11.9. This sharp increase reflects growing optimism in the German economy, reflecting easing trade tensions and the formation of a new government.
Flash CPI data for April showed that headline inflation remained steady at 2.2% year-on-year, exceeding estimates of 2.1%. Core CPI, which excludes food and energy, rose to 2.7% annually in April from 2.4% in March against 2.5% anticipated.
In the upcoming week, several key economic indicators are scheduled for release that may affect the Euro. Notably, Manufacturing and Services PMIs for May are due on Thursday. These indicators will provide fresh insights into business activity across the Eurozone, with particular attention on whether the manufacturing sector continues its path toward stabilization and if the services sector maintains its growth momentum.
GBP/USD gained strength last week, rising to the 1.330 mark. If the GBP/USD rate goes up, it may encounter resistance at 1.344, while support may be found near 1.313.
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 stressed that global uncertainties and trade tensions influenced the rate cut. Bailey emphasized a cautious approach moving forward, citing global uncertainties and the need to balance inflation control with economic support.
The UK and the US have reached a trade agreement that reduces tariffs on key British exports. The deal lowers US tariffs on British cars and eliminates tariffs on British steel and aluminum. In exchange, the UK agreed to remove its 19% tariff on US ethanol imports and align its steel and aluminum tariffs with US levels. The Sterling gains strength from the trade agreement, which alleviates concerns on trade tariffs with the US.
Headline inflation in the UK eased to 2.6% year-on-year in March, down from 2.8% in February, against expectations of 2.7%. Monthly CPI dropped to 0.3% in March from 0.4% in February against estimates of 0.4%. Core inflation, which excludes food and energy, rose by 3.4% annually in March, slightly lower than February’s 3.5% reading.
The British economy grew by 0.7% in Q1 2025, outperforming forecasts of 0.6% growth and marking the fastest growth among G7 nations. This expansion was driven by robust services and production sectors, as well as increased business investment and exports. Monthly GDP rose by 0.2% in March, beating expectations of economic stagnation.
USD/JPY rose to 148.7 early last week, then dipped to 145.7. If the USD/JPY pair declines, it may find support at 139.9. If the pair climbs, it may find resistance at 148.7.
The Yen faced significant pressure last week, following the release of GDP data on Friday. Japan's economy contracted by 0.2% in the first quarter of 2025, exceeding the anticipated 0.1% decline, and marking the first negative quarterly result in a year. On an annualized basis, GDP shrank by 0.7%, surpassing the projected 0.3% contraction. This downturn was primarily attributed to reduced net exports and escalating trade tensions with the US. The unexpected contraction has raised concerns about a potential technical recession, especially as US tariffs have begun to impact Japanese exports. 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%, but its overall tone was more dovish than anticipated. 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, and there is a high probability of a second 25-bp rate hike within the 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%.
The BOJ March meeting minutes have revealed a cautious and divided stance among policymakers on future interest rate hikes. Policymakers are divided, with some urging caution due to uncertainties like US trade policies and others advocating for quicker action.
The BOJ has expressed concerns over Japan's economy, as the effect of US tariffs is likely to affect the country’s industries and economic stability. The BOJ has warned that Trump's tariffs could undermine the wage and price cycle necessary for future interest rate hikes.
Inflation in Japan is on the rise, raising the odds of future rate hikes and providing support for the Yen. Tokyo Core CPI rose sharply to 3.4% year-on-year in April from 2.4% in March against expectations of a 3.2% reading. National Core CPI rose to 3.2% in March from 3% in February, which was in line with expectations.
This coming week, several key events may influence the Yen's trajectory. The G7 finance ministers' meeting in Canada from May 20–22 is expected to address foreign exchange issues, with Japanese Finance Minister Katsunobu Kato emphasizing the importance of consensus on foreign exchange stability. The Yen’s stability is especially important to the Japanese government, especially since the US has been exerting pressure on Japan to strengthen the Yen, to reduce trade deficits between the two countries.
In addition, Japan's National Core CPI data for April are scheduled to be released on May 23 and will be closely watched by traders. Analysts anticipate a year-on-year increase of 3.5%, which could influence the Bank of Japan's monetary policy decisions.
Gold prices dropped to $3,250 per ounce mid-week but rallied later in the week, rising to $3,240 per ounce. If gold prices rise, they may encounter resistance at $3,500 per ounce, while if gold prices decline, support may be encountered near $3,120 per ounce.
Gold prices hit an all-time high of $3,500 per ounce in April, boosted by the dollar’s decline and trade war concerns. Gold prices dipped early last week, dropping to $3,120 per ounce, their lowest level in almost five weeks. This downturn was primarily driven by easing trading tensions, notably a trade truce between the US and China, which diminished the demand for gold as a safe-haven asset.
Global trade war concerns have been raising the appeal of safe-haven assets. US President Donald Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. Trump’s tariffs are likely to raise global inflation and lower the economic outlook, promoting a risk-averse sentiment.
Last week, however, the US and China agreed to a 90-day suspension of most tariffs. The US reduced tariffs on Chinese goods from 145% to 30%, while China lowered tariffs on US imports from 125% to 10%. China also pledged to halt non-tariff countermeasures, including lifting certain export controls and removing US companies from restrictive lists.
Gold prices experienced a notable rebound later last week, driven primarily by disappointment over the peace talks between Russia and Ukraine. Peace negotiations between Russia and Ukraine commenced in Istanbul last week. However, Russian President Vladimir Putin opted to send a lower-level delegation, and his absence cast doubts on the potential for a peace deal. Demand for safe-haven assets remains elevated, and gold prices are sensitive to geopolitical risks and global trading developments.
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 edged lower last week, and the dollar index dropped from 101.9 to 100.1. U.S. Treasury yields remained steady, with the US 10-year bond yielding approximately 4.45%.
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 struck a slightly hawkish tone in his post-meeting remarks. Powell hinted that, while rate cuts are still possible later in the year, their timing and scale will be dictated strictly by incoming data.
Softer-than-expected inflation readings last week reignited expectations of a more dovish Federal Reserve stance. Fed rate cut expectations went up, as easing inflationary pressures may encourage the Fed to start lowering interest rates. Market odds of a June rate cut remain close to zero, but rate cut expectations in July rose above 60% compared to just 30% the week before.
Oil prices were volatile last week, oscillating around $62.4 per barrel. If oil prices retreat, they may encounter support near $55.6 per barrel, while resistance may be found near $65.3 per barrel.
Oil prices gained strength early last week, bolstered by easing US-China trade tensions, which alleviated fears of a global recession and raised demand outlook. Oil prices dipped later in the week, however, as US crude oil stockpiles released on Wednesday surprised on the upside. Driven by a combination of tightening US crude stockpiles and ongoing global supply concerns. The Energy Information Administration (EIA) reported a large increase in US crude oil inventories of 3.5 million barrels for the week ending May 9, significantly above expectations of a 2.0 million-barrel draw, reinforcing concerns about oversupply.
Oil prices have been under pressure since OPEC+ announced a second consecutive monthly production increase earlier this month, adding 411,000 barrels per day in June. The move, led by Saudi Arabia, signaled a strategic shift toward reclaiming market share, even at the expense of lower prices. OPEC’s decision to raise oil output defied already softening demand and growing global economic concerns. Markets will closely monitor the upcoming OPEC+ ministerial meeting on May 28 for further guidance on output policy.
Oil prices are kept in check by high central bank interest rates. 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 struck a slightly hawkish tone in his post-meeting remarks. Powell hinted that, while rate cuts are still possible later in the year, their timing and scale will be dictated strictly by incoming data.
Softer-than-expected inflation readings last week reignited expectations of a more dovish Federal Reserve stance. Fed rate cut expectations went up, as easing inflationary pressures may encourage the Fed to start lowering interest rates. Market odds of a June rate cut remain close to zero, but rate cut expectations in July rose above 60% compared to just 30% the week before.
Bitcoin remained bullish last week, rising above the $105,000 mark over the weekend. If BTC price declines, support can be found at $93,200, while resistance may be encountered at $108,000.
Ethereum traded around the 2,500 level last week. If the Ethereum price declines, it may encounter support near $1,720, while if it increases, it may encounter resistance near $2,740.
Global trade war concerns have been causing turmoil in markets. US President Donald Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. Trump’s tariffs are likely to raise global inflation and lower the economic outlook, promoting a risk-averse sentiment.
Last week, however, the US and China agreed to a 90-day suspension of most tariffs, raising the appeal of high-risk assets such as cryptocurrencies. The US reduced tariffs on Chinese goods from 145% to 30%, while China lowered tariffs on US imports from 125% to 10%. China also pledged to halt non-tariff countermeasures, including lifting certain export controls and removing US companies from restrictive lists.
Cryptocurrency prices are also 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 struck a slightly hawkish tone in his post-meeting remarks. Powell hinted that, while rate cuts are still possible later in the year, their timing and scale will be dictated strictly by incoming data.
Softer-than-expected inflation readings last week reignited expectations of a more dovish Federal Reserve stance. Fed rate cut expectations went up, as easing inflationary pressures may encourage the Fed to start lowering interest rates. Market odds of a June rate cut remain close to zero, but rate cut expectations in July rose above 60% compared to just 30% the week before. Crypto markets went up following the release of softer-than-expected US inflation data last week, which bolstered investor confidence.
Regulatory developments are also boosting crypto markets. US President Donald Trump has recently announced the creation of a national Bitcoin reserve, stressing his determination to make the US the crypto capital of the world. New Hampshire has become the first US state to establish a cryptocurrency reserve, allowing the state to allocate up to 5% of public funds into digital assets like Bitcoin.
BTC/USD 1h Chart
ETH/USD 1h Chart
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Written by:
Myrsini Giannouli
चलनिधि प्रदाता के रूप में उद्योग उपस्थिति
और विश्वसनीय निष्पादन
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