Markets were quiet on Monday due to UK and US holidays and a lack of major news. Early Tuesday, sentiment improved slightly on hopes tied to Trump’s EU tariff delay, strong China industrial output, Gaza ceasefire talks, and US-Iran diplomacy. Still, concerns over Trump’s tax and trade policies, and his criticism of Putin’s inaction on Ukraine, kept investors cautious.
The US Dollar Index (DXY) rebounded from a five-week low, snapping a two-day losing streak, while USDJPY seesaws near a month’s low despite stronger Japan service inflation and hawkish BoJ comments.
Further, Gold extended losses from key resistance, while Crude Oil fell for a second day on expectations of higher Middle East and OPEC+ output.
Elsewhere, Antipodean currencies struggled despite upbeat China data, pressured by the USD’s recovery. USDCAD rose, helped by weaker oil and pre-event consolidation.
Meanwhile, Bitcoin and Ethereum saw modest pullbacks after three-day gains, Asia-Pacific stocks traded mixed, and bond yields eased after last week’s sharp rise.
EURUSD ends a two-day rally, retreating from a one-month high, while GBPUSD dips after hitting its highest level since early 2022. The pullback comes as the US Dollar stages a corrective bounce, though trade optimism limits downside pressure.
Trump’s EU tariff delay and hawkish ECB comments keep Euro bulls cautiously optimistic ahead of key EU/US data. Meanwhile, upbeat UK data, trade deal hopes, and a bullish breakout support GBP, challenging the pair’s decline.
USDJPY briefly hit a one-month low before bouncing, despite a slightly positive Monday close. Strong April service inflation and BoJ Governor Kuroda’s hawkish tone failed to lift the Yen, as cautious sentiment and stalled US-Japan trade talks weighed on the pair’s recovery.
China’s industrial production rose for a second straight month, hitting its fastest pace since December. Optimism also grew on signs of progress in US-China trade talks and Beijing's stimulus plans — a potential boost for the AUD, NZD, and CAD.
However, the return of full market activity after US/UK holidays and renewed concerns over US debt, driven by Trump’s trade and fiscal policies, weighed on AUDUSD and NZDUSD, while supporting USDCAD. A drop in crude oil, Canada’s top export, also helped lift the Loonie pair, despite little change in broader market trends.
Crude oil prices fall for a second day as prospects of a US-Iran nuclear deal, OPEC+ output hikes, rising US inventories, and Trump’s “drill baby drill” stance fuel supply concerns. Still, mixed signals on Gaza and Russia-Ukraine conflicts, along with China optimism and a weaker US Dollar, limit further downside.
Meanwhile, Gold (XAUUSD) pulls back from key resistance near $3,365–$3,370 amid a USD rebound. Yet, strong demand from India and China, plus lingering global uncertainty, keep gold bulls cautiously optimistic ahead of this week’s key data and events.
Bitcoin (BTCUSD) and Ethereum (ETHUSD) post their first daily loss in four sessions, pressured by a stronger US Dollar and a lack of fresh bullish news from the crypto space. Still, record ETF inflows and rising institutional interest support long-term sentiment, even as retail demand stays muted.
After a quiet start to the week due to US/UK holidays, momentum traders will focus on mid-tier EU data, US Durable Goods Orders, and Consumer Confidence. Watch for updates on US trade and fiscal worries, plus political developments in Gaza, Ukraine, and Asia.
That said, the US Dollar may hold its recent rebound, keeping pressure on major currencies and commodities. USDJPY could lose some gains if risk sentiment fades or US data disappoints Fed hawks. GBPUSD is likely to stay bullish, while EURUSD, commodity currencies, and cryptocurrencies may face selling pressure. Further, Gold and crude oil are expected to pull back, and equities and bonds may continue recent declines.
May the trading luck be with you!
