Markets are expecting further cooling in the Eurozone inflati
Quick overview
- Markets anticipate further cooling in Eurozone inflation, potentially leading to ECB rate cuts in 2025.
- The USD declined amid tariff war concerns with China, although sentiment improved after the U.S. extended tariff relief on select Chinese exports.
- The ISM manufacturing index fell below 50, indicating contraction, while the Atlanta Fed GDPNow forecast for Q2 growth surged to 4.6%.
- Gold prices are rising amid geopolitical tensions and a shifting Fed outlook, while Bitcoin and Ethereum have also seen significant gains.
Markets are expecting further cooling in the Eurozone inflation which could escalate the ECB rate cuts ahead in 2025.
The USD moved lower on the back of concerns about tariff wars, especially with China. Trump last week accused China of breaking the trade deal.
China rejected the claim and countered that it was the United States that breached the deal. Later today, the White House said we want countries “best offer” by Wednesday in tariff talks.
However, sentiment improved after Bloomberg reported that the United States had extended tariff relief on select Chinese exports until August 3. Besides that, the U.S. and Iran reportedly reached a tentative understanding that would allow Iran to continue enriching uranium at modest levels while avoiding a complete dismantlement of its nuclear facilities which is viewed as de-escalatory.
as a result, The US stocks erased early declines which was confusing unless you believe that all will pass over time. The Nasdaq led the way with a gain of 0.67%. The S&P was up 0.41% while the Dow rose 0.08%.
The ISM manufacturing index today stayed below 50 at 48.5 vs 49.5 last month. Construction spending also was weaker at -0.4% vs +0.3% estimate. The prior month was revised lower to -0.8% vs -0.5%. That data supports a lower dollar.
And to add more confusion in the “witches brew” that defines the markets (or doesn’t), the Atlanta Fed GDPNow forecast for Q2 growth continued the surged to 4.6% from 3.8% in its current guesstimate.
Today’s Forex Events
Investors brace for a week of key economic data and monetary updates across major regions, with gold and crypto assets continuing their ascent amid macro uncertainty.
A wave of critical economic releases and policy signals are scheduled for Tuesday, setting the stage for a pivotal week in global markets. Among the highlights are the Reserve Bank of Australia’s meeting minutes, Switzerland’s latest inflation print, and new Eurozone economic indicators—all being closely watched for signs of economic direction and potential central bank moves.
In Switzerland, markets are expecting a slight uptick in monthly inflation, with consensus estimates pegging the May Consumer Price Index (CPI) at 0.2% m/m, compared to a flat 0.0% reading previously. However, on a year-over-year basis, inflation is forecast to ease further. Headline CPI is projected to slip by 0.1%, marking another step down in what has been a consistent decline over the past two years. Core inflation is also likely to show continued softening. With April’s flat CPI print already at the lower end of the Swiss National Bank’s 0-2% target, any further weakness could increase speculation of a dovish policy stance ahead.
In the Eurozone, inflation is also on a downward trend. The region’s Flash Core CPI for May is expected to decelerate to 2.4% y/y, down from 2.7% in April, while the headline figure is projected to dip from 2.2% to 2.0%. This moderation in inflation is reinforcing expectations that the European Central Bank will proceed with a widely anticipated 25 basis point rate cut on Thursday, bringing the deposit rate down to 2.00%.
In the United States, investor focus turns to the latest JOLTS job openings data, a key labor market indicator that could shape expectations ahead of the next Federal Reserve meeting.
Last week, markets were slower than what we’ve seen in recent months, with gold retreating as a result, the EUR/USD falling below 1.11, and stock markets continuing upward. The moves weren’t too big, but we opened 37 trading signals in total, finishing the week with 25 winning signals and 12 losing ones.
Gold Returns to $3,000
Meanwhile, global sentiment continues to support gold prices. Amid lingering geopolitical tensions, a more cautious market backdrop, and signs of a shifting Fed outlook, gold has regained momentum. After climbing from around $3,200, the yellow metal once again tested major resistance near $3,500—a level last seen in April. While a breakout has yet to materialize, the mood around bullion remains upbeat, with investors still valuing gold for its role as a hedge against inflation and financial instability. Still, the path higher has been uneven. The easing of geopolitical fears earlier in May prompted a brief pivot toward riskier assets, causing gold to consolidate in a tightening range between $3,120 and $3,500.
Currency Markets Defy Rate Logic as Yen Weakens
Currency markets have also exhibited some unexpected behavior. The U.S. dollar strengthened against the yen even as U.S. Treasury yields declined, with USD/JPY rising from 143.40 to 144.31. Analysts suggest the move may reflect capital outflows from Japan and broader global portfolio shifts, highlighting how traditional currency dynamics are being reshaped by deeper structural and geopolitical currents.
USD/JPY – Daily Chart
Cryptocurrency Update
Bitcoin Sellers Tests the 20 SMA
Bitcoin surged past $110,000 for the first time last week, gaining over 6% in just a few sessions. The rally reflects growing investor anxiety over America’s fiscal trajectory, soaring national debt levels, and renewed geopolitical risks. These concerns have helped bolster Bitcoin’s appeal as a hedge during times of macroeconomic stress—further reinforcing its evolving status as a legitimate store of valuem.
BTC/USD – Weekly chart
Ethereum Tries Breaking Above MAs Again
Ethereum has also participated in the upswing, rising over 20% from its April trough. The momentum behind Ether stems largely from the successful rollout of its latest upgrade, dubbed Pectra, which enhances wallet compatibility and strengthens staking functionalities. These improvements have not only increased Ether’s utility but also reignited investor enthusiasm across both retail and institutional segments, breathing fresh life into the broader crypto market.
ETH/USD – Weekly Chart
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank’s local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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