The US economy’s recent performance was seen by many as signalling US ‘exceptionalism’. Concerns about a US recession emerging from Trump’s tariff announcements in April led to a shift away from such trades, reducing the USD’s appeal as a safe haven.

Despite this, forecasts predict EUR/USD to reach 1.15 within 12 months, reflecting a weak US economic outlook. The USD is expected to retain its dominant role as the global reserve currency, although other currencies continue to challenge this position.

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What we’ve seen recently is a shift in sentiment, prompted initially by the fear that Trump’s move on tariffs in April might rekindle recessionary pressure in the United States. As these concerns circled through the market, many participants began to retreat from previously popular trades built on the narrative of U.S. economic strength. That sentiment had driven demand for the dollar earlier in the year, positioning it as a relatively secure asset in uncertain times.

However, that perception now appears to be softening. The projection of the euro moving toward 1.15 against the dollar in the coming year is telling. It’s not that there’s sudden confidence in European fundamentals; rather, it’s a reassessment of the U.S. picture—especially with recent data missing expectations in areas previously viewed as stable.

The dollar, though still firmly entrenched as the anchor currency for global trade and reserves, is facing increased questioning. Various economies, from Asia to the Middle East, have progressed gradually in building alternative settlements away from greenback reliance. That doesn’t mean a dramatic reshuffling is imminent, but for traders, it’s a signal worth considering when looking at medium- or long-dated positions.

Tactical Considerations in Trading

From a tactical standpoint, when consensus forecasts point to a gradual depreciation of the greenback, especially against the euro, risk-management strategies should adapt accordingly. Pricing in volatility around scheduled events—particularly U.S. inflation readings and central bank statements—becomes a priority. Hedging should be revisited routinely as macro conditions remain fluid.

Powell’s upcoming appearances and the Fed’s tone could stir up fresh volatility, particularly with real yields softening and Treasury issuance continuing at a steady clip. Giselle, from the European side, seems content with a wait-and-see approach, which might support euro carry trades for those looking further out on the curve.

Given the dynamic, we need to be more selective about entries and exits, especially in spot exposures. Emphasis shifts to options strategies that benefit from either range-trading behaviour or directional plays based on calendar spreads. There may also be opportunities in relative value positioning between currency pairs that historically correlate but are now beginning to diverge.

Lastly, as the macro picture remains clear but shaky, high-frequency indicators will play a larger role in short-term decisions. Traders would be wise to give weight to real-time expenditure data, energy prices, and employment revisions when shaping views. Momentum can turn quickly, and as we’ve seen in the past, market positioning often overreacts before returning to balance.

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The number of US oil rigs on land has decreased by two, bringing the total to 576. This marks the third weekly drop in the number of rigs.

The oil market is currently experiencing changes. This is due to OPEC’s decision to increase barrel output by more than expected. Meanwhile, shifts in trade policy are adding to the uncertainty.

Natural Gas Sector Outlook

In contrast, the natural gas sector appears more robust. US supply days have fallen by approximately 18% year-on-year.

With the reduction in US oil rigs now extending into a third consecutive week, immediate attention shifts toward the broader supply-side picture. Baker Hughes data shows a steady retreat in land-based drilling activities, hinting at a conservative outlook among producers despite previously stable prices. The number slipping to 576 reflects lower confidence in near-term returns on new production, perhaps influenced by weaker margins or hesitancy surrounding storage capacity.

OPEC’s production increase, exceeding earlier expectations, may appear strange at first, especially when considered alongside the persistent trimming of US rigs. However, the group seems intent on maintaining influence over pricing by pushing more product into the market—even if at the cost of tighter margins. That move, combined with adjustments in cross-border energy policy, means short-term pricing volatility is likely to remain above historical norms. These changes, particularly trade measures affecting demand routes, place additional variables into our price estimates.

Looking at the natural gas market, supply patterns continue to diverge. A marked drop in year-on-year supply days—down by around 18%—suggests a different set of incentives. Instead of holding back, producers may be responding to gradual drawdowns in storage and more consistent offtake, especially domestic. With lower supply buffer days, we could reasonably anticipate firmer spot prices if weather events or baseline consumption shift higher.

Trading Strategy Implications

In terms of trading strategy, pricing behaviour may continue to depend less on demand signals and more on production cues. We’ve already seen reduced US rig activity acting as a strong proxy for forward curve expectations. If traders see flat or declining rig counts without corresponding price rebounds, it becomes more sensible to revise expectations for prompt-month contracts rather than back-months. That scenario may provide some risk asymmetry worth capitalising on.

Longer-dated contracts look especially vulnerable to overestimation if current OPEC behaviour continues. With expanded output now pushing physical supply higher, we should factor in downward pressure on later maturities, barring an unexpected draw in inventories. Meanwhile, spreads between contract months could widen slightly as short-term storage levels and weather models are released. Caution around overly steep backwardation is warranted—particularly if calendar spreads are moving more rapidly than warranted by underlying pipeline data.

The gas side offers a degree of confidence, at least in structure. Lower inventory levels, when mapped against current production, suggest less slack in the system. That tightness gives calendar spreads room to remain relatively firm. If we limit positioning to high-liquidity terms or near term straddles, it might offer better payout profiles than outright directional bets. Reaction to storage reports should remain immediate and well-aligned with observed draws, especially as demand remains seasonally strong.

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Gold Market Reaction To Consumer Sentiment

Recent dovish US economic data, including lower-than-expected CPI and PPI figures alongside increased Initial Jobless claims, have shifted market expectations towards at least two Fed rate cuts in 2025. Fed Chair Jerome Powell noted potential inflation volatility due to supply shocks, complicating monetary policy.

Gold faces technical pressure trading near $3,180 after failing to maintain above $3,200. The bearish double top pattern signals potential reversal from April highs, with support around $3,160–$3,150. RSI indicates weakening momentum, with downside pressure expected unless $3,250 can be robustly reclaimed.

Market Context And Projections

With gold pulling back more than 4% on the week — a degree of weakness not seen since late last year — it’s apparent the metal is struggling to hold investor attention at current valuations. After peaking near $3,500 in April, we’ve now seen more than $300 shaved off that high, a retracement accelerated by lighter flows into safe-haven assets and persistent technical selling.

The broader context shaping this move is increasingly constructive for risk assets. A provisional US-China tariff truce, scheduled for the next three months, has acted as a release valve on global trade uncertainty. Simultaneously, diplomatic channels have eased previously tense hotspots, particularly across parts of Asia and the Middle East. This easing of geopolitical friction dulls the urgency for market participants to hold positions in gold, traditionally a destination during periods of heightened anxiety.

Encouragingly, direct talks between Moscow and Kyiv — the first since the full breakdown of diplomacy in 2022 — signal a tentative shift toward engagement. For assets like gold, which tend to benefit from pessimism, these developments have dented the broader narrative that kept bids firm earlier this year.

Despite sentiment improving abroad, economic signals at home continue to paint a fragile picture. The May reading from the University of Michigan’s Consumer Sentiment Index came in well below consensus, falling to 50.8. It’s a steep month-on-month drop that should, in theory, bolster demand for inflation hedges. However, the muted market reaction suggests we’re still in unwind mode, with profit-taking outweighing any renewed haven bids.

Recent economic data out of the United States has leaned softer. Inflation prints — both CPI and PPI — failed to match earlier expectations. Coupled with a rise in jobless claims, this has firmed projections pointing to at least two rate reductions in 2025. Powell’s recent remarks supported this outlook but added nuance — reminding us that supply-driven price shocks remain a variable the Committee cannot easily ignore.

This dovish pivot on rates would usually offer gold a tailwind. Instead, the current price structure implies that supply and positioning are determining near-term direction. As of Friday, the metal is hugging the $3,180 mark, pressed down by a persistent failure to hold $3,200 — a level that recently acted as a pivot. With that threshold breached, the double top formation from April becomes more visible on the chart. It’s a classic signal of spent momentum.

We now look to the $3,160–$3,150 area as the next band of potential price stabilisation. If that zone holds, it may offer a short-term reprieve. The RSI trend also reflects sagging enthusiasm, having slipped below neutral levels, and any renewed lift would likely need a decisive reclaim of $3,250 to regain upside traction.

Meanwhile, implied volatility in precious metals options has eased somewhat, particularly at the front-end. This is consistent with a market digesting softer data while transitioning out of extreme positioning. In the near term, we expect tactical selling to remain the dominant driver. Responsive buying interest will more likely emerge at technical supports — not here, not yet.

What’s required from here is less reaction, more structure. Keep position sizing nimble. Monitor developments in global diplomacy alongside upcoming central bank commentary. The market is no longer moving simply on sentiment or data alone — it’s responding to timing mismatches between expectations and official action.

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The Federal Reserve is set to reduce its workforce by 10% over the next few years. At present, the Federal Reserve employs approximately 26,000 individuals.

This reduction equates to around 2,600 positions. The changes will unfold gradually rather than all at once.

Federal Reserve Core Tasks

The Federal Reserve’s tasks include managing currency, processing checks, and supervising the banking system. Despite the reduction, these essential functions will continue.

The planned workforce cut aims to streamline operations within the Federal Reserve. It remains committed to efficiently carrying out its responsibilities.

The decision to trim staff by around 10%—some 2,600 positions—from the Federal Reserve’s current headcount of roughly 26,000 is a calculated move aimed at improving internal processes. Duties such as bank supervision, processing payments, and currency distribution are viewed as foundational and will not be interrupted during this transition. The reduction will be implemented slowly, in stages, spread out over years rather than quarters, which may lessen the strain on operational continuity.

This phased approach sends a message. It’s a response to shifting requirements, perhaps also to long-term budgetary constraints, and possibly reflects ongoing advances in automation and digitisation within central banking operations. Instead of expanding teams or maintaining current size, the focus has turned to doing more with slightly less. For us, that raises questions around the possible consequences on institutional responsiveness, especially when unforeseen market stressors emerge.

Implications of Staff Reductions

When employment numbers change in a measured organisation like this, we pay attention not to the quantity but the timing. That the move is staggered tells us that no short-term operational shock is expected. However, attention will be more acutely fixed on how resource efficiency translates into regulatory vigilance and monetary operations over time.

Given this context, the broader backdrop for market watchers is less about the immediate effects and more about the longer trajectory of deflationary signals. Not necessarily in headline inflation, but within the machinery that governs rates, credit supply, and liquidity support functions. We might reasonably anticipate feedback to this internal shift through future communications or rate path clarity. Daly said little publicly so far, which adds a bit of opacity, but Powell’s previous comments on institutional preparedness could infer that this realignment has been on the agenda for a while.

What we should be doing is recalibrating expectations. If internal trimming continues as projected and future comments don’t address operational drag, then we must assess what that does to policy execution timelines. Well-run institutions adapt, but at this scale, the effect filters into how smoothly policy adjustments can be deployed.

It may benefit us to set alerts around upcoming Federal Open Market Committee minutes and employment-related filings. Even quieter statements could suggest how stretched certain divisions may become. We don’t need to overreact, but staying ahead of these implementation lags matters—for trade duration assumptions and for gauging how responsive they remain to second-tier data inputs.

So, while primary responsibilities remain intact, and nothing looks paused or abandoned, these administrative shifts become more than footnotes. They form part of a new data set — not one of numbers or rates, but of competence continuity. That, in turn, feeds straight into our models.

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Gold Price Movement

Gold experienced a sharp decline on Friday, falling below $3,200, affected by a stronger US Dollar and reduced geopolitical tensions. This move positions gold for its largest weekly loss of the year.

Ethereum’s price stayed above $2,500 after increasing significantly since early April. The ETH Pectra upgrade saw over 11,000 EIP-7702 authorisations within a week, showing robust uptake.

President Donald Trump’s May 2025 Middle East trip resulted in major deals, aimed at boosting US trade relations. These initiatives focus on trade balance corrections and American leadership in defence and technology exports.

What’s happening here is a revealing cross-section of market direction across macroeconomics, fiat currencies, commodities, and digital assets. Each of these areas tells a slightly different story, with immediate implications for short-term positioning, especially within the derivatives market. Let’s unpack the finer points to better understand what to watch for and how to respond.

Trump’s Trade Agreements

The reduction in Russia’s Consumer Price Index from 0.65% to 0.4% may not seem drastic at first glance, yet it signals a dampening in domestic inflation pressures. When we translate that into macroeconomic tone, it’s indicative of a possible loosening stance from policy authorities—or at the very least, less urgency to tighten further. Fluctuations in price pressures from emerging market economies like this one often have second-order effects, particularly on energy-related assets and currency correlations. Watching policy shifts from Moscow might help anticipate ripple effects into energy derivatives.

Now, looking westwards, the Euro has retreated notably even in the face of weaker consumer sentiment in the United States. The EUR/USD falling to 1.1130 even as the University of Michigan index softened suggests the Dollar’s strength is stemming more from inflation expectations than current consumer views. That’s backed up by the fall in GBP/USD to 1.3250, reinforcing the idea that cable remains vulnerable to shifts in US macro prints more than domestic data. Traders in FX forwards or options should view this as a directional bias toward Dollar strength with a near-term floor forming, assuming incoming US data continues to deliver on the hawkish side.

Gold’s break below $3,200 paints an interesting picture. This is not simply a safe haven asset losing its appeal due to peace prospects improving—it’s also a technical reaction to US Dollar strength. Gold often trades inversely to the greenback, and with interest rates expected to remain elevated or track higher for longer, the cost of holding non-yielding assets like gold pushes traders to offload exposure. The fact that it’s potentially shaping up to be its weakest week all year gives tactical traders plenty to think about in constructing hedges or adjusting spreads. Risk models may require swift recalibration if this momentum continues into next week—particularly on leveraged gold positions or calendar spreads.

Ethereum is holding its ground above $2,500, following steady upward price action since early April. While traditional asset classes are reacting to geopolitical and economic data, digital assets are responding to their own engines. Here, we’ve got a technical driver in the form of the Pectra upgrade. With more than 11,000 EIP-7702 authorisations occurring in a matter of days, it’s evident adoption is not lagging. This sort of developer traction usually supports long gamma positions, and for those trading ETH options, rising open interest paired with price stability suggests potential for sharp price expansion. We may want to track protocol updates closely, as they’re increasingly guiding short-term price behaviour in key tokens.

Meanwhile, Trump’s trade delegation from May 2025 has reportedly locked in a series of agreements focused around American defence and tech exports in the Middle East. While not an immediate input for volatility models, these deals do establish the groundwork for shifting global trade dynamics. Any increase in weapons or semiconductor shipments could eventually impact industrial share valuations or raw material demand forecasts. Extrapolating this into derivatives, commodity swaps or energy-linked futures might price in these trade shifts before quarterly figures confirm them. It’s worth being early rather than reactionary in these types of developments.

For those tracking volatility more closely in the coming fortnight, this current mix of subdued inflation abroad, a firming US Dollar, and tightening liquidity conditions may point towards building positions that lean into strength where probable but remain nimble on timing. We’re seeing divergent forces—macro pressures here, software upgrades there—each potentially feeding a different side of the book. Staying liquid matters. So does conviction, once a signal crosses your threshold.

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The Budget Committee’s vote was 16-21, resulting in a failure to pass the proposal. This outcome may contribute to the US facing a potential increase in the deficit by 1 or 1.5 percentage points, reaching above 7% of GDP.

There is market anticipation that efforts will be made to pass the proposal in due course. The current debate centres around reducing Medicaid spending.

No Further Votes Conducted

It appears that no further votes will be conducted on Capitol Hill today.

With the setback in the committee vote, we’re now looking at a scenario where budgetary imbalances may begin to exert more pressure, especially if follow-up negotiations lose traction. The rejected proposal’s connection to the deficit cannot be discounted – a projected rise towards or beyond 7% of GDP puts additional strain on government bond yields and fiscal outlooks. Markets rarely like uncertainty on the national accounts front, and in this case, the failure to make fiscal trims could limit scope for maneuver on future policy moves.

The focus from lawmakers has shifted, quite publicly, towards healthcare cost savings, with Medicaid as the central lever. That points to a politically sensitive path ahead. We’ve seen precedents where deadlocks here prompt temporary delays, but the longer this continues, the more likely it becomes that macro expectations begin to respond not just to policy itself, but to prolonged dysfunction.

Although there were no fresh votes today, expectations remain that fresh versions of the bill—or amendments that secure broader backing—are on the horizon. That builds in a short-term narrative of stop-start positioning, where both fiscal and political developments require close monitoring. Fixed income markets, in particular, may find themselves caught trying to recalibrate if borrowing levels look poised to rise without a clear offset in spending cuts.

Fiscal Risks Embedded

From our perspective, moves in the coming sessions should be viewed in light of these fiscal risks now appearing more embedded. We’ll be watching for rising volatility around government auction announcements, headline-driven moves in health sector-linked equities, and any further indication of deadlock or agreement emerging from leadership. It’s also reasonable to expect re-pricing on segments of the curve sensitive to debt outlooks—generally speaking, those with durations two years and out.

Execution timing matters more now. Patterns suggest trading volumes thin into gridlock echoes, and wider bid-ask spreads may return if no political momentum resurfaces shortly.

Overall, the lack of voting activity today, despite initial optimism, shows early signs that consensus isn’t merely delayed—it may not yet exist.

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The EUR/CHF pair lingered around the 0.94 mark on Friday with minor gains, maintaining a bearish trend. Key support exists below 0.9350, with nearby resistance at 0.9360. Despite modest recovery, the overall technical perspective indicates downward pressure due to ongoing selling forces, confining the pair to a narrow range.

The alignment of the 20, 100, and 200-day SMAs indicates downward pressure, confirming the broader selling trend. The RSI hovers in the 40s, suggesting neutral market conditions, while the MACD indicates a slight buying momentum, contrasting with the bearish sentiment.

The Momentum (10) indicator remains around 0, hinting at mild buying interest. Both the Ultimate Oscillator (7, 14, 28) and Stochastic %K (14, 3, 3) sit in the 50s, indicating a largely neutral stance. Traders face indecision as they consider potential rebounds against the prevailing downtrend.

Immediate support is anticipated around 0.9353, followed by 0.9341 and 0.9334. Resistance may arise around 0.9362, followed by 0.9363 and 0.9364, limiting short-term recovery efforts.

Although the pair edged slightly upwards around the 0.94 handle last Friday, the general chart behaviour has not deviated much from its longer-term direction. Price action remains rather boxed in, reflecting a lack of conviction on either side. While a bounce was observed, the move lacks any real depth, consistent with what we’ve been seeing from broader technical tools.

With the short and medium-term SMAs stacked above price, and the 200-day average continuing its descent, the overall downtrend remains undisturbed. This alignment reinforces the sense that upward corrections are struggling to hold. What this set-up typically implies is that when buyers do step in, their efforts are quickly countered by more persistent selling just overhead.

The RSI, balancing around the mid-40s, reflects this indecision—enough support to prevent a sharp drop, but far from suggesting an upswing with any substance. Meanwhile, the MACD displays a subdued attempt by bulls to regain some traction. Though it has slightly ticked upwards, there’s no solid divergence to latch onto.

Momentum indicators such as the 10-period reading barely register a directional push. We’re observing values hovering around neutral zones, without a decisive break in intensity. Similarly, the Ultimate Oscillator and the Stochastic %K continue to trade in the middle range, confirming the absence of a strong directional hand. This consolidation reflects a market waiting for clearer cues or shocks—neither side appears eager to commit fully.

That being said, levels drawn directly from recent price movements suggest where interest is likely to stir. The 0.9353 level remains initial support, though weaker buyers gave way easily earlier last week. Below that come 0.9341 and 0.9334, where fresh order flow emerged during previous attempts lower. On the way up, the series of resistances between 0.9362 and 0.9364 have become a bit compressed, but still present meaningful zones where supply has typically stepped in.

If we’re watching options or taking short-duration positions linked to this pair, that clustering of resistance above suggests upside attempts may be short-lived without broader backing. Rolling short-strike positions higher could be considered, provided there’s confirmation through momentum data. Conversely, any decisive break below 0.9330, particularly if volume accompanies it, might clear the path for sellers to challenge more extended levels.

The data currently tells us that, without a new catalyst or reversal signal, the pair remains vulnerable to renewed selling below the 0.9350 area. Positioning here has to be responsive. We want to lean with price, but be prepared for failed moves in either direction. Narrow trading bands rarely last forever, but until they break, premiums must be handled with care.

European stocks closed on a positive note, marking five consecutive weeks of growth. On the day, the German DAX increased by 0.2%, France’s CAC by 0.3%, and the UK’s FTSE 100 gained 0.6%. Spain’s Ibex saw a rise of 0.8% and Italy’s FTSE MIB went up by 0.4%.

Over the week, Germany’s DAX climbed by 1.1%, while France’s CAC advanced by 1.7%. The UK’s FTSE 100 rose by 1.5%, with Spain’s Ibex achieving a substantial increase of 3.6%. Italy’s FTSE MIB also experienced a notable growth of 3.1%.

Trade Negotiations Challenge

The gains nearly offset the setbacks experienced on Liberation Day, with Italy, Spain, and Germany reaching new closing highs. However, a challenging period looms concerning trade negotiations between the EU and US, with no straightforward resolution in sight.

In simple terms, over the recent week, European markets moved steadily upward, logging their fifth week of gains in a row. This doesn’t happen often, and it suggests that investors are holding a fair bit of confidence — or at least minimal concern — in the state of the region’s larger economies. The DAX in Germany, CAC in France, and the FTSE 100 in the UK all pushed higher both on the day and across the week. The Ibex and FTSE MIB not only joined that upward trend but posted even stronger growth on a percentage basis.

These movements mean that, despite what had initially been a bit of a dip earlier on — particularly around Liberation Day, which tends to bring lower activity and sometimes less direction — the markets have largely recovered and even gone beyond previous levels in several cases. This upward trend, especially with multiple countries hitting fresh closing highs, reflects underlying momentum. It also hints that investors have largely brushed off the recent setbacks and are instead positioning themselves ahead of upcoming macro events.

But there’s more going on behind the scenes. While stocks have been climbing, trouble may be brewing, particularly in the background where discussions between major trading blocs remain unresolved. The upcoming meetings and policy shifts expected from both Brussels and Washington are likely to produce friction in the next round of headlines. And that’s where it begins to matter — not in the direct numbers posted by indices, but in how those expectations begin to feed into rate-sensitive sectors and longer-run positioning strategies.

Implied Volatility Shifts

What we’ve seen from this combination of wider gains and record closes is a broad willingness to keep bidding up risk in sectors that face the most exposure to external sentiment. That’s encouraging because it tells us volatility has remained mostly contained. However, that sentiment could shift quickly. What some traders might interpret as a trailing rally could suddenly look overstretched if negotiations take an unproductive turn — especially if rhetoric sharpens unexpectedly.

From where we stand, it becomes important to consider implied volatility shifts in the run-up to this trade discussion phase. The past week has almost certainly pulled greeks — particularly gamma and vega — into more concentrated zones across major indices. We’re likely to see positioning around shorter-dated contracts tighten. The premiums imply little appetite for protection at this point, but that might not last.

In such moments, historical patterns become particularly useful. There’s precedent to suggest that after five or six weeks of ascent, European indices tend to flatten or see light pullback before policymakers introduce new momentum. It’s worth scanning the volatility curve across sectors such as autos and industrials — where correlation to global trade rhetoric remains high and dispersion remains low — for sharp moves ahead.

Traders should weigh not just exposure, but also liquidity depth across maturities, particularly where market makers are still absorbing shifts in hedging demand. The stance should be less about directional bets and more about leaning into skew, exploring opportunities in delta-neutral scripts where risk remains adjustable.

We’ve seen enough in this recent rally to say that flows have continued to lift broader markets, but what comes next rests more on how the disputes between economic powers unfold. It’s within that context that current premiums, narrow put-call spreads and lean upside open interest should be interpreted — less as an invitation to follow the trend blindly, more as a reminder to exercise care, especially when volume is floating upward but depth appears diluted.

It’s in weeks like this that layered risk becomes clearer, and patience, often underpriced, can pay forward.

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The USD/CHF currency pair is currently experiencing a challenge as it encounters resistance at the 0.8540 level, which is crucial for determining its potential upward movement. Failure to breach this resistance could result in further declines, possibly extending the ongoing downtrend.

The US Dollar has appreciated against the Swiss Franc, buoyed by discussions around tariffs, interest rate expectations, and risk sentiment. The pair is now testing a resistance level at 0.838, showing a daily gain of 0.28%.

Fibonacci Retracement Levels

USD/CHF previously found support at 0.8040, its lowest since 2015, prompting a recovery. This rebound approached a significant Fibonacci retracement level at 0.8320, previously a major turnaround point.

The resistance level of 0.8540 aligns with the 23.6% Fibonacci retracement and previous long-term support. A monthly close above it could indicate a market sentiment shift, whereas failure to do so keeps the downtrend viable, possibly leading to a decline toward 0.7770 or 0.7070.

A recent recovery is notable in the weekly time frame, yet the Relative Strength Index remains below neutral. On the daily chart, momentum shows hesitancy just below 0.8536, with potential for corrections if this resistance isn’t surpassed.

Currently, the US Dollar shows varied percentage changes against major currencies. The USD is notably strong against the Swiss Franc.

Technical Resistance Observations

The current pattern we see in USD/CHF presents a rather technical discussion, hinged around defined levels that traders will be watching closely — especially those with exposure to directional strategies. While the broad macro themes, like trade policy and interest rate projections, have enlivened the US Dollar, what matters in the next stretch is how the pair behaves near the stalled 0.8540 area. That zone, which aligns both with a familiar Fibonacci marker and long-held structural support from previous trading cycles, is more than just a price level; it’s where sentiment and positioning tend to pivot.

So far, we’ve witnessed a rebound that lacked clear momentum. The recovery from 0.8040 — the lowest in roughly nine years — might have given the pair some breathing space, but the response near 0.8320, where we saw the 38.2% retracement cap further gains, casts doubt on the strength behind the bounce. Resistance has come in right where buyers would be expected to reassert, yet there’s been hesitation, not conviction.

The 0.8540 cap hasn’t yet been decisively challenged; price is stalling below it, and volume isn’t giving any clear push. On multiple time frames, RSI still points to mild downside bias. Weekly oscillators haven’t recovered to the point of confirmation. Meanwhile, on the daily chart, there’s a clear deceleration, a rounding off in momentum, rather than a build-up.

Should price fail again to stretch above that 0.8540 level — and close above it on a monthly basis — we have to assume that recent stability is more noise than trend change. There’s very real risk of a slide, likely targeting the broader zone between 0.7770 and 0.7070, areas that featured during the pair’s long-term consolidation back in the early-to-mid 2010s. Those levels weren’t random bounces; they were structurally tested, and any return will attract considerable attention again.

From a positioning angle, we’ve seen options flow react to this hesitation. Implied volatility remains subdued, but premiums have started leaning towards protection against downside, suggesting we’re not the only ones noting the waning upward pressure. Some might interpret this as pricing in a catalyst; we think it’s more a reflection of failed upside momentum.

With USD strength uneven elsewhere — showing dominance over certain majors while underperforming against others — it adds another wrinkle. But regardless of external conditions, the technical resolution at 0.8540 will dictate short-term playbooks. For now, risk management should reflect the threat of rejection at an area that’s proven sticky before. We will follow closely should momentum indicators start lifting, especially if RSI begins tracking above 50 consistently — but until then, the preference is clear.

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Bank of America maintains a bearish outlook on the dollar, despite a temporary truce between the U.S. and China. The recent rise in the dollar is viewed as tactical and not indicative of long-term improvement, with challenges still facing the currency.

Uncertainty in policies persists, with the pause in trade tensions considered short-lived. Policy directions remain unpredictable, which could lead to renewed volatility as deadlines and tariff suspensions conclude.

Us Economy Slows Down

The U.S. economy is experiencing slower growth compared to pre-trade war levels. This is due to delayed investments and reduced business confidence, contributing to an ongoing economic drag.

The current account surplus in the U.S. is shrinking, reducing investment inflows and weakening support for the dollar. Institutional investors are reassessing their exposure to U.S. assets, potentially leading to continued capital outflows.

Fiscal uncertainty presents risks related to long-term Treasury issuance and inflation expectations. The Trump administration’s preference for lower interest rates and a softer dollar perpetuates depreciation pressures over the long term.

Bank of America views these structural forces, including weak capital inflows and policy uncertainties, as continuing to push the dollar down over the medium term.

Short Term Adjustments

Given the context above, it’s fairly clear that monetary positioning remains in flux, and what we’ve seen lately isn’t a trend reversal but a pause in a broader directional move. The short bump in the dollar’s strength seems tied to short-term positioning adjustments, possibly driven by temporary optimism surrounding trade discussions rather than anything more lasting. The dollar’s recent uptick, then, lacks the kind of solid foundation we’d need to consider it a turnaround.

While the headline ceasefire on tariffs may have cooled concerns for a moment, the deeper story remains one of hesitation, with those making longer-term trades likely to remain cautious. With no concrete resolution and deadlines looming, there’s a sense that instability could re-emerge fairly quickly. We’re not out of the woods—not by a long shot.

Delving into macro conditions, what stands out is the momentum loss in output. Economic momentum has slowed—businesses are sitting on cash, investments are sluggish, and hiring decisions appear deferred. That’s pretty telling. It suggests that uncertainty from global risks continues to weigh on boardroom sentiment. Prolonged hesitation like this tends to ripple through markets. From our side, that often creates tricky setups and raises the bar for directional conviction.

External balances are also being watched closely. With the current account sliding, there’s simply less natural demand for dollars. That translates into weaker structural support, particularly when global investors begin to look elsewhere for returns. The flow dynamics are vital here—less foreign buying interest typically means assets may have to reprice, and in a stronger way than some expect.

Then there’s the fiscal stance, which remains loaded with potential consequences. Discussion continues over the scale of Treasury issuance needed to fund widening deficits. Yield questions creep in, and inflation hedges become more relevant once rate direction favours easing. All of this points to more caution for those managing exposure across the curve. In particular, we’re seeing demand for inflation protection pick up, suggesting the market is not fully buying into any disinflation argument.

As we’ve interpreted from Harris and his team, the underlying lean is still towards dollar weakness. They’re paying attention to long-range imbalances, and we are too. Capital has a way of moving away from perceived uncertainty—especially when alternative destinations offer more yield stability or political clarity.

The main takeaway? Don’t assume recent calm means direction has changed. We’re watching the bid/offer spreads tighten, but conviction among long-dollar holders appears thin. Many are trading tactically around events rather than building long-term positions, and we suspect that won’t change until more clarity emerges on spending plans, rate policy, and the next moves from global central banks.

For now, we’re focusing on levels, keeping sizing light, and avoiding overstretch—especially in pairs overly tied to US fiscal or trade risk. Bias towards short-side setups may reassert itself quickly, especially around data inflections or if Treasury supply overshoots. Keep watching those auction tails.

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