What are we looking at today:

  • USD strengthening once more: The dollar continues to strengthen this morning and is closing in on the key May high on Dollar Index.   
  • GBP under pressure: With a slew of disappointing UK economic data for April released this morning, the potential is for GBP to be dragged even lower.    
  • Indices under mounting selling pressure: Wall Street fell -3% into the close on Friday and US futures are pushing close to -2% lower this morning. European indices are not as bad but are still coming under selling pressure.   
  • Data trading: It is a quiet day for the economic calendar with no data announcements of notes for traders.


Friday’s upside surprise in US inflation has caused shockwaves through major markets. Market participants had been positioning for a topping out of inflation, but the data has served as a key warning that inflation may be stubborn to unwind. This is driving a reassessment of how aggressive the Federal Reserve may need to be in its monetary policy. 

Treasury yields have spiked higher and the USD has significantly strengthened. There has been a significant flow out of higher-risk assets. Cryptocurrencies are feeling the brunt of the selling, with Bitcoin -14% down this morning. However on major markets, Wall Street fell by -3% on Friday, and futures show another -2% down this morning.   

An early morning announcement of UK economic data for April has shown worse than expected readings across the board, with a contraction in monthly GDP, whilst Industrial Production also disappointed. This may weigh on GBP as a result. Elsewhere, the economic calendar is rather bare today, with no major economic announcements due. 

Today's news

Market sentiment has turned sharply negative: The upside surprise in US inflation has triggered an acceleration of USD higher, whilst equities are being sold off.   

Treasury yields have spiked higher: A “bear flattening” yield curve has come as shorter-dated Treasuries have sold off harder at the prospect of more aggressive Fed tightening. The 10-year yield is +8bps today and is now above the 3.20% May high to 3.24%. The 2-year yield is also above its May high and is +14bps to 3.20% today. The spread is now just +4 basis points.     

US dollar strengthening: The Dollar Index has strengthened significantly in the past few sessions. The key May high of 105.00 is being eyed once more.   

UK data disappoints: UK GDP fell by -0.3% in April (+0.1% expected). Industrial Production was -0.6% for the month and keeps year on year growth at +0.7%.

Cryptocurrency falls dramatically: Crypto is being massively sold off again. Bitcoin is down -14% this morning to below $25,000 and is at its lowest level since Christmas 2020.   

Economic Data:

  • No major economic data

Major markets outlook

Broad outlook: Huge surge of negative risk appetite flows. USD is the big outperformer in forex. Commodities falling, indices and US futures are also sharply lower.

Forex: Big USD outperformance. AUD, NZD and GBP are the underperformers. 

  • EUR/USD broke decisively below the 1.0625 support on Friday and has not stopped. The pair is now eyeing a test of the minor higher low at 1.0460 but the crucial 1.0350 May low is now a realistic test. Initial resistance is at 1.0505/1.0535 and then at 1.0610.


  • GBP/USD has fallen sharply in the past couple of sessions, breaching 1.2430 initially and subsequently 1.2330. This now brings the crucial May low at 1.2155 back into range. Momentum is very negative once more but also with downside potential, leaving our preferred strategy of selling into intraday rallies. Minor resistance is at 1.2300/1.2330.
  • AUD/USD is accelerating lower and has broken the support at 0.7035 this morning. This now opens 0.6950 as the next support and if that is breached the key May low c. 0.6830 comes into view. Intraday rallies are a chance to sell. The initial resistance is 0.7035/0.7065.

Commodities: Precious metals have been volatile since the US inflation but essentially remain rangebound for now. Oil is unwinding to the support of the trend channel.

  • Gold was volatile in the wake of the US inflation data but has essentially held the range. Friday’s candle rebounded from $1825 and swung sharply higher. However, the market has fallen over at $1879 today and is unwinding again towards the middle of the range. Once the dust settles on the near-term volatility we will know more about the outlook. 
  • Silver rebounded on Friday from $21.26 which has held what is now a 3-week trading range to bolster the support around $21.26/$21.43. However, the rebound has fallen over this morning and the support is under threat again today. A decisive close below $21.26 would be a breakdown and would re-open the $20.45 key May low. Momentum on the RSI suggests that the risk of a downside break is growing. Initial resistance is at $22.00.
  • Brent Crude oil remains in a one-month uptrend channel but has now unwound last week’s gains and is around the bottom of the channel support. This means reaction to the first support at $120.50 will be an important gauge. A closing breach would be disappointing for the bulls and put the upside break on ice. Resistance is mounting now at $126.35.

Indices: Wall Street dropped sharply and is down again today. Indices are now eyeing their key May lows. 

  • S&P 500 futures have accelerated lower in recent sessions and are now testing the key support at 3807. A close below would be a 16-month low and open the downside of the next leg lower towards the next support band 3655/3720. Momentum is aggressively bearish again but also has downside potential. There is a weekend gap open at 3895 which needs to be filled but is also a basis of resistance now.
  • German DAX has accelerated lower in the past four sessions and is already eyeing a test of the May low at 13,270. With momentum bearish but still, with downside potential on the daily RSI, a breach of 13,270 would re-open the March lows at 12,435 once more. There is a downside gap at 13,735 that is now open.
  • FTSE 100 has fallen as other major markets have and is now testing the 7157/7227 support band of the May lows. A breach opens a much deeper correction, with 7051 as the initial support. Initial resistance is at 7292/7364.

Support and Resistance levels

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