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Euro surged against Dollar after ECB President Christine Lagarde struck a relatively confident tone in her post-meeting press conference. She downplayed immediate trade war fallout, stating that U.S. tariffs would likely impact growth more in 2026, by which time EU fiscal expansion—particularly military spending—would help cushion the blow.

Also, Lagarde emphasized that the ECB is well positioned to respond to prevailing uncertainties. There was no explicit signal of a pause in the easing cycle, but the emphasis on a "meeting-by-meeting" approach suggests the ECB will tread carefully going forward.

Meanwhile, US futures ticked up after Chinese state media reported that President Trump and President Xi had held a phone call, providing a modicum of relief amid heightened trade tensions. The news sparked a mild rally in US equity futures and lent support to risk-sensitive currencies like the Australian and Canadian Dollars.

However, Dollar itself faced renewed pressure following a surprising jump in initial jobless claims. The data added to a string of disappointing US labor signals this week—weak ADP job growth and declines in ISM employment components—raising the risk of a downside surprise in Friday’s NFP report.

Elsewhere, Silver extended its rally and surged to its highest level in 13 years. The move reflects growing investor demand for tangible, supply-constrained assets amid structural uncertainties around US fiscal and trade policies.

For decades, persistent US current account deficits were offset by capital inflows into Treasuries and equities. That dynamic is now being reassessed, as sovereign wealth funds and large institutional investors rebalance away from the US due to rising geopolitical risk, trade protectionism, and concerns over long-term debt sustainability. This structural shift has driven renewed interest in precious and industrial metals.

Technically, next near term target for Silver is 100% projection of 28.28 to 33.66 from 31.65 at 37.03. Decisive break there will pave the way to 161.8% projection at 40.35. For now, outlook will remain bullish as long as 33.66 resistance turned support holds, in case of retreat.

In Europe, at the time of writing, FTSE is up 0.22%. DAX is up 0.52%. CAC is up 0.24%. UK 10-year yield is up 0.01 at 4.621. Germany 10-year yield is up 0.031 at 2.558. Earlier in Asia, Nikkei fell -0.51%. Hong Kong HSI rose 1.07%. China Shanghai SSE rose 0.23%. Singapore Strait Times rose 0.35%. Japan 10-year JGB yield fell -0.044 to 1.461.

US initial jobless claims jump to 247k vs exp 235k

US initial jobless claims rose 8k to 247k in the week ending May 30, above expectation of 235k. Four-week moving average of initial claims rose 4.5k to 235k. Continuing claims fell -3k to 1904k in the week ending May 24. Four-week moving average of continuing claims rose 8k to 1895k, highest since November 27, 2021.

ECB cuts 25bps, downgrades inflation forecasts

ECB lowered deposit rate by 25bps to 2.00% as widely expected. The central bank cited “exceptional uncertainty,” and its commitment to a data-dependent, meeting-by-meeting approach, refraining from offering forward guidance on the future path of interest rates.

In the updated economic projections, ECB now expects headline inflation to average 2.0% in 2025 and 1.6% in 2026—down 0.3 percentage points from March's forecast. Headline inflation would then return to target at 2.0% in 2027. The revision was largely due to lower energy prices and a stronger Euro.

Core inflation is expected to ease to 2.4% in 2025 and 1.9% in both 2026 and 2027, broadly unchanged from previous forecasts.

On growth, ECB projects real GDP to expand by 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027. While the 2025 GDP forecast remains unchanged due to a strong first quarter, ECB acknowledged that the remainder of the year looks weaker, in part due to trade-related uncertainty.

Weak global demand and potential retaliation to US tariffs could continue to drag on exports and business investment. However, rising public investment, particularly in defense and infrastructure, is expected to lend some support to growth in the medium term.

Eurozone PPI slumps -2.2% mom on energy prices

Eurozone PPI dropped sharply by -2.2% mom in April, steeper than the expected -1.8% mom. decline. Annual PPI rose just 0.7% yoy, below forecasts of 1.2% yoy. PPI ex-energy was up 0.1% mom, 1.1% yoy

The drag on Eurozone PPI was driven primarily by a -7.7% mom fall in energy prices. Prices for intermediate goods also declined slightly by -0.1% mom, while capital goods prices held flat. In contrast, consumer goods offered some offset, with durable and non-durable segments rising 0.1% mom and 0.3% mom respectively.

The broader EU showed a similar picture, with PPI falling -2.1% mom and rising just 0.6% yoy. Country-level data revealed significant monthly drops in industrial prices in France (-4.3%), Ireland (-4.0%), and Bulgaria (-4.9%). Only a handful of smaller economies like Cyprus and Malta posted slight increases.

Japan’s real wages fall -1.8% yoy in April, down for the fourth month

Real wages in Japan fell by -1.8% yoy in April, marking the fourth consecutive month of decline as persistent inflation continued to erode household purchasing power.

While nominal wages rose 2.3% yoy, slightly below the expected 2.6%, gains were outpaced by a still-elevated consumer inflation rate of 4.1%, driven by rising food and energy costs. The inflation metric used by the labor ministry has remained near 4% for five straight months, keeping real income in negative territory.

On the positive side, base salaries rose 2.2% yoy, the fastest increase in four months and well above March’s 1.4% yoy gain. This also marked the 42nd consecutive month of growth in regular pay. Overtime pay rebounded with a modest 0.8% yoy rise, while special payments grew 4.1% yoy.

China’s Caixin PMI composite falls to 49.6, contracts for first time since 2022

China’s Caixin PMI Services rose modestly from 50.7 to 51.1 in May, aligning with expectations. However, the gain in services was not enough to offset the drag from manufacturing, as PMI Composite slipped into contraction at 49.6, its first reading below 50 since December 2022.

Wang Zhe of Caixin Insight Group noted that the manufacturing slump was weighing heavily on the overall market, with new export orders remaining "sluggish" across both goods and services. Although input costs rose slightly, firms were unable to pass these on to customers, with selling prices continuing to fall and compressing profit margins.

Caixin flagged "unfavorable factors remain relatively prevalent", with growing external trade uncertainty and "noticeable weakening" in macro indicators at the start of Q2. The "significantly intensified"downward pressure raises the urgency for further targeted policy support.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1371; (P) 1.1403; (R1) 1.1449; More...

EUR/USD's rebound from 1.1064 resumed by breaking through 1.1453 today. Intraday bias is back on the upside for 1.1572 high. Strong resistance could be seen there to limit upside, at least on first attempt. On the downside, On the downside, break of 1.1356 support will indicate that the corrective pattern from 1.1572 has started the third leg, and target 1.1209 support. Nevertheless, decisive break of 1.1572 will confirm larger up trend resumption.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 55 W EMA (now at 1.0856) holds.

US initial jobless claims rose 8k to 247k in the week ending May 30, above expectation of 235k. Four-week moving average of initial claims rose 4.5k to 235k.

Continuing claims fell -3k to 1904k in the week ending May 24. Four-week moving average of continuing claims rose 8k to 1895k, highest since November 27, 2021.

Full US jobless claims release here.

ECB lowered deposit rate by 25bps to 2.00% as widely expected. The central bank cited “exceptional uncertainty,” and its commitment to a data-dependent, meeting-by-meeting approach, refraining from offering forward guidance on the future path of interest rates.

In the updated economic projections, ECB now expects headline inflation to average 2.0% in 2025 and 1.6% in 2026—down 0.3 percentage points from March's forecast. Headline inflation would then return to target at 2.0% in 2027. The revision was largely due to lower energy prices and a stronger Euro.

Core inflation is expected to ease to 2.4% in 2025 and 1.9% in both 2026 and 2027, broadly unchanged from previous forecasts.

On growth, ECB projects real GDP to expand by 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027. While the 2025 GDP forecast remains unchanged due to a strong first quarter, ECB acknowledged that the remainder of the year looks weaker, in part due to trade-related uncertainty.

Weak global demand and potential retaliation to US tariffs could continue to drag on exports and business investment. However, rising public investment, particularly in defense and infrastructure, is expected to lend some support to growth in the medium term.

Full ECB statement here.

5 June 2025

The Governing Council today decided to lower the three key ECB interest rates by 25 basis points. In particular, the decision to lower the deposit facility rate – the rate through which the Governing Council steers the monetary policy stance – is based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission.

Inflation is currently at around the Governing Council’s 2% medium-term target. In the baseline of the new Eurosystem staff projections, headline inflation is set to average 2.0% in 2025, 1.6% in 2026 and 2.0% in 2027. The downward revisions compared with the March projections, by 0.3 percentage points for both 2025 and 2026, mainly reflect lower assumptions for energy prices and a stronger euro. Staff expect inflation excluding energy and food to average 2.4% in 2025 and 1.9% in 2026 and 2027, broadly unchanged since March.

Staff see real GDP growth averaging 0.9% in 2025, 1.1% in 2026 and 1.3% in 2027. The unrevised growth projection for 2025 reflects a stronger than expected first quarter combined with weaker prospects for the remainder of the year. While the uncertainty surrounding trade policies is expected to weigh on business investment and exports, especially in the short term, rising government investment in defence and infrastructure will increasingly support growth over the medium term. Higher real incomes and a robust labour market will allow households to spend more. Together with more favourable financing conditions, this should make the economy more resilient to global shocks.

In the context of high uncertainty, staff also assessed some of the mechanisms by which different trade policies could affect growth and inflation under some alternative illustrative scenarios. These scenarios will be published with the staff projections on the ECB’s website. Under this scenario analysis, a further escalation of trade tensions over the coming months would result in growth and inflation being below the baseline projections. By contrast, if trade tensions were resolved with a benign outcome, growth and, to a lesser extent, inflation would be higher than in the baseline projections.

Most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis. Wage growth is still elevated but continues to moderate visibly, and profits are partially buffering its impact on inflation. The concerns that increased uncertainty and a volatile market response to the trade tensions in April would have a tightening impact on financing conditions have eased.

The Governing Council is determined to ensure that inflation stabilises sustainably at its 2% medium-term target. Especially in current conditions of exceptional uncertainty, it will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. The Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path.

Key ECB interest rates

The Governing Council today decided to lower the three key ECB interest rates by 25 basis points. Accordingly, the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will be decreased to 2.00%, 2.15% and 2.40% respectively, with effect from 11 June 2025.

Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP)

The APP and PEPP portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.

***

The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises sustainably at its 2% target over the medium term and to preserve the smooth functioning of monetary policy transmission. Moreover, the Transmission Protection Instrument is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:45 CET today.

Silver price surged on Thursday, rallying nearly 4% by the mid-European trading, to hit the highest since February 2012.

Fresh demand also lifted the silver price to new record high in India, that contributes to strengthening bullish outlook, as silver enjoys strong support from ongoing geopolitical tensions and growing signals of slowdown in US economic growth.

Uncertainty over tariffs is another supportive factor for precious metals that adds them to the assets used to counter threats of stronger negative impact from weakening economic growth, shockwaves from heated geopolitical situation and higher inflation.

Siver price breached barriers at $34.78 and $35.00 (former top / psychological) and pressure immediate targets at $36.00 and 36.10 (round-figure / Fibo 123.6% projection of the rally from $28.15, 2025 low), violation of which would unmask $37.04 (Fibo 138.4% projection).

Daily studies are fully bullish but overbought and suggest that bulls may take a breather for consolidation in the coming sessions.

Broken $35.00 level (psychological / broken Fibo 61.8% of larger $48.78/$11.23 downtrend) reverted to support which should keep the downside protected.

Res: 36.00; 36.10; 37.04; 37.48.
Sup: 35.00; 34.78; 33.90; 33.66.

EURUSD holds in extended consolidation under new multi-week high (1.1454) but keeps firm tone that boosts prospects for further growth.

Bullish daily studies (strong positive momentum, MA’s in bullish configuration and thick daily cloud underpinning near-term action) contribute to positive outlook

Rising 10DMA tracks the price action since May 19, and offers solid support at 1.1373 (also near broken Fibo 61.8% of 1.1573/1.1065 pullback) followed by daily Tenkan-sen (1.1332) which should hold dips and keep lower trigger at 1.1286 (daily cloud top) intact.

All eyes are on today’s ECB decision and Friday’s US NFP report which would provide fresh direction signals.

The European Central Bank is widely expected to cut rates by additional 25 basis points and likely to signal pause in its year-long easing cycle until autumn.

Traders will be focusing on President Lagarde’s press conference for more details about ECB’s action in coming months.

Eurozone inflation is at CB’s target zone, however the policymakers remain cautious about potential stronger negative consequences, as escalation of trade war would fuel inflation.

On the other hand, the two recent reports from the US labor sector were mixed, as JOLTS showed stronger than expected results in May while hiring in US private sector slumped last month (ADP report).

US Nonfarm Payrolls rose by 177K in April and economists expect 130K increase in May, though some banks lowered their expectations after disappointing ADP report results that added to growing worries about unexpected NFP drop.

The US dollar is in a downward trajectory and may accelerate losses on NFP miss that would provide fresh boost to the single currency and open way for potential retest of 2025 peak (1.1573).

Res: 1.1453; 1.1473; 1.1500; 1.1547.
Sup: 1.1404; 1.1373; 1.1357; 1.1332.

Eurozone PPI dropped sharply by -2.2% mom in April, steeper than the expected -1.8% mom. decline. Annual PPI rose just 0.7% yoy, below forecasts of 1.2% yoy. PPI ex-energy was up 0.1% mom, 1.1% yoy

The drag on Eurozone PPI was driven primarily by a -7.7% mom fall in energy prices. Prices for intermediate goods also declined slightly by -0.1% mom, while capital goods prices held flat. In contrast, consumer goods offered some offset, with durable and non-durable segments rising 0.1% mom and 0.3% mom respectively.

The broader EU showed a similar picture, with PPI falling -2.1% mom and rising just 0.6% yoy. Country-level data revealed significant monthly drops in industrial prices in France (-4.3%), Ireland (-4.0%), and Bulgaria (-4.9%). Only a handful of smaller economies like Cyprus and Malta posted slight increases.

Full Eurozone PPI release here.

Gold prices held firm at 3,373 USD per troy ounce on Thursday, remaining near a four-week high. The metal’s strength is being fuelled by mounting concerns over the US economic slowdown, boosting demand for non-yielding safe-haven assets.

US data signals economic distress

The latest reports revealed a contraction in the US service sector for the first time in nearly a year – an alarming sign of broader weakness.

Additionally, the ADP employment report indicated a notable slowdown in private-sector hiring. In May, only 37,000 new jobs were added, far below the expected 111,000 and lower than April’s figure of 60,000.

These weak indicators have bolstered expectations that the Federal Reserve will cut interest rates at least twice this year. Such prospects typically favour gold, as the metal becomes more attractive in a low-rate environment.

Despite Donald Trump’s repeated calls for rate cuts, Fed officials remain cautious, especially in light of persistent trade risks and volatile global conditions.

Attention now shifts to the US non-farm payrolls report, due on Friday, which could provide further clarity on the Fed’s policy path.

Technical analysis of XAU/USD

On the H4 chart, gold is forming the fifth wave of growth, targeting 3,415 USD. The entire structure is viewed as a corrective phase following the previous decline. Once this wave is complete, a new downtrend towards 3,060 USD is anticipated. The MACD indicator supports this scenario, with its signal line above zero and pointing sharply upwards, indicating continued bullish momentum for now.

On the H1 chart, gold formed a consolidation range around 3,331 USD, then broke out upwards, reaching the local target of 3,391 USD. A correction to 3,333 USD has already played out. Currently, the market is developing the final leg of the fifth wave towards 3,417 USD, with a compact consolidation zone forming around 3,374 USD. If gold breaks upwards, the next resistance will be at 3,404 USD, followed by a pullback to 3,374 USD, and then further growth to the 3,417 USD target. The Stochastic oscillator confirms this scenario, with its signal line below 20 and moving sharply upwards towards 80, signalling the potential for near-term upward continuation.

Conclusion

Gold remains well-supported by deteriorating US economic data and expectations of monetary easing by the Fed. As long as concerns over employment, services activity, and trade uncertainty persist, gold’s upward momentum is likely to continue. Key technical levels include support at 3,333 USD and resistance at 3,404-3,417 USD, with broader downside risk emerging only after the current bullish wave concludes.

As shown on the USD/JPY chart, the pair is hovering near key support at ¥142.50 per US dollar.

While demand was strong enough at the end of May to lift the exchange rate from this level to a peak around ¥146.00, USD/JPY has once again retreated to the ¥142.50 area.
Why has USD/JPY declined?

On one hand, the US dollar has weakened following disappointing economic data released yesterday. The figures revealed a sharp slowdown in private sector hiring and an unexpected contraction in the US services sector, fuelling concerns over a possible recession.

On the other hand, yen strength is being driven by the Bank of Japan's apparent willingness to raise interest rates — reaffirmed on Tuesday by Governor Kazuo Ueda — which has reinforced expectations of a tightening cycle.

USD/JPY Technical Analysis

In early June, the ¥142.50 level had already shown its role as support (as indicated by the arrow), but it is once again under pressure — a sign of bearish dominance.

Yesterday, sellers broke through local support at ¥143.57, which may now act as resistance.

More US economic data is due on Friday, with key labour market figures set to be released at 15:30 GMT+3. These could potentially trigger a bearish attempt to break below the ¥142.50 level on the USD/JPY chart.

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Daily Pivots: (S1) 192.86; (P) 194.05; (R1) 194.66; More...

Intraday bias in GBP/JPY remains neutral at this point. Further rise is in favor as long as 191.86 support holds. Firm break of 196.38 will resume whole rally from 184.35. However, firm break of 191.86 will indicate near term reversal and turn bias back to the downside.

In the bigger picture, price actions from 208.09 are seen as a correction to rally from 123.94 (2020 low). Strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. However, sustained break of 175.94 will bring deeper fall even still as a correction.