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At an event overnight, San Francisco Fed President Mary Daly said Fed is in a "good position" to respond to evolving conditions and uncertainties. She emphasized, “patience is the word of the day,”

"We've got solid growth, a solid labor market and declining inflation," she said. Despite lingering uncertainties, overall sentiment remains constructive, with people feeling the economy is performing “fairly well.”

"It's just a matter of resolving the uncertainty so we can continue to do very well," Daly added.

Key Highlights

• WTI Crude Oil prices started a recovery wave above the $60.00 level.
• A connecting bullish trend line is forming with support at $61.90 on the 4-hour chart.
• Gold prices dipped below the $3,300 and $3,280 levels.
• EUR/USD is now trading below the 1.1320 resistance zone.

WTI Crude Oil Price Technical Analysis

WTI Crude Oil price found support at $55.50 and recovered against the US Dollar. It tested $63.90 and is again showing bearish signs.

Looking at the 4-hour chart of XTI/USD, the price settled above the $61.50 level and the 100 simple moving average (red, 4-hour). However, it is now struggling to settle above the 200 simple moving average (green, 4-hour).

The price is now moving lower below $62.50 and testing the 23.6% Fib retracement level of the upward move from the $55.52 swing low to the $63.91 high.

There is also a connecting bullish trend line forming with support at $61.90 on the same chart. On the downside, the first major support sits near the $61.90 zone. A daily close below $61.90 could open the doors for a larger decline.

The next major support is $59.20 and the 50% Fib retracement level of the upward move from the $55.52 swing low to the $63.91 high. Any more losses might send oil prices toward $56.50 in the coming days.

On the upside, the price is facing hurdles near the $62.50 level. The first key resistance sits near the $63.20 level. The main hurdle is now near the $64.00 zone, above which the price may perhaps accelerate higher. In the stated case, it could even visit the $65.50 resistance. Any more gains might call for a test of the $68.00 resistance zone in the near term.

Looking at Gold, there was a fresh decline, and the bears were able to push the price below the $3,280 support zone.

Economic Releases to Watch Today

• US Initial Jobless Claims - Forecast 229K, versus 228K previous.
• US Retail Sales for April 2025 (MoM) – Forecast 0%, versus +1.5% previous.
• US Producer Price Index for April 2025 (YoY) – Forecast +2.5%, versus +2.7% previous.

USD/CAD has been on a grind higher since May 6 and has now returned to the key psychological level 1.4000 level. Volatility has subsided somewhat of late as trade deals and a rebound in overall market sentiment has led to calmer markets as a whole.

May has been a rough month thus far for the Canadian dollar. Prime Minister Mark Carney’s visit to meet Trump didn’t show any signs of easing US-Canada tensions. Renegotiating the USMCA trade deal looks like it’ll take longer than other international trade agreements for both countries. This has come at a time where the US Dollar has shown signs of a recovery but there are still headwinds for the greenback moving forward.

Is the US Dollar set for more pain?

The US Dollar rise of late has been welcomed by markets but there is growing concern over the sustainability of the Dollar's strength. Earlier today there was a report stating that the US is not seeking to weaken the Dollar through trade deals, citing an unnamed source.

According to a person familiar with the situation, US officials negotiating trade deals around the world are not attempting to include currency policy pledges in the agreements.

Foreign exchange markets are on edge due to concerns. President Donald Trump's administration wants a weaker dollar and may use trade negotiations to achieve that goal. On Wednesday, the South Korean won rose nearly 2% against the dollar, while the Japanese yen also gained. Earlier this month, Taiwan's currency experienced its biggest increase in decades.

An ING Think report today painted a picture of concern for the Greenback. The report may be on to something, citing the recent 90-day pause between the US-China as a pragmatic approach but one which is unlikely to wipe away the scars of a topsy-turvy month of April.

There had been a noticeable shift in April away from the Greenback as asset managers sought more diversification when it comes to FX reserves given the volatility and lack of safe haven appeal of the Dollar.

ING states that the lag effects of this pivot are yet to be felt which may be true to some extent at least. Further adding to this, ING cites the upcoming unfunded tax cuts making its way through Congress as another factor which could weigh on the Dollar moving forward.

All in all the US Dollar picture remains uncertain to say the least.

Bank of Canada (BoC) to Cut Rates Again?

The Bank of Canada faces an interesting few months ahead as data continues to deteriorate. When it comes to monetary policy, the Fed and BoC are both expected to cut rates in the coming months. However, at present it does appear that the BoC may beat the Fed to cut rates first.

This could be something else that is weighing on the CAD of late and could come into play in the weeks ahead.

Economic Data Ahead

Looking ahead, the calendar is light this week in terms of Canadian data. There is however a host of US data releases and Fed speakers scheduled to speak before the week comes to a close.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar.

Technical Analysis - USD/CAD

From a technical standpoint, USD/CAD has rejected of the psychological 1.4000 level on both Monday and Tuesday.

Tuesdays daily candle closed as a shooting star on the daily timeframe which hinted at further downside.

However yesterdays daily candle closed as a hammer off support at 1.3900 hinting at further upside.

If USD/CAD can clear the 1.4000 handle the top of the descending channel may come into focus around the 1.4100 handle.

If price fails to make a convincing move above the 1.4000 a retest of the 1.3900 support may come into focus. Below that support may be found at 1.3854 and 1.3747.

USD/CAD Daily Chart, May 14, 2025

Source: TradingView (click to enlarge)

CHFJPY: ⬇️ Sell

• CHFJPY reversed from the resistance level 176.00
•  Likely to fall to support level 173.00

CHFJPY currency pair recently reversed from the pivotal resistance level 176.00, which has been repeatedly reversing the price since November.

The resistance level 176.00 was strengthened by the upper daily Bollinger Band.

Given the strength of the resistance level 176.00 and the strongly bullish yen sentiment seen today, CHFJPY currency pair can be expected to fall to the next support level 173.00 (low of the previous correction 2).

AUDJPY: ⬇️ Sell

•  AUDJPY reversed from resistance area
• Likely to fall to support level 93.20

AUDJPY currency pair recently reversed from the resistance area between the key resistance level 95.30 (former monthly high from March), upper daily Bollinger Band and the 61.8% Fibonacci correction of the downward impulse wave (C) from November.

The downward reversal from this resistance area stopped the earlier short-term impulse wave 3 from the start of May.

Given the overbought daily Stochastic and strongly bullish yen sentiment, AUDJPY currency pair can be expected to fall to the next support level 93.20.

Gold price fell through key supports on Wednesday, deflated by growing optimism on US-China trade deal that cooled fears about deeper economic crisis and offset other factors that boost safe haven demand.

Fresh wave of risk appetite pushed gold through pivots at $3228 (50% retracement of $2956/$3500 upleg) which recently contained several attacks and $3200 (psychological/low of pullback from new record high).

Sustained break of $3200 to complete bearish failure swing pattern and generate signal of potential deeper pullback from $3500 peak.

Daily studies are weakening as 14-d momentum is heading deeper into negative territory and the price fell below 10/20/30 DMA’s which also formed bear-crosses.

However, oversold stochastic warns of possible increased headwinds that may result in hesitation at $3200 zone and keep near term price action in extended consolidation.

The price should stay under broken Fibo 50% ($3228) and extended upticks not to exceed daily highs of Tuesday / today ($3265/57 respectively) to keep bears intact.

Res: 3200; 3228; 3265; 3292.
Sup: 3164; 3126; 3100; 3084.

Fed Vice Chair Philip Jefferson said in a speech today he supported last week’s decision to keep the federal funds rate unchanged, which he views as “moderately restrictive.” He noted that the current policy setting is “well positioned” to respond to a range of evolving economic conditions.

Jefferson pointed to a sharp decline in consumer and business sentiment this year, saying he is closely monitoring "hard data" for signs of weakening economic activity.

On the inflation front, he acknowledged that higher tariffs could add upward pressure to prices in the months ahead, though it remains uncertain whether such effects would prove “temporary or persistent.”

With elevated risks to both sides of the dual mandate, Jefferson said "the current stance of monetary policy is well positioned to respond in a timely way to potential economic developments."

Full speech of Fed's Jefferson here.

Markets

There were hardly any data with market moving potential and for now no trade-related headlines from US president Trump to guide trading today. European equities are taking a breather after the recent rebound (EuroStoxx 50 -0.1%). US indices open marginally higher after yesterday’s (tech) rebound on president Trump’s announcement of several eye-catching contracts in the Middle East. Core bond markets were mainly mired on technical trading. The US curve steepens slightly with yields adding between 0.5 bps (2-y) and 3.2 bps (30-y). German bunds slightly outperform Treasuries, with yields easing about 1.0 bp across the curve. Fortunately, FX markets at least provided a bit more of animateness. The dollar at the end of the Asian trading dropped in an otherwise calm market. The move was triggered by comments on financial news wires (Bloomberg) referring to people familiar with the trade talks between the US and South Korea earlier this month saying they also discussed FX policies. This caused markets to ponder whether an outright weaker dollar might also get more weight in trade talks with other trading partners. For now there is no official reaction to the reports. Even so, the SK won after tentatively easing this morning currently trades more than 1% stronger in a daily perspective. The move also spilled over the yen. USD/JPY currently trades near 146.25, off the intraday lows, but to be compared with an intraday top of 147.67 early in Asian dealings. The euro is also captured by this overall USD setback, but underperforms the likes of the yen. EUR/USD regained the 1.12 mark but struggles to make further progress (1.1215). EUR/JPY yesterday intraday at 165.1 came with reach of the 166.7 end October top, but today eases to 164.15. Even as US trade negotiations with the EU are rumored to have made little progress for now, the topic of a too weak currency likely is more of an issue for Asian currencies rather than for the EU (only Germany is on the monitoring list of the US Treasury Department). As indicated above, the move today was mainly limited to FX markets and it is not evident for officials from the countries involved in trade talks to openly comment on this topic. Also from a US point of view, there are risks to openly push for a weaker USD as it might revive the sell US trade that was a source of elevated market volatility last month. In this respect, we keep still also keep an eye at the very long end of the US curve. The US 30-y yield is again within reach of the 5.0% barrier (4.94%). The latest rebound in US yields mainly was for a ‘good reason’ (reflation on a de-escalation in trade tensions). However, LT US yields surpassing 5.0% (whether due a risk of USD weakness, due to doubts or fiscal sustainability or whatever other reason) soon might tilt to becoming a renewed source of (global) uncertainty.

News & Views

The Kingdom of Belgium launched a new 5-yr bond via syndication today. OLO 105 (Oct2030) was prices to yield MS +28 bps, compared with guidance in the MS +30 bps area; allowing the debt agency to raise €7bn with books above €72bn. The BDA now raised €27.6bn of its €42bn 2025 OLO funding need (65.5%). The lion share came from syndicated deals following a new long 10-yr (€7bn OLO103 3.1% Jun2035) and a long 15-yr (€5bn OLO 104 3.45% Jun2042) earlier this year. They also raised $1bn via a 10-yr USD benchmark within the framework of the EMTN programme. If the debt agency sticks to its funding plan, this was the final new OLO of the year with the remainder of the funding need to be raised via regular monthly auctions. The May auction is cancelled, leaving five more on the calendar (no planned in August). The means an average of €2.88bn to be raised at each occasion which is in line with traditional targeted amounts (€3bn area).

National Bank of Poland Kochalski sees a pretty good change of a decision on rate cuts in July. His base case is a 25 bps cut, but he doesn’t rule out copying this month’s 50 bps move. Overall, he sees scope for 50-75 bps of easing by end 2025. Yesterday, NBP Janczyk suggested a preference to a 50 bps rate cut somewhere this year if inflation and wage growth stay soft. In the short run, attention shifts to Polish presidential elections. The Polish president is more than a ceremonial function with the current president, linked to the previous Law and Justice party, complicating PM Tusk’s policy making. The latter’s candidate (Trzaskowski) is expected to come out on top in Sunday’s first round of voting with a second round run-off against the PiS-candidate (Nawrocki) expected on June 1st. Polls also favour Trzaskowski over Nawrocki in that tie. EUR/PLN holds steady around 4.24 after the zloty recovered partly from April losses thanks to the risk rebound.

Cable keeps firm near term tone and extends recovery after Tuesday’s 1% rally generated positive signal on over 50% retracement of 1.3444/1.3139 pullback and completion of bullish engulfing pattern on daily chart.

Fresh extension higher on Wednesday rose above Fibo 61.8% retracement that adds to development of reversal signal, after strong bounce on Tuesday signaled that corrective phase from new 2025 high (1.3444) is likely over.

Formation of bear-trap under Fibo 38.2% of 1.3444/1.3139 contributes to positive near-term outlook, along with predominantly bullish daily studies.

Traders focus on tomorrow’s releases of UK GDP data, with expectations for 0.6% growth in Q1 being significantly above 0.1% growth in the first three months of 2024, although economists see flat growth in March compared to 0.5% expansion in the previous month.

Sterling would benefit from better than expected GDP data that would also ease pressure on BOE to cut rates again in June (bets for June cut have dropped significantly after May’s hawkish cut).

Also, a trade deal with the US would ease uncertainty and improve economic situation on removing one of major obstacles for economic growth.

Res: 1.3360; 1.3402; 1.3444; 1.3500.
Sup: 1.3270; 1.3232; 1.3200; 1.3162.