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Gold jumped over 2% on Monday, lifted by weaker dollar and persisting uncertainty over US-China trade conflict that revived safe-haven demand.

Strong bounce followed repeated failure to register clear break of strong support at $3228 (50% retracement of $2956/$3500 upleg / daily Kijun-sen).

The metal’s price returned above $3300 mark and cracked important resistance at $3315 (10DMA / Fibo 38.2% of $3500/$3201 bear-leg) to generate signal that corrective phase from new all-time high may be over.

Reversal signal is developing on daily chart, as 14-momentum bounced into positive territory after touching the centreline, daily MA’s are about to turn to full bullish configuration, while today’s large bullish candle contributes to formation of reversal pattern.

Ability to hold above $3300 would keep near term bias with bulls, and daily close above $3315 to validate signal and open way for further recovery and expose targets at $3351 / $3386 (Fibo 50% and 61.8% retracement of $3500/$3201 respectively).

Markets will keep a close eye on development of US-China case and will also look for fresh signals about Fed’s monetary policy trajectory, as the FOMC meets this week and will announce its rate decision late Wednesday.

Res: 3328; 3351; 3370; 3386.
Sup: 3300; 3272; 3228; 3201.

The ISM Services increased 0.8 points to 51.6 in April, beating expectations of a small decline. Eleven of eighteen industries reported growth in April, up from ten in March, though still below the 14 reporting expansion in January and February.

Business activity declined, falling 2.2 points to 53.7. New orders increased to 52.3, ending a streak of monthly declines and reversing a particularly weak reading (50.4) last month. The imports index registered a large decline (-8.3), falling to 44.3 and sending the sub-index into contractionary territory.

The employment index increased to 49.0 but remains in contractionary territory, suggesting services payrolls continued to decline in April. However, the employment index has signaled contraction several times since early 2024, while the labor market continued to expand.

The prices paid sub-component jumped up to 65.1 from 60.9 April, suggesting price pressures are heating up in the service sector.

Key Implications

The service sector expanded in April, but the details are less encouraging. While the overall index improved, business activity declined and it looks as though the service sector is feeling the effects of tariffs coming into place in April, cutting activity and imports at the same time.

Most respondents in this survey reported challenges to their operations and pricing from tariffs. The combination of areas which registered gains (new export orders, inventories, and prices) is indicative of businesses trying to get ahead of retaliatory tariffs or other policy changes and could foreshadow a deeper decline in the coming months. More importantly, the sharp increase in prices, coupled with the decline in activity, suggests the service sector could also be moving towards stagflation, something we have already seen in manufacturing.

Markets

One of the biggest (and sole, really) movers in today’s uninspired session was oil. Brent crashed >4% during Asian dealings before recovering intraday. OPEC+ decided on Saturday to restore another 411k barrels of output in June. That’s the same amount they decided in April to do for May, which was also a huge surprise back then. It shows that OPEC (and Saudi Arabia) is eager to regain market share while punishing members with above-quota production. The balance of risks for oil prices remains tilted to the downside given tepid global demand. Dollar weakness is the name of the game on currency markets. EUR/USD trades higher around 1.1363, be it within the established narrow 1.13-1.15 range. USD/JPY drops from 145 to 143.6 and the trade-weighted dollar index turns back below 100 in another sign of the dollar lacking momentum for a comeback worthy the name. Among the best performers is the Australian dollar (second place after JPY in G10). AUD has high hopes from the Labour Party election victory. A solid majority paves the way for clearcut policies, including what is dubbed a fiscal “spendathon”. Sterling is going nowhere just north of EUR/GBP 0.85 amid UK markets closed for May Day and going into Thursday’s Bank of England meeting. A rate cut is expected with growth and inflation forecasts probably downgraded. The key question, however, is how much scope for cuts the BoE sees going forward given the stagflationary vibes running through the UK. Money markets currently price in around 100 bps of cuts for the remainder of the year (incl. Thursday’s meeting). The Fed also convenes this week on Wednesday but we expect no change in the tone Powell held during a speech two weeks ago: Too high inflation and upside inflation risks have priority over a still-robust labour market. A long rates pause (beyond the summer) is in the cards. The upcoming Fed meeting and lack of eco data – until the US services ISM releases that is – help explain the calm in core/US bond markets. US yields trade little changed apart from some (natural?) long end underperformance (30-yr +3.6 bps). We see a similar curve shift in Germany (+30-yr + 1.6 bps).

The April US services ISM came out to the better side of expectations with the headline index improving from 50.8 to 51.6 (50.2 expected). Details showed new orders recovering to 52.3 after a 1.8 point drop in March. Employment still shrinks but only marginally (49.0 from 46.2). Prices paid gained traction again though, with the subseries rising to the highest level since early 2023 (65.1). US yields eke out a few additional bps and the USD pares earlier losses after the release in a first reaction.

News & Views

Swiss CPI consumer prices stagnated in April, both compared to March 2025 and compared to April 2024, according to data published by the Swiss Statistical office (FSO) today. This compares to expectations for a 0.2% M/M rise. Core inflation also printed at a softer than expected 0.1% M/M and 0.6% Y/Y. Domestic prices declined 0.1% M/M to slow to 0.8% Y/Y. Imported goods rose 0.3% M/M but were 2.5% below last year’s level. Goods prices rose 0.2% in a monthly perspective, but declined 2.0% Y/Y. Services prices fell 0.1% M/M to be up 1.4% Y/Y. The data were also lower than the forecast of the Swiss National Bank (SNB) at the time of its March policy meeting when it saw inflation at 0.4% on average in Q1 and at 0.3% in Q2. The average expected for this year was already set at a low 0.4%. The combination of low inflation, being reinforced by a strong Swiss franc caused markets to fully a discount a new rate cut at the June 19 meeting from 0.25% back to zero. The Swiss franc eased marginally/temporarily after the CPI release (EUR/CHF 0.934). Even so, in case of further Swiss franc strength, the SNB faces the difficult choice of reconsidering FX interventions and/or returning to negative rates.

Turkish inflation in April rose 3.0% M/M and 37.86% Y/Y, compared to 2.46% and 38.10% in March. Core inflation excluding energy, food and beverages, tobacco and gold rose 3.34% M/M and 37.12% Y/Y. The outcome was marginally lower than expected. After starting gradual easing last year, the Central Bank of the Republic of Turkey at the April 17 meeting again raised its one week repo rate to 46.0% from 42.5%. In March the CBRT already took emergency tightening measures to preserve financial stability and cope with renewed inflationary risks from a weaker currency due to domestic political turmoil at that time. The lira dropped to new all-time lows (against the dollar and the euro) after the imprisonment of opposition member Ekrem Imamoglu. The weak currency probably will force the CBRT to keep a tight monetary conditions from some time to come. At USD/TRY 38.586, the lira is holding near all-time low levels against the dollar except for the volatile moves on March 19.

US ISM Services PMI from 50.8 rose to 51.6 in April, beating expectations of 50.6. The gain was driven by stronger new orders, which rose from 50.4 to 52.3.

However, business activity slipped to 53.7 from 55.9. Employment rebounded from 46.2 to 49.0, but stayed in contraction territory for the second consecutive month.

The most notable development was the sharp jump in the prices index—from 60.9 to 65.1—the highest since January 2023.

Overall, the data point to modest economic growth, with ISM estimating a 1% annualized GDP expansion based on the services reading.

Full US ISM services release here.

Daily Pivots: (S1) 143.82; (P) 144.87; (R1) 146.01; More...

No change in USD/JPY's outlook and intraday bias stays neutral at this point. Overall near term outlook will stay bearish as long as 38.2% retracement of 158.86 to 139.87 at 147.12 holds. Break of 141.96 will argue that the rebound has completed as a corrective move. Retest of 139.87 should then be seen next in this case.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Daily Pivots: (S1) 0.8208; (P) 0.8264; (R1) 0.8321; More….

Range trading continues in USD/CHF and intraday bias remains neutral. On the upside, above 0.8333 will resume the rebound from 0.8038. However, upside should be limited by 38.2% retracement of 0.9200 to 0.8038 at 0.8482. On the downside, below 0.8196 minor support will bring retest of 0.8038. Firm break there will resume larger down trend.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8763) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.

Daily Pivots: (S1) 1.3250; (P) 1.3291; (R1) 1.3318; More...

Range trading continues in GBP/USD and intraday bias remains neutral. On the downside, firm break of 1.3232 support will indicate short term topping and rejection by 1.3433 key resistance. Intraday bias will be back on the downside for deeper pullback to 55 D EMA (now at 1.3020) and possibly below. On the upside, firm break of 1.3433 key resistance confirm larger up trend resumption.

In the bigger picture, price actions from 1.3433 are seen as a corrective pattern to the up trend from 1.3051 (2022 low). Rise from 1.2099 could either be resuming the up trend, or the second leg of a consolidation pattern. Overall, GBP/USD should target 1.4248 key resistance (2021 high) on decisive break of 1.3433 at a later stage.

Daily Pivots: (S1) 1.1257; (P) 1.1319; (R1) 1.1364; More...

EUR/USD is staying in tight range above 1.1265 and intraday bias remains neutral. On the downside, below 1.1265 will resume the corrective fall from 1.1572 short term top. But downside should be contained by 38.2% retracement of 1.0176 to 1.1572 at 1.1039. On the upside, break of 1.1424 will suggest that the correction has completed and bring retest of 1.1572 high.

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 1.0808) holds.

The currency markets remain subdued in early trading this week, with the exception of a broad, mild Dollar weakness. Among the major currencies, movements have been muted despite notable developments. Swiss inflation falling back to 0% has increased pressure on the SNB to cut rates further to avoid deflation, but the Swiss Franc showed little response. Similarly, an unexpected improvement in Eurozone investor confidence failed to generate any sustained lift in the Euro.

In equities, European stocks were mixed, lacking clear conviction, while UK markets closed for a public holiday. US futures also point to a slightly weaker open. Meanwhile, oil prices saw some stabilization but remained lower for the day after OPEC+ agreed to a production hike over the weekend. WTI crude is attempting to recover, but the bearish bias remains as markets now anticipate a potential production surplus in the second half of the year.

The most eye-catching action is unfolding in Asian currency markets. Taiwanese Dollar soared more than 5% to a three-year high against Dollar, capping an 8% gain in just two sessions. The sharp move followed the conclusion of US-Taiwan trade talks last week, stoking speculation that a tacit agreement to strengthen the TWD may have been reached. While it's denied by Taiwan’s central bank, the pace and scale of the rally suggest market confidence in a policy-backed shift, which would align with US interests in reducing bilateral trade imbalances.

China’s offshore yuan also rallied sharply, touching a six-month high against the greenback. While no official catalyst was pinpointed, the move followed speculation that the US and China may soon begin tariff negotiations. However, any such discussions would be complex and drawn-out, likely injecting fresh volatility into CNY markets.

Technically, one focus now is on how far Gold's rebound could go. Firm break of 3352.97 resistance will indicate that correction from 3499.79 has already completed at 3201.70, ahead of 3167.62 resistance turned support. Retest of 3499.79 should be seen next, with prospect of breaking through this level to resume the record run.

Eurozone Sentix confidence surges to -8.1 as investors cheer calm EU response to trade war

Eurozone Sentix Investor Confidence rose sharply from -19.5 to -8.1,well above expectations. Current Situation Index climbed from -23.3 to -19.3, the highest level since August 2024. Expectations Index turned positive, rising from -15.8 to 3.8.

Sentix credited the European Commission's "level-headed response" toward escalating US trade actions for the improving sentiment. Additionally, a surprising improvement in inflation data has reinforced expectations that ECB will be able to continue its gradual rate-cutting cycle.

While investors are clearly more upbeat, Sentix noted the mood was "more subdued but basically ‘calm’", comparing to March.

ECB’s Panetta warns protectionism threatens global prosperity

Italian ECB Governing Council member Fabio Panetta warned today that rising protectionism poses a serious threat to global economic stability

Speaking at an event, Panetta said, "Openness to trade has benefited both advanced and developing nations, reducing inequality and lifting hundreds of millions of people out of extreme poverty."

However, "protectionism threatens to undo these achievements and to weaken the very fabric of global prosperity," he added.

He emphasized that geopolitical tensions, alongside growing uncertainty in global trade, are becoming central considerations for policymakers.

Swiss CPI drops to 0% as import deflation worsens

Swiss consumer price growth came to a standstill in April, with headline CPI unchanged month-on-month for a second consecutive month.

On an annual basis, inflation slowed sharply from 0.3% yoy to 0.0% yoy, marking a return to flat price levels not seen since the disinflationary spell of early 2021.

Core CPI (excluding fresh and seasonal products, energy and fuel) also lost momentum, easing from 0.9% yoy to 0.6% yoy.

The softness in inflation was driven by a decline in domestic product prices, which fell -0.1% mom and decelerated from 1.0% yoy to 0.8% yoy. Meanwhile, imported product prices offered a small offset, rising 0.3% mom but still contracting -2.5% yoy (prior -1.7% yoy).

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1257; (P) 1.1319; (R1) 1.1364; More...

EUR/USD is staying in tight range above 1.1265 and intraday bias remains neutral. On the downside, below 1.1265 will resume the corrective fall from 1.1572 short term top. But downside should be contained by 38.2% retracement of 1.0176 to 1.1572 at 1.1039. On the upside, break of 1.1424 will suggest that the correction has completed and bring retest of 1.1572 high.

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 1.0808) holds.

WTI Oil opened with $2 gap lower on Monday and hit the lowest since Apr 9, after OPEC+ over the weekend announced decision to further increase oil production by 411K bpd from June.

This marks the third consecutive output increase which totaled 960K bpd, including increases in April May and June.

The decision negatively impacted oil prices as markets remain very concerned about oil demand outlook, darkened by growing fears about further weakening of the global economy which already felt strong drag from US trade tariffs.

The pressure on oil prices could increase on concerns that further output increases would fully offset cartel’s earlier decision of voluntary production cuts and deepen threats of disbalance between production and demand.

Fresh weakness neared key support at $55.12 (Apr 9 low, the lowest since Feb 2021) but face strong headwinds at this zone that may keep the price in consolidation before final push lower.

Immediate bears are expected to remain intact as long as today’s gap is unfilled, though extended upticks (which cannot be ruled out) should be ideally capped under $60.00 (50% retracement of $64.70/$55.14 bear-leg / psychological reinforced by daily Tenkan-sen) to keep near term bias with bears.

Daily studies are bearish (strong negative momentum / daily Tenkan / Kijun-sen in bearish setup and diverging) and add to negative near term outlook.

Res: 57.11; 57.66; 58.79; 60.00.
Sup: 55.12; 54.77; 52.43; 51.59.