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US Dollar

The US dollar has received positive news from the Fed, the oil market and the US economy. Jerome Powell is staying in the FOMC, Brent crude has surpassed $120 per barrel, and orders for durable goods excluding aircraft and military equipment jumped by 3.3% in March. This was the best reading for the leading indicator in the last six years.

Powell believes that the US labour market is stabilising, while inflation is set to accelerate due to the conflict in the Middle East. This combination provides a strong case for a rate hike. The futures market has raised the odds of such an outcome in 2026, playing into the hands of EURUSD bears.

He also says he will remain at the Fed as Governor, with Kevin Warsh taking over as Chairman. Powell is prepared to defend the Fed’s independence, which has been threatened by the White House, undermining investor confidence in the US dollar and contributing to its decline. The task facing Kevin Warsh, recently appointed by Congress to reform the Federal Reserve, is becoming more complicated.

Stock indices

US stock indices continue to ignore geopolitics. Had someone said at the start of the conflict in the Middle East that the Strait of Hormuz would be closed until the end of April, there would have been no shortage of bearish forecasts for shares. Currently, Polymarket puts the odds at 52% that the world’s main oil artery will remain blocked until the end of June, while the S&P 500 is trading near its record highs.

Investors believe that a recession may not materialise, but they cannot afford to miss out on a strong corporate earnings season. From March lows, the Magnificent Seven has risen by 21% on expectations of higher first- and second-quarter profits. The earnings-per-share forecast for the information technology sector stands at 41%, double that of the materials sector, which ranks second.

Investors are once again captivated by artificial intelligence. However, the same fears that were present in the market before the conflict resurface from time to time. For instance, news that OpenAI had failed to meet its profit and user growth forecasts led to the share prices of related companies plummeting. Investors feared that the colossal investments in AI would fail to generate decent financial returns.

Gold

Soaring oil prices, the sharpest rise in 2-year Treasury yields since the April 2022 FOMC meeting, and a strengthening US dollar are forcing gold to retreat. The precious metal is concerned about the threat of central banks, led by the Fed, keeping rates high for an extended period, and the growing risks of further hikes amid rising inflationary pressures against the backdrop of the Middle East conflict.

Jerome Powell maintains that the US labour market is gradually stabilising, while inflation risks rising further due to geopolitical factors. Three of his FOMC colleagues dissented, arguing that rates are more likely to fall than rise. The result was a rally in Treasury bond yields and a strengthening of the US dollar. A combination that creates headwinds for Gold.

Gold might have fallen even further had it not been for renewed central bank interest in bullion. According to the World Gold Council, their purchases rose from 208 tonnes to 240 tonnes in the first quarter. Poland, Uzbekistan and China were particularly active. In contrast, Turkey, Russia and Azerbaijan became net sellers.

Cryptocurrency

Bitcoin is not seeing the same bullish momentum as the stock market. A key barrier around 80,000 is holding the price back, prompting investors to take profits.

Strong demand for derivatives at this level is forcing market makers to hedge by selling as Bitcoin approaches it. As a result, each attempt to extend the rally is quickly capped.

Also, the macroeconomic backdrop is not conducive to a resumption of the uptrend. Galaxy Digital notes that when Bitcoin was trading near record highs in the autumn of 2025, the Fed was cutting rates. Doing so now would be problematic, as rising oil prices stemming from the conflict in the Middle East are forcing central banks to maintain tight monetary policy.

What next?

The key event on the economic calendar for the first full five-day week of May will be the US April jobs report. The data will either confirm or refute Jerome Powell’s suggestion that the labour market is stabilising. If this is indeed the case, accelerating US inflation driven by rising energy prices and second-order effects will pave the way for a federal funds rate hike in 2026, which would be good news for the dollar.

Other key events this week include the Reserve Bank of Australia meeting, where markets are pricing in the risk of another 25-basis point rate hike to 4.35 per cent, which could support AUDUSD. In the US, attention will be on the March trade balance data and the April ISM services figures. Meanwhile, New Zealand will release its first-quarter employment data.

Investors will continue to monitor developments in the Middle East. The current lack of major updates may suggest a period of calm before potential volatility returns. The longer this lasts, the higher the risks of conflict escalation, including a return to hostilities between the US and Iran.

Market Overview

The crypto market capitalisation rose by 1.29% over the past 24 hours to $2.57 trillion, supported by the Nasdaq-100 and S&P 500 indices hitting impressive new all-time highs. Furthermore, the strengthening of the Japanese yen caused the dollar index to fall, lowering the benchmark. The top performers were Zcash (+5%), Dash (+4.8%) and Aptos (+3.4%). The underperformers among the top coins were Theta (−1%), Cosmos (−1.4%) and NEAR (−1.4%).

Bitcoin is once again attempting to climb above $77K, having found support from buyers during the dip to $75K. The shakeout of buyer positions proved to be quicker than might have been expected. However, it is too early to speak of bullish dominance until the leading cryptocurrency has confidently broken through the final resistance at $80K, which would open the way to $84K–$85K.

Ethereum is setting a more cautious tone. Over the past three weeks, the price has retreated after touching the 200-week moving average from below, which is an important signal of a bearish market prevailing across this asset and the whole altcoin market. However, the situation is balanced by ETH’s strong rebound at the start of the year from the long-term support line of the uptrend, which runs through the lows of 2022 and 2024.

News Background

Bitcoin rose by 12.2% in April to $76,500, marking its strongest growth in the last 12 months. Before this, in March, BTC showed a slight gain (+2%) following five months of decline.

From a seasonal perspective, May is considered a positive month for BTC. Over the past 15 years, Bitcoin has ended the month with gains on nine occasions and with losses on six. The average gain was 26.5%, while the average loss was 14.5%.

Bitcoin’s growth is being held back by market participants’ positions on the Deribit exchange, notes Bloomberg. Call options expiring in May and June, worth $1.5 billion, are concentrated around the $80K level. In such a situation, market makers are forced to sell the asset as its price rises to hedge their risk.

No fewer than 11 indicators are signalling the best buying opportunity in five years, points out MN Trading founder Michael van de Poppe. The last time the market saw a similar picture was in the fourth quarter of 2022.

Tether’s investment arm has proposed merging three companies to create a leading public organisation in the Bitcoin industry. This involves the merger of Twenty-One Capital (XXI), financial services provider Strike, and mining platform Elektron Energy.

Daily Pivots: (S1) 210.12; (P) 213.40; (R1) 216.33; More...

Fall from 216.58 could still extend lower, but strong support should emerge from 209.58 to bring rebound, at least on first attempt. On the upside, above 214.02 minor resistance will turn intraday bias neutral first. However, firm break of 209.58 will solidify the case that it's already correcting the whole five-wave rally from 184.35. In this case, 38.2% retracement of 184.35 to 216.58 at 204.28 will be the next target.

In the bigger picture, while the fall from 216.58 is steep, there is no clear sign of trend reversal yet. The long term up trend could still extend to 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90 on resumption. However, sustained break of 55 W EMA (now at 205.09) will argue that it's already in medium term down trend for 184.35 support.

Daily Pivots: (S1) 181.48; (P) 184.53; (R1) 186.77; More...

Intraday bias in EUR/JPY remains on the downside, and fall from 187.93 could extend lower to 180.78 support. But strong support should emerge there to bring rebound, at least on first attempt. On the upside, above 184.57 will turn intraday bias neutral first. However, decisive break of 180.78 will argue that it's already correcting whole five-wave impulse from 154.77. Next target will be 38.2% retracement of 154.77 to 187.93 at 175.26.

In the bigger picture, the pullback from 187.93 is steep, there is no sign of reversal yet. Uptrend from 114.42 is still expected to resume at a later stage to 78.6% projection of 124.37 (2022 low) to 175.41 (2025 high) from 154.77 at 194.88. However, sustained break of 55 W EMA (now at 177.50) will argue that it's already in a medium term down trend to 175.41 resistance turned support and below.

Daily Pivots: (S1) 0.8608; (P) 0.8639; (R1) 0.8656; More…

EUR/GBP's fall from 0.8740 resumed and accelerated after breaking through 0.8652. Intraday bias is back on the downside fro 0.8610 key support. Decisive break there will carry larger bearish implications and pave the way to 0.8466 fibonacci level next. On the upside, above 0.8652 support turned resistance will turn intraday bias neutral again first.

In the bigger picture, focus is back on 38.2% retracement of 0.8821 to 0.8863 at 0.8618. Sustained break there will confirm that whole rise from 0.8221 has completed at 0.8863. Deeper decline should then be seen to 61.8% retracement at 0.8466 at least. For now, risk will stay mildly on the downside as long as 55 D EMA (now at 0.8682) holds, in case of recovery.

Daily Pivots: (S1) 1.6245; (P) 1.6334; (R1) 1.6381; More...

EUR/AUD's fall from 1.6482 resumed after brief recovery. Intraday bias is back on the downside for retesting 1.6126 low. Decisive break there will resume larger down trend from 1.8554. On the upside, break of 1.6423 resistance will turn bias back to the upside for stronger rebound.

In the bigger picture, fall from 1.8554 (2025 high) is in progress and deeper decline should be seen to 61.8% retracement of 1.4281 to 1.8554 at 1.5913, which is slightly below 1.5963 structural support. Decisive break there will pave the way back to 1.4281 (2022 low). For now, risk will stay on the downside as long as 55 W EMA (now at 1.7129) holds, even in case of strong rebound.

Daily Pivots: (S1) 0.9131; (P) 0.9188; (R1) 0.9227; More....

Despite near the strong volatile, EUR/CHF is still bounded in established range below 0.9264. Intraday bias remains neutral and further rise is expected with 0.9155 support intact. On the upside, firm break of 0.9264 will resume the rise from 0.8979 to 0.9394 resistance next. However, break of 0.9155 will turn bias back to the downside for deeper pullback.

In the bigger picture, considering bullish convergence condition in W MACD, a medium term bottom should be in place at 0.8979. Sustained trading above 55 W EMA (now at 0.9277) will add more credence to this case. Further break of 0.9394 resistance will pave the way to 0.9660 resistance next. However rejection by the 55 W EMA will set up another fall through 0.8979 low at a later stage.

Another month ended with no light at the end of the tunnel for the Iran war. On the contrary, the US is not willing to lift the naval blockade in the Strait of Hormuz, while Iran says it will not give up its nuclear programme and will not come to the negotiating table unless the US lifts the blockade. We’re repeating the same lines every day.

Meanwhile, the near-closure of the Strait of Hormuz keeps the oil market tight. Trump downplays rising oil prices, arguing that there is plenty of oil – but blocked in the Strait – and that prices will fall like a rock once the issues are resolved. But when will that be? No one knows.

This is the takeaway from this week’s central bank meetings: the Federal Reserve (Fed), the Bank of Canada (BoC), the European Central Bank (ECB) and the Bank of England (BoE) all left rates unchanged, but their policy outlook was more or less aggressive. The ECB decision, for example, initially came across as dovish, until Christine Lagarde said a rate hike was discussed and could come as soon as June, depending on the data. That’s the issue: recent data confirmed that the energy shock slowed European growth to near zero in Q1 while pushing inflation to 3%. The question is whether energy-led inflation will spill over salaries and broader economy. If it does, the ECB must act.

The ECB’s tone brought euro bulls back in. The EURUSD extended its recovery above the 100-DMA, while benchmark EU 10-year yields fell and the Stoxx 600 jumped 1.38%, helped by a sharp correction in oil prices. With no clear trigger, the move likely reflects positioning and the re-emergence of the ‘demand destruction’ narrative as oil approaches $120pb.

This is not a hard ceiling. A prolonged conflict could eventually break above $120pb, but yesterday’s retreat in oil supported equities, alongside earnings.

Strong earnings – especially from banks and energy – boosted the Stoxx 600, mirroring the US.

In the US, major indices hit fresh record highs on AI optimism. The Dow Jones gained 1.62%, led by Caterpillar, which beat estimates with a 22% rise in Q1 revenue, supported by data centre and power infrastructure demand. The company reported a record $63bn backlog, up nearly 80% year-on-year. The AI boom may be displacing some jobs, but it is creating others. Some expect AI spending to reach $1tn next year, with Big Tech alone projected to spend over $700bn this year – potentially rising to $800–900bn.

As we enter May – traditionally a softer month – earnings resilience continues to offset geopolitical and inflation concerns.

US data showed Q1 growth slowing to around 2%, while price pressures eased. This pushed the US 2-year yield lower, with the 10-year falling below 4.40%.

US futures point to a positive open, while many European markets are closed for Labour Day. AI optimism remains the base case unless geopolitics deteriorate.

After the close, Apple reported better-than-expected earnings, with services revenue nearing $31bn. The company authorised a $100bn buyback and raised its dividend by 4%. However, Apple remains absent from the AI model race and relies on external providers: they don’t have to spend on pricey infrastructure, but higher reliance to model providers means margin pressure and reduced control over its ecosystem over time, leaving Apple more exposed to pricing power and innovation cycles dictated by external AI providers than its own decisions.

In FX, the US dollar weakened, driven by a sharp drop in USDJPY after Japanese authorities signalled possible intervention beyond 160. This pattern is now well established: authorities warn near 160 and may step in. Intervention doesn’t reverse the trend but clears speculative positioning. Buying the yen remains unconvincing, but selling USDJPY into 160 – if timed well – can be effective.

In focus today

Today is a holiday in many markets and relatively quiet in terms of data releases. Focus remains on energy markets ahead of the close of the week, following yesterday's volatile oil price movements.

In the US, we receive the April ISM manufacturing index, where markets expect a rise to 53.0 (prior: 52.7).

We also look out for the tier-2 releases of April PMI manufacturing indexes in the UK and US.

Economic and market news

What happened yesterday

Oil prices briefly surged to USD 126/bbl, the highest since March 2022, before retreating closer to USD 114/bbl towards the end of the session, which might be linked to the big swing in the Japanese Yen (see separate bullet). As the first oil future contract has moved from delivery in June to July the 'spot price' is now USD 111/bbl at the time of writing while the June contract ended at USD 114/bbl. Prices initially climbed on reports that President Trump was considering military strikes to break the negotiation deadlock with Iran. Iran said it would retaliate on US positions if US renewed attacks, the situation reflecting that efforts to resolve the conflict remain deadlocked. Markets remain sceptical of a near-term resolution to the conflict, with shipping data showing minimal traffic through the Strait of Hormuz and Polymarket investors assigning roughly a 20% probability that traffic in Hormuz strait returns to normal by end of May.

The ECB kept the deposit rate unchanged at 2.00% as widely expected. Lagarde refrained from giving firm guidance of the future rate path and stated that the ECB will have more information in June to take a decision, including new projections and scenarios. By extension, the market reaction was highly contained. We continue to expect the ECB to increase policy rates by 25bp in June and July, respectively. Our call was backed by an ECB sources story later in the afternoon saying that a June hike is very likely and that policymakers were in broad agreement about the need to move. For more details, read our ECB Review - An ocean of uncertainty, 30 April.

The Bank of England (BoE) held the bank rate steady at 3.75% as widely expected, presenting a scenario framework that suggests rate hikes could be appropriate but avoiding any pre-commitment. Markets responded by trading Gilt yields lower, with the June meeting now priced close to a 50-50 chance of a rate hike. The BoE appears cautious, and while risks are tilted towards one or two hikes, we believe the most likely outcome remains no changes. Read more in Bank of England Review - Active hold and no pushback on hawkish pricing, 30 April.

In the US, Q1 flash GDP grew 2.0% q/q AR which was less than expected by consensus (cons: 2.3%, Danske: 1.7%). The growth picture remains similar to last year, with steady but cooling private consumption and AI-related investments in data centres and software driving growth, while residential and non-residential investments remain under pressure. Meanwhile, the Q1 Employment Cost Index rose +0.9% q/q (prior: +0.7%), slightly exceeding expectations, primarily due to an increase in benefits rather than wages.

In the euro area, we received a long list of data. Flash HICP inflation rose to 3.0% y/y in April (prior: 2.6% y/y) in line with consensus, driven by higher energy inflation (10.8% y/y) and the largest monthly increase in food prices since last summer. Core inflation declined as expected to 2.2% y/y (cons: 2.3%, prior: 2.3%), and both services inflation and goods inflation momentum remained broadly in line with recent trends. GDP grew by 0.1% q/q in Q1 2026 (cons: 0.2%, prior: 0.2%), a weaker-than-expected outcome partly driven by volatility in the Irish economy and disappointing French growth. Meanwhile, the unemployment rate fell to 6.2% in March as expected (prior: 6.3%), reflecting a stable labour market. Although unemployment remains low, softer demand for labour, evidenced by declining vacancy ratios and surveys on employment expectations, points to a more balanced labour market compared to 2021/2022.

In Japan, the Ministry of Finance intervened in currency markets on Thursday to support the yen, which surged by up to 3% against the dollar following the move. This marks Japan's first intervention in nearly two years and comes amid mounting speculative pressure on the yen. Finance Minister Katayama hinted at further action, suggesting JPY 160 remains a critical threshold for policymakers.

In Norway, the NAV unemployment rate remained steady at 2.1% in April, slightly above Norges Bank's projection of 2.0%. The marginal rise in gross unemployment reflects a labour market that remains tight and growth near trend. With unemployment levels still low, Norges Bank is likely to maintain its focus on anchoring inflation expectations. Norges Bank also announced that they lift their daily fiscal NOK buying slightly from NOK 50m to NOK 100m in May likely reflecting lower energy prices compared to end-March. This was in line with expectations and should not have any market impact.

Equities: Global equities moved higher yesterday, taking several major indices to fresh all-time highs, including MSCI World, S&P 500, Russell 2000 and Nasdaq.

The move was closely linked to the sharp turnaround in oil yesterday morning. Looking at the oil price over the past 24 hours, the gap between the high and the low has been more than 12%. Importantly, there was no particularly strong trigger behind the massive reversal in oil.

Like yesterday, the key point when analysing market moves is that there are many drivers in play at the same time. Geopolitics, macro data, micro data from one of the busiest earnings days of the season, and central banks. In other words, it is very difficult to separate the individual drivers and assign the exact market reaction to each of them.

One important observation is that yesterday's move to new equity highs was not led by tech. In fact, tech was the only sector lower on the day, with massive underperformance driven by earnings.

Oil was clearly the major trigger for the risk-on move, but with tech lower, defensives outperformed. On top of that, earnings were strong in defensives, not least in US healthcare, which helped lift the defensive sectors.

This morning, Asia is quieter with many markets closed for 1 May. Nikkei is higher despite a stronger yen in the wake of FX intervention.

Many European markets are also closed today, but US futures are trading higher this morning.

FI and FX: Risk sentiment improved over yesterday's session, despite Khamenei's vow to guard Iranian nuclear and ballistic capabilities. Brent Crude pulled back to around USD 114/bbl after breaking above USD 126/bbl at European open. In rates space, EUR swap rates fell back by 5-10bp across the curve and Bund yields declined by 10bp in the medium tenors over the course of the day. In the afternoon, the ECB held policy rates unchanged as widely expected, leaving the deposit rate at 2.00%. Lagarde refrained from providing firm guidance of the future rate path and stated that the ECB will have more information in June to decide, including new projections and scenarios. By extension, the market reaction was highly contained. We continue to expect two hikes in June and July, respectively. EUR/USD jumped higher, breaking above the 1.17 mark. USD/JPY declined sharply by about 2.5% over yesterday's session. Nikkei reported Japanese intervention in the FX market, aligning with the significant price action. The considerable oil price volatility also impacted NOK FX during yesterday's session although the magnitude was relatively contained with EUR/NOK kept within a 9-figure range. Norges Bank's announcement to lift the daily fiscal NOK buying pace by NOK 50m from NOK 50m to NOK 100m also failed to trigger any market response - which we think is fair.

Daily Pivots: (S1) 1.3543; (P) 1.3619; (R1) 1.3658; More...

USD/CAD's fall from 1.3965 resumed after brief recovery and intraday bias is back on the downside. Next target is a retest on 1.3480 low. For now, risk will remain on the downside as long as 1.3709 resistance holds, in case of recovery.

In the bigger picture, price actions from 1.4791 are seen as a corrective pattern to the whole up trend from 1.2005 (2021 low). Deeper fall could be seen, as the pattern extends, to 61.8% retracement of 1.2005 to 1.4791 at 1.3069. However, decisive break of 38.2% retracement of 1.4791 to 1.3480 at 1.3981 will argue that the correction has completed with three waves down to 1.3480 already. Further break of 1.4139 will confirm and bring retest of 1.4791 high.