EUR/USD Analysis: Bulls Now Must Overcome Stagflation Risk
EUR/USD is hovering near its lowest level since early April after a textbook "buy the rumor, sell the fact" reaction to the ECB's 25bp hike this morning.
The market reaction tells the story. The hike was 95% priced going in, but the ECB's revised forecasts took away from any strength. Headline inflation projection raised to 3.0% for 2026 from 2.6%. Growth simultaneously cut to 0.8% from 0.9%. They're anticipating a stagflation environment, and tightening into it is a more difficult policy path than tightening into expansion.
For the US, headline PPI came in at 6.5% versus 6.4% expected and 6.0% prior. Core was softer but headline ran hot enough to reinforce the Fed's case. Initial jobless claims at 229K added a minor labor signal.
The rate differential is widening, not narrowing. The Fed is positioned to hike again while the ECB is hiking into contraction. EUR/USD reflects that asymmetry.
read the full article here.
— Alan
EUR/USD is hovering near its lowest level since early April after a textbook "buy the rumor, sell the fact" reaction to the ECB's 25bp hike this morning.
The market reaction tells the story. The hike was 95% priced going in, but the ECB's revised forecasts took away from any strength. Headline inflation projection raised to 3.0% for 2026 from 2.6%. Growth simultaneously cut to 0.8% from 0.9%. They're anticipating a stagflation environment, and tightening into it is a more difficult policy path than tightening into expansion.
For the US, headline PPI came in at 6.5% versus 6.4% expected and 6.0% prior. Core was softer but headline ran hot enough to reinforce the Fed's case. Initial jobless claims at 229K added a minor labor signal.
The rate differential is widening, not narrowing. The Fed is positioned to hike again while the ECB is hiking into contraction. EUR/USD reflects that asymmetry.
read the full article here.
— Alan
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AUD/USD Analysis: RBA Is Now Pivoting Away From Hikes
AUD/USD is now ~250 pips below the resistance zone that capped advances in May.
Why the fall? Well, RBA hike expectations have shifted. August probability fell from 80% a month ago to just 35% now. June 16 is essentially priced as a hold. Meanwhile, US futures have swung to fully price a Fed hike by December. The two trajectories have reversed: a month ago, AUD had a substantial rate advantage; today, that advantage has nearly disappeared.
The AU-US 3-year spread has compressed to just 32 basis points, the narrowest since November and down from above 80bps in April. This is the cleanest signal of the rate dynamic that has driven AUD/USD lower.
AUD's May 24 CPI release will be the next domestic catalyst. TD Securities noted the data needs to show firm evidence of energy pass-through to justify an August hike. April's surprise to the downside makes that increasingly unlikely (in my personal opinion)
read the full article here.
— Alan
AUD/USD is now ~250 pips below the resistance zone that capped advances in May.
Why the fall? Well, RBA hike expectations have shifted. August probability fell from 80% a month ago to just 35% now. June 16 is essentially priced as a hold. Meanwhile, US futures have swung to fully price a Fed hike by December. The two trajectories have reversed: a month ago, AUD had a substantial rate advantage; today, that advantage has nearly disappeared.
The AU-US 3-year spread has compressed to just 32 basis points, the narrowest since November and down from above 80bps in April. This is the cleanest signal of the rate dynamic that has driven AUD/USD lower.
AUD's May 24 CPI release will be the next domestic catalyst. TD Securities noted the data needs to show firm evidence of energy pass-through to justify an August hike. April's surprise to the downside makes that increasingly unlikely (in my personal opinion)
read the full article here.
— Alan
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🔔 Closing Bell - Question of the Day
When positioning data shows an extreme consensus in one direction, why does this create risk even if the thesis is correct?
When positioning data shows an extreme consensus in one direction, why does this create risk even if the thesis is correct?
Anonymous Quiz
40%
Few buyers remain to push it further — any unwind trigger creates outsized reversal
18%
High conviction accelerates the trend — late entrants pile in and extend the move
14%
Extreme consensus historically confirms continuation through the full cycle
29%
Crowded positioning compresses volatility — reducing reversal risk going forward
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Nasdaq Analysis: SpaceX Euphoria May Spark Major Rally Now
The Nasdaq is up nearly 1% today and breaking out of the descending trendline that has capped price action on the 4-hour chart since the early-June peak at 30,800. Two catalysts are driving the bid: SpaceX's IPO and reports of a breakthrough in US-Iran talks.
SpaceX listed on Nasdaq today at $135 per share and popped nearly 30% out of the gate. The euphoria is real, and risk appetite has broadened across tech. Trump called off latest threats to strike Iran citing a "breakthrough" in negotiations.
The fundamental drag has not gone away. CPI ran hot this week, PPI surged to 6.5% headline, and last Friday's NFP at 172K gave the Fed clear cover to hike if inflation persists.
The decisive variable is whether the Iran breakthrough is real. A confirmed ceasefire sends oil lower, yields lower, and the dollar softens — that combo is genuinely bullish for equities. Without it, today's bounce is risk-on could get faded.
read the full article here.
— Alan
The Nasdaq is up nearly 1% today and breaking out of the descending trendline that has capped price action on the 4-hour chart since the early-June peak at 30,800. Two catalysts are driving the bid: SpaceX's IPO and reports of a breakthrough in US-Iran talks.
SpaceX listed on Nasdaq today at $135 per share and popped nearly 30% out of the gate. The euphoria is real, and risk appetite has broadened across tech. Trump called off latest threats to strike Iran citing a "breakthrough" in negotiations.
The fundamental drag has not gone away. CPI ran hot this week, PPI surged to 6.5% headline, and last Friday's NFP at 172K gave the Fed clear cover to hike if inflation persists.
The decisive variable is whether the Iran breakthrough is real. A confirmed ceasefire sends oil lower, yields lower, and the dollar softens — that combo is genuinely bullish for equities. Without it, today's bounce is risk-on could get faded.
read the full article here.
— Alan
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US OIL Update: I hope this is the last Oil markup I do for a while.
WTI broke below $85 today — a break below a structural floor since that has held during the conflict. The decline of more than 3% has pushed price to an 8-week low and confirms what I have been watching for weeks: a break below $85 signals the market believes the war is ending.
Iran's Foreign Minister Araghchi stated the US-Iran Memorandum of Understanding has "never been closer." Officials report both sides are moving toward a deal to reopen the Strait of Hormuz, potentially in time for the upcoming G7 meeting. President Trump introduced some doubt by saying the published draft terms did not reflect the agreement discussed, but the directional momentum remains toward resolution.
Let's see if this time is actually different.
read the full article here.
— Alan
WTI broke below $85 today — a break below a structural floor since that has held during the conflict. The decline of more than 3% has pushed price to an 8-week low and confirms what I have been watching for weeks: a break below $85 signals the market believes the war is ending.
Iran's Foreign Minister Araghchi stated the US-Iran Memorandum of Understanding has "never been closer." Officials report both sides are moving toward a deal to reopen the Strait of Hormuz, potentially in time for the upcoming G7 meeting. President Trump introduced some doubt by saying the published draft terms did not reflect the agreement discussed, but the directional momentum remains toward resolution.
Let's see if this time is actually different.
read the full article here.
— Alan
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🔔 Closing Bell - Question of the Day
After price breaks above resistance, traders often wait for a "retest" before entering. Why?
After price breaks above resistance, traders often wait for a "retest" before entering. Why?
Anonymous Quiz
86%
The retest confirms the breakout — former resistance holding as support validates buyer conviction
6%
The retest confirms the breakout — price returning to the level signals buyers are losing momentum
8%
The retest confirms the breakout — by proving sellers reclaimed the level
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USD/CHF Analysis: 200-Day Test Defines What's Next
USD/CHF is pulling back from the 0.8000 resistance zone and is now set to test the 200 Day SMA below.
The CHF strength is primarily a USD weakness story rather than a Swiss catalyst. The interim deal — to be signed in Switzerland on Friday — lifts the US blockade and reopens the Strait of Hormuz. The cascade is direct: oil dropped sharply, inflation expectations moderated, Fed hike pricing eased, and the dollar's safe-haven premium evaporated.
The Swiss side is mixed. May PPI fell 0.4% versus the 0.4% increase expected — a deflationary reading that would typically weigh on the franc. But consumer sentiment improved and the SNB is expected to hold rates through year-end. Switzerland's role as deal host adds prestige but limited direct fundamental impact.
The franc's strength here is the dollar's weakness. If the deal stalls, expect dollar strength to override this trend.
read the full article here.
— Alan
USD/CHF is pulling back from the 0.8000 resistance zone and is now set to test the 200 Day SMA below.
The CHF strength is primarily a USD weakness story rather than a Swiss catalyst. The interim deal — to be signed in Switzerland on Friday — lifts the US blockade and reopens the Strait of Hormuz. The cascade is direct: oil dropped sharply, inflation expectations moderated, Fed hike pricing eased, and the dollar's safe-haven premium evaporated.
The Swiss side is mixed. May PPI fell 0.4% versus the 0.4% increase expected — a deflationary reading that would typically weigh on the franc. But consumer sentiment improved and the SNB is expected to hold rates through year-end. Switzerland's role as deal host adds prestige but limited direct fundamental impact.
The franc's strength here is the dollar's weakness. If the deal stalls, expect dollar strength to override this trend.
read the full article here.
— Alan
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Gold Forecast: Gold Now Has To Overcome the 200-Day
Gold has bounced more than 8% from last week's $4,000 lows to $4,340, possibly to overcome the 200-day SMA. The rally is driven by a single mechanism that defines gold's macro relationship: yields lower equals gold higher. Yields higher equals gold lower.
The Iran deal has reversed the entire driver chain. Oil dropped to $80 on the Strait reopening framework. Inflation expectations moderated. Fed hike odds collapsed from 70% a week ago to under 41% for December. The 10-year and 2-year yields are retreating.
The technical setup demands patience. Price is sitting directly below the 200-day SMA. The $4,200–$4,400 zone is the level that previously acted as support and now must be reclaimed as support again. Until Gold closes above both the 200-day SMA and the upper boundary of this zone, it remains technically vulnerable.
The Fed's June 16–17 meeting is especially important for the outlook of rates and inflation.
read the full article here.
— Alan
Gold has bounced more than 8% from last week's $4,000 lows to $4,340, possibly to overcome the 200-day SMA. The rally is driven by a single mechanism that defines gold's macro relationship: yields lower equals gold higher. Yields higher equals gold lower.
The Iran deal has reversed the entire driver chain. Oil dropped to $80 on the Strait reopening framework. Inflation expectations moderated. Fed hike odds collapsed from 70% a week ago to under 41% for December. The 10-year and 2-year yields are retreating.
The technical setup demands patience. Price is sitting directly below the 200-day SMA. The $4,200–$4,400 zone is the level that previously acted as support and now must be reclaimed as support again. Until Gold closes above both the 200-day SMA and the upper boundary of this zone, it remains technically vulnerable.
The Fed's June 16–17 meeting is especially important for the outlook of rates and inflation.
read the full article here.
— Alan
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🔔 Closing Bell - Question of the Day
A market maker’s primary role is to:
A market maker’s primary role is to:
Anonymous Quiz
52%
Provide liquidity by quoting bid and ask prices — profiting from the spread between them
22%
Provide liquidity by quoting bid and ask prices — profiting from directional bets against order flow
18%
Provide liquidity by quoting bid and ask prices — profiting from commissions charged per transaction
9%
Provide liquidity by quoting bid and ask prices — profiting from holding inventory positions overnig
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US 10Y Now Easing as Iran Deal Crushes Hike Odds
The US 10-year yield is easing to a three-week low as the US-Iran peace agreement removes some of the inflation pressure that drove yields from 3.95% at war start to 4.65% recent highs.
The chart frames the policy regime cleanly. Above the trendline, yields signal restrictive policy expectations. A confirmed break below would signal the market believes the Fed's tightening cycle has peaked and easing is approaching. Until that break occurs, the structurally hawkish framework remains in place.
Warsh's press conference and updated projections will set the tone. CME FedWatch data shows December hike odds dropped to 56% from approximately 70% a week ago, but the broader curve still prices continued normalization toward higher rates.
The Iran deal removed the energy-driven inflation catalyst. What it did not do is reverse the underlying inflation that built up over three and a half months of elevated oil.
read the full article here.
— Alan
The US 10-year yield is easing to a three-week low as the US-Iran peace agreement removes some of the inflation pressure that drove yields from 3.95% at war start to 4.65% recent highs.
The chart frames the policy regime cleanly. Above the trendline, yields signal restrictive policy expectations. A confirmed break below would signal the market believes the Fed's tightening cycle has peaked and easing is approaching. Until that break occurs, the structurally hawkish framework remains in place.
Warsh's press conference and updated projections will set the tone. CME FedWatch data shows December hike odds dropped to 56% from approximately 70% a week ago, but the broader curve still prices continued normalization toward higher rates.
The Iran deal removed the energy-driven inflation catalyst. What it did not do is reverse the underlying inflation that built up over three and a half months of elevated oil.
read the full article here.
— Alan
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AUD/USD Analysis: Tightening Bias Is Now Mostly Priced In
AUD/USD is recovering from recent lows near 0.7000 after the RBA held rates at 4.35% and reaffirmed it stood ready to hike again if needed.
The RBA's tone was hawkish in language but cautious in practice. The board acknowledged the economy and consumer demand have slowed, the housing market has cooled, but inflation remains too high to declare victory. Markets responded by lowering August hike odds to roughly 30% and assigning 60% probability to one final hike to 4.60%.
Inflation risks look well and truly priced. Australian 10-year yields at 4.85% reflect a tightening cycle that has been substantially priced in.
The structural question remains the rate spread. AUD-US 10Y differential has compressed throughout May and June. Without a fresh widening: either RBA delivers the final hike or the Fed shifts dovish — the Aussie lacks a sustained tailwind beyond near-term range trading.
read the full article here.
— Alan
AUD/USD is recovering from recent lows near 0.7000 after the RBA held rates at 4.35% and reaffirmed it stood ready to hike again if needed.
The RBA's tone was hawkish in language but cautious in practice. The board acknowledged the economy and consumer demand have slowed, the housing market has cooled, but inflation remains too high to declare victory. Markets responded by lowering August hike odds to roughly 30% and assigning 60% probability to one final hike to 4.60%.
Inflation risks look well and truly priced. Australian 10-year yields at 4.85% reflect a tightening cycle that has been substantially priced in.
The structural question remains the rate spread. AUD-US 10Y differential has compressed throughout May and June. Without a fresh widening: either RBA delivers the final hike or the Fed shifts dovish — the Aussie lacks a sustained tailwind beyond near-term range trading.
read the full article here.
— Alan
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🔔 Closing Bell - Question of the Day
When a central bank raises interest rates, what is the intended effect on the economy?
When a central bank raises interest rates, what is the intended effect on the economy?
Anonymous Quiz
65%
Borrowing becomes more expensive — slowing spending and investment to cool inflation
13%
Borrowing becomes more expensive — slowing spending and investment to stimulate growth
13%
Borrowing becomes more expensive — which increases purchasing power by strengthening the currency
9%
Borrowing becomes more expensive — which accelerates lending as banks earn higher margins on loans
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US 10Y Now Tests Critical Level Before Warsh's FOMC - Will Update After FOMC
The US 10Y at 4.434%, drifting down to the 4.40–4.45% zone that acts as immediate support.
Two catalysts pulled yields lower into today's meeting. Oil broke below $85, removing the inflation pressure that drove yields from 3.95% at war start to 4.65% recent highs. The US-Iran framework — set to be signed possible TODAY — has further moderated hike expectations.
Markets still price at least one hike this year, but odds eased to 56% from 70% a week ago. Warsh's first FOMC is expected to hold at 3.50–3.75%. The substance comes from the dot plot — whether the median dot still implies hikes or has shifted toward neutral.
Yields are at the inflection. A break below the trendline confirms the bond market believes tightening has peaked. A bounce signals the inflation embedded from three months of elevated oil still demands Fed action regardless of how the war ends.
read the full article here.
— Alan
The US 10Y at 4.434%, drifting down to the 4.40–4.45% zone that acts as immediate support.
Two catalysts pulled yields lower into today's meeting. Oil broke below $85, removing the inflation pressure that drove yields from 3.95% at war start to 4.65% recent highs. The US-Iran framework — set to be signed possible TODAY — has further moderated hike expectations.
Markets still price at least one hike this year, but odds eased to 56% from 70% a week ago. Warsh's first FOMC is expected to hold at 3.50–3.75%. The substance comes from the dot plot — whether the median dot still implies hikes or has shifted toward neutral.
Yields are at the inflection. A break below the trendline confirms the bond market believes tightening has peaked. A bounce signals the inflation embedded from three months of elevated oil still demands Fed action regardless of how the war ends.
read the full article here.
— Alan
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EUR/USD short signal worked out nicely.
Happy fed day!
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