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• Prior -4.2%
• Market index 248.4 vs 223.7 prior
• Purchase index 162.8 vs 146.6 prior
• Refinance index 721.0 vs 649.0 prior
• 30-year mortgage rate 6.84% vs 6.89% prior

That’s a modest rebound in mortgage applications as both purchases and refinancing activity jumped in the past week. The average rate of the most popular US home loan continues to stay elevated though, holding just under 7% after the surge higher in April.

This article was written by Justin Low at www.forexlive.com.

It shouldn’t be surprising that as the stock market rebounded on positive expectations for trade deals, so did Bitcoin. The cryptocurrency is driven by the same macro factors that influence the stock market.

The market is now in a bit of a consolidation as we await the next key catalyst which will likely be the details of the first trade deal. Everything revolves around that because on the rates front, the Fed is not going to cut amid this uncertainty until the labour market cracks.

Therefore the focus remains on that first trade deal which US officials continue to repeat will likely be announced by the end of the week (or Monday at the latest).

The market will want to see if 10% is the floor or we can get lower. Above 10% will likely be taken as a disappointment and should trigger another selloff. Conversely, a rate below 10% (the lower the better) should take us to all-time highs pretty quickly.

On the daily chart, we can see that the price broke above the key resistance zone around the 90K level and went into a bit of a consolidation around the 95K level as the market awaits new information on the trade front. From a risk management perspective, the buyers will have a better risk to reward setup around the 90K level to position for a rally into the all-time highs. The sellers, on the other hand, will want to see the price breaking lower to extend the drop into the 85K level next.

On the 4 hour chart, we can see that the price action formed what looks like an expanding rising wedge. The buyers will likely continue to lean on the trendline to keep pushing into new highs, while the sellers will look for a break lower to extend the pullback into the 90K level. Watch out for the FOMC decision today as it could provide a dip-buying opportunity as the market continues to keep a positive outlook for the first trade deal.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

More to come..

This article was written by Justin Low at www.forexlive.com.

We had a good run in the S&P 500 as the market continued to rally on de-escalation expectations. There’s an old adage saying that “bull markets climb a wall of worry” and that’s exactly what happened in the last weeks.

We went pretty quickly from strong pessimism to optimism and the positioning got a bit overstretched. Today, we have the FOMC policy decision and a pushback against the dovish market pricing could trigger some short-term weakness in the stock market.

The optimism for trade deals though will likely trump the negative reaction and keep the uptrend intact. The only thing I can see changing the trend at the moment is a disappointing first trade deal as the market would revise its expectations on the more negative side.

On the 1 hour chart, we can see that we have a nice support zone around the 5,590 level where we can also find the trendline for confluence. That’s where we can expect the dip-buyers to step in with a defined risk below the trendline to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to extend the pullback into the 5,456 level next.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior +0.3%; revised to +0.2%

Looking at the breakdown, there was a decrease in volume of retail trade for food, drinks, tobacco (-0.1%) and non-food products (-0.1%). That is slightly offset by an increase for automotive fuel (+0.4%).

This article was written by Justin Low at www.forexlive.com.

The euro had a great performance year to date mainly due to the increased German fiscal spending expectations and Trump’s tariffs. In the last four weeks though, the EURUSD pair hasn’t done much due to the lack of key developments on the trade and interest rates front.

The ECB continues to cut rates amid economic uncertainty and expected slowdown from tariffs. The Fed, on the other hand, is keeping rates steady amid inflation uncertainty.

The short dollar trade is also overstretched, so there’s the risk of some unwinding of the positioning in case the market reprices its dovish expectations for the Fed.

Today, we will have the first test as the Fed could push back against the 80 bps of easing priced in by the market giving the greenback a boost. The next key area to watch is trade negotiations as positive developments there could see further unwinding of the short dollar trade.

On the 4 hour chart, we can see that the EURUSD pair is consolidating at a key support zone around the 1.1278 level where we can also find a trendline for confluence. This is where we can expect the buyers to step in with a defined risk below the trendline to position for a rally into the 1.16 handle. The sellers, on the other hand, will look for a break lower to start targeting the 1.09 handle next.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior 46.4

The downturn in UK construction is seen easing a little, with house building showing some resilience. However, commercial work continues to decline and this time at its quickest pace since May 2020. So, that remains a drag. The overall sector is still in a challenging spot but at least there are some green shoots. S&P Global notes that:

“UK construction companies have endured a bumpy
ride since the start of the year as domestic economic
headwinds and hesitancy among clients led to a lack of
new work to replace completed contracts.

“Output levels continued to slide in April, but the rate of
decline eased to its slowest for three months. This was
helped by slower reductions in residential building work
and civil engineering activity.

“Commercial construction was a weak spot and lost
momentum since March. Output decreased at the
fastest pace for nearly five years amid reports of greater
risk aversion among clients and a wait-and-see approach
to major spending decisions.

“Despite a sharp and accelerated fall in input buying,
strong cost pressures persisted in April. Overall input
price inflation eased only slightly from March’s 26-month
peak. Survey respondents commented on rising prices
paid for a range of raw materials, as well as efforts by
suppliers to pass on greater payroll costs.

“An encouraging development in April was a slight
improvement in business activity expectations for the
year ahead. Output growth projections improved to the
highest level so far this year, with a number of survey
respondents citing the prospect of a turnaround in
workloads across the residential building segment.”

This article was written by Justin Low at www.forexlive.com.

The latest data shows that China’s gold reserves at the end of April were at 73.77 million ounces, up from 73.70 million ounces at the end of March. In value terms, the reserves at the end of April amount to $243.59 billion compared to $229.59 billion at the end of March.

It’s the sixth consecutive month now that the PBOC has been increasing its gold reserves. Just keep swimming, swimming, swimming.

This article was written by Justin Low at www.forexlive.com.

The Fed today is expected to keep interest rates steady at 4.25-4.50% and overall maintain a neutral stance given the uncertainty around tariffs and inflation expectations.

The market is pricing around 80 bps of easing by year-end
but Fed Chair Powell could push back against such dovish
expectations triggering a repricing to around 50 bps, which has been the Fed’s baseline for 2025.

There is a scenario though where the Fed doesn’t cut at all or delivers just one cut in 2025. The main factor for that scenario revolves around trade negotiations.

If we get something very positive, like much lower than expected reciprocal tariffs or even free trade deals, there will likely be a strong surge in demand. We’ve been hearing and seeing from the economic reports that business are cautious due to tariff uncertainty and that’s holding back activity. With a positive resolution, economic activity will pick up fast.

In this best case scenario, the Fed could be even more constrained because there will be upward pressure on inflation and the economic data will start to show a strong rebound in activity justifying a cautious approach to rate adjustments.

This is something to keep in mind because such changes offer great trading opportunities as the market readjusts to new conditions. Contingency planning is an essential part of a trader’s analysis.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior 40.3

The downturn in Germany’s construction sector is continuing to ease, with improvements seen across all sectors at least. The pace of declines in overall activity and new orders were much slower, so that’s at least a positive takeaway despite the continued struggle.

This article was written by Justin Low at www.forexlive.com.

• Eurostoxx -0.2%
• Germany DAX +0.1%
• France CAC 40 -0.4%
• UK FTSE -0.2%
• Spain IBEX -0.2%
• Italy FTSE MIB -0.2%

German stocks were the highlight yesterday as it did recover with Merz securing the chancellor seat in the second time of asking. But looking to the overall mood today, things are looking fairly tentative. And that comes despite some enthusiasm in US futures, though somewhat more limited compared to earlier in the day. S&P 500 futures are up 0.4% on hopeful optimism of US-China trade talks but the gains have been more than halved since the headlines crossed some nine hours ago.

This article was written by Justin Low at www.forexlive.com.

They are saying that if the US wants a deal, then they would have to stop threatening China. These are all fighting words but the bottom line is that we are at least taking a step towards de-escalation as both sides are set to sit down for initial talks. However, whether or not that step eventually leads to something is a separate issue though.

This article was written by Justin Low at www.forexlive.com.