Yen Surges, Pound Shines: May 26, 2025
Moneta Markets Daily Global Market Update. Yen Surges, Pound Shines: May 26, 2025
Global financial markets on May 26, 2025, are driven by US fiscal concerns, central bank policy divergence, and easing trade tensions. The US Dollar (DXY at 99.70) hits a one-month low amid deficit fears from Trump’s $4T tax bill, lifting GBP/USD to a multi-year high above 1.3550 and pressuring USD/CAD below 1.3700. Japanese Yen strengthens (USD/JPY near 142.70) on BoJ rate-hike bets and US-Japan trade optimism. WTI crude holds above $61.50, while gold dips to $3,335 on reduced trade war fears. US Durable Goods Orders and FOMC minutes are key this week.
Gold Dips to $3,335
Current Level: Gold (XAU/USD) trades near $3,335, down 0.4%.
Market Dynamics: Easing US-EU trade fears (tariff delay) reduce safe-haven demand, pressuring gold, per FXStreet. US fiscal concerns (Moody’s downgrade) and Fed rate-cut bets support XAU/USD. Russia-Ukraine escalation and Gaza tensions limit losses. FOMC minutes and US PCE data are key, with Chinese gold purchases as a tailwind.
Technical Outlook: Support at $3,260; resistance at $3,346. Bullish RSI above 50 favors upside to $3,400.
Japanese Yen Hits Monthly High
Current Level: USD/JPY trades near 142.70, down 0.2%, with JPY at a monthly high.
Market Dynamics: Hot Japanese CPI (3.6% YoY) and BoJ rate-hike bets (Uchida’s hawkish stance) bolster JPY, per FXStreet. US-Japan trade deal hopes (Ishiba’s G7 target) and geopolitical risks (Russia-Ukraine, Gaza) enhance safe-haven demand. USD weakens due to US fiscal concerns (Moody’s Aa1 downgrade) and dovish Fed expectations (two cuts in 2025). Tokyo CPI (Friday) and G7 trade talks are focal points.
Technical Outlook: Support at 142.00; resistance at 143.10. Bearish RSI below 50 favors downside to 141.00.
GBP/USD Soars Above 1.3550
Current Level: GBP/USD trades near 1.3560, a February 2022 high, up 0.3%.
Key Drivers: Strong UK Retail Sales and hot April CPI (3.5% YoY) reduce BoE rate-cut bets, boosting GBP, per FXStreet. USD weakens amid US deficit fears ($4T tax bill) and Fed rate-cut expectations (74% chance for September). FOMC minutes (Wednesday) and US PCE Price Index (Friday) will shape USD sentiment, with BoE’s June meeting in focus.
Technical Outlook: Resistance at 1.3632; support at 1.3451. Bullish RSI above 60 signals momentum, with 1.3723 as a target
USD/CAD Drops Below 1.3700
Current Level: USD/CAD trades near 1.3690, a YTD low, down 0.3%.
Market Dynamics: USD selling persists due to US fiscal concerns and dovish Fed signals, per FXStreet. Hot Canadian CPI reduces BoC June rate-cut odds, supporting CAD despite softer WTI ($61.50). Canadian Retail Sales (today) and US Durable Goods Orders (Tuesday) are key. Easing US-EU trade tensions (tariff delay to July 9) add CAD support.
Technical Outlook: Support at 1.3600; resistance at 1.3800. Bearish RSI below 50 suggests further downside to 1.3500.
WTI Crude Above $61.50
Current Level: WTI crude trades near $61.50, up 0.2%.
Market Dynamics: Easing US-EU trade tensions (tariff delay to July 9) and Gaza escalation fears support WTI. OPEC+ output hike concerns (+411,000 bpd for July) and EIA inventory build (+1.328M barrels) cap gains. US-Iran nuclear talks (limited progress) sustain supply risks. US Durable Goods Orders and FOMC minutes will influence USD and oil.
Technical Outlook: Resistance at $62.00; support at $60.00. RSI above 50 suggests cautious bullishness, per Reuters.
EUR/USD Holds Above 1.1300
Current Level: EUR/USD trades near 1.1315, up 0.1%.
Key Drivers: USD weakness and lower Treasury yields (30-year at 5.03%) lift EUR, despite weak Eurozone PMI (Composite 49.5). German Q1 GDP (flat) and ECB’s dovish signals (Vujčić’s 2% target by 2026) cap gains, per FXStreet. Trump’s EU tariff delay (July 9) reduces trade war fears, supporting EUR. FOMC minutes and US PCE data will drive direction.
Technical Outlook: Resistance at 1.1425; support at 1.1200. RSI near 57 maintains bullish bias, with US data critical.
Economic Data and Policy Focus
Today’s Data: Canadian Retail Sales and US Durable Goods Orders (Tuesday) kick off a data-heavy week. US Prelim GDP (Thursday), PCE Price Index (Friday), and FOMC minutes (Wednesday) will shape Fed rate-cut expectations (74% chance for September). Tokyo CPI (Friday) will influence BoJ rate-hike bets.
Geopolitical Developments: Russia’s massive Ukraine attack and Gaza strikes (38 killed) boost safe-haven JPY, gold, and silver. US-Iran nuclear talk uncertainties and US sanctions threats add volatility.
US Fiscal Concerns: Trump’s $4T tax bill, passed by the House, awaits Senate approval, raising deficit fears (Moody’s projects 134% debt-to-GDP by 2035).
US-China Trade Deal and Geopolitical Risks
Trade Status: US-EU tariff delay (July 9) and US-Japan trade optimism (Ishiba’s G7 goal) ease trade war fears, per FXStreet. US-China truce (US: 30%, China: 10%) faces strain from Huawei chip restrictions, with China’s Li Qiang signaling new policy tools, including “unconventional measures.”
Geopolitical Tensions: Russia-Ukraine escalation, Gaza operations, and US-Iran talk uncertainties drive safe-haven flows.
Outlook
On May 26, 2025, USD weakness (DXY at 99.70) lifts GBP/USD (1.3560) and EUR/USD (1.1315), while pressuring USD/CAD (1.3690) and USD/JPY (142.70). WTI ($61.50) gains on geopolitical risks, but gold ($3,335) dips on trade optimism. Silver ($33.15) holds steady. US data (Durable Goods, GDP, PCE), FOMC minutes, and Tokyo CPI will drive volatility, with US fiscal concerns and geopolitical tensions in focus.
Stay tuned for further updates.