Here is what you need to know on Tuesday, May 24:
Markets seem to have turned cautious early Tuesday following Monday's risk rally. The US Dollar Index, which lost nearly 1% at the start of the week, is posting small daily gains near 102.20 in the European morning and US stock index futures are down between 0.8% and 1.8%. S&P Global will release May flash PMI reports for Germany, the euro area, the UK and the US. April New Home Sales will be featured in the US economic docket as well. Finally, FOMC Chairman Jerome Powell is scheduled to speak later in the day.
Beijing announced on Tuesday that the work-from-home orders will be extended after the city reported the largest one-day increase in the number of infections in a month. Meanwhile, escalating tensions between the US and China seem to be weighing on the market mood as well. United States Trade Representative (USTR) Katherine Tai said early Tuesday that they were still working on the next trade actions in China. Moreover, US President Joe Biden noted that there were no changes to their policy and that the US would get involved militarily to defend Taiwan against China.
EUR/USD climbed to its highest level in nearly a month at 1.0700 on Monday but lost its bullish momentum on the second day of the week. The pair was last trading in the negative territory near 1.0670. In addition to the broad dollar weakness, hawkish comments from European Central Bank (ECB) officials helped the shared currency find demand and fueled the pair's rally. European Central Bank (ECB) President Christine Lagarde said that they were “likely to be in a position” to exit negative rates toward the end of the third quarter and ECB Governing Council member Francois Villeroy de Galhau noted that a deal on rate hikes in the near term was "probably done."
GBP/USD gained more than 100 pips on Monday but failed to break above 1.2600. The pair stays relatively quiet above 1.2550 early Tuesday. Bank of England (BoE) Governor Andrew Bailey noted on Monday that they are prepared to raise the policy rate again if needed but acknowledged that tightening must take income shock into account.
Selling opportunity? Why GBP/USD's rally is unjustified and could lead to a downfall.
USD/JPY struggled to find direction despite the broad-based dollar weakness on Monday and extended its sideways grind near mid-127.00s. Koji Nakamura, head of the Bank of Japan's division overseeing monetary policy drafting, reiterated that they will continue to ease the monetary policy to assist the economy.
NZD/USD is pushing lower and trading below 0.6450 on Tuesday after having closed the previous four trading days in the positive territory. The data from New Zealand showed in the early Asian session that Retail Sales contracted by 0.5% on a quarterly basis in the first quarter.
AUD/USD climbed to its highest level in nearly three weeks above 0.7100 on Monday but erased a large portion of its gains on Tuesday. The S&P Global Manufacturing PMI in Australia declined to 55.3 in May from 58.8 in April, missing the market expectation of 57.8.
Bitcoin fell nearly 4% and moves up and down in a narrow range below $30,000 early Tuesday. Ethereum broke below $2,000 late Monday and seems to be having a difficult time staging a rebound.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.