The dollar is mostly little changed on the day, as major currencies are lacking any real appetite to start the week. EUR/USD is sitting around 1.1680, continuing to keep below its key near-term moving averages for now:
The near-term bias might be more bearish but we’re not yet seeing sellers make too much of the recent gradual downside momentum. If we do push past 1.1650, then things will get more interesting with retracement levels brought in.
Besides that, USD/JPY is also largely flattish at 147.33 on the day. The pair is looking to build on the Friday move higher but there is modest resistance nearby closer to 148.00 for now. The downside remains more limited closer to its 100-day moving average of 145.79 currently.
Elsewhere, GBP/USD is just a little lower by 0.2% to 1.3473 while USD/CAD is flat at 1.3683 on the day. The commodity currencies are the laggard, with AUD/USD down 0.2% to 0.6565 and NZD/USD down 0.4% to 0.5985 currently. That comes amid a slightly more defensive risk mood.
That being said, US futures have trimmed losses with S&P 500 futures now down by just 0.3%. It was as much as 0.6% earlier with European indices also cutting losses a little on the session. The DAX is down 0.6% but was down by a little over 1% earlier at the lows.
After Trump has threatened the EU and Mexico with 30% tariffs, the waiting game continues now. It’s all about anticipating what comes next in the negotiations over the next two weeks.
In the meantime, the focus for markets turns back to key US data starting from tomorrow. The US CPI report is the big one to watch this week and will help to mold Fed expectations ahead of the July and September meetings.
The expectation for the inflation numbers tomorrow is that they should come in hotter in June compared to May. Core annual inflation is estimated to be at 3.0%, up from 2.8% in the month before.
For now, trades are pricing in ~93% odds of no rate change for July with ~67% odds of a 25 bps rate cut for September
