Forex News

BNP Paribas strategists argue that Europe is emerging as an alternative safe haven, with the Euro gaining ground as a global safe asset. They note that the European Central Bank's (ECB) work highlights stronger demand for Euro assets and a higher convenience yield on German bunds, which supports broader Eurozone financing conditions. They stress Europe’s industrial resilience, services strength, tech momentum and improving policy and geopolitical backdrop.

Euro benefits from haven re-rating

"All this turmoil has already made Europe look more attractive, as a haven of stability."

"Last week, the ECB’s annual report on The International Role of the Euro revealed that the euro is catching up as the world’s safe asset of choice."

"On multiple occasions, during recent episodes of market turmoil, the euro behaved more like a safe asset than the US dollar."

"Financial markets have noticed: the so-called convenience yield[2] on German bunds rose threefold from 30 bps to 90 over 2023-25."

"To the extent that all other bonds (sovereign and private) in euros are priced off German bunds, this benefits the entire Eurozone economy."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• US private employers added an average of 29K jobs per week in late May.
• Job gains lose some momentum, receding from the previous week’s gain.

Private-sector hiring in the US has cooled in late May. The NER Pulse, the weekly companion to the ADP National Employment Report, shows that companies added an average of 29K jobs per week in the four weeks ending May 23.

That marks a slight downtick from the prior reading of 35.75K, suggesting a potential impasse in hiring.

What do the ADP figures mean for the US Dollar?

The Greenback extends Monday’s pessimism and drops to two-day lows. Indeed, as gauged by the US Dollar Index (DXY), the buck returns to the sub-100.00 region, revisiting 99.70 as investors continue to assess the latest data releases and geopolitical events.

The weekly decline in the US Dollar (USD) exclusively follows some cooling of geopolitical tensions in the Middle East, as market participants remain hopeful of an eventual agreement between the US and Iran to end the conflict.

Technical Analysis

In the daily chart, the Dollar Index Spot trades at 99.72. The near-term bias is constructive as price holds above the 55-day, 100-day and 200-day simple moving averages (SMAs) clustered just below 99.00, indicating a supported uptrend structure. The Relative Strength Index (RSI) at roughly 59 leans bullish without yet signaling overbought conditions, while the Average Directional Index (ADX) near 23 suggests a gradually strengthening but still moderate trend backdrop.

On the downside, initial support is seen at the recent horizontal pivot around 99.50, followed by the 55-day SMA near 98.99 and the 100-day and 200-day SMAs at 98.59–98.64, which together form a broader demand zone ahead of secondary support at 97.62. On the topside, immediate resistance appears at 100.39, ahead of a nearby cap at 100.64, with a break above these levels exposing the higher resistance band around 101.98.

(The technical analysis of this story was written with the help of an AI tool.)

(This story was corrected on June 9 at 15:16 GMT to say in the first bullet that US private employers added an average of 29K jobs instead of 35.75K.)

Mexico reported that 12-month inflation rose by 3.94% in May, down from 4.45% previously and the 4.03% expected by market participants. The index, released by the Bank of Mexico (Banxico), reinforced expectations that the central bank will maintain its interest rate at current levels for an extended period.

On a monthly basis, headline inflation was up 0.21%, while the core monthly reading came in at 0.22%, both below market expectations.

What does Mexican inflation mean to the Mexican Peso?

The Mexican Peso barely reacted to the news. As previously noted, the lower-than-anticipated figures reinforce the case for no near-term change in interest rates. Banxico trimmed the overnight interbank target rate by 25 basis points (bps) to 6.50% when it met in May. The next monetary policy meeting will take place on June 25.

USD/MXN Technical Outlook

In the four-hour chart, USD/MXN trades at 17.38 and holds a mild bullish bias as it hovers just under the 20-period simple moving average (SMA) at 17.381 while staying above the 100- and 200-period SMAs around 17.34, suggesting downside attempts are being absorbed above the broader trend floor. Short-term momentum remains constructive with the 14-period Momentum indicator in positive territory and the Relative Strength Index (RSI) hovering near the neutral 50 line, hinting at a consolidative advance rather than an overstretched move.

On the topside, immediate resistance is defined by the 20-period SMA at 17.38. A sustained break higher would open the way for further gains toward the next psychological hurdles beyond the recent highs. On the downside, initial support is seen at the nearby intraday pivot around the day’s open at 17.4482, turning lower toward the current price zone, ahead of a more important demand band at the 200-period SMA near 17.3401, reinforced by the 100-period SMA at 17.3391, where buyers are likely to re-emerge if the cross retreats.

(The technical analysis of this story was written with the help of an AI tool.)

MUFG’s Lee Hardman notes that the US Dollar has stalled after the Dollar Index met resistance near 100.00 as Middle East tensions between Iran and Israel eased and Oil prices retreated toward USD90. However, he highlights that a hawkish repricing of Fed rate expectations, ahead of key US CPI data and the June FOMC meeting, continues to underpin the Dollar.

Fed outlook and geopolitics steer USD

"The US dollar lost upward momentum yesterday after the dollar index ran into resistance at the 100.00-level."

"Nevertheless, the US dollar is still continuing to derive more support from the recent hawkish repricing of Fed rate hike expectations."

"The next key test for the Fed rate hike expectations will be the release tomorrow of the latest US CPI report for May."

"The next FOMC meeting on 17th June is likely to be an important pivot point for Fed policy expectations and the US dollar as it will be the first time that new Fed Chair Kevin Warsh will outline his thoughts on how the Fed should respond to the energy price shock."

"Last week’s stronger nonfarm employment report has made it more likely that the Fed will at least drop their easing bias at the June FOMC meeting."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)