Daily Analysis 05/05/2025

• GBP/USD Price: The GBP/USD pair advances toward 1.3280 during early Monday trading in Europe. Momentum is backed by bullish technicals, with price action remaining above the 100-day EMA and the 14-day RSI supporting continued upside.
• Trump FED: President Trump confirmed he won’t remove Fed Chair Powell before his term ends in 2026, despite branding him "a total stiff." Trump's public push for lower interest rates adds to speculation that easing by the Fed is on the horizon.
• NFP Data: Despite a better-than-expected US Nonfarm Payrolls report on Friday, market participants appear increasingly confident that the Fed will cut rates by up to 100 basis points by year-end. This keeps pressure on the USD, benefiting GBP/USD.
• Sentiment: While current momentum favors the Pound, market caution ahead of major central bank events and lingering global macro risks are prompting measured positioning rather than aggressive buying.
• BoE Meeting: Traders are hesitant to chase further gains ahead of Thursday’s Bank of England monetary policy decision, as expectations for a 25 bps rate cut remain prevalent. This event is likely to set the tone for the pair’s next directional move.

Closing statement: GBP/USD is supported by favorable technicals and Fed-related rate cut expectations, but the upcoming BoE decision introduces potential volatility. Traders remain cautiously optimistic, awaiting confirmation from central bank guidance.

• XAU/USD Price: XAU/USD trades with a slight intraday positive bias during Monday's European session, staying above the $3,250 mark, though follow-through buying remains limited as investors await key macro events.
• US-China Talks: While China acknowledged potential trade talks with the US regarding President Trump’s 145% tariff move, both sides remain far apart, with Trump offering ambiguous commentary on the possibility of a deal, maintaining uncertainty in the geopolitical backdrop.
• US Labor Market: Friday’s US jobs data showed stable unemployment at 4.2% and wage growth holding at 3.8% YoY, which led markets to reduce expectations for a June rate cut by the Federal Reserve, thereby limiting gold’s upside.
• FOMC Policy: The market’s next major catalyst is the FOMC meeting on Wednesday, where guidance on future rate cuts and the Fed’s tone will directly impact the US Dollar and gold price trajectory.
• Market Tone: With safe-haven demand subdued and the USD remaining firm, gold remains range-bound, as traders avoid strong directional bets ahead of key central bank signals.

Closing statement: Gold remains supported but range-bound, with diminished Fed rate cut hopes and limited safe-haven flows curbing bullish momentum. The FOMC outcome will likely define near-term direction for XAU/USD.

• Crude Oil Price: West Texas Intermediate (WTI) continues its downward momentum, trading around $56.50 per barrel on Monday during European hours, as market sentiment weakens on fresh supply news.
• OPEC+ News: OPEC+’s decision to increase production by 411,000 barrels per day in June, potentially bringing back 2.2 million bpd by November, has spurred renewed concerns over oversupply, putting downward pressure on prices.
• Ukraine News: In an interview on Sunday, Russian President Vladimir Putin stated that Russia has the means and strength to bring the Ukraine conflict to a logical conclusion. This comes ahead of Putin's unilaterally declared three-day ceasefire over May 8-10.
• Israel News: Israeli Prime Minister Benjamin Netanyahu promised to respond to Yemen’s Houthi rebels ballistic missile attack that hit Ben Gurion International Airport on Sunday and added that Iran would also face consequences from the strike.
• US Services Sector: Traders now await the US ISM Services PMI release later Monday, which could offer short-term trading cues, particularly regarding the broader economic outlook and potential demand implications.

Closing statement: Crude oil remains under pressure amid an OPEC+ output surge and subdued demand outlook, despite heightened geopolitical risks. Short-term price action hinges on US data, while oversupply concerns cap recovery attempts.

• DAX Price: The DAX surged to 23,087 on May 2, posting a 2.62% daily gain and marking its ninth consecutive winning session, fueled by renewed trade optimism and stronger-than-expected US labor market data.
• Corporate News: Siemens Energy (+7.49%), SAP (+4.31%), and Infineon (+3.93%) led the gains as investor sentiment improved on easing trade tensions. Airbus rose 5.33% after beating earnings estimates, driving a 4.97% gain in MTU Aero.
• China News: News that China may return to US trade negotiations buoyed global risk appetite and raised hopes for a US-EU trade deal, providing a significant lift to export-heavy DAX constituents.
• Eurozone CPI: Eurozone core inflation increased to 2.7% in April, up from 2.4% in March, dimming expectations of swift European Central Bank (ECB) rate cuts. However, markets still expect the ECB to prioritize growth amid global economic uncertainty.
• US ISM Services: Investors now await the US ISM Services PMI on May 5, with forecasts suggesting a slight dip from 50.8 to 50.6, which may shape market expectations around US economic resilience and Fed policy direction.

Closing statement: DAX maintains strong upward momentum on the back of corporate strength and easing trade concerns, while macro data and central bank expectations continue to shape the medium-term outlook. Further upside may depend on US service sector performance and ECB communication.