Market Rebound Stalls: Oil Plunges, Stocks Rise, Dollar Mixed

Market Sentiment Overview

Markets displayed mixed signals as May ended with the S&P 500 posting its largest monthly gain since November 2023 (+6.2%), while oil markets turned deeply bearish amid OPEC+ uncertainty. The US Dollar navigated choppy waters, briefly hitting 100.50 before retreating to mid-99s on tariff court rulings. Trump extended the EU tariff deadline to July 9, providing temporary relief, although trade tensions remain elevated. The key focus shifts to Friday’s US employment report and upcoming central bank decisions.

Currencies

USD Index: Court Rulings Create Volatility (99.44)

Current Trend: Mixed/Consolidative Market Sentiment: Uncertain

The US Dollar faced a tumultuous week, briefly surging above 100.00 before retreating to the mid-99s after a federal court blocked Trump’s “Liberation Day” tariffs. The Court of International Trade ruled that Trump overstepped his constitutional authority, though a federal appeals court temporarily reinstated the tariffs pending review. This marked the fourth consecutive monthly decline for the DXY, down nearly 10% since February’s tariff-driven peaks. Fed officials emphasized “unusually elevated uncertainty” in meeting minutes, with markets pricing only a 25% probability of July rate cuts. Friday’s NFP report emerges as the week’s key catalyst.

Resistance: 99.90; 101.32

Support: 97.60; 96.24

EUR/USD: ECB Rate Cut Expectations Weigh (1.1350)

Current Trend: Consolidative Market Sentiment:Uncertain

The US Dollar faced a tumultuous week, briefly surging above 100.00 before retreating to the mid-99s after a federal court blocked Trump’s “Liberation Day” tariffs. The Court of International Trade ruled that Trump overstepped his constitutional authority, though a federal appeals court temporarily reinstated the tariffs pending review. This marked the fourth consecutive monthly decline for the DXY, down nearly 10% since February’s tariff-driven peaks. Fed officials emphasized “unusually elevated uncertainty” in meeting minutes, with markets pricing only a 25% probability of July rate cuts. Friday’s NFP report emerges as the week’s key catalyst.

Resistance: 1.1421; 1.1548

Support: 1.1275; 1.1162

GBP/USD: Pullback from 39-Month Highs (1.3450)

Current Trend: Bullish (Correcting) Market Sentiment: Cautious

GBP/USD corrected from three-year highs of 1.3593 after failing to sustain momentum above 1.3600. The Pound’s retreat was primarily driven by broad USD recovery mid-week following positive US consumer confidence data and Fed hawkish minutes. However, the pair’s overall bullish structure remains intact, supported by stronger UK economic fundamentals and favorable US-UK trade arrangements. Technical setup continues to favor upside potential once the current correction completes. Key support at 1.3400, resistance at 1.3600.

Resistance: 1.3592; 1.3712

Support: 1.3379; 1.3254

Stocks

S&P 500: Best May Since 1990 Despite Late Concerns (5,912)

Current Trend: Bullish (But Fragile) Market Sentiment: Cautiously Optimistic

The S&P 500 delivered its best May performance since 1990, surging 6.2% to break back into positive territory year-to-date. The rally was fueled by easing US-China trade tensions mid-month, though Trump’s Friday social media posts accusing China of violating agreements sparked fresh concerns. The index found key support at its 200-day moving average, but strategists warn of difficulty breaking above 6,000 given ongoing trade uncertainties. The Nasdaq led gains with a 9.6% monthly surge, while the Dow added 3.9%. Market sensitivity to trade headlines remains elevated.

Resistance: 5987.35; 6137.40

Support: 5785.96; 5647.75

Apple (AAPL): Production Pressure Continues

Current Trend: Under Pressure Market Sentiment: Negative

Apple remains in Trump’s crosshairs over iPhone production locations. Despite extending $500 billion US investment commitments over four years, the company faces persistent pressure to shift manufacturing from planned India facilities to domestic US production. Analysts maintain that US iPhone production would result in retail prices around $3,500, making it economically unfeasible. The stock continues to underperform broader markets amid ongoing tariff threats.

Resistance: 205.31; 213.74

Support: 193.40; 185.90

Commodities

WTI Crude Oil: Bearish Outlook Deepens (60.79)

Current Trend: Strongly Bearish Market Sentiment: Very Negative

WTI crude closed at $60.79, down 1.20% for the week and marking its second consecutive weekly decline. Despite US crude inventories falling 2.8 million barrels (significantly more than expected), demand concerns overshadowed the positive stock data. China’s manufacturing PMI remained below 50 at 49.5, while Eurozone PMI fell to 49.5, reinforcing weak global demand. OPEC+ meeting on June 2 looms large, with the group considering adding 411,000 bpd in July. Analysts fear WTI could fall to the $53-55 range if demand doesn’t rebound and OPEC+ proceeds with output increases.

Resistance: 63.40; 65.42

Support: 60.04; 57.94

Gold: Struggles for Direction Amid Mixed Signals (3,280)

Current Trend: Neutral/Consolidative Market Sentiment: Uncommitted

Gold failed to build on the previous week’s impressive gains, trading in a narrow range around $3,280 as markets digested mixed US data and tariff developments. Trump’s extension of the EU tariff deadline to July 9 initially pressured safe-haven demand, while court rulings on tariffs created volatility. The precious metal largely ignored Friday’s PCE inflation data, showing the annual rate declining to 2.1%. Technical outlook suggests Gold is approaching a breakout, with Friday’s NFP report potentially serving as the catalyst. Support at $3,250, resistance at $3,350.

Resistance: 3364.37; 3437.37

Support: 3239.21; 3166.21

Central Bank Calendar & Key Events (June 2-6, 2025)

Major Central Bank Meetings

• Monday: OPEC+ Meeting (crucial for oil markets)
• Wednesday: Bank of Canada Rate Decision (expected hold at 2.75%)
• Thursday: ECB Rate Decision (25bps cut to 2.25% widely expected)

Key Economic Releases

• Monday: US ISM Manufacturing PMI for May, UK Nationwide House Prices
• Tuesday: US JOLTS Job Openings, Eurozone inflation data for May
• Wednesday: US ADP Employment, ISM Services PMI, Australia Q1 GDP
• Thursday: US Initial Jobless Claims, Germany Industrial Orders
• Friday: US NFP Report for May (week’s highlight), Canada Employment Data

Fed Speakers Calendar

• Monday: Fed Chair Powell at 75th Anniversary Conference
• Tuesday: Fed’s Kashkari
• Wednesday: Multiple Fed officials, including Williams
• Thursday: Fed’s Barkin, Goolsbee, Kugler, Daly

Week Ahead Outlook

The coming week centers on Friday’s US employment report, with markets expecting around 170,000 NFP additions. A strong reading could support Fed hawkishness and USD strength, while weak data might revive July rate cut expectations. ECB’s anticipated rate cut on Thursday will test EUR resilience, while OPEC+ decision on Monday could determine oil’s next major move. Trade headlines remain a wild card, with court reviews of Trump’s tariff authority ongoing.

Risk management remains crucial given elevated volatility from central bank decisions, employment data, and potential trade policy shifts.