🇺🇸 U.S. Economy: Disinflation Continues, but Labour Market Holds

The U.S. economy is showing clearer signs of a controlled slowdown. Last week’s Initial Jobless Claims slightly dipped to 231,000, beating forecasts and hinting at a still-resilient labour market. However, April’s Core PCE Price Index (due on May 31) is expected to confirm further disinflation progress.

May’s flash PMI data showed a modest decline in services and manufacturing, pointing to softer demand. While inflation has eased from its peak, consumer spending is beginning to flatten — a sign that households are growing more conservative.

With the next FOMC meeting scheduled for June 11–12, markets are pricing in a 57% chance of a rate cut by July, especially if inflation surprises to the downside.

 Global Central Bank Watch

🇺🇸 Federal Reserve (FOMC)

Current Rate: 4.25%–4.50%
Outlook: Dovish tilt growing stronger
Focus: Labour strength vs. inflation cooldown

🇬🇧 Bank of England (BoE)

Latest CPI fell to 2.4%, its lowest level in nearly three years, increasing the odds of a June rate cut. GDP remains stagnant, and consumer confidence remains low. The pound has continued to weaken.

🇪🇺 European Central Bank (ECB)

The ECB signalled it may begin cutting rates as early as June, with inflation forecasts being revised lower. German factory orders and French manufacturing output remain weak, adding pressure on the euro.

 Currency Market Outlook

• USD: Strengthening slightly on safe-haven demand and Fed patience. However, disinflation could flip sentiment quickly.
• EUR: Struggling amid weak European data and dovish ECB tones.
• GBP: At risk of deeper downside if BoE cuts materialize without clear growth recovery.

Equities and Commodities

• U.S. Equities: The S&P 500 continues to grind higher, supported by AI-driven tech optimism. Still, breadth remains thin, and markets are vulnerable to any surprises from the Fed or economic data.
• Gold (XAU/USD): Pushing toward $2,400 as rate cut bets and geopolitical tensions support demand.
• Oil (WTI): Volatile near $79 per barrel, with ongoing supply chain disruptions in the Middle East and uncertain global demand forecasts.

 Fundamental Analysis

Markets are walking a tightrope — encouraged by disinflation but wary of overplaying the soft-landing narrative. While the Fed and ECB appear poised to ease policy, the economic data hasn’t yet confirmed a clear path forward.

U.S. tech stocks and gold remain market leaders, driven by investor appetite for quality and safety. However, emerging markets and cyclical sectors may continue to underperform until central banks begin cutting decisively.

 Technical Analysis

EURUSD has now made some strong structure to the upside on the 4-hour time frame. With price now being stuck at a strong resistance area which gives us a strong indication that price will at least break the highs as we know the late sellers have their stop losses placed there. What we want to know wait and see for is if price can break the high and continue, or if price breaks the high grabs liquidity and then drops further going on a stop loss hunt before pushing to the upside. The coming weeks are going to be very interesting as EURUSD is shaping up for some lovely moves, that’s for sure. 

 Trading Tips for the Week Ahead

• Watch Key Data:
  • U.S. Core PCE – May 31
  • German CPI – May 29
  • U.S. Consumer Confidence – May 28
• Stay Flexible: With volatility expected around economic prints and Fed commentary, don’t marry your bias.
• Focus on Quality Setups: Fewer, higher-probability trades trump overtrading in choppy conditions.
• Risk Management First: When markets are uncertain, your edge is your discipline.