ForexLive European FX news wrap: Dollar holds mostly firmer, equities under pressure

Headlines:

• Dollar keeps in control to start the new week
• Weekly update on interest rate expectations
• Traders are only barely seeing one rate cut by the Fed for this year now
• Stocks accelerate losses in European morning trade
• ECB’s Vujcic: ECB unlikely to accelerate rate cuts
• ECB’s Rehn: It makes sense to continue with rate cuts
• ECB’s Lane says further monetary policy easing is likely
• US unveils new restrictions on AI chip exports
• Trump adviser says to expect call with Putin soon

Markets:

• JPY leads, GBP lags on the day
• European equities lower; S&P 500 futures down 0.7%
• US 10-year yields flat at 4.773%
• Gold down 0.8% to $2,668.50
• WTI crude up 1.9% to $78.06
• Bitcoin down 4.2% to $90,574

It’s been a decent start to the new week but we’re mostly picking up from where we left off on Friday.

Risk trades are slumping further today as the dollar is jumping higher, continuing the moves after the US jobs report last week. Stocks are being pummeled with European indices down across the board and US futures also slipping lower during the session.

S&P 500 futures were down around 0.3% earlier but are now down 0.7% with the drop earlier bordering on a 1% decline. This sees the cash index set for a crack under its 100-day moving average later at the open, only for the second time since November 2023.

In the major currencies space, the dollar stays more bid in general with the euro and sterling in particular lagging.

EUR/USD is continuing to sink lower as it dips under the 1.0200 mark, down 0.5% to 1.0195 currently. Large option expiries at 1.0200 is still keeping price action a little stickier but the downside bias is clear.

Meanwhile, GBP/USD is down 0.7% to test the 1.2100 handle earlier – now seen at 1.2115. The 1.2000 level is the next key technical level eyed by sellers on the way down from here.

The dollar is only really down against the yen, with USD/JPY seen lower by 0.4% to 157.05 currently. That comes as 10-year yields in the US are coming off earlier highs of 4.80% to 4.77% now.

In other markets, gold is finally feeling the weight of the stronger dollar as it is down to test its own 100-hour moving average near $2,666 in the past hour. Then, we have Bitcoin which is down over 4% as sellers are threatening a shove back towards $90,000 to start the week.

This article was written by Justin Low at www.forexlive.com.