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The Fed is ready to take a break

6 June 2023

The dollar index is consolidating near 104. Traders continue to analyze May data on the labor market, which added uncertainty about the further actions of the US Federal Reserve. Thus, the unemployment rate increased from 3.4% to 3.7%, which is much more serious than the forecasted 3.5%, and the growth of average wages slowed down from 0.4% to 0.3%. Under these conditions, it remains unclear what the officials of the American regulator will do at the next meeting this month: earlier, most experts were confident that the rate would increase by 25 basis points, but rising unemployment could force the Fed to take a break in the tightening cycle. At the moment, the probability of a rate hike is 26%. Given the above, the decline in the dollar may continue.

SELL STOP 103.90/TP 103.20/SL 104.10


The EUR/USD pair is trading near 1.07. Investors are still analyzing May data on inflation and the possible reaction of the European Central Bank (ECB). The price growth in the euro area slowed down more than expected. The consumer price index in annual terms fell from 7.3% to 6.9% instead of 7.2%. ECB Chief Economist Lane noted that the increase in interest rates is beginning to put pressure on inflation. Most experts believe the regulator will make two more raises of 25 basis points before taking a break. With that said, the prospect of further policy tightening could support the European currency.

BUY STOP 1.0720/TP 1.0800/SL 1.0690


Brent crude is trading at $77 after opening with a gap. Prices are supported by the Senate’s approval of a budget agreement to increase the US government debt limit for two years. In addition, the OPEC+ countries at the meeting agreed to extend the restrictions on oil production until the end of next year in order to support falling energy prices. Thus, in 2024, the total volume of oil production will be 40.46 million barrels per day – 1.4 million less than now. Given the above, the likelihood of a supply shortage on the market has increased, which may provide long-term support to quotes.

BUY STOP 77.50/TP 78.50/SL 76.90


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