The market is entering the holiday season

At yesterday's session we saw a calm trade on Wall Street. The indices lost slightly. Also the Eurodollar market did not show any major changes, although we saw an attack on the 1,06 level. Currently, the main currency pair is just below resistance - the upper band of the mid-term downturn channel.

More significant changes were visible in the debt market. Treasury bond yields rose after sharp declines last week. The yield on US 2-year government bonds increased by 6 bp to 3,12%, and on 10-year bonds by 7 bp to 3,20%. German 10-year securities gained 11 bp and soared to the level of 1,55%. American indices They lost slightly, although this morning futures are rising again and the chart shows that another upward impulse is building. Perhaps the Friday's rebound will have its continuation.

Yesterday's macro data from the United States did not affect the dollar significantly, even though the May durable goods orders surprised to the upside. However, the Dallas Fed activity index disappointed as it fell to -17,7 points. This is the lowest reading since May 2020 - when the pandemic was at its peak.

Euro dollar at an important level

EUR / USD attacked the 1,06 level, but the rate stayed above this level only for a while. Technicians will surely notice the mid-term downtrend that may have stopped euro buyers. Still the possible scenario is bigger rebound in EUR / USDas suggested by the emerging double hole pattern. The two minimums I am talking about were set at a non-accidental level, namely around 1,0350 - i.e. the low from the turn of 2016 and 2017.

Perhaps more about monetary policies EBCWe will find out from the Powell, Lagarde and Bailey panel, which will be held tomorrow on the occasion of the ECB Central Banking Forum in Sintra, whether the Fed or the BoE. However, much has already been said and central bankers would have to put a lot of effort into increasing volatility on the FX.

Lukasz Zembik, TMS Brokers