In This Issue

• FX Recap — dollar holds firm despite Iran optimism

• EUR/USD — momentum turning higher, key levels in focus

• USD/JPY — testing BOJ resolve at 160

• GBP/USD — middle of the range, momentum neutral

• Crude Oil — rally stalls at Fibonacci resistance, bounce attempt intact

• BTC — bullish divergence on new low, bounce risk

• EUR/AUD — vol compressed to December lows, watch for breakout

• Week Ahead — Iran and BOJ the key drivers

FX Recap

The Iran peace deal continued to dominate the narrative, but unlike prior weeks, the dollar held firm. Despite ongoing ceasefire optimism, the PCE print on Thursday — 3.8% headline and 3.3% core — reinforced the view that the Fed is in no hurry to ease and kept the dollar supported. The DXY ended the month up roughly 1%, with EUR/USD range-bound near 1.165 and GBP/USD giving back most of its early-May gains. Price action across FX is becoming increasingly two-way with ranges tightening as we head into summer.

EUR/USD

EUR/USD traded sideways over the past week with momentum moving out of oversold territory toward neutral and pointing higher. The setup remains constructive but lacks conviction at this stage.

Key support levels:

• 1.1585 — last week’s low

• 1.1556 — lower Bollinger Band

Resistance:

• 1.1670 — pivot level from the past month and the 20-day moving average

• 1.1775–85 — May highs and upper Bollinger Band

USD/JPY

USD/JPY is pushing back up against the 160 zone with 159.76 the high — testing BOJ resolve once again. Worth noting that even with the pair trading near multi-week highs, momentum is overbought and has crossed over pointing lower. The divergence between price and momentum is worth watching closely.

If the pair gets hit from here it will most likely have something to do with the BOJ.

Key levels on the downside:

• 158.44 — 20-day moving average

• 156.48 — lower Bollinger Band

GBP/USD

GBP/USD is trading in the middle of its multi-week range at 1.3450 with momentum neutral and pointing sideways. No technical bias in either direction from here.

Resistance:

• 1.3478 — 20-day moving average

• 1.3520/30 — pivot zone

• 1.3634 — upper Bollinger Band

Support:

• 1.3321 — lower Bollinger Band

• 1.3302 — May 18th low

EUR/AUD

Volatility in EUR/AUD has compressed to levels not seen since December. Price is trading right on the 20-day moving average at 1.6250. Watch for a breakout when vol expands — the longer the compression holds, the bigger the eventual move.

Resistance: upper Bollinger Band at 1.6327.

Support: lower Bollinger Band at 1.6156.

Crude Oil

Crude oil’s rally stalled precisely at the confluence of the 20-day moving average and the 50% Fibonacci retracement — an area identified as key resistance. Despite the pause, momentum indicators remain in oversold territory and continue to turn higher, suggesting the broader recovery attempt remains intact.

If crude can push through this resistance zone, the next upside target is 98.01 — the 61.8% Fibonacci retracement of the decline from the May high to last week’s low.

Key Resistance: 98.01 — 61.8% Fibonacci retracement

Key Support: 90.19 — 61.8% Fibonacci retracement of the bounce, near-term level to watch on any pullback. Holding above that level keeps the recovery pattern intact.

BTC

BTC printed a bullish divergence on the new recent low Monday. Momentum is not confirming the move lower — with momentum still oversold but pointing higher, there is bounce risk from these levels.

76,483 is the key level to watch on any bounce — the 20-day moving average. The last time BTC closed above the 20-day was May 15th.

Week Ahead

The week will likely see sideways markets with the dollar bouncing around on Iran headlines. What the BOJ does will be the other key story to watch as USD/JPY approaches 160 again. Ranges are tight and summer trading conditions are starting to set in. Stay nimble.

Market Notes

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Next Tuesday: Weekly market update. — Mark

Meridian Compass is brought to you by Mark Schaefer, a portfolio manager with over 30 years experience developing and trading systematic strategies in global futures and FX at major banks and hedge funds.

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