In This Issue

• FX Recap — payrolls shock, dollar rallies, Iran stays in focus

• EUR/USD — gap lower, bullish divergence, bounce setup

• USD/JPY — over 160 again, same BOJ playbook

• EUR/GBP — middle of the range, momentum turning higher

• Crude — range bound, consolidating for the next big move

• BTC — sharp flush, momentum turning, bounce setup

FX Recap

May payrolls came in at 172,000 last week — nearly double the 85,000 consensus — and the unemployment rate held at 4.3%. That was enough to push markets from pricing a possible December hike to a near 70% probability. The DXY climbed over 1% on the week.

Iran stayed in the background all week — ceasefire optimism one day, denial the next. The Strait remains closed and the geopolitical risk premium isn't going away. But the jobs number was the real driver, and it reinforced what the Fed has been saying all along — no rush to cut, and now the conversation is shifting toward whether they might actually need to hike.

The upcoming Fed meeting under new Chair Warsh is shaping up to be an interesting one. He's publicly opposed the dot plot and forward guidance — so beyond the rate decision, markets will be watching what he communicates.

EUR/USD

EUR/USD gapped lower on Friday's payrolls release, taking out key support at 1.1575/80 and closing below the lower Bollinger Band. The move was sharp and clean — driven by the dollar, not EUR weakness.

But momentum didn't confirm the move lower. Bullish divergence is now in play, and today's reversal bar strengthens the setup. A close back inside the Bollinger Bands after Friday's close below is a meaningful signal.

On a bounce, the levels to watch are 1.1575/85 — previous support now acting as resistance — and the 20-day moving average at 1.1630, which has been acting as resistance since mid-May. Today's low is the pivot. A close below that negates the divergence.

USD/JPY

USD/JPY is sitting over 160.00 — the level the BOJ has flagged repeatedly — and the market is still here. No intervention yet.

This is the same playbook we've seen before. Weak shorts pile in against the theoretical BOJ seller, the pair grinds higher, the shorts get cleaned out, then the BOJ steps in. Watch for a squeeze higher before the inevitable intervention response.

EUR/GBP

EUR/GBP is sitting in the middle of its two-month range, trading just below the 20-day moving average at .8658. Momentum is oversold but has crossed over and is pointing higher.

Watch for a close above .8658 — that opens the door to a move toward the upper Bollinger Band at .8704, which also aligns with the 200-day moving average. A clean close above that level would be meaningful.

Crude (CLN6)

Crude has been range bound for the past week, bouncing between 90 and 97. Headlines on the ceasefire go back and forth but price isn't going anywhere until there is substantial news on Iran and the Strait — one way or the other.

Momentum has moved out of oversold territory and price is trading right on the 50-day moving average at 91.52. The market is in consolidation mode. The wider Fibonacci bounds — 85.96 to the downside and 104.40 to the upside — are the levels that matter when price finally breaks out of this tight range.

BTC

BTC had a sharp drop, trading below 70,000 and printing five consecutive closes below the lower Bollinger Band before bottoming at 59,101 on Friday. That's a significant flush.

Momentum is deeply oversold and has crossed over pointing higher. Further dips from here will likely find support. The setup points to a bounce toward the 20-day moving average at 71,159. Friday's low of 59,101 is the pivot on a closing basis — a close below that and the setup changes.

Week Ahead

The Fed meeting June 17 is now the central event. Warsh's first press conference as chair will be closely watched — not just for the rate decision but for how he handles forward guidance. Any hawkish signal reinforces the dollar.

Iran and the Strait remain the macro anchor. The ceasefire back-and-forth continues and crude will stay range bound until there's a definitive move in either direction.

USD/JPY over 160.00 is the other one to watch — the BOJ has been here before and the market knows the playbook. 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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