Caution was the name of the game on Wednesday as inflation fears and concerns over slowing growth left investors on edge.

European shares fell while Wall Street futures flashed red due to the lack of appetite for risk ahead of the ECB meeting on Thursday and the US inflation report on Friday. In the commodities arena, oil prices drifted higher thanks to supply concerns and prospects of higher demand. Gold struggled for direction, waiting for a fresh directional catalyst to trigger some action.

It’s been an interesting start to the week with the Reserve Bank of Australia surprising many with a half-point interest rate hike and the yen weakening again.

JPY pressure is intense at the moment. 10-year US Treasury yields have moved above 3% and oil is at $120 per barrel. As long as those yields are rushing higher, momentum is bullish in USD/JPY. 

The world’s most popularly-traded currency pair, EURUSD, is set to face two major catalysts in the coming week:

Monday, June 6

A sense of tension gripped financial markets on Wednesday as inflation jitters, recession fears, and worries about rising interest rates left investors on edge.

Fasten your seatbelts and tighten up because this could be a wild week for gold!

It is shaping up to be another volatile week for financial markets thanks to key economic reports from major economies and numerous speeches by Federal Reserve officials.

Global equities were tugged and pulled by inflation fears, rate hike expectations, and ongoing geopolitical risks. In the currency space, king dollar loosened its grip on the FX space allowing G10 majors to bounce while gold lingered below its 200-day Simple Moving Average.