US stock indices moved into recovery mode last week after a sharp downward correction. Nasdaq was quickly bought back from local lows, and by the end of the week, the index returned to between 29,700 and 29,800. The main driver behind the improvement in sentiment was the decline in the oil risk premium following reports of ongoing negotiations between the United States and Iran. The drop in Brent crude oil prices reduced fears of a new inflation shock and allowed investors to partially return to risk assets. However, in technical terms, the Nasdaq has now approached an important resistance zone around 29,850–30,000. How it moves further will depend on signals from the Fed.
The currency market showed mixed movements. EUR/USD failed to develop a sustainable rise after the ECB's decision to raise the interest rate and remained under pressure around 1.1560. This suggests that the market sees the ECB's hawkish stance not as a sign of economic strength, but as a forced reaction to inflation. The dollar, in turn, continues to be supported by expectations that the Fed will keep interest rates high for a longer period of time. Until EUR/USD consolidates above 1.1600, any upward move looks more like a technical rebound than the beginning of a full-fledged uptrend.
Brent crude oil movements are still driven mainly by the geopolitical risk premium. At the beginning of the week, prices remained elevated due to risks surrounding the Middle East and possible supply disruptions. However, later on, prices fell sharply to around $88 per barrel amid hopes for a diplomatic settlement. This became the main factor behind the improvement in stock market sentiment. Bitcoin also rebounded from around $60,000 to $63,000–64,000, but its structure remains weaker than the Nasdaq's. Until BTC consolidates above $64,000–65,000, the recovery looks more like a correction after a strong decline than a full reversal.
United States: Fed interest rate decision
The main event of the coming week will be the Fed meeting. The market expects it to keep its main interest rate unchanged at 3.75%, so the key focus will not be on the decision itself, but rather on updated economic projections, the FOMC's statement, and the Fed Chair's press conference. After inflation picked up pace and energy prices rose, investors will closely watch whether the Fed acknowledges the risks of renewed inflationary pressure. Hawkish rhetoric may support the dollar and put pressure on the Nasdaq, Bitcoin, and gold. A softer tone, on the contrary, could extend the recovery for these risk assets.
Japan: Bank of Japan monetary policy decision
On 16 June, market attention will focus on the Bank of Japan's meeting. Investors will assess whether the regulator is ready to tighten its monetary policy or maintain a cautious stance. This is important for markets because of the yen exchange rate and global carry trades. If the Bank of Japan sends a more hawkish signal, the yen may strengthen sharply, which could trigger a decline in USD/JPY and a partial deterioration in risk appetite. In such a scenario, pressure may also spread to the Nasdaq and Bitcoin. If the BOJ maintains a soft tone, demand for risk assets may receive additional support. For USD/JPY, the key area remains 160.00–160.70.
United Kingdom: Inflation and Bank of England decision
For the British pound, the key events of the week will be inflation data and the Bank of England's meeting. If inflation comes in above expectations, the market may strengthen expectations that high interest rates will be maintained, which would support GBP/USD. However, in technical terms, the pair doesn't look confident yet. The current rate is around 1.3390, which is below the important resistance zone of 1.3440–1.3470. That's why, in a positive scenario, this area may become the first upside target.