Eurozone Final Services PMI, U.S. Trade Balance, AMD Earnings

The EUR/USD pair hovered around the familiar 1.1300 level as the new trading week began ending the session 0.08% lower, with the euro caught in a narrow consolidation range. Market participants remain indecisive, as momentum in either direction has been hard to sustain.

This week offers little in terms of impactful European economic data. Final Purchasing Managers’ Index (PMI) figures are unlikely to surprise, and pan-European Retail Sales data, due Wednesday, are already projected to disappoint. With limited catalysts from the eurozone, traders are turning their attention to the upcoming U.S. Federal Reserve policy decision.

Heading into the key central bank event risk, Friday's upbeat US jobs data and the US ISM Services PMI released on Monday eased market concerns about a recession. The Fed is widely expected to hold interest rates steady, though the move is likely to draw criticism from the Trump administration, which continues to pressure for earlier rate cuts. While labor market and inflation indicators remain largely stable, ongoing uncertainty surrounding U.S. trade policy clouds the economic outlook, complicating the Fed’s path forward. For now, the central bank appears committed to its dual mandate of maintaining employment and price stability.

Although a rate hold is virtually priced in, all eyes will be on Fed Chair Jerome Powell’s post-announcement commentary. Investors are eager for clues that could signal the beginning of a potential easing cycle.

Gold prices surged more than 2% on Monday, following a sharp drop in the U.S. Dollar Index. This move came despite surprisingly resilient economic data from the United States, reinforcing views of a solid underlying economy.

The latest ISM Services PMI report signaled ongoing strength in the U.S. services sector, with rising price pressures suggesting persistent inflationary forces. This comes amid renewed trade policy tensions, after former President Donald Trump over the weekend announced a 100% tariff on foreign-produced films. Trump also reiterated his call for interest rate cuts, though he clarified that he does not plan to remove Federal Reserve Chair Jerome Powell before his term ends in 2026.

Speaking on trade, Trump noted that the U.S. is engaged in negotiations with multiple countries, including China, and emphasized his desire to secure a comprehensive deal with Beijing.

Investor focus is now firmly on this Wednesday’s Federal Reserve policy decision. While markets have fully priced in a rate hold, Chair Powell’s press conference will be closely scrutinized for any signs of a shift toward a more dovish stance. The Fed will not update its economic projections until the June meeting, making Powell’s tone and commentary even more critical for short-term market direction.

Oil prices declined on Monday, reversing some earlier losses after OPEC+ signaled plans to increase output more aggressively than previously expected. The move raised concerns about oversupply at a time when global demand remains under pressure, dragging crude prices closer to four-year lows seen in early April.

At its latest meeting over the weekend, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to raise production by 411,000 barrels per day starting in June—nearly triple the volume initially flagged. Key producers Saudi Arabia and Russia are set to lead the ramp-up, raising the prospect of a supply glut that could weigh further on prices.

This output increase could undermine any price support stemming from potential geopolitical disruptions, particularly in the Middle East. With crude already facing pressure from a soft global demand outlook, the move signals a challenging path ahead for oil markets.

Recent signs of dialogue between Washington and Beijing offered little comfort to traders. On Sunday, Trump stated he had no immediate plans to speak with Chinese President Xi Jinping, although he confirmed that U.S. officials had been in contact with their Chinese counterparts.

The US 500 ended its longest winning streak in two decades on Monday, slipping as investors weighed fresh tariff threats from U.S. President Donald Trump and awaited a pivotal Federal Reserve policy decision later this week.

Trump announced on Sunday a 100% tariff on foreign-produced films, though details on implementation remain unclear. The surprise move sparked volatility in entertainment stocks and added to broader concerns about trade disruptions and inflationary pressure.

Treasury Secretary Scott Bessent downplayed market concerns, saying Trump’s tariff, tax, and deregulation agenda would ultimately attract long-term investment to the U.S.

Meanwhile, inflation fears resurfaced as the ISM Services PMI showed stronger growth and a sharp rise in input costs—the highest in over two years.

Entertainment shares took an initial hit on tariff news, though many trimmed losses.

Attention now turns to the Federal Reserve, which is widely expected to hold interest rates steady in its Wednesday policy decision. Investors will closely monitor Fed Chair Jerome Powell’s press conference for any signals on the timing and pace of future rate cuts.