Fed Chair Powell Testifies, CB Consumer Confidence, Richmond Manufacturing

The EUR/USD pair posted huge gains on Monday ending the session 0.85% higher. The pair’s rally was driven by a combination of improved global risk sentiment and growing expectations of a shift in US monetary policy.

Investors reacted positively to the announcement of a ceasefire between Israel and Iran, brokered by US President Donald Trump. The truce has boosted market confidence, reducing demand for traditional safe-haven assets such as the US dollar.

Further pressuring the dollar was a dovish tilt in comments from Federal Reserve Governor Michelle Bowman. Speaking on Monday, Bowman signaled support for a potential interest rate cut as early as the July policy meeting, citing increasing risks to the labor market. “It is time to consider adjusting the policy rate, and we should put more weight on downside risks to the job market going forward,” she said.

Meanwhile, in the Eurozone, European Central Bank President Christine Lagarde warned of increasing downside risks to the region’s economic outlook. Addressing the European Parliament’s economic committee, Lagarde cited recent survey data indicating “some weaker prospects for economic activity in the near term” and emphasized concerns over the impact of US trade policies. “Risks to the growth outlook remain tilted to the downside,” she noted.

While the ECB remains cautious, the euro has found near-term support as shifting dynamics in global monetary policy and geopolitics weigh on the US dollar.

Bitcoin rose sharply on Monday, lifted by a broader uptick in risk appetite following the announcement of a ceasefire between Israel and Iran. The truce, brokered by U.S. President Donald Trump, helped ease market jitters after a week of heightened geopolitical tensions.

Despite the gains, the cryptocurrency remained within the narrow range that has characterized most of June’s price action. Broader crypto markets also advanced in tandem with global equities, as appetite for risk assets recovered.

The ceasefire, announced by President Trump on social media, reportedly took effect around 01:00 ET (05:00 GMT). Both Tehran and Jerusalem acknowledged the agreement, though Iran reportedly continued limited strikes up until just before the deadline. Trump urged both sides to honor the truce, noting that if it holds for 24 hours, it could mark a turning point in the latest round of hostilities.

Separately, Democratic Senator Adam Schiff of California introduced new legislation on Monday aimed at curbing potential conflicts of interest involving government officials and cryptocurrencies.

Dubbed the Curbing Officials’ Income and Nondisclosure (COIN) Act, the bill seeks to bar the president, members of Congress, and other senior federal officials from investing in, issuing, or endorsing digital assets.

Trump has faced ongoing criticism for his pro-crypto policies, with opponents alleging they disproportionately benefit his personal financial interests and those of his inner circle.

While the COIN Act is still in its early stages, it underscores growing concerns in Washington over transparency, ethics, and the influence of digital assets on public policy.

Oil prices fell sharply on Monday, as investor concerns over a prolonged Middle East conflict eased following U.S. President Donald Trump’s announcement of a ceasefire agreement between Iran and Israel. The declines follow a broader pullback in energy markets amid de-escalation hopes.

Trump said that both Iran and Israel had agreed to a complete ceasefire, with Iran expected to halt hostilities immediately and Israel to follow within 12 hours. If maintained for 24 hours, the ceasefire would mark the formal end of the 12-day conflict between the two countries.

The announcement came after Iran launched what Trump described as a “very weak response” — a limited missile strike on a U.S. military base in Qatar — in retaliation for earlier U.S. strikes on Iran’s nuclear infrastructure. The Iranian attack resulted in no reported casualties, easing fears of a wider regional escalation.

Oil markets reacted swiftly, pricing in reduced geopolitical risk. Crucially, Iran refrained from targeting oil infrastructure or threatening the Strait of Hormuz — a vital chokepoint for global crude supply — easing fears of supply disruptions.

Investors now await further developments from regional leaders and any confirmation of a formal agreement, which could cement a more sustained recovery in risk assets — or reignite fears of renewed conflict.

Wall Street posted strong gains on Monday, as optimism over a potential interest rate cut by the Federal Reserve in the coming months outweighed investor concerns about ongoing geopolitical tensions in the Middle East.

All three major U.S. equity benchmarks closed sharply higher, led by a rally in consumer discretionary stocks. Tesla was a standout performer, jumping 8.12% following the debut of its long-anticipated robotaxi service in Austin, Texas.

Investor sentiment was further bolstered by dovish commentary from Federal Reserve officials. Fed Vice Chair Michelle Bowman indicated a shift in the central bank’s policy outlook, stating that it was "time to consider adjusting the policy rate" as labor market risks begin to outweigh inflationary pressures. Chicago Fed President Austan Goolsbee echoed the view, noting that recent tariffs have had a milder-than-expected economic impact.

While Israel continued strikes on Iran following U.S. military involvement over the weekend, markets responded positively to signs that escalation may be limited.

Economic indicators further reinforced bullish sentiment. S&P Global’s advance "flash" PMI showed stronger-than-expected growth in business activity, while a separate report revealed a surprise increase in new home sales for May, despite high borrowing costs.

Investors will be closely watching the Commerce Department’s upcoming releases later this week, including the final estimate of Q1 GDP, the Fed’s preferred inflation gauge, and Fed Chair Jerome Powell’s testimony before Congress.