Psychology for major markets May 9
USD recovering helped by more positive equity tone
EUR/USD – Edging lower as the USD sees a general recovery as equities rise on hopes of trade deals.
USD/JPY – Tested September 2024 lows below 140 but bounced as equities recovered. Upside nevertheless looks very limited above 145 with equities vulnerable at higher levels.
EUR/GBP – GBP has recovered some of the ground lost to the EUR on tariff concerns helped by the US trade deal. BoE rate cut was expected and has little impact, but mildly hawkish tone suggests GBP my have scope for gains.
AUD/USD – Made some progress after break of resistance area above 0.64, but has slipped back to test 0.64 level once again on general USD strength. US/China trade deal may be needed to restore bullish tone.
Equities – Strong recovery after initial bloodbath on US tariff increases but high US valuations still suggest scope for further declines longer term if tariffs cause significant US growth slowdown.