Psychology for major markets May 8

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, and may have further upside with a US trade deal expected. BoE rate cut is expected but well priced in and unlikely to have much impact

AUD/USD – Made some progress after break of resistance area above 0.64, with more stable risk picture suggesting scope for further gains into high 0.60s.

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.