Psychology for major markets May 31st

EUR/USD – Firmer USD tone on the back of rising yields and softer equities, but good support near 1.08 and EUR supported by stronger CPI data. 1.08-1.09 range trading seen.

USD/JPY – Downside risks persist on declining yield spread and threat of BoJ intervention near 158, but small gains possible in low vol environment as carry trading continues.

EUR/GBP - EUR/GBP dropped below 0.85 on increased ECB talk after dovish ECB comments on Monday, but has recovered back above the figure helped by stronger Eurozone CPI. A break lower looks tough now June UK rate cut has been priced out.

AUD/USD – Pushed higher on better commodity/China sentiment. US yield declines likely to be required for a break above 0.67.

EUR/CHF – Shying away from a test of parity and dipping lower on strong Swiss GDP data, but still has upside potential if confidence in European recovery builds.

Equities – Falling back as yields rise in the US and Europe but dovish ECB comments and better European growth data suggests limited downside