As we head into Monday, June 2, 2025, global markets are bracing for a session of heightened volatility, driven by a confluence of central bank events, critical economic data, and lingering trade-policy uncertainty. Traders face a week packed with potential catalysts – from an ECB policy meeting to key U.S. ISM reports and labor market data – all against a backdrop of shifting risk sentiment. Recent signs of cooling U.S. inflation and ongoing tariff uncertainty have weighed on the U.S. dollar, setting the stage for sharp moves in major currency pairs as fresh data and central bank signals emerge.
EUR/USD
Chart: EUR/USD candlestick chart with technical indicators (MACD, RSI, Stochastic) showing late-May to early-June price action.
Technicals in Focus
EUR/USD has started the week on a firm footing, rebounding to around 1.1370 in early trading and recouping last session’s decline. The pair is now approaching the 1.1400 handle – a key resistance area – amid a mildly bullish short-term trend. Momentum indicators paint an improving picture. The MACD remains above its signal line in positive territory, reflecting continued upward momentum. The RSI has climbed back above the mid-50s, indicating strengthening bullish pressure without yet reaching overbought levels. Meanwhile, the Stochastic oscillator is turning upward from its recent pullback, confirming that buying momentum is returning. Overall, the technical bias leans to the upside as long as support near 1.1300 holds.
Trading Strategy:
- Bias: Buy (bullish bias) on dips
- Entry Zone: ~1.1320–1.1300 (buy on a dip into support)
- Target: 1.1420, near the recent high (potential extension toward 1.1450 if momentum continues)
- Stop Loss: 1.1280 (below last week’s support level)
USD/CAD
Chart: USD/CAD showing a downturn into early June, with MACD, RSI, and Stochastic indicators in bearish territory.
Technicals in Focus
USD/CAD extended its slide to about 1.3720 as Monday’s Asian session got underway, marking a second straight session of declines and bringing the pair toward the 1.3700 psychological support level. The technical tone has clearly turned bearish. The MACD has crossed below its signal line into negative territory, signifying growing downward momentum. The RSI has fallen below the 50 mark, indicating sellers are gaining control (though the indicator is not yet in oversold territory). The Stochastic oscillator also points lower, with %K and %D lines trending near the oversold threshold. If the 1.3700 support fails to hold, the next downside target could be around 1.3650. On the flip side, any rebound is likely to encounter resistance around 1.3780–1.3800, where selling pressure emerged late last week.
Trading Strategy
- Bias: Sell (bearish bias) on minor rebounds
- Entry Zone: ~1.3740–1.3780 (sell on a bounce toward resistance)
- Target: 1.3650, near next support (with potential for 1.3600 on an extended decline)
- Stop Loss: 1.3820 (above key resistance and last week’s highs)
AUD/USD
Chart: AUD/USD in late May, illustrating a downtrend with MACD, RSI, and Stochastic in oversold regions.
Technicals in Focus
AUD/USD remains under heavy pressure after consecutive sessions of losses, plunging to a multi-week low around 0.7263 late last week. This sustained drop has produced a clear downtrend (series of lower highs and lower lows on the chart). Momentum indicators underscore the bearish bias: the MACD is deep in negative territory (with the MACD line well below the signal line), and the RSI is hovering near the 30 level – teetering on the edge of oversold conditions. The Stochastic oscillator is likewise stuck in an oversold range; while it has flattened out slightly, it has yet to flash a definitive bullish crossover. These oversold readings suggest the potential for a corrective bounce, but any recovery may be limited. Upside attempts could face resistance around 0.7350 (a recent support-turned-resistance), whereas a continuation of the downtrend might see the 0.7200 area come into play if sellers press further.
Trading Strategy:
- Bias: Sell (bearish trend intact) on rallies
- Entry Zone: ~0.7320–0.7350 (sell into a bounce toward resistance)
- Target: 0.7200, near the next major support level
- Stop Loss: 0.7380 (above the 0.7350 resistance and recent swing high)
Market Outlook
Upcoming Economic Events: The coming days feature several high-impact events that could drive FX volatility. Notably, the European Central Bank’s rate decision and the U.S. labor market report headline this week, amid an atmosphere of ongoing trade-policy uncertainty. Early in the week, attention centers on global PMI data and central bank communication out of Asia-Pacific. On Tuesday, the Reserve Bank of Australia will release minutes from its latest meeting – the RBA has recently signaled it is prepared to cut rates further if the economic outlook deteriorates, a dovish stance that has weighed on the Aussie.
By midweek, focus shifts to North America. U.S. ISM surveys bookend the start of the week: ISM Manufacturing PMI for May (due Monday) is forecast to remain in contraction around 48.7, and the ISM Non-Manufacturing PMI (services) on Wednesday will be eyed for signs of resilience in the larger services sector. ADP employment change (Wednesday) will offer an early gauge of the U.S. jobs trend. Midweek also brings a key central bank event: the Bank of Canada meets on Wednesday, and markets expect the BoC to hold rates steady – an outcome reinforced by Canada’s stronger-than-expected Q1 GDP growth. The Canadian dollar has been supported into this meeting (aided by upbeat data and firm oil prices), so any surprise from the BoC could jolt USD/CAD. Traders will additionally keep an eye on any Fed speakers scheduled before the Fed’s late-June policy meeting, listening for clues on whether the Fed’s bias might shift in light of recent soft inflation data.
Later in the week, the spotlight turns to Europe and the U.S. on Thursday and Friday. Thursday’s ECB meeting is a major event: the European Central Bank is widely expected to cut interest rates by 25 bps on June 5, extending its year-long easing campaign. A rate cut to 2.00% has been heavily telegraphed, and President Lagarde’s press conference will be scrutinized for forward guidance – particularly whether the ECB might pause subsequent cuts in coming months. Any deviation from expectations or a shift in tone (more hawkish or dovish than anticipated) could spark significant moves in EUR-crosses.
Finally, Friday’s labor data will be critical for market direction into week’s end. The U.S. Non-Farm Payrolls report for May is due, and consensus estimates point to a sharp slowdown in job creation (around +130k jobs expected, compared to a 177k gain previously). The unemployment rate is forecast to hold at 4.2%. A significant surprise in either direction could recalibrate expectations for the Fed’s policy path. The Canadian employment report for May will be released the same day, potentially adding volatility to CAD pairs in tandem with the U.S. jobs data. With central bank decisions (ECB, BoC), pivotal PMI readings, and crucial employment figures all on the docket, volatility drivers are plentiful – traders should be prepared for swift market moves and adjust risk management accordingly.
Volatility Drivers to Watch
In summary, this week’s FX market volatility will be driven by a mix of central bank policy cues and macro data. The ECB decision (and any signals about future easing), the tone of BoC’s announcement, and the RBA’s dovish leanings will shape currency flows, especially in EUR, CAD, and AUD. Meanwhile, U.S. economic indicators – notably the ISM reports and Non-Farm Payrolls – will provide insight into the health of the U.S. economy and influence the USD’s direction. All of this unfolds under the cloud of trade policy uncertainty, as traders remain alert to any new developments on tariffs or geopolitical news that could swing risk sentiment. Given the convergence of these factors, expect choppy price action and heightened volatility across the major currency pairs as the week progresses. Stay nimble and adhere to key technical levels when navigating the days ahead.