Canada CPI, Home Depot Earnings, FOMC Members Speak

On Monday, the EUR/USD pair briefly approached the 1.1300 level before paring gains slightly, still managing to close the session higher overall.

This week’s economic calendar is relatively light, leaving market sentiment to be shaped largely by headlines and broader macro developments. The spotlight turns to Thursday, when a flurry of Purchasing Managers Index (PMI) data from both the Eurozone and the United States could serve as the next catalyst for direction.

Adding to market complexity, Moody’s downgraded the United States' sovereign credit rating last Friday, stripping Treasuries of their last remaining AAA designation. The agency cited escalating national debt and persistent fiscal deficits as reasons for the downgrade—structural issues that successive administrations have failed to address effectively. While investor reaction was initially cautious, markets quickly found their footing, and the move had limited long-term impact on perceived U.S. creditworthiness.

Meanwhile, Federal Reserve officials have remained active on the speaking circuit, emphasizing that market hopes for rate cuts may be premature. Policymakers continue to highlight the uncertainty created by evolving trade and tariff policies, which complicates the outlook for monetary policy adjustments.

As markets await Thursday’s PMI data, the EUR/USD pair remains range-bound but vulnerable to volatility.

Bitcoin pulled back on Monday after a volatile start to the week that saw the cryptocurrency briefly surge past $107,000 before reversing gains. More than $600 million in crypto derivatives positions were liquidated since late Sunday, as Bitcoin’s swift spike triggered a wave of short squeezes followed by profit-taking and stop-loss selling.

The late Sunday surge—over $2,500 in under an hour—was likely fueled by thin weekend liquidity and algorithmic buying at key technical levels. However, the sharp reversal suggests that speculative positioning remains fragile, with traders quick to lock in gains amid market uncertainty.

A major driver has been easing trade tensions between the U.S. and China, which has contributed to a broader risk-on sentiment. Additionally, last week’s softer U.S. inflation data strengthened market expectations for a potential Federal Reserve rate cut later this year. Although concerns persist that trade tariffs could stoke inflation again, current conditions have favored risk assets, including cryptocurrencies.

Lower inflation and the prospect of rate cuts typically weigh on the U.S. dollar, enhancing the appeal of alternative assets such as Bitcoin.

Crypto market sentiment also received a boost after Coinbase Global Inc. became the first cryptocurrency firm to join the S&P 500 index, signaling broader institutional acceptance of digital assets.

On Monday, Strategy Inc. announced the purchase of an additional 7,390 BTC for approximately $764.9 million, according to a regulatory filing.

Oil prices closed slightly higher on Monday, buoyed by growing skepticism over the likelihood of a renewed U.S.-Iran nuclear agreement, which offset pressure from a U.S. sovereign credit downgrade and signs of weakening global demand.

Investor sentiment was swayed after Iranian state media quoted Deputy Foreign Minister Majid Takht-Ravanchi as saying that nuclear negotiations would stall if the U.S. demands Tehran cease its uranium enrichment activities. The remarks dampened hopes for a diplomatic breakthrough that could have led to the easing of U.S. sanctions and the return of up to 400,000 barrels per day of Iranian crude to global markets.

Meanwhile, Moody’s decision to downgrade the U.S. sovereign credit rating added another layer of uncertainty. The move has triggered renewed questions about the fiscal stability of the world’s largest oil consumer, compounding bearish sentiment sparked by weaker-than-expected Chinese economic data.

China’s industrial output and retail sales both fell short of expectations, casting doubt on the strength of demand recovery in the world’s top oil importer.

Further downside pressure came from geopolitical rhetoric, with U.S. Treasury Secretary Scott Bessent reaffirming that President Donald Trump intends to proceed with tariffs on nations deemed to be negotiating in “bad faith.”

With markets caught between geopolitical tensions, macroeconomic risks, and shifting trade policies, crude oil is likely to remain reactive to headlines and vulnerable to sharp intraday swings in the sessions ahead.

U.S. equity markets closed largely unchanged on Monday as investors digested the implications of a U.S. sovereign credit rating downgrade by Moody’s. The move, announced after markets closed on Friday, cited the country’s growing $36 trillion debt burden and rising interest obligations.

Moody’s lowered the federal government’s long-standing "Aaa" rating to "Aa1," prompting a cautious start to the trading session. While equities initially declined, major indexes recovered losses through the afternoon, with the US 500 managing to notch a modest gain and extend its winning streak to six consecutive sessions.

Novavax jumped 15% following U.S. regulatory approval of its long-anticipated COVID-19 vaccine, marking a key milestone for the biotech firm.

U.S. Treasury yields rose as investors weighed the potential impact of President Donald Trump’s sweeping tax-cut bill, which advanced through a key congressional committee over the weekend. The yield on the benchmark 10-year note ticked up 1 basis point to 4.449%, reflecting worries that the legislation could exacerbate the federal debt burden.