FTSE 100 nears five-week high as EUR/USD bounces back and WTI slips   

Macro update

Global equities remain cautious amid Middle East tensions: Asian markets traded mixed overnight while US futures were broadly flat, as investors continued to monitor geopolitical risks alongside the outlook for inflation and interest rates.

Oil prices stay elevated on supply concerns: Brent crude remained close to Monday’s highs as markets kept a close watch on Middle East developments and the potential for further supply disruption.

Bond yields edge lower as rate expectations shift: Government bond markets stabilised, with yields easing as investors reassessed the likely path and timing of future central bank rate cuts.

Dollar steady while yen remains under pressure: The US dollar moved within narrow ranges against major currencies, while the yen stayed weak amid persistent policy divergence and higher global yields.

China factory prices show signs of improvement: Recent producer price data suggested stabilising pricing conditions in China’s industrial sector, reinforcing hopes for firmer demand momentum.

UK shop price inflation exceeds expectations: Shop price inflation rose 1.2% year-on-year in May, driven by higher non-food, shipping and raw material costs linked to the Middle East conflict.

FTSE 100 trades near five-week high

The FTSE 100 is trading at levels last seen in late April and nears Monday's high at 10,573, a rise above which would likely engage the early-to-mid-April highs at 10,697-to-10,724.

Support may be found between the mid-April low and early May high at 10,494-to-10,488. Further potential support sits at the mid-May 10,400 high.

Short-term outlook: bullish while above the 20 May low at 10,234, targeting the early-to-mid-April highs at 10,697-to-10,724

Medium-term outlook: bullish while above the 18 May low at 10,113, targeting the 11,000 region

FTSE 100 daily candlestick chart

EUR/USD tries to recover

EUR/USD seems to be in the process of levelling out above its current May six-week low at $1.1577. The late April low at $1.1655 remains in sight with the 200-day simple moving average (SMA) at $1.1681. The latter may also be reached, once resistance between the late April-to-early May lows at $1.1655-to-$1.1677 has been bettered.

A fall through last week's $1.1577 low may push the $1.1550 region to the fore.

Short-term outlook: bullish while above $1.1577, targeting the $1.1655-to-$1.1682 region in the first instance

Medium-term outlook: neutral while below $1.1849 but above $1.1506

EUR/USD daily candlestick chart

WTI trades in two-week lows

Despite heightened tensions in the Middle East, the oil price retreats on hopes of an agreement between the US and Iran being reached.

WTI currently trades close to two-week lows seen at $88.66 per barrel, traded on the 6 May. If slipped through, the 23 March-to-mid-April lows at $84.37-to-$78.97 may be reached.

Immediate resistance sits at Friday's $94.73 low.

Short-term outlook: bearish while below the 18 May $105.21 high

Medium-term outlook: neutral while above the 6 May low at $88.66 but below the March peak at $119.48

WTI daily candlestick chart