Insights 
VT 
The United States Michigan Consumer Sentiment Index stood at 50.8 in May, falling short of the anticipated 53.4. This data point reflects consumer confidence in the economic outlook and is crucial for assessing consumer spending behaviour.
EUR/USD experienced a decline to three-day lows around 1.1130. Despite the decrease in the U-Mich index, the US Dollar gained support as inflation expectations rose.
GBP/USD dropped back to 1.3250 as USD buying intensified, indicating strong US Dollar movement. The rise in US consumer inflation expectations contributed to this trend, according to data from the U-Mich survey.
Gold Prices And Us Dollar Movement
Gold prices fell sharply below the $3,200 mark after a previous rally, affected by a recovering US Dollar and decreased geopolitical tensions. The XAU/USD remains on track to register its largest weekly loss of the year.
Ethereum’s price remained stable above $2,500 following a significant increase since April. Increased adoption of the ETH Pectra upgrade demonstrated positive market reaction with over 11,000 EIP-7702 authorisations in a week.
President Trump’s Middle East visit led to numerous high-profile deals intended to bolster US trade relationships. This development aims to correct trade imbalances and strengthen American leadership in defence and technology exports.
The lower-than-expected Michigan Consumer Sentiment Index in May, which came in at 50.8 against forecasts of 53.4, points to weaker confidence among households regarding the future state of the economy. A result this subdued often precedes more cautious discretionary spending, which tends to feed back into retail and services demand metrics over the following quarters. It can be tempting to interpret this sentiment drop as a buy signal for risk assets, especially when viewed in isolation, but that would miss the wider implications of the inflation expectations buried within the same report. Those expectations shifted higher—even as overall sentiment dipped—and that nuance rebalanced trader sentiment sharply toward the dollar.
This dynamic was reflected most clearly in the EUR/USD and GBP/USD pairs, both of which reversed their earlier moves. The euro’s slip to 1.1130, a level last seen three sessions ago, may seem confusing at first given the soft consumer data. However, we need to remember that the bond market reacted more to the pricing in of stickier inflation than to the sentiment surprise. Our experience tells us that when expectations of longer-lasting inflation rise, traders often pre-emptively back the greenback to hedge across assets—an instinct that was present again here.
Sterling followed a similar path. The pound fell back to 1.3250 against the dollar, largely as a result of increased USD buying across the board. It’s clear that inflation fears nudged Treasury yields up again this week, drawing flows toward dollar-denominated assets. The post-survey adjustment was rapid, with speculative positions reflecting this shift almost as soon as the revised data crossed the wires.
Gold And Ethereum Price Stability
In the commodities space, the sharp move lower in gold, slipping under the $3,200 level, marked a break after weeks of climbing momentum. Weakened geopolitical risk, including a few de-escalations in regions that typically support safe-haven bids, effectively removed one of the primary drivers behind the recent rally. Overlay that with a reinvigorated dollar and short-term technical triggers, and the sell-off was both sharp and widespread. Weekly forecasts show XAU/USD on pace for its worst performance of the year so far, with futures traders tightening risk on long gold derivatives earlier than expected. Notably, several positions linked to ETF flows shed exposure in sync with the stronger dollar bid.
ETH, by contrast, managed to hold firm above $2,500, broadly maintaining the gains chalked up since April. The uptake of the Pectra upgrade—especially the EIP-7702 smart contract authorisations surpassing 11,000—illustrates tangible developer confidence. This is not merely speculative repositioning. When network participation increases alongside price, there’s typically a medium-term positioning benefit that begins to show up in options open interest. We are already seeing that pre-emptive hedging behaviour pick up with more consistent call spreads being written at higher levels.
Turning to geopolitics, the former administration’s recent tour through key parts of the Middle East was not just symbolic. Several of the joint statements signed are multi-year agreements with delivery pipelines baked in. Considering the nature of these defence and tech-related deals, the downstream effects fall more on industrial equities and manufacturing output indicators over time. From a market-making perspective, the longer view is needed. These contracts won’t impact next month’s numbers, but they’re likely to factor into second-half positioning, particularly in sectors exposed to aerospace and advanced computing exports.
In the next few weeks, we expect derivatives markets to remain event-driven. Short-term setups must be weighed against macro inputs more carefully, especially as traders adjust to the inflation-forward interpretation of recent sentiment data. Timing entries without watching both real yields and dollar funding pressures will be difficult. It’s not a straight path, but the directional cues remain clear when we step out of the intraday noise.
