Weekly update: Markets await a peace deal – will it materialize?

The upcoming US labor market data scheduled for release on June 5, 2026, at 8:30 AM ET, represents another milestone for macro financial markets. As the Federal Open Market Committee (FOMC) navigates sticky inflation and a shifting growth trajectory, the nonfarm payrolls (NFP) report from the Bureau of Labor Statistics (BLS) may serve as a foundational piece of evidence for interest rate projections and currency valuations.

​According to Bloomberg’s consensus forecasts, market participants expect the US economy to have added 95,000 nonfarm jobs in May. This forecast reflects a continuing, gradual moderation in hiring compared to previous months.

To provide more context, April 2026: The economy added 115,000 jobs, outperforming a conservative consensus estimate of 62,000. In March 2026, payrolls rose by an upwardly revised 185,000, rebounding sharply from a strike-impacted February print of -156,0001. While the data point to a slowing pace of monthly job creation, consecutive positive prints suggest that the labor market is finding a stable baseline rather than entering a sharp contraction.

The combination of a moderately slowing labor market, with May NFP projected at 95,000 jobs, and sticky US inflation, where headline CPI Y/Y recently sat at 3.8% alongside core inflation risks from high oil prices, creates a challenging dynamic for the upcoming mid-June FOMC interest rate decision. The Federal Reserve, which has recently viewed risks to its dual mandate as balanced, is likely to maintain a policy of "optionality". This reinforces the possibility of keeping rates higher for longer or even pivoting toward hikes if energy-driven inflation spikes.

​According to the CME Fedwatch tool, 98.3% participants expect the Fed funds rate to remain unchanged at the June 17th, 2026, FOMC meeting; however, participants expect rates to rise as we move further into 2026.

The upcoming week features several pivotal central bank interest rate decisions, with a significant focus on the Bank of Japan (BOJ). Market expectations for a 25 basis point interest rate hike at the BOJ's June meeting have surged to approximately 78%, which would raise the policy rate from 0.75%. This shift is driven by persistent inflationary pressures and a weakened Yen, despite a slight cooling in headline Tokyo inflation to 1.4%. Additionally, both the European Central Bank and the Bank of England are scheduled to announce their latest policy decisions, though they are widely expected to maintain current rates amid ongoing global uncertainty.

• Ascending channel: The price action is contained within a well-defined, multi-month ascending channel (bounded by the purple trendlines). The market is strictly in a long-term bullish trend, consistently printing higher highs and higher lows.
  
• Price is trading near the upper boundary of the channel, currently hovering around 159.822.
  
• Moving averages (EMA 9 & MA cross 9/21): The shorter-term EMA (blue line, 159.442) is tracking tightly below the current price. The 9- and 21-MAs cross, with the green fast line above the orange slow line, confirms steady upward momentum.
  
• RSI (5): Sitting at 70.47, which places it just inside the overbought territory. While momentum is strong, it suggests the current leg up might be extended in the short term.
  
• MACD (12, 26, 9): The MACD line is above the signal line (0.138 vs 0.223), and both are above the zero line. The histogram shows mild but stable positive momentum.
  
• ATR (14 currently at 0.714, market volatility has flattened out significantly compared to the high-volatility spikes seen back in February and May.
  
• Immediate resistance 159.697 weekly R1 has just been breached, with weekly R2 160.123 and monthly R1 160.939 looming directly above as the next major resistance.
  
• Immediate support: The weekly pivot (PP) rests at 159.228, closely backed by weekly S1 at 158.802.
  
• Major structural support: The monthly pivot (PP) sits lower at 157.986, lining up with past horizontal congestion.

• The price action for USD/CAD is contained within a long-term descending channel defined by the two thick pink trendlines, dictating a structural, macro bearish-to-neutral bias. The price recently surged to the upper bound of this descending channel following a strong bullish leg that began in late April, and is currently testing dynamic trendline resistance around 1.38563.
  
• The 50 MA (orange line, 1.37605) recently crossed below the 200 MA (green line, 1.38128), which technically denotes a death cross. However, the spot price has aggressively poked back above both moving averages, challenging the validity of that bearish signal, with the 9-period EMA (blue line, 1.38161) providing immediate dynamic support.
  
• Overhead resistance: The immediate resistance zone, which conflates directly with the upper channel boundary line, includes 1.38538 (Weekly R1), 1.39118 (Weekly R2), and 1.39272 (Monthly R1).
  
• Immediate support: A support zone, which aligns closely with both the 50 and 200 moving averages, includes 1.38120 (Weekly Pivot), 1.37540 (Weekly S1), and 1.37386 (Monthly Pivot).
  
• The RSI (5) is currently printing at 72.99 (signal line at 74.71), indicating the pair is trading in overbought territory. This overbought momentum is colliding precisely with the macro descending channel's upper trendline and the Weekly R1 resistance, suggesting the upward momentum is facing an immediate exhaustion test. A potential negative divergence could be in progress, however, a close price for the daily timeframe is yet to be determined.

Footnotes:

¹ https://www.bloomberg.com/markets/economic-calendar

² https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category.htm#
³ https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
⁴ https://www.bluegamma.io/central-banks/central-bank-interest-rate-forecasts/the-bank-of-japan-interest-rate-forecast