Markets continue to react positively to the stabilization of the situation in the Middle East in anticipation of negotiations between Israel and Iran. Meanwhile, investors have shifted their full attention to the release of unexpectedly positive U.S. labor market data and comments from the Federal Reserve Chair.

So, investors have redirected their focus from the Middle Eastern conflict to the previously heated situation surrounding trade disputes initiated by the U.S. president. The 90-day deadline for the delayed implementation of harsh tariffs on China is nearing its end. Resolving this critical issue—not only for Washington and Beijing but also for the broader global economy—is essential to determining whether the world will fall into a full-scale economic downturn. While it is only known that back-channel negotiations are ongoing between the countries, the outcome remains unclear. However, it is safe to say that reaching a compromise would be a major positive factor, supporting markets and demand for risk assets.

On Monday, unexpectedly strong reports on manufacturing sector activity (PMI and ISM PMI) were released, showing increases to 52.9 from 52.0 points and 49.0 from 48.5 points, respectively. Additionally, the manufacturing prices index rose slightly from 69.4 to 69.7. But the main driver that boosted demand for U.S. equities and weighed on Treasury yields was the surprise surge in job openings in the May JOLTS report. Instead of the expected decline to 7.320 million, the figure jumped to 7.769 million. Notably, the previous month's data was also revised upward to 7.395 million.

Naturally, market participants reacted to this wave of optimism, believing that improvements in the labor market reduce the likelihood of the U.S. economy sliding into a full-blown recession.

Another positive development on Monday was the speech by Fed Chair Jerome Powell, who expressed cautious optimism about the possibility of rate cuts later this year. However, he also reiterated his recurring theme this year about the risk of rising inflation stemming from Trump's trade and tariff wars. He emphasized the need for additional economic data before making any decisions on rates. Still, that was enough, given that the Chair had previously avoided even hinting at a potential resumption of the rate-cutting cycle.

What Can Be Expected on the Markets Today?

Today, the focus will be on the ADP employment report. According to the consensus forecast, the number of new jobs is expected to rise to 99,000 in June from 37,000 in the previous month. If the actual numbers meet or exceed expectations, this could be viewed positively by the markets. On this wave, we may see continued demand for company shares. The U.S. dollar may come under limited pressure, but if so, it likely won't last long. It is currently supported by optimism that the American economy will avoid a recession. The cryptocurrency market is likely to remain in a state of consolidation relative to the U.S. dollar. Crude oil prices have stabilized in anticipation of the outcome of negotiations between Iran and Israel. At the open, the Russian stock market is showing mixed performance. Opponents of Russia in the U.S. Congress have so far failed to push through a bill imposing restrictions on buyers of Russian oil.

Overall, the market outlook remains moderately positive.

Forecast of the Day:

EUR/USD

The pair is trading above the 1.1765 mark. Improved sentiment toward the dollar and the potential for another European Central Bank rate cut—given that inflation is hovering around the 2% target—could lead to a corrective decline to 1.1670, but only if the pair falls below 1.1765. A potential sell level is around 1.1755.

GBP/USD

The pair is trading near the support level of 1.3700. A break below this level could strengthen the bearish momentum. Improved sentiment toward the dollar may push the pair down to 1.3590, but only after a drop below 1.3700. A potential sell level is 1.3692.