* Fed holds rates steady but with highest level of dissent since 1992

* Oil soars as Trump rejects Iran’s offer, says blockade stays until nuclear deal

* US stocks flat, mega cap tech earnings disappoint after close

* Gold and silver drop further on crude-driven inflation concerns

FX: USD touched the 50-day SMA 98.49 as a divided FOMC noted increasing worries over inflation with three dissents from policymakers who no longer think the bank should communicate a bias towards lowering costs. These hawkish dissents were seen as a shot across the bows to new incoming Chair Warsh who may be more dovish. Powell’s final meeting as head saw him confirm he will stay as a governor. He also said the Fed could move away from easing bias in language at its next meeting. Money markets reined in bets on rate cuts with no changes expected this year.

EUR neared two-week lows after trading sideways in a relatively tight range ahead of the ECB meeting. The 200-day SMA is at 1.1675 and the 50-day at 1.1648. Relative central bank policy will be front and centre with the outlook and rate differentials potentially driving price action in the major over the medium-term. Focus is on signals at today’s ECB gathering with summer hikes on the table to keep inflation expectations anchored.

GBP continued to consolidate above the 100-day SMA at 1.3461. The 50-day and 200-day SMAs sit below just above 1.34. The April peak is 1.3599. PM Starmer has survived the week of scrutiny, but attention turns to next week’s local elections where the ruling Labour party are expected to perform very badly. Near-term focus is on today’s Boe meeting. Interestingly, speculative futures positioning in GBP is sizeably short, which means bears are vulnerable to a squeeze.

JPY struggled as rising Treasury yields meant widening spreads with JGBs and a headwind for the yen. The major broke to the upside and the uptick in bullish momentum looks like it will take out the recent cycle high from late March at 160.46. We note we are potentially in intervention territory but also the fact that Governor Ueda abstained from giving guidance for a hike at the June meeting at his recent BoJ press conference.

US stocks: The S&P 500 lost 0.49% to close at 7,139, the Nasdaq was 1.01% lower at 27,029 and the Dow Jones settled down by 0.05% at 49,141. Energy was the big outperformer as crude prices jumped over 6%, while materials and healthcare were the main laggards. Robinhood plunged 13% after the online broker missed Q1 profit expectations. Visa jumped 9% after the company raised its full-year forecast. Data storage companies climbed after Seagate reported an upbeat Q4 forecast, itself up more than 10%. Intel soared another 12% to fresh record high after its positive results last week. Its CPUs are increasingly being used to coordinate workloads. Meta fell 5% after results after the close as it announced it was further expanding its AI spending. Alphabet was the only tech titan who released results after hours trading in the green, as Q1 profit surged on search business and AI demand.

Asian stocks: Futures are mixed. APAC stocks traded better through the session though the lack of progress in peace talks between Iran and the US overshadowed the risk mood. The ASX 200 underperformed with healthcare and miners weighing. The Hang Seng and Shanghai Composite outperformed their peers amid a plethora of earnings. BYD, the EV maker beat estimates but net income dropped.

Gold slid for a third straight day as inflation worries boosted Treasury yields. The 10-year yield rose to one-month highs.

Day Ahead – ECB & Bank of England meetings

The ECB is expected to hold the deposit rate at 2.00% given the limited amount of hard data or concrete signs of second round inflationary effects. Markets predict up to 75bps of tightening in 2026, beginning in June and a second hike in July. Given expectations for a hold this time, focus will be on the statement for rate hike signals, and then President Lagarde’s press conference on how likely a pre-summer increase is. Overall, the ECB is expected to avoid pre-committing to action, but keep the door open to summer tightening, with optionality the key watchword as numerous policymakers have outlined in recent weeks. As such, June’s announcement and updated forecasts are likely to be the meeting to watch. The euro may go back to being driven by risk sentiment and oil fairly quickly after the meeting, unless Lagarde & co are explicitly hawkish.

Policymakers at the Old Lady are expected to maintain the Bank Rate at 3.75% and await further information on the impact of the Middle East conflict on the UK and global economy. However, the decision may well be subject to dissent, with a recent inflationary PMI series, a hawkish decision-making-panel and hotter than expected wages and services inflation arguing in favour of action but offset by cooler-than-expected core CPI in March. Governor Bailey has been quite clear that the BoE is in no rush. More recently, market pricing has taken another turn on the back of deteriorating energy markets and the macro data coming in mostly on the hawkish side. Overall, policymakers will likely want to wait for more data, evidenced by Greene outlining that second round effects could take months to show, before acting, particularly as domestic activity was relatively weak even before the conflict. Money market pricing is indicative of an April hold, but there is currently more than 70bps of tightening implied by end-2026.

Chart of the Day – Apple hoping to handsomely beat

Apple reports its latest earnings after the US closing bell on Thursday. AI-linked growth amid durable earnings are the key watchwords ahead of the iPhone maker worth nearly $4 billion. The Cupertino-based company celebrated its 50^th birthday recently and also announced a successor to CEO Tim Cook who has been at the helm for over 15 years and himself took over from co-founder Steve Jobs. Consensus forecasts EPS of $1.96 on revenues of $109.3 billion. This is the least direct AI infrastructure trade of the group, so the focus is less on AI hype and more on resilience. Apple’s services remain strong, so if margins hold and China looks more stable that may be enough to support the new boss. But if the forward message feels too incremental, the stock risks looking expensive as well as unexciting. The stock has lagged all the Mag 7 apart from Microsoft over the past 18 months with the stock marginally in the red on the year. A wide range has developed since October between $243 and $277 give or take. The former is a major Fib (38.2%) of the move higher from the Liberation Day low to the all-time top at $288.62. The 50-day SMA sits at the December 2024 swing high just above $260.