FX Daily: Subdued oil volatility preventing USD breakout in Daily Currencies Ratings 05/06/2026 USD: Payrolls should remain USD supportive Brent’s inability to trade back to $100/bbl remains a bit baffling. The longer the supply disruption lasts, the more vulnerable the oil market should be and, in theory, face greater upward volatility whenever de-escalation hopes aren’t fulfilled. Our commodities team also notes that total inventory draw over the last month and a half has been 32m barrels, and even if the Strait of Hormuz flows resume today, inventories are likely to continue to tighten into the third quarter, leaving upside risk to prices. To keep oil prices at these levels, there must therefore be a big deal of optimism about a peace deal baked in. This is preventing the USD from breaking higher in an environment that is otherwise materially stronger than a month ago for the greenback thanks to hawkish Fed repricing. Today’s US May jobs report will test rate expectations. We look for payrolls slightly above consensus (100k vs 88k) and unchanged unemployment at 4.3%. Markets are awaiting the catalyst to leap into fully pricing in a rate hike by the Fed this year (now 17bp) – an upside surprise today could be that. A near-consensus print would probably only cement recent hawkish moves and create a firmer floor for the dollar whilst awaiting news from the Gulf. Francesco Pesole EUR: Risks remain on the downside EUR/USD bounced around yesterday, but remains stuck in a 1.160-1.1650 range that has held for most of the past two weeks. It’s still quite telling that the pair is trading about 1.5% lower than when oil was at these levels in April. The partial disconnect with oil prices remains a clear testament to the short-term rate differential returning as a more prominent driver for EUR/USD, something that is confirmed by the beta in our short-term fair value model. We continue to view next Thursday’s European Central Bank meeting as a moderately positive euro catalyst