The EUR/USD pair remains resilient on Forex, hovering near 1.1720, close to record highs last seen in September 2021. Markets are intently watching German retail sales, which decelerated from 2.3% to 1.6% y/y and slid from –1.1% to –1.6% m/m, underperforming expectations of a 0.5% rise. Eyes are now on Germany’s June inflation data (due at 14:00 GMT+2), expected to slightly accelerate, with the harmonized consumer price index (HICP) forecast at 0.3% m/m and 2.2% y/y. These figures will shape expectations for future ECB policy moves, with the central bank having recently cut its main rate by 25 bps to 2.10%.

The eurozone continues to face structural headwinds: subdued industrial output, rising global competition, and unresolved trade uncertainties. The July 9th expiry of the US-EU tariff moratorium threatens to raise cross-border costs, with only the UK having secured a partial trade agreement with the US—though it still faces tariffs on key exports.

Meanwhile, US core PCE for May ticked up from 2.6% to 2.7% y/y and from 0.1% to 0.2% m/m, with the broader PCE index rising from 2.2% to 2.3% y/y. This marginal inflation uptick is stoking speculation the Fed will delay rate cuts, with July cut probabilities now at 25%, up from just 12% two weeks prior, after Chair Jerome Powell signaled a dovish tilt but cautioned against immediate policy easing.

Forex GBP/USD: Pound Surges on Robust UK Economic Data

The GBP/USD pair is rallying, breaking above 1.3725 on strong bullish momentum from last week. Revised UK GDP figures confirmed 1.3% y/y and 0.7% q/q growth in Q1. Investors now await May consumer credit data, projected to slow from £1.58bn to £1.1bn, while net lending is expected to jump and mortgage approvals slightly dip. The US core PCE and inflation backdrop are also weighing on the pair, as markets raise bets for a July Fed rate cut (CME FedWatch: 25% probability).

The pound is also supported by trade policy uncertainty: while the UK secured a trade deal with the US, steel and other key exports remain tariffed. Broader optimism is tempered by hopes for a US-China trade deal, though Beijing has yet to comment.

AUD/USD: Aussie Recovers as Inflation Slows, Eyes on RBA

The AUD/USD is rebounding towards 0.6550 in Asia, retracing last Friday’s dip from local highs. Australia’s June inflation, as measured by the Melbourne Institute, slowed to 2.4% y/y (down from 2.6%), while the m/m reading ticked up 0.1% after a –0.4% prior. These signals may nudge the RBA toward further dovishness, though the central bank remains cautious as US Fed policy remains uncertain. May private sector credit in Australia accelerated y/y but decelerated m/m, indicating mixed demand. Chinese PMI data gave modest support, with manufacturing up to 49.7 and services up to 50.5.

Investors are also bracing for the US nonfarm payrolls report on Thursday, with consensus for 110K new jobs (down from 139K), slower average hourly wage growth, and a possible uptick in unemployment—all factors that could sway AUD/USD direction.

USD/JPY: Yen Strengthens as Japanese Output Disappoints

USD/JPY is retreating, testing 143.85 as last week’s bearish impulse continues. Japan’s May industrial production contracted 1.8% y/y after a 0.5% gain, and expanded just 0.5% m/m (vs. 3.4% forecast), weighed down by US tariff uncertainty. Diplomatic tensions—such as the cancellation of PM Kishida’s NATO summit trip—underscore growing economic divergence. Tokyo CPI slowed in June, casting doubt on a Bank of Japan rate hike at the July meeting, while retail sales missed expectations at 2.2% y/y.

US PCE data also looms large, nudging the Fed toward a dovish bias that could drive further dollar losses against the yen.

XAU/USD: Gold Steadies on Diminished Safe-Haven Demand

Gold is staging a minor corrective rebound, trading near 3290.00 after last week’s slide to late-May lows. Friday’s US PCE data reinforced the outlook for sticky inflation but no imminent Fed easing, limiting gold’s upside. Peace talks and a ceasefire between Israel and Iran have also dampened safe-haven demand, as risk sentiment improves. The US jobs report on Thursday could be the next catalyst for volatility in XAU/USD.