Forex EUR/USD: Euro Recovers as Markets Await New Drivers
The euro is regaining ground versus the US dollar, trading above 1.1740 in early Asian trade after last week’s bearish pressure spurred by robust US employment data. All eyes now turn to Thursday’s German inflation report (08:00 GMT+2), with consensus expecting annual CPI at 2.0% and little change month-over-month. Yet, inflation has faded as a top market concern following the ECB’s proactive monetary easing. Market sentiment suggests the central bank may only deliver one more rate cut this cycle, likely waiting for the optimal window. The Federal Reserve, meanwhile, is under increasing pressure from the White House to adopt a dovish tone, though Chair Jerome Powell told Congress recently that the Fed will not rush to ease policy. Market participants are therefore focused on the June FOMC minutes (due Wednesday 20:00 GMT+2) for clues about the pace and likelihood of further rate reductions in 2025. Trade policy remains in focus, as the 90-day tariff moratorium expires July 9—so far, only the UK has struck a comprehensive deal with the US, while China has only agreed to temporary mutual tariff reductions. Monday’s Eurozone macro releases—especially May retail sales, which slowed to 1.8% year-over-year (vs. 2.7% prior)—had a muted impact.
GBP/USD: Sterling Supported by Trade Breakthrough
The British pound is advancing against the dollar, rebounding from short-term lows and testing resistance at 1.3635. Market fundamentals remain largely unchanged, with the dollar under pressure from Washington’s trade ambiguity and persistent criticism of the Fed’s policy stance by the White House. Last week’s passage of President Trump’s expansive tax-and-spending bill has drawn warnings about a rising budget deficit and public debt, undermining investor confidence in the greenback. The upcoming expiration of the US tariff moratorium (July 9) is a key risk event, but the UK’s successful trade agreement with Washington is providing the pound with meaningful support. Other countries have until August 1 to submit proposals before tariffs come into full effect. Latest macro data from the UK—including the Halifax house price index (flat in June, up 2.5% y/y)—had minimal impact. The market is also watching for Friday’s GDP and industrial production numbers, which are expected to show a mild recovery (+0.1% after –0.3% in April) and stabilization in manufacturing.
AUD/USD: Aussie Bounces as RBA Surprises with a Hold
The Australian dollar surged back to 0.6540 in Asian trade after the Reserve Bank of Australia (RBA) defied expectations by keeping rates steady at 3.85%. Analysts had broadly anticipated a 25 bps cut. Policymakers cited ongoing uncertainty around US trade policy—specifically the risk of sharply higher US import tariffs—as a factor. The latest NAB business survey showed improved sentiment in June, with business confidence rising from 2 to 5 and conditions from 0 to 9. Meanwhile, in the US, investors await the Fed minutes and digest last week’s jobs report, which showed 147K new jobs in June (above forecasts), unemployment ticking down to 4.1%, and wage growth moderating to 3.7% y/y.
USD/JPY: Dollar Pressures Yen Despite Mixed Japanese Data
The dollar is climbing against the yen, testing 146.00 as traders parse a mixed set of Japanese macro indicators. Bank lending in June rose by 2.8% (vs. 2.4% prior and 2.3% consensus), while the seasonally-adjusted current account for May jumped to ¥3.44 trillion (vs. ¥2.94 trillion expected). However, the trade balance deteriorated, and coincident economic indices slipped. The biggest headwind for the yen remains sluggish income growth—average cash earnings slowed to 1.0% y/y in May, a deflationary sign that dims hopes for Bank of Japan tightening. The Fed minutes and the ongoing US-Japan tariff standoff remain pivotal. Initial jobless claims in the US fell to 233K last week, pushing the probability of a July Fed rate cut down to just 5% (from nearly 25% pre-NFP).
XAU/USD: Gold Sideways as Traders Wait for Fed Clarity
Gold prices (XAU/USD) are holding near $3,330/oz in subdued early trade as the market awaits fresh catalysts. The upcoming Fed minutes may provide further guidance on the trajectory of US monetary policy, with Chair Powell reaffirming the health of the labor market and economic stability. Renewed trade tensions—especially as the tariff moratorium expires—are providing mild support for safe-haven flows. Notably, only the UK has secured a comprehensive deal with the US ahead of the deadline.