The euro is showing mixed performance against the US dollar, consolidating near its highest levels since September 2021. Market activity remains subdued as investors hesitate to open new positions ahead of the highly anticipated US Non-Farm Payrolls (NFP) report, due at 14:30 (GMT+2). Analysts expect June’s nonfarm employment to contract from 139,000 to 120,000 jobs, while average hourly earnings are projected to rise by 0.3% month-over-month and hold steady at 3.9% year-over-year. The unemployment rate is expected to edge higher from 4.2% to 4.3%.
Market participants largely anticipate the Federal Reserve will cut borrowing costs at its July meeting, with odds standing at roughly 25%. However, at the European Central Bank (ECB) forum, Fed Chair Jerome Powell reiterated a cautious stance, stressing that future monetary policy moves will depend strictly on macroeconomic data, especially in light of ongoing White House tariff policies.
Today, the eurozone will publish the June services PMI at 10:00 (GMT+2). Any decline below 50.0 points—along with a lower composite PMI—could pressure the euro. Overall, the single currency is supported by concerns over US tariff policy outcomes and President Donald Trump’s proposed budget, which could swell the US debt by $3.3 trillion by revising social programs and defense spending.
Forex GBP/USD: Sterling Corrects Following Technical Pullback
The British pound is consolidating around 1.3631, attempting to recover from yesterday’s sharp drop after retreating from October 2021 highs. The recent selloff was driven by technical factors rather than fundamentals. The US dollar remains under pressure from President Trump’s restrictive trade and tax policies, while fears persist over legislation extending tax breaks, reducing social welfare, and increasing defense outlays, potentially adding $3.3 trillion to federal debt in the coming decade.
The Senate recently approved the bill with Vice President JD Vance casting the tie-breaking vote. Additional downward pressure on the dollar came from weaker-than-expected ADP employment data, which showed a 33,000 drop in June versus analyst expectations of a 95,000 increase. In the UK, June’s services PMI is due at 10:30 (GMT+2); any fall below 51.3 points or a drop in the composite index from 50.7 could weigh on the pound. Some support for sterling comes from the UK’s successful trade agreement with the US, set to avert additional tariffs when Trump’s moratorium expires on July 9.
AUD/USD: Aussie Dollar Mixed Amid Trade and Macro Releases
The Australian dollar is range-bound near November highs, with traders eyeing May’s foreign trade data: exports fell by 2.7% month-on-month after a 1.7% decline previously, while imports rose by 3.8%, up from 1.6%. As a result, the trade surplus narrowed from A$4.86 billion to A$2.24 billion—well below forecasts of A$5.09 billion.
Separately, June’s S&P Global services PMI improved to 51.8 from 51.3, beating expectations, while the composite PMI rose from 51.2 to 51.6. Retail sales for May rose by just 0.2%, missing expectations, and building permits were up only 3.2% versus forecasts of 4.8%. AiG’s manufacturing activity index dropped to -29.3 from -23.5.
US traders are also cautious ahead of today’s NFP data at 14:30 (GMT+2), which could significantly influence monetary policy. Fed Chair Jerome Powell has previously signaled a rate cut could occur later this year, but this does not align with the White House’s push for immediate cuts, targeting 1.00% or lower. The probability of a July rate cut now exceeds 25%, according to CME’s FedWatch tool, though most analysts still expect any move in September, with two to three minor adjustments by year-end.
USD/JPY: Dollar Shows Modest Gains as Traders Remain Cautious
The US dollar is posting modest gains against the Japanese yen, trading near 143.89 and extending the correction from the previous day. Market participants remain cautious ahead of the crucial US labor market data, which could influence Fed policy in the coming months. Powell’s recent remarks suggest rate cuts remain on the table, but not at the pace preferred by the Republican White House, which is pushing for more aggressive easing.
US-Japan trade negotiations are also in focus. After seven rounds of talks, little progress has been made. With the July 9 deadline approaching—the end of Trump’s 90-day moratorium—Japan and other US partners are scrambling to secure agreements that would mitigate inflationary risks. Trump’s criticism of Tokyo’s reluctance to buy US rice continues to cloud negotiations, though official figures show robust bilateral trade. The threat of increased tariffs remains a headwind for the yen.
XAU/USD: Gold Surges as Safe-Haven Demand Rises
Gold (XAU/USD) continues its bullish momentum, driven by safe-haven demand ahead of the July 9 expiration of the US tariff moratorium. Only the UK has secured a deal to avoid sudden tariff hikes. With few fundamental drivers to support the US dollar, gold could benefit further if today’s US labor report disappoints. Forecasts call for the creation of just 120,000 nonfarm jobs in June, down from 139,000 in May, while wage growth is expected to decelerate slightly. The unemployment rate could tick up from 4.2% to 4.3%.
Mortgage Bankers Association (MBA) data show the average long-term mortgage rate fell by 9 basis points last week—the lowest since April—boosting refinancing activity and lifting the average loan size to $313,700. As the Fed weighs its next move, gold may remain attractive as a hedge against policy uncertainty and rising sovereign debt risks.