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MUFG’s Michael Wan notes that Asian currencies should benefit from stronger regional growth differentials versus the US, particularly in AI-related export economies such as South Korea, Taiwan, Malaysia and Singapore. He highlights that Asia FX is being pulled between a stronger Dollar, sticky US yields and evolving Fed policy under Chair Kevin Warsh, alongside shifting oil-driven risk sentiment.

Asia FX tug of war intensifies

"Overall, while oil prices rose on these developments and this weighed on sentiment somewhat, the overall level of oil prices seem to be low enough to support risk sentiment. Beyond the Iran conflict, the key driver of Asia FX and rates markets is also the changing nature of the Fed under new Fed Chair Kevin Warsh, and the spillover from both a stronger Dollar and also sticky US yields. As such, while the previous underperformers such as INR and PHP have been more resilient in the near-term due to lower oil prices, we have seen some underperformance in the low yielders in our region as the drivers shift towards rate differentials."

"Moving forward, our base case for Asian currencies is that they will also receive support from better growth differentials with the US, especially the likes of AI electronic exporting currencies such as South Korea, Taiwan, Malaysia, and Singapore. Our previous framework on the drivers of Asia FX analysing past Fed rate cycles shows that yield differentials is only one factor influencing currencies in our region, with growth differentials and risk sentiment just as importantly if not sometimes more important. Of course, if the Fed does turn materially more hawkish and this also results in declines in risk appetite in markets this will certainly matter for Asia FX."

"But if our base case holds, overall strong growth in Asia, decent improvement in risk sentiment should be able to more than offset what we have seen and expect to see from the Fed moving forward."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• AUD/USD breaks the 0.7000 mark, struggling ahead of US inflation data.
• US PCE is the key catalyst, as a stronger-than-expected reading could support a hawkish Fed stance and put renewed pressure on the pair.
• China remains important to the Aussie; the PBoC left rates unchanged at 3% as expected.

The AUD/USD pair fell near the 0.700 area on Monday, struggling to extend gains as investors remain cautious ahead of the upcoming US Personal Consumption Expenditures Price Index (PCE), the Federal Reserve’s (Fed) preferred inflation gauge.

Attention now turns to the upcoming US PCE inflation report, which will be released on Thursday. A stronger-than-expected reading could reinforce expectations that the Fed will maintain a hawkish stance, supporting the Greenback and putting renewed pressure on AUD/USD.

The People's Bank of China (PBoC) left interest rates unchanged earlier in the day. China-related sentiment also remains important for the Australian Dollar, given Australia’s strong trade exposure to the world’s second-largest economy.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6997, keeping a bearish near-term tone as it sits beneath both the 20-period and 100-period Simple Moving Average (SMA) at roughly 0.7013 and 0.7075. The pair is capped by a tight band of nearby resistance levels just overhead, while the Relative Strength Index (RSI) around 38 suggests persistent downside pressure rather than an imminent recovery.

On the topside, initial resistance is seen at 0.7002, followed by a more congested barrier near 0.7013–0.7020, where a horizontal cap aligns with the 20-period SMA. A sustained break above these levels would be needed to ease immediate selling pressure, with the 100-period SMA near 0.7075 acting as a higher resistance hurdle. On the downside, the first notable support comes in at 0.6995, where a horizontal floor guards against a deeper extension of the recent decline.

(The technical analysis of this story was written with the help of an AI tool.)

• EUR/USD hovers near three-month lows as hawkish Fed expectations keep the US Dollar supported.
• Signs of progress in US-Iran talks improve market sentiment but fail to lift the Euro.
• ECB President Christine Lagarde says the central bank must remain agile in responding to the Iran shock.

EUR/USD trades under pressure on Monday, extending losses from the previous week as expectations of a hawkish Federal Reserve (Fed) underpin the US Dollar (USD), even as easing tensions in the Middle East curb safe-haven demand for the Greenback. At the time of writing, the pair trades around 1.1498, hovering near its lowest level in three months.

The first round of face-to-face talks between the United States and Iran concluded in Switzerland on Monday, with Pakistan and Qatar acting as mediators. In a joint statement, Qatar and Pakistan said Washington and Tehran had agreed on a roadmap to reach a final deal within 60 days. The two sides also agreed to continue technical-level talks for the remainder of the week.

However, improved market sentiment on optimism surrounding US-Iran negotiations did little to help EUR/USD recover from recent losses, as hawkish Federal Reserve expectations kept the US Dollar favored over the Euro (EUR).

At last week's monetary policy meeting, policymakers stressed their commitment to returning inflation to the 2% target after price pressures accelerated in recent months due to the energy shock.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is trading around 101.00, near its highest level in thirteen months.

Across the Atlantic, the European Central Bank (ECB) is also facing a difficult trade-off between rising inflation and slowing economic growth. Policymakers responded by raising interest rates by 25 basis points earlier this month.

Speaking on Monday, ECB President Christine Lagarde said the ECB must remain agile in responding to the Iran shock and that the central bank is "well positioned" to navigate the situation. She added that the outlook remains uncertain, with upside risks to inflation and downside risks to economic growth, but noted that there is "no evidence yet of de-anchoring or second-round effects that warrant a more forceful policy action."

Focus now shifts to a busy week ahead, featuring a slate of speeches from ECB policymakers, preliminary global Purchasing Managers Index (PMI) data, the US Personal Consumption Expenditures (PCE) Price Index report and the final estimate of first-quarter US Gross Domestic Product (GDP).

• The Dow closed higher Monday even as the broader market sold off.
• The green close reflects a rotation out of mega-cap technology, not genuine strength.
• Thursday's core PCE release is the week's decisive catalyst against a hawkish Fed backdrop.

The Dow Jones Industrial Average (DJIA) booked a green close on Monday, adding roughly 167 points, or 0.3%, on a session that was anything but bullish underneath. That gain reads as strength until you notice the S&P 500 slipped 0.3% and the Nasdaq Composite shed 1.1%, which means the index did not lead the tape so much as outlast it. The DJIA settled near 51,750 after a volatile run; the green print owes far more to what it does not hold than to anything it does.

Borrowed strength from a tech exodus

The real story on Monday was capital fleeing the mega-cap technology that has carried this market for two years. Alphabet dropped 6% on fears that artificial intelligence talent is heading for the exits, with Amazon and Meta off 4% and 3% and the newly listed SpaceX sliding another 8% in its third straight decline. Holding far less of that growth complex than the Nasdaq, the DJIA became the passive beneficiary of the rotation into value rather than its engine. Microsoft, one of the Dow's own thirty, fell 2% and still could not drag the index red, a measure of how indiscriminate the bid for everything-but-tech really was.

Falling Crude Oil cuts both ways

Crude Oil prices turned lower after mediators Qatar and Pakistan said Washington and Tehran had agreed on a roadmap toward a final deal within 60 days; the slide deepened once the Treasury cleared Iranian Crude Oil sales for the same window, taking Brent down more than 3% toward $77 and WTI off over 2% to near $74. Cheaper energy flatters the Dow's industrial and transport names, though a roadmap is not a signed deal. Implementation talks have already slipped amid renewed fighting in Lebanon; treating a 60-day framework as settled peace is the kind of optimism this tape has burned before.

A high that would not stick

The price action backs that skepticism, with futures dipping to the session low near 51,500 during the overnight and premarket hours before grinding higher through the cash session to a fresh high close to 51,900 and then surrendering roughly 140 points to settle near 51,750. A push to a new high that fades almost immediately is not the signature of a market that trusts its own rally. The Stochastic Relative Strength Index (Stoch RSI) finished around 49.5, mid-range with no momentum extreme in either direction, the reading of a tape that is churning rather than breaking out.

All roads lead to Thursday's PCE

The week's defining event lands Thursday at 12:30 GMT, when the May reading of the Personal Consumption Expenditures Price Index (PCE) arrives alongside the third estimate of first-quarter Gross Domestic Product (GDP). Core PCE is expected to tick up to 3.4% YoY from 3.3%, with the monthly pace seen near 0.3% against 0.2% prior; the headline gauge is pencilled in at 4% YoY. That matters because last week's hawkish Federal Open Market Committee (FOMC) decision pulled rate-hike expectations forward to as soon as October, leaving the Federal Reserve (Fed) hunting for any excuse to tighten. A hot inflation print would harden that pricing; rotation only shelters the Dow until the entire tape reprices on rates.

Resistance: The session high near 51,900 is the immediate ceiling, with the round 52,000 mark just above. Rallies into that band look like selling opportunities while the Fed leans hawkish; bulls need a close above 51,900 before any breakout deserves trust.

Support: Initial support sits near 51,650, the intraday shelf the index leaned on through the afternoon, with the session low near 51,500 the line that matters beneath it. A close below 51,500 would confirm the rotation bid has run out of road.

Bias: The directional lean is lower into Thursday, with Monday's green close best read as a rotation artifact rather than evidence of underlying demand. The spike-and-fade tape argues for fading strength rather than chasing it; the play is to sell rallies toward 51,900 with a downside target near 51,500. A hot core PCE print is the catalyst most likely to crack that floor.

Dow Jones Industrial Average 5-minute chart

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note that USD/SGD remains supported around 1.29 as the Singapore Dollar (SGD) Nominal Effective Exchange Rate (S$NEER) trades near the top of its band, implying the pair should hover close to this level. In the short term, they expect consolidation between 1.2900 and 1.2935, while over the coming weeks the pair could push toward 1.2960 if support at 1.2870 holds.

Upside bias while consolidation persists

"24-HOUR VIEW: While we indicated last Friday that USD “could continue to rise,” we highlighted that “negative divergence is forming, and a break above the major resistance at 1.2930 is unlikely.” Upward momentum was stronger than expected, as USD rose to 1.2935 before settling at 1.2922 (+0.13%). There has been a tentative slowdown in momentum, but this is more likely to lead to USD trading in a range at these higher levels rather than a sustained pullback. Expected range for today: 1.2900/1.2935."

"1-3 WEEKS VIEW: Last Thursday (18 Jun, spot at 1.2880), we stated that “the risk for USD has shifted back to the upside,” but we indicated that it “must first surpass the 1.2915/1.2930 resistance zone before a continued rise is likely.” USD broke above the resistance zone on Friday, printing a high of 1.2935. While we would have preferred a more decisive break, the price action suggests that USD could rise toward 1.2960. To keep the momentum going, USD must hold above 1.2870 (‘strong support’ level was at 1.2840 last Friday)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• US VP Vance says US-Iran talks laid a constructive foundation.
• Starmer’s resignation fails to derail Pound’s intraday recovery.
• Core PCE, GDP and PMIs shape next US Dollar catalyst.

The Pound Sterling advances some 0.14% on Monday as the US-Iran negotiations laid a “good foundation” according to US Vice President JD Vance, after ending the first round of talks in Switzerland. Meanwhile, the UK PM Keir Starmer announced its resignation, though the move didn’t spill over to the GBP/USD, which trades solidly at around 1.3250.

GBP/USD gains as diplomacy headlines cushion Starmer resignation risks

Market sentiment improved since the US and Iran delegations met for negotiations, yet Tehran called for a closure of the Strait of Hormuz due to Israel's continued attacks on Lebanon. This prompted a reaction by US President Donald Trump, who threatened to attack Tehran if Tehran fulfilled its threats about Hormuz.

Political turmoil didn’t weigh on the Pound, which traded higher throughout the day despite Prime Minister Keir Starmer stepping aside and opening nominations for his replacement on July 9.  The leader to succeed him is Andy Burnham, who was recently sworn in as a member of the UK Parliament.

Fears that Andy Burnham would become the new PM triggered a jump in UK Gilts earlier this year, but so far, his team has said that he will adhere to the current Chancellor, Rachel Reeves' fiscal rules.

Analysts cited by Reuters said, “We still need to get clarity on what will change if the fiscal rules stay the same. So, from a markets point of view there will be a laser focus on the costs of any policy changes and what they mean for economic growth.”

In the US, the economic docket is light, though traders' eyes are on Flash PMIs, the final reading of Q1 2026 GDP, and the Federal Reserve’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index. In the UK, investors' focus would be on political issues, along with speeches by Bank of England (BoE) speakers.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3260, keeping a bearish near-term tone as spot holds below the clustered simple moving averages (SMA) from the Moving Average Triple now seated around 1.3459. The failure to sustain the former upwards support trend line, broken near 1.3441, reinforces a downside bias, while the Relative Strength Index (RSI) at about 38 stays in weak territory, suggesting sellers retain the initiative despite intermittent rebounds.

On the topside, the Moving Average Triple at roughly 1.3459 forms the first significant resistance, aligned with the broader downwards resistance trend line drawn from the 1.3869 region, which continues to cap recovery attempts. On the downside, price is drifting back toward the broader ascending-support structure that originates near 1.3159 and recent lows just above 1.3200, where another test of that zone would be needed to signal whether bears can extend the slide or if the pair instead stabilizes into a broader consolidation.

(The technical analysis of this story was written with the help of an AI tool.)

BNY’s Geoff Yu highlights that iFlow Carry has turned negatively significant for the first time in 2026, signalling ongoing unwinding of carry trades but also a potential contrarian opportunity. He argues that improved risk appetite, helped by a Gulf ceasefire and a limited Fed hawkish pivot, could support a strong recovery in FX carry as liquidation completes.

Carry unwinds hint at rebound

"Our iFlow Carry index has moved into negative statistical significance for the first time in 2026. The index is the daily Spearman rank correlation between 32 currency flow indicators and their corresponding local bond yields. This index gauges the strength of flows’ alignment with their corresponding bond yields."

"Current flows indicate that currency flow performance is increasingly negatively aligned with those currencies’ bond yields, i.e. carry trades are unwinding. While this may continue in the near term, we see the alignment as a contrarian signal, indicating that carry trades stand to recover strongly as liquidation runs its course. Recovery in iFlow Carry is also consistent with the improved risk environment given the ceasefire in the Gulf and a limited hawkish pivot from the Fed for now."

"To identify the most attractive currencies in line for mean reversion, we look for those with the biggest potential moves in rankings if carry interest turns strongly positive. BRL longs offer a strong risk-reward profile according to this criterion. The currency is only moderately overheld but has been, by far, the most-sold carry currency over the past month."

"All other high-yielding currencies also remain net long, but flow scores are more subdued. CHF is a similar story case for funders: over the past month it has been well-bought, while its holdings score is now comfortably positive. This is a very rare state of affairs for a currency with zero rates, and – unlike JPY – it is not considered excessively undervalued."

"Already, we are seeing a shift toward improved risk appetite outside of equity markets, and we are particularly attentive to potential gains in FX carry trades as real yields recover. The bigger question is how to reconcile U.S. exceptionalism with improved risk-reward elsewhere, and that is where idiosyncratic factors will matter greatly."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• USD/JPY trades down to161.10 as traders stay cautious near the four-decade high around 162.00.
• Intervention risks remain elevated with Japanese authorities closely monitoring currency moves.
• US PCE is the next key catalyst as a stronger inflation print could support the Fed’s restrictive stance, while softer data may trigger profit-taking.

The USD/JPY pair sank as low as 161.07 on Monday, retreating from highs near 161.90 as traders remain alert to possible Japanese intervention after the pair moved close to a four-decade high.

Japanese officials have repeatedly warned that they are closely monitoring currency markets, and the latest move comes after USD/JPY posted its highest weekly close in about 40 years.

For now, USD/JPY remains supported by the Greenback’s yield advantage, but the closer the pair gets to 162.00, the greater the risk of verbal or direct intervention from Tokyo. That could leave the pair vulnerable to sharp pullbacks even if the broader trend remains tilted to the upside.

Attention also turns to the upcoming US Personal Consumption Expenditures Price Index (PCE), the Fed’s preferred inflation gauge. A stronger-than-expected PCE reading on Thursday could reinforce expectations that the Fed will keep policy restrictive for longer, while a softer print may give traders a reason to take profit after the pair’s strong rally.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 161.35, maintaining a constructive bullish bias as it holds above the 20-period Simple Moving Average (SMA) at 161.12 and the 100-period SMA at 160.27. The pair also stays above horizontal support at 161.16, while the Relative Strength Index (RSI) eases back toward the mid-60s area around 59, suggesting bullish momentum is moderating rather than reversing after recent overbought readings.

On the topside, initial resistance is seen at 161.58, followed by 161.77, and then the recent horizontal cap near 161.92. On the downside, a break below the nearby 161.16 support would expose the 20-period SMA at 161.12, with the deeper 100-period SMA underpinning the broader uptrend around 160.27.

(The technical analysis of this story was written with the help of an AI tool.)

Nomura’s Dominic Bunning highlights that British Pound (GBP) has reacted calmly to Keir Starmer’s resignation, with investors focusing on the prospect of Andy Burnham becoming Prime Minister and his choice of Chancellor. Bunning argues that GBP’s medium-term path will be driven more by the BoE’s relatively dovish reaction function and narrowing policy rate differentials than by UK political developments, though fiscal-rule changes and tax hikes remain key tail risks.

BoE policy seen driving GBP path

"The FX market has taken the news of Keir Starmer’s resignation rather calmly, with GBP actually outperforming on signs that the new Prime Minister may be appointed rather than elected, thus potentially softening the risk of any eye-catching and GBP-negative headlines from the campaign trail."

"From a political and fiscal perspective, two issues stand out to us as ongoing tail risks for GBP."

"More broadly, cyclical dynamics are at the heart of our view of GBP underperformance and long EUR/GBP trade idea."

"We have long thought the BoE’s reaction function would be more dovish than many of its peers."

"Our baseline forecasts see policy rate differentials narrowing by 125bp by the end of 2027 (75bp ECB hikes, 50bp BoE cuts)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• Silver gains nearly 1.7% and holds around $66.00 amid diplomatic progress between the US and Iran.
• Lower Oil prices help ease concerns about an energy-driven inflation shock.
• Expectations of a more hawkish Fed continue to cap the precious metal’s upside potential.

Silver (XAG/USD) trades around $65.90 at the time of writing on Monday, up 1.69% on the day and snapping a three-day losing streak. The white metal is attracting renewed investor interest as markets assess the implications of diplomatic progress between the United States (US) and Iran.

Support for Silver comes after Qatar and Pakistan announced that Washington and Tehran have agreed to a formal roadmap aimed at reaching a final peace agreement within the next 60 days. The development has helped push Oil prices lower and ease concerns about a renewed energy-driven inflation surge, a factor that had recently fueled volatility across financial markets.

Iranian Foreign Minister Abbas Araqchi also confirmed several breakthroughs in the negotiations, including waivers for Oil and petrochemical exports, the release of part of Iran’s frozen financial assets, and the launch of a broader economic reconstruction program.

However, the geopolitical outlook remains uncertain. US President Donald Trump warned on Sunday that the United States could carry out direct strikes against Iran if Tehran-backed groups launch further attacks on Israel. The threat continues to encourage a degree of caution among investors despite the diplomatic progress reported so far.

Meanwhile, Silver’s gains could remain limited by shifting monetary policy expectations. Last week, the Federal Reserve (Fed) left interest rates unchanged while delivering a more hawkish message. Updated projections showed that nine of the nineteen members of the Federal Open Market Committee (FOMC) now expect at least one rate hike this year.

This shift has led markets to consider the possibility of a rate increase as early as September. In this environment, higher US Treasury yields and a resilient US Dollar (USD) could reduce the appeal of non-yielding assets such as Silver, even as ongoing geopolitical uncertainties continue to support demand for precious metals.