Forex News

Geoff Yu at BNY highlights that the PBoC’s new overnight liquidity tool was launched at 1.25%, below consensus and the seven-day reverse repo rate, sending a dovish signal. The facility aims to smooth short-end funding and cash market volatility. Government bond yields edged lower and USD/CNY slipped, as markets priced a modest easing in Chinese financial conditions.

Short-end rates guided lower

"China easing: Any shift in the PBoC’s liquidity management will have implications for global financial conditions. The new overnight reverse repo facility has debuted at 1.25%, which is 15bp below the key 7-day reverse repo rate and also below the 1.30-1.35% consensus range before the operation. Evidently, the weak round of data seen over the past month has increased the impetus for stimulus, and we firmly believe that fiscal measures are on the way."

"However, such responses can only go so much without fundamental change in corporate “involution,” and the message is clear as Beijing’s city government issued yet another summons to platform firms to improve profitability."

"The PBoC has set the rate on its new overnight liquidity tool at 1.25%, below the 1.30-1.35% consensus range, in a move widely viewed as a mild dovish surprise and a de facto easing signal. The bank also carried out ¥300bn of overnight reverse repurchase operations, while its seven-day reverse repo benchmark stayed at 1.4%. The action is the first use of this facility to manage liquidity and is intended to better control short-end borrowing costs, smooth cash market volatility and support a more market-oriented framework for short-term rate setting."

"Market reaction was modest, with government bond yields edging lower after the announcement. CSI 300 +1.21% to 4927, USDCNY -0.106% to 6.7932, 10y CGB -1.2bp to 1.714%."

"FI: There was broad-based demand for sovereign bonds, led by the Eurozone, the U.K and India. Selling was concentrated in Philippine, Colombian and Japanese government bonds."

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

• GBP/JPY forms ascending triangle near yearly highs.
• RSI clears 50, signaling bullish momentum is accelerating.
• Break above 215.00 exposes 216.00 and 216.60 resistance.

The Pound Sterling advances against the Japanese Yen on Monday, up 0.59% amid fears for a possible intervention by Japanese authorities in the foreign exchange markets. At the time of writing, the GBP/JPY trades at 214.78, bouncing off daily lows of 213.41.

GBP/JPY Price Forecast: Technical Outlook

The cross-pair consolidates near the year highs, forming an ‘ascending triangle’, which could open the door for further upside. The GBP/JPY has reclaimed the 50-day Simple Moving Average (SMA) at 214.06, which has exacerbated the rally towards the current spot price of 215.00.

Momentum, as measured by the Relative Strength Index (RSI), turned bullish exponentially, clearing the 50-neutral level and heading toward the 55.00 mark. The path of least resistance is tilted to the upside, if not for the potential intervention.

The first resistance for GBP/JPY would be 215.00. A breach of the latter will expose the 215.40-215.50 area ahead of 216.00. Above this area, the next resistance is the year-to-date (YTD) high at 216.60.

Downwards, the first support is the 50-day SMA at 214.06. If breached, the next support would be the 213.00 mark ahead of the 100-day SMA at 212.83.

GBP/JPY Price Chart – Daily

HSBC strategists highlight that the US Dollar (USD) has broken out of prior G10 ranges following an interim US–Iran peace agreement and a shift in Federal Reserve (Fed) messaging. They argue that hawkish repricing of US rates, underpinned by resilient US growth, should support further USD strength, with the Dollar Index (DXY) already moving above 101.

Fed repricing underpins Dollar strength

"The interim US-Iran peace agreement, alongside a shift in Federal Reserve (Fed) messaging, has disrupted the previously range-bound behaviour across several G10 currencies. The change in the Fed narrative is particularly supportive for the USD, enabling a break-out from long-established trading ranges. Reflecting this, the US Dollar Index (DXY) moved above 101 (Bloomberg, 26 June)."

"Although easing geopolitical tensions typically reduces demand for the USD as a “safe haven” currency, we expect the increasingly hawkish repricing of US rate expectations to become the main driver, supporting further USD strength over the near term. Importantly, Fed policy appears to be anchored in continued US economic resilience, rather than the stagflation-style trade-offs shaping policy debates elsewhere in G10."

"Hawkish repricing of US rates, supported by resilient growth, is USD positive."

"The US-Iran deal and a shift in Fed messaging ended rangebound moves in many G10 FX pairs."

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

UOB’s Senior Technical Strategist Quek Ser Leang expects USD/CNH to remain confined in a tight near-term range, with the Dollar likely to trade between 6.7950 and 6.8100. Despite easing upward momentum, UOB still sees scope for a move toward 6.8300 while 6.7900 holds as strong support. On a 1–3 month horizon, a break above the 21-week EMA at 6.8430 is needed to signal a sustained recovery.

Dollar holds range with upside risks

"24-HOUR VIEW: USD rose to 6.8195 last Thursday and then pulled back. On Friday, when USD was at 6.8020, we indicated that “although there is room for USD to retreat further, given that there is no clear increase in downward momentum, any decline is likely to stay within a 6.7950/6.8100 range.” USD then traded between 6.7982 and 6.8094, closing largely unchanged at 6.8044 (+0.04%). There has been no shift in either downward or upward momentum, and we continue to expect USD to trade between 6.7950 and 6.8100."

"1-3 WEEKS VIEW: We have held a positive USD view since the middle of the month. In our most recent narrative from last Thursday (25 Jun, spot at 6.8130), we indicated that “the surge in momentum suggests USD could rise to 6.8300.” While upward momentum has since eased, as long as the ‘strong support’ at 6.7900 (no change in level) is not breached, there is still a chance for USD to head toward 6.8300"

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

Here is what you need to know for Tuesday, June 30:

The US Dollar Index (DXY) lost some momentum on Monday, trading near 101.10 but remaining close to recent highs, as investors took profits ahead of key US labor market data later in the week. The Greenback remains supported by resilient US activity, firm Treasury yields and expectations that the Federal Reserve (Fed) could keep policy restrictive for longer.

EUR/USD recovered some ground near the 1.1420 level as traders digested mixed Eurozone sentiment data and comments from European Central Bank (ECB) President Christine Lagarde at the ECB Forum on Central Banking 2026. Lagarde warned that Europe is more likely to face shocks that push inflation away from the target, adding that the region’s resilience gives the ECB room to raise rates without creating financial stress. Attention now turns to German Retail Sales and preliminary HICP inflation.

GBP/USD edged higher near the 1.3260 price region as the US Dollar (USD) softened, although Sterling’s upside remained limited by caution ahead of fresh United Kingdom (UK) data and broader risk sentiment.

USD/JPY remained elevated near multi-decade highs at 161.90 as the Yen continued to suffer from the wide policy gap between the Federal Reserve and the Bank of Japan (BoJ). The BoJ’s gradual tightening path has done little to offset the Dollar’s yield advantage, keeping Japanese authorities under pressure as markets watch for possible intervention.

AUD/USD fell near the 0.6890 area ahead of the Reserve Bank of Australia (RBA) meeting minutes due early Tuesday. Markets will search for details on the Board’s inflation concerns and whether policymakers still see room for further tightening. China will also be key for the Aussie, with the NBS Manufacturing and Non-Manufacturing PMIs also due on Tuesday.

West Texas Intermediate (WTI) Oil trades muted near the 70.50 price level as renewed concerns over the Strait of Hormuz keep supply-risk premiums alive. However, prices remain below recent highs as investors continue to assess whether tensions in the Middle East will disrupt exports or gradually ease.

Gold came under pressure near the $4,020 level amid a stronger Greenback backdrop and higher rate expectations, reducing demand for the non-yielding metal. Still, geopolitical uncertainty continues to limit deeper losses, with traders watching US jobs data for the next major move.

• Silver consolidates below $60 as death-cross risk intensifies.
• RSI aims lower, signaling sellers remain firmly in control.
• A break below $57 exposes $56.49 and $54.46 as supports.

Silver (XAG/USD) price treads water, losing over 1.50% on Monday as the white metal is poised to end June down over 22.50% after tumbling below $60.00 per troy ounce. The rise in US Treasury yields, the strength of the US Dollar, and the lack of a geopolitical risk premium keep the non-yielding metal under pressure.

XAG/USD Price Forecast: Technical Outlook

Silver is consolidating in the $55.70-$59.57 range, with buyers unable to reclaim the $60.00 level. Worth noting that the 50-day Simple Moving Average (SMA) at $72.61 approaches the 200-day SMA at $69.64, about to form a ‘death-cross.’ This would cement the case that sellers are in charge and that further losses lie ahead.

From a momentum standpoint, the Relative Strength Index (RSI) aims lower, closing in on oversold territory. Hence, the path of least resistance is downwards.

If XAG/USD dives below $57.00, it clears the path to challenge the December 9, 2025, low of $56.49, followed by the October 17, 2025, high of $54.46. Once cleared, the next support is the November 21, 2025, daily low of $48.63.

For a bullish reversal, buyers must clear the $60.00 mark, ahead of testing the 200-day SMA at $69.64.

XAG/USD Price Chart – Daily

BNY’s Geoff Yu highlights renewed US Dollar (USD) strength as a growing headwind for APAC (Asia-Pacific) currencies, with USD/JPY identified as the pivotal pair. Yu notes that a decisive break above key technical resistance could trigger negative spillovers across APAC FX, equities and rates, as investors prioritize FX hedge management over macro data in the current environment.

Dollar gains pressure APAC currencies

"Asia is now facing a renewed headwind from the resurgent U.S. dollar as markets reprice Fed rate expectations, adding to persistent foreign outflows and fragile equity sentiment."

"Macro data is likely to take a back seat as investors focus on managing portfolio FX hedges amid broad USD strength."

"USD/JPY remains the key market to watch."

"A decisive break above 162 technical resistance would raise the risk of negative spillovers across APAC currencies, equities, and rates."

"The offshore yuan (CNH) has shown relative resilience, but that’s increasingly difficult to sustain, suggesting investors have room to rebuild USD hedges if dollar strength persists."

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

HSBC notes that dovish comments from European Central Bank (ECB) President Christine Lagarde and lower Oil prices now lead its economists to expect the ECB to hold rates in 2026. The bank sees Euro (EUR) downside over coming months, as EUR/USD is expected to drift lower amid lingering regional growth concerns and rising French political risks ahead of the April 2027 presidential election.

ECB hold and French risks weigh on Euro

"In Europe, dovish remarks from European Central Bank (ECB) President Christine Lagarde on 22 June likely put downward pressure on the EUR. Since the Strait of Hormuz has reopened and oil prices have fallen, our economists now expect the ECB to hold rates in 2026, rather than proceed with the two additional hikes previously anticipated."

"We therefore expect EUR/USD to drift lower over the coming months. While lower energy prices can be supportive for the EUR, they are unlikely to be enough to resolve wider concerns about economic growth in the region. Political risk could also re-emerge, with France’s April 2027 presidential election approaching and centrist parties currently trailing in the polls."

"Any perceived weakening in fiscal discipline or reform momentum could raise risk premia, slow capital inflows, and add further pressure on the EUR."

"The EUR and GBP are likely to face rising headwinds from political uncertainty and growth risks."

"ECB President Lagarde’s dovish tone and lower oil prices support an ECB rates hold."

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

European Central Bank (ECB) President Christine Lagarde delivered an introductory speech at the ECB Forum on Central Banking 2026 on Monday, warning that the Eurozone is likely to face more frequent shocks in the coming years that could move inflation away from the ECB’s target.

Key takeaways:

We are more likely to face shocks in coming years that push inflation away from target.

The resilience Europe has built means rate hike effects on the economy are more contained.

Resilience means the ECB can raise rates to address inflation without fear it becomes a source of financial stress.”

Lagarde flags inflation shocks but backs ECB’s capacity to hike

FXS Speechtracker’s 7.3/10 score marks a clear hawkish tilt versus Lagarde’s historic 5.6/10 baseline, signaling stronger conviction on the need to confront inflation risks. By warning that the Euro area is more likely to face shocks in coming years that push inflation away from target, Lagarde reinforces a bias toward keeping policy tight and being ready to re-hike if price pressure reemerges.

Lagarde’s emphasis that the resilience Europe has built makes rate hike effects on the economy more contained underpins the idea that the ECB can act more forcefully without triggering financial stress. This combination of heightened inflation risk and confidence in the system’s resilience supports a hawkish interpretation, likely to underpin Euro demand as markets reassess the ceiling for future ECB tightening.

A section of this article was written with the help of an AI tool.

• The US 10-year yield edges higher as Middle East tensions stabilize Oil.
• The US 2-year yield rises as markets price 2026 Fed tightening.
• Warsh, JOLTS, ISM and NFP to drive next yield catalyst.

US Treasury yields steadied on Monday during the North American session as tensions in the Middle East halted the decline in crude Oil prices, while money markets are still pricing in at least 34 basis points of Federal Reserve (Fed) tightening in 2026.

Yields hold firm as Fed tightening bets counter softer US Dollar

The US 10-year Treasury note yield, the benchmark, rises by 1 basis point to 4.38%. Negotiations between the US and Iranian teams are expected to take place in Doha, Reuters reported.

The US 2-year Treasury yield, the most sensitive to changes in monetary policy, rises nearly 2% to 4.11%. Money markets had so far priced in 34 bps of Fed tightening towards the end of the year.

Meanwhile, the US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, recoils during the day, down to 101.08, and falls 0.28% as traders seeking risk move towards riskier assets.

The 5- and 10-year breakeven rates, a market-based measure of inflation expectations, are at 2.21% and 2.20%, respectively, after peaking in mid-April at 2.72% and 2.5%, respectively.

The US economic schedule will be busy. Aside from the appearance of the new Fed Chair, Kevin Warsh, at Sintra in Portugal, the docket will feature JOLTS job openings, the ISM Manufacturing PMI, jobless claims, and the US Nonfarm Payrolls for June, which are expected to provide clues about the jobs market.

US 10-year Treasury yield chart