Forex News

• EUR/GBP drifts lower, approaching year-to-date lows, in the 0.8600 area.
• Strong German Retail Sales and the UK GDP's downward revision have failed to support the pair.
• Euro bears are likely to find significant support at the 0.8600 area.

The Euro (EUR) trades lower against the British Pound (GBP) for the second consecutive day on Tuesday, with price action approaching 11-month lows at 0.8600. The positive surprise of German Retail Sales has failed to boost the Euro, while the downward revision to the UK’s Q1 Gross Domestic Product had no visible impact on the Pound.

Eurozone data released earlier in the day revealed that German Retail Sales increased 1.1% in May, following a downwardly revised 0.4% decline in April, and beating expectations of a 0.1% contraction. In the twelve months to May, retail consumption rose 1.8%, following a 0.6% drop in April, according to data released by Destatis on Tuesday.

In the UK, the final estimation of the Q1 GDP, also released on Tuesday, showed that the economy grew 0.6% in the first three months of the year, unchanged from previous estimations, although the year-on-year growth has been revised to 0.9%, down from the previously reported 1.1% rise.

Technical Analysis: Euro bears are likely to be challenged around 0.8600

EUR/GBP trades at 0.8610, consolidating just above nearby support as the cross oscillates in a tight range. The immediate bias is bearish with the four-hour Relative Strength Index (14) at 35.57, hinting at slightly soft momentum. The Moving Average Convergence Divergence (MACD) hovers around the zero line, reinforcing the idea of a directionless market rather than a trending phase.

Against this background, bears are likely to need additional impulse to breach the support area between year-to-date (YTD) lows, at 0.8604, and the mid-August 2025 lows, at 0.8597. If these levels give way, the next target will be the June 23, 2025 high around 0.8575.

On the topside, immediate resistance is seen at Monday's high of 0.8632, followed by a previous support-turned-resistance at 0.8657 (Jun 19 high). Further up, the June 22 high, near 0.8690, would come into focus.

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

(This story was corrected on June 30 at 12:15 GMT to say, in the headline, that German Retail Sales data beat expectations, not Eurozone PMI data.)

• Oil prices remain steady at $70 despite peace talks uncertainty and limited traffic through the Strait of Hormuz.
• Investors' optimism about a negotiated end of the conflict is keeping Oil prices from escalating further.
• The timing of the next round of talks remains uncertain, with the status of Hormuz being a key point of friction.

Crude Oil prices remain flat for the second consecutive day this week, with the price of the US benchmark West Texas Intermediate (WTI) barrel stuck at the $70.00 area. The uncertainty surrounding the US-Iran conflict and this weekend’s skirmishes have failed to deter investors from betting on a negotiated end of it, which is keeping Crude Oil at pre-war levels.

News from Iran, however, remains confusing. US President Donald Trump said on Monday that Tehran requested a meeting, following a round of reciprocal attacks over the weekend. Iran’s Foreign Ministry has denied any plan to meet US negotiators this week but announced that it will send an expert delegation to Doha.

Traffic through the Strait of Hormuz collapses

This weekend’s hostilities have also limited oil tankers’ traffic through the Strait of Hormuz. According to data by the Strait of  Hormuz Live Tracker, only 5 vessels have crossed the waterway in the last 24 hours, below the average of around 30 last week and a minimal fraction of the daily average of 160 vessels before the war.

The status of the key waterway remains a key point of friction between the US and Iran. Ebrahim Azizi, the Chairman of the Iranian Parliament’s National Security and Foreign Policy Commission, said in a local broadcaster that “the Strait of Hormuz is an inseparable part of Iran’s national sovereignty” and that it will be managed solely by the Islamic Republic.

These views contrast with the position of the US, which has called on Iran to simply step aside and let traffic flow freely and safely through the strait.

Markets, however, seem to believe that both parties will, eventually, reach a lasting peace agreement, which is keeping Oil prices from appreciating further. WTI Oil is set to close the month with a nearly 20% decline, adding to a 15% drop in May, following the first US-Iran ceasefire agreement. Oil prices have returned to pre-war levels despite the depleted global reserves and the trickle of tankers crossing the Hormuz chokepoint. Only time will say if market expectations were too optimistic.

• Silver rebounds after finding support near $56.60, though Fed rate hike expectations continue to limit upside.
• Investors await the US JOLTS Job Openings report for fresh clues on the strength of the labor market.
• Thursday's US Nonfarm Payrolls report could be the main catalyst for the precious metal this week.

Silver (XAG/USD) rebounds on Tuesday and trades around $58.80, up 0.96% at the time of writing, after finding support near $56.60 earlier in the day. Despite the recovery, the white metal continues to trade in an unfavorable fundamental environment as markets maintain expectations that the Federal Reserve's (Fed) next policy move will be another interest rate hike.

According to the CME FedWatch tool, investors now see nearly an 80% chance that the Fed will deliver at least one additional rate hike before the end of the year. Higher interest rates increase the opportunity cost of holding non-yielding assets such as Silver, continuing to weigh on investor demand for precious metals.

Market attention is now turning to the United States (US) Job Openings and Labor Turnover Survey (JOLTS) data for May, due at 14:00 GMT. Economists expect employers to have posted 7.3M job openings, down from 7.618M in April. A sharper-than-expected slowdown in the labor market could temper expectations for further monetary tightening, while a stronger reading would reinforce bets on additional rate hikes.

Beyond the JOLTS report, the key event of the week will be Thursday's US Nonfarm Payrolls (NFP) report for June. Investors will closely monitor labor market data after Fed Chair Kevin Warsh stated that the central bank's forward guidance is no longer well-suited to the current monetary policy environment.

Nordea strategists examine EUR/DKK trading at its weakest level since the Euro’s introduction and argues Nationalbanken may have quietly shifted its de facto intervention band. They highlight Denmark’s much stronger fundamentals versus the Euro area and notes that the FX spot is above historic intervention levels, suggesting reduced concern about a weaker Danish krone and a more symmetric band.

De facto band questioned

"The EUR/DKK FX spot is at its weakest level since the EUR was introduced in 1999. Historically, the central bank would have intervened in the FX market by now and - if that wasn't enough to strengthen the krone - raised its policy rate independent of the ECB (or the Bundesbank before that). But fundamentals have changed and so, perhaps, has the central bank's intervention policies."

"Since mid-2025, EUR/DKK has constantly been trading above the central parity. According to our assessment this is partly due to lower demand for DKK among non-financial Danish companies due to a substantial increase in foreign direct investments as well as more DKK liquidity in the system."

"However, contrary to previous periods, this upward pressure in EUR/DKK has (at least up until now) not been met with intervention from Nationalbanken. This implies that, in our assessment, Nationalbanken today is significantly less concerned about a weakening of the Danish krone against the euro compared to previously. This has happened because the fundamental balances in the Danish economy have developed markedly more favorably relative to the euro area."

"In this article we have argued that the central bank has good reasons to change its de facto intervention band if it so wishes. Whether this is actually the case, we'll only learn over the coming years by looking at the FX spot vs actual interventions, as the central bank does not comment on its intervention policies. Perhaps the de facto band need not be strictly symmetrical, but if the central bank wants to make this change, it has more than enough arguments to do so."

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

Commerzbank FX analyst Michael Pfister examines why higher Brazilian interest rate expectations tend to weaken the Brazilian Real (BRL) rather than support it. Using correlation, regression and mediator analysis, he finds that fiscal dominance and widening CDS spreads drive BRL depreciation when the expected rate differential versus the US increases, and he maintains a forecast for higher USD/BRL levels.

Fiscal dominance undermines Brazilian Real

"Rising expectations of key interest rate hikes should in theory cause a currency to appreciate. In Brazil, however, the opposite is true. A one-percentage-point increase in expectations causes the Brazilian real to depreciate by more than one percent."

"Rising expectations regarding the interest rate differential between Brazil and the US were associated with higher USD/BRL levels over the last couple of years. Expectations of a higher Brazilian carry have thus even weakened the real."

"Regressing the performance of a BRL index against changes in Brazilian key interest rate expectations yields a strong result: if expectations of the key interest rate two years from now rise by one percentage point in a single week, the BRL depreciates by roughly 1.5 percent. One might suspect that this is due to the time period chosen or a lack of control variables."

"This unusual relationship is likely to be explained by Brazil’s fiscal policy. A simple test shows that an increase in interest rate expectations by one percentage point causes CDS spreads to rise by 10.1 basis points."

"In short, rising interest rate expectations are a warning sign for the Brazilian real, rather than an indication to buy. If the Brazilian president's ambitious spending plans lead to higher fiscal risks, the real is likely to come under further pressure. We are thus maintaining our forecast of higher USD/BRL levels."

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

Silver prices (XAG/USD) rose on Tuesday, according to FXStreet data. Silver trades at $58.58 per troy ounce, up 0.54% from the $58.27 it cost on Monday.

Silver prices have decreased by 17.58% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 68.60 on Tuesday, down from 68.93 on Monday.

(An automation tool was used in creating this post.)

Rabobank's Senior FX Strategist Jane Foley discusses British Pound (GBP) performance around United Kingdom (UK) political developments, focusing on potential leadership by Burnham and adherence to existing fiscal rules. Foley highlight calm in the gilt market but stress political and funding uncertainties. They expect EUR/GBP to move moderately higher over the next 1–3 months as Bank of England (BoE) rate hike expectations are repriced.

Political risks and BoE repricing

"Neither the gilts nor the pound posted much of a reaction to the speech by UK PM in-waiting Burnham yesterday. Burnham, who could become PM as soon as July 20 if no other candidate comes forward by the July 17 deadline, outlined his vision for the country in a speech centred on devolution. Crucially for markets, this included the reassurance that he would stick to the current Chancellor’s fiscal rules."

"This suggests that despite the calm in GBP markets since Burnham won the Makerfield by-election earlier this month, investors will be on alert for any signs that the purse strings may be loosened. Assuming Burnham does become UK PM, his choice of Chancellor is likely to provide a crucial signal to the market regarding the government’s fiscal stance. We continue to expect EUR/GBP to grind higher to 0.87 on a 1-to-3-month view."

"Political uncertainty can have a depressive impact on business confidence, investment and growth meaning that another change in PM just two years after a general election in the UK is not an optimal scenario for GBP markets. That said, the fact that PM Starmer has stepped down and that Burnham may be able to take the reins without a messy leadership election has removed some of the uncertainty that had been feared just a couple of weeks ago. For now, Burnham’s reassurances that he will stick to Chancellor Reeves’ fiscal rules has kept the gilt market calm."

"This points to the vulnerability of GBP should gilts suffer a bout of jitters. Latest CFTC speculators’ data has pointed to a surge in short GBP positions which may also be a reflection of political uncertainty."

"A further re-pricing of BoE rate hike expectations is likely to weigh on the pound. We see scope for a moderate move higher in EUR/GBP on a 1-to 3-month view."

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

• NZD/USD rises as New Zealand’s ANZ Business Outlook Index jumped to 36.6 in June, hitting a multi-month high.
• New Zealand's big four banks forecast a Q2 economic contraction, leading markets to scale back expectations for aggressive RBNZ tightening.
• CME FedWatch tool suggests that traders are now pricing in above 60% probability of a Fed rate hike by September.

NZD/USD gains ground for the second successive day, trading around 0.5650 during the European hours on Tuesday. The New Zealand Dollar (NZD) maintains its upward momentum, drawing strong support from a sharp rebound in domestic sentiment.

The key catalyst was New Zealand’s ANZ Business Outlook Index, which surged to 36.6 in June from 10.0 in the previous month. This marked the highest confidence reading since February, providing the Kiwi pair with solid near-term backing. Additionally, a recent pullback in global oil prices following a US-Iran nuclear agreement helped ease immediate, near-term inflation anxieties across the market.

However, the NZD/USD pair may face uphill battles moving forward as the broader economic fallout from the earlier energy shock continues to linger. Highlighting these underlying vulnerabilities, New Zealand's four major banks all forecast the domestic economy to contract in the second quarter. This economic strain has forced market participants to scale back their expectations for aggressive monetary tightening by the Reserve Bank of New Zealand (RBNZ).

Markets are now pricing in just a 66% chance of a July rate hike, down significantly from over 80% a few weeks earlier, and anticipate only two interest rate increases this year rather than the previously expected three.

The upside of the NZD/USD pair could be restrained as the US Dollar (USD) receives support from growing expectations of a hawkish Federal Reserve interest rate path. According to the CME FedWatch tool, traders are now pricing in above 60% probability of a Fed interest rate hike by September.

Traders are looking ahead to Wednesday's US ADP employment data and Thursday's Nonfarm Payrolls (NFP) report for clues on the Federal Reserve's next policy moves. A stronger-than-expected jobs report could reinforce the Fed's "higher-for-longer" interest rate stance, potentially dampening appetite for risk-sensitive assets.

ING strategists Michiel Tukker and Benjamin Schroeder note that Oil has returned to pre-war levels but argue the market is overly optimistic about the speed and durability of the supply recovery. They highlight an unstable balance between demand, physical buying and strategic reserves, and stress that second-round inflation risks and Oil’s future trajectory will only become clearer later this year.

Supply recovery doubts support prices

"The recent fall in oil prices can partly be attributed to the current imbalance between supply and demand."

"Physical buyers are still awaiting better pricing while countries’ strategic reserves continue to add supply to the market."

"This is not a stable equilibrium, however. At some point, buyers will need to enter the market, and reserves will have to be replenished."

"Oil is stabilising around pre-war levels, but we continue to see upside risks in the near term that could pose some upward pressure on rates."

"Only later this year will we have a better understanding of the second-round inflation impact and more certainty about the trajectory of oil."

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

• USD/JPY attracts some follow-through buying amid a combination of supporting factors.
• The wide US-Japan rate gap keeps the JPY carry trade in play and acts as a tailwind.
• The Iran uncertainty and Fed hike bets underpin the USD, contributing to the move higher.

The USD/JPY pair sticks to a bullish bias for the second consecutive day and trades around the 162.30 region during the first half of the European session, near a four-decade high touched earlier this Tuesday.

The Japanese Yen (JPY) continues with its relative underperformance in the wake of a wide interest rate differential between Japan and other major economies, including the US. In fact, the Bank of Japan (BoJ) raised policy rates to 1% – the highest since 1995 – in June, while the US Federal Reserve (Fed) maintained its interest rate target range of 3.5% to 3.75%. This gap of around 250 basis points (bps) keeps the so-called JPY carry trade in play and continues to act as a tailwind for the USD/JPY pair.

The US Dollar (USD), on the other hand, attracts fresh buyers and stalls a three-day-old retracement slide from its highest level since May 2025. Renewed US-Iran hostilities fuel inflationary fears and bolster bets for US Federal Reserve (Fed) rate increases. According to the CME Group's FedWatch Tool, traders are currently assigning an 80% probability of a move by the end of this year, which, in turn, offers some support to the USD and further contributes to the bid tone around the USD/JPY pair.

The aforementioned factors, to a larger extent, counters market speculations that Japanese authorities will step in again to prop up the domestic currency. In fact, Japan’s Chief Cabinet Secretary Minoru Kihara reiterated during a regularly scheduled press conference earlier today that he is always ready to take necessary action on forex. Furthermore, Japan’s Finance Minister Satsuki Katayama said that her government will respond appropriately to currency moves at any time as needed.

Meanwhile, the BoJ's hawkish tilt fails to impress the JPY bulls, suggesting that the path of least resistance for the USD/JPY pair remains to the upside. The Summary of Opinions from the BoJ's June meeting showed last week that members debated mounting inflation risks, with some calling for faster rate hikes to near levels deemed neutral to the economy. Moreover, signs that inflation in Japan was picking up endorse the BoJ’s tightening stance, though it does little to provide any respite to the JPY.

Traders now look forward to Tuesday's US economic docket, featuring the Conference Board's Consumer Confidence Index and JOLTS Job Openings data. The focus, however, will be on Fed Chair Kevin Warsh's appearance on Thursday at the European Central Bank (ECB) Forum in Sintra. Apart from this, the popularly known Nonfarm Payrolls (NFP) report will offer cues about the Fed's policy path, which, in turn, will drive the USD and provide a fresh impetus to the USD/JPY pair.