The recent two-day risk-on rally in the US stock market showed signs of fatigue as attention turns to upcoming economic data, Fed policy guidance, and tariff-related developments. Market participants are now eyeing the expiration of the White House’s 90-day pause on reciprocal global tariffs (excluding China), set for 9 July.
Risk-on euphoria in the US stock market fades
On Wednesday, 25 June, early intraday gains across major US equity benchmarks largely faded by the close. The Dow Jones Industrial Average and the small-cap Russell 2000 underperformed, losing -0.3% and -1.2%, respectively. The S&P 500 ended flat, while the tech-heavy Nasdaq 100 edged up 0.2% to a new all-time intraday high, driven by Nvidia’s 4.3% surge to a record close.
Asia equities diverge, led by Japan
Asian stock markets remained mostly buoyant, supported by a weakening US dollar. Japan’s Nikkei 225 outperformed with a 1.4% intraday gain, breaking above a 7-week trading range to reach a 4-month high. Singapore’s Straits Times Index rose 0.21%, while the Hang Seng Index slipped -0.5%, bucking the regional trend.
Fed Chair Powell maintains cautious tone
In his second day of testimony before the US Congress (Senate Banking Committee), Fed Chair Jerome Powell reiterated remarks from Tuesday, stating that the Fed remains uncertain about the inflationary impact of new US tariffs. He emphasized that there is no urgency to cut interest rates.
The US dollar weakens further as the euro and sterling hit multi-year highs
The US dollar extended its decline for a third straight session. The US Dollar Index fell -0.3% on Wednesday and slipped another -0.2% in today’s Asia mid-session, nearing a critical long-term support at 97.40. A weekly close below this level could signal the start of a multi-month downtrend.
Meanwhile, the euro strengthened for a fifth consecutive day to $1.1665, its highest since October 2021. Sterling climbed to $1.3670, the strongest since February 2022. In Asia trade, the top-performing currencies against the greenback were the GBP (+0.3%), JPY (+0.2%), and AUD (+0.1%).
The Japanese yen showed renewed strength, with USD/JPY falling to 144.80—below the 145.00 psychological threshold—ahead of key Tokyo inflation and retail sales data due Friday. Consensus expects Tokyo core inflation to ease to 3.3% y/y in June from 3.6% in May, still well above the BoJ’s 2% target.
Gold holds above support amid dollar weakness
Gold (XAU/USD) continues to stabilize above its 50-day moving average and key support at US$3,300, rising slightly by 0.05% to US$3,334 in the Asia session, aided by ongoing US dollar softness.
Economic data releases
Fig 1: Key data for today’s Asia mid-session (Source: MarketPulse)
Nikkei 225 bullish breakout from 7-week Ascending Triangle range
Fig 2: Japan 225 CFD Index minor trend as of 26 June 2025 (Source: TradingView)
The price actions of the Japan 225 CFD Index (a proxy for the Nikkei 225 futures) have staged a bullish breakout from a 7-week “Ascending Triangle” range configuration, previously in place since 13 May 2025 that indicates the start of a potential multi-week impulsive up move sequence within its medium-term uptrend phase in place since 7 April 2025 low.
The hourly RSI momentum indicator has reached an extreme overbought level of 81.20, the highest since 28 May 2025, which suggests that the Japan 225 CFD Index may stage a minor pull-back at this juncture before resuming its bullish impulsive up move.
Watch the intermediate support at 39,145 and the 38,850 key short-term pivotal support to hold the minor pull-back movements with the next intermediate resistances coming in at 39,830, and 40,280 (15 October/30 December 2024 swing high areas (see Fig 2).
On the flip side, failure to hold above 38,850 invalidates the bullish breakout scenario for the continuation of the choppy corrective decline sequence to expose the next intermediate supports at 38,600 and 38,150/38,035 (also the 20-day and 200-day moving averages).
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