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European currencies have temporarily stabilised following a phase of downward correction, as markets await the release of key economic data. In the absence of new strong catalysts, the market has adopted a wait-and-see approach near critical support levels — 1.3400 for GBP/USD and 1.1600 for EUR/USD. Investors' attention is firmly focused on inflation figures, which may either support a resumption of recent bullish trends or serve as a trigger for a deeper correction.

Today, market participants are closely monitoring UK inflation data. In the coming trading sessions, investors are also expecting a batch of macroeconomic releases from the eurozone, including Italy’s CPI and trade balance figures — these could help define the short-term trajectory of the EUR/USD pair.

Amid uncertainty, investors continue to price in a potential correction in the US dollar. At the same time, the persistent divergence between the Federal Reserve and European regulators remains a key factor shaping the trend in major currency pairs.

GBP/USD

The GBP/USD pair tested the important support level near 1.3400 yesterday. Technical analysis of GBP/USD suggests a continuation of the downward correction within the formation of a Tower pattern. Should there be a sharp rebound from the 1.3300–1.3340 zone, the price may return to the 1.3470–1.3500 range.

Upcoming events that could shift the direction of GBP/USD:

• Today at 09:00 (GMT+3): UK Consumer Price Index (CPI)
• Today at 11:30 (GMT+3): UK House Price Index
• Today at 15:30 (GMT+3): US Producer Price Index (PPI)

EUR/USD

The EUR/USD pair is currently holding above the 1.1500–1.1560 range. Its further movement will depend on macroeconomic data and the European Central Bank’s rhetoric. Technical analysis indicates the potential for a deeper downside correction as part of a Bearish Harami pattern. If buyers manage to defend the key support at 1.1600, the price could strengthen towards 1.1680–1.1700.

Upcoming events that could shift the direction of EUR/USD:

• Today at 12:00 (GMT+3): Eurozone Trade Balance
• Today at 17:00 (GMT+3): Speech by Michael S. Barr, Vice Chair for Supervision of the US Federal Reserve Board
• Tomorrow at 12:00 (GMT+3): Eurozone Consumer Price Index (CPI)

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Markets

The devil of yesterday’s June US CPI inflation report was in the details. Headline and core CPI rose by 0.3% M/M and 0.2% M/M respectively to be up 2.7% Y/Y (from 2.4%) and 2.9% Y/Y (from 2.8%) respectively. Those outcomes were almost bang in line with consensus estimates, explaining the initial attempt to rally by US Treasuries. Details showed a relatively small increase in shelter prices (0.2% M/M) which carry the biggest weight in CPI calculations and play a less dominant role in PCE deflators to be published at the end of the month. Several goods categories like household furnishings, video and audio products and toy prices recorded monthly price rises ranging between +1% and +1.8% and do suggest some early pass-through of tariffs. Bearing in mind that the overall tariff level will rise after the August 1 deadline, it made investors rethink the Pavlov-reaction after the CPI report made initial headlines. Daily changes on the US yield curve ranged between +4.1 bps and +5.5 bps with the belly of the curve underperforming the wings. The US 30-yr yield closed above the psychological 5% mark for only the third time since the autumn of 2023. Technical resistance stands at 5.15% (YtD high) and 5.18% (2023 top) respectively. An (uncontrolled) sell-off in (core) bonds with very long tenors poses a significant threat to overall market stability especially once trading volumes thin early August. The implied Fed rate path for this year didn’t change that much, suggesting that the move was driven by a combination of higher inflation expectations and a higher Fed terminal rate. Dallas Fed president Logan overnight presented a base case in which monetary policy needs to hold tight for a while longer to bring inflation sustainably back to target. During this period, she believes that maximum employment can be sustained even with a modestly restrictive policy. Logan is ready to adapt her view fairly soon if a combination of softer inflation and a weakening labour market calls for it. Yesterday’s move in US Treasuries helped the dollar’s bottoming out process in FX space. EUR/USD closed at 1.1601 from a start at 1.1664. The trade-weighted greenback (DXY) rallied from 98.12 to 98.62 with the June high (99.47) being first resistance.

US president Trump overnight suggested that sectoral tariffs on pharmaceuticals and on semiconductors will likely be imposed as soon as the end of the month. He suggested a timeline which starts with a low tariff, given companies a year or so to react/move to the US before making it a very high tariff (for pharma; 200%?!). These sectoral levies will hurt European risk sentiment at the onset of trading. US producer price inflation are on tap this afternoon and risks adding to yesterday’s sell-off in US Treasuries. UK June inflation this morning rose more than expected for headline (3.6% Y/Y), core (3.7% Y/Y) and services inflation (4.7% Y/Y). Sterling in a first reaction fails to really profit in light of the recent repositioning on rather dovish comments by BoE governor Bailey (slack opening up in economy, labour market weakening, potential impact on BoE’s reaction function).

News & Views

In an appearance before European Parliament, Claudia Buch, head of the ECB’s Supervisory Board, indicated that the next ECB stress test will check the resilience of bank’s solvency for geopolitical risk scenarios. “In the 2026 thematic stress test exercise, we will follow up on this year’s stress test by asking banks to assess which firm-specific geopolitical risk scenarios could severely impact their solvency”. The ECB holds a so-called thematical stress tests every other year. The previous thematical test in 2024 was on cyber security. The exercise will come in the form of a so-called reverse stress test. In this procedure regulators will determine a specific outcome for the level of banks’ solvency, and then ask them to put in place scenario’s that might lead to hitting these levels.

US President Trump announced that the US reached a trade agreement with Indonesia. In this agreement, the US will impose a 19% tariff on imports from the country. The country earlier was threatened with a 32% levy from August 1st in one of the letters Trump sent to trading partners. In this respect Indonesia is the first country that succeeded to reduce the letter tariff with a trade agreement. According to the US President, Indonesia will erase all duties on Indonesian imports. Trump also said the country agreed to buy $19bn of US goods, including $15bn of US energy products and $4.5bn of US agricultural products. The county also committed to buying 50 Boeing jets. Trump suggested that another two or three trade deals would be made by the August 1st deadline, with India apparently in pole-position.

Yesterday’s US inflation data was… mixed. Headline CPI rose 0.3% month-on-month, exactly as expected, pushing the annual rate up to 2.7% from 2.4% in the prior month. But core inflation came in softer than anticipated, briefly lifting market sentiment. Since core inflation is what really guides Federal Reserve (Fed) decisions, the initial reaction leaned bullish. However, the relief didn’t last long. Signs of tariff-driven inflation are already starting to show, as some companies begin passing on higher costs to consumers. Bloomberg highlights that appliance prices jumped the most in five months, while toys, furniture, and sports equipment saw their steepest increases since 2021 and 2022, respectively.

Consequently, the market didn’t digest the US CPI report well. Treasury yields climbed across the curve: the 2-year yield—which reflects Fed policy expectations—rose to 3.95%, the 10-year yield reached 4.50%, and the 30-year yield hit 5.00%.

Japanese yields, one of the drivers of the global rise in sovereign yields, continue to edge higher. This morning, the 10-year JGB yield hit 1.60% for the first time since 2008, amid concerns about unsustainable fiscal spending. If the LDP retains its majority in Sunday’s Upper House elections, fears are that spending could accelerate further. The yen remains under pressure despite rising yields, with the USDJPY approaching the key 150 level.

Forget about a July cut

Fears of tariff-fueled inflation and the continued strength in labour market data are pushing expectations of Fed rate cuts further out. The Fed is not expected to cut rates at its meeting later this month—and may skip the September meeting as well. Fed funds futures currently assign only a 54% probability to a rate cut in September.

If inflation accelerates while jobs data remains solid, the Fed will likely stand pat. This shift in sentiment has helped the US dollar find a bid. The dollar index climbed past 98.50 yesterday. The net bearish speculative positioning appears stretched enough to allow for further upside in which case the USDJPY could break above 150 (depending also on the Japanese election), the EURUSD may fall toward the 1.12–1.15 range, and Cable could drift toward 1.3150–1.32. Still, the dollar remains in a medium-term downtrend and current strength is better seen as a correction rather than a reversal.

Chips and banks

Nvidia jumped 4% on Tuesday after reports that the White House will approve exports of its H20 chips to China—a logical policy pivot given the Chinese export ban had cost the company an estimated $10 billion in revenue. AMD rallied 6.4% on similar optimism.

ASML this morning reported stronger-than-expected Q2 results. Orders came in well above forecasts, fueled by AI demand. The company said full-year sales could be up ~15% from last year. The update may help support a recovery in ASML’s share price, which had lost nearly 50% between last July and April in Amsterdam.

BUT note that semiconductors could give some of the latest gains as Donald Trump freshly said that tariffs on pharmaceuticals could be effective from the end of this month and levies on semiconductors could follow soon...

Elsewhere, the first wave of US bank earnings surprised to the upside. JPMorgan, Citi, and Wells Fargo struck a confident tone, citing the resilience of consumers and businesses, and a still-solid labour market despite rising inflation expectations. Regulatory easing is also expected to free up capital.

Still, reactions were mixed. Wells Fargo fell over 5% after cutting its net interest income guidance. JPMorgan slipped 0.74% despite upbeat investment banking revenues. Citi jumped more than 3.5% to its highest level since 2008, helped by a new stock buyback program. Provided the first results and the market reaction, we could see consolidation in S&P500 financial stocks after a 24% rally since the April dip.

Oil falls, Uranium gains

US crude has been testing the 200-DMA to the upside despite news – earlier this week - that Saudi Arabia exported above its quotas last month in a rush to get its oil out of the Persian Gulf as Israel went to war with Iran (which by the way, was probably a one-off breach of the quota and doesn’t change the cartel’s plans to completely exit the 2.2mbpd restrictions and stop there). But yesterday’s API data – that showed 19 mio barrel build in US inventories last helped to push oil bulls to the sidelines and led to an almost 3% slide in US crude. Note that, the softer US dollar has been a supportive factor for oil prices (along with geopolitical tensions), and the ongoing recovery in USD and relatively softer Mid East tensions (at least slower headlines) could limit the upside potential near the 200-DMA and keep oil in the $65-68pb range until fresh direction.

Meanwhile, the Global X Uranium ETF just hit its highest level since 2013. The move reflects growing demand for energy infrastructure to power AI-driven data centers—some of which are now the size of small cities in the US. Against this backdrop, energy and cybersecurity investments remain compelling complements to portfolios anchored by AI heavyweights like Nvidia.

Daily Pivots: (S1) 1.3353; (P) 1.3410; (R1) 1.3442; More...

GBP/USD recovers mildly ahead of 1.3369 support and intraday bias remains neutral. Outlook is unchanged that strong support is expected from 1.3369 to complete the correction from 1.3787. On the upside, break of 1.3561 support turned resistance will bring retest of 1.3787 high first. Firm break there will resume larger up trend to 100% projection of 1.2099 to 1.3206 from 1.3138 at 1.3813. However, sustained break of 1.3369 will bring deeper correction back to 1.2706/3206 support zone.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3019) holds, even in case of deep pullback.

Sterling edged modestly higher today after UK inflation surprised to the upside, though gains were restrained. CPI and core CPI both accelerated in June, with goods inflation jumping sharply. The move raises questions about tariff passthrough effects and complicates the BoE's path ahead.

While a BoE rate cut is still likely in August, the case is now less clear-cut. The Monetary Policy Committee is clearly divided, and hawks like Chief Economist Huw Pill, who dissented in the cut in May, could push back again against easing. Still, even if the easing cycle proceeds, there is little room for BoE to deviate from one cut per quarter to keep policy tight enough to anchor inflation expectations.

For the week so far, Dollar leads FX rankings, followed by Loonie and Swiss Franc. Yen is the weakest performer, with Kiwi and Aussie also under pressure. Sterling and Euro sit in the middle. Overall, the rankings reflect a cautious and not particularly risk-friendly backdrop.

On trade, US President Donald Trump announced a tentative agreement with Indonesia that would fix tariffs at 19%—below the 32% he previously threatened. Trump claimed the deal secures full US access to the Indonesian market and includes substantial purchases of American energy, agriculture, and aircraft. These figures have yet to be confirmed by Jakarta.

Trump’s move adds to recent deals struck with the UK and Vietnam and builds on a interim agreement with China. While many of these arrangements offer only temporary relief from steeper tariffs, they signal some momentum in Washington's bilateral trade strategy ahead of the August 1 deadline. That said, these deals often preserve some tariff structure, rather than eliminate it. For example, Canada’s Prime Minister Carney noted Tuesday that Trump remains committed to tariffs, suggesting any new deal might come with strings attached.

In the digital asset space, Bitcoin slipped back below 120k as the House GOP scuttled a vote on the GENIUS Act. Speaker Mike Johnson canceled the day’s schedule as conservatives demanded the stablecoin bill be merged with other crypto measures. The delay adds uncertainty to the bill’s future, though Republicans broadly support a regulatory framework.

Technically, some consolidations is likely in Bitcoin for the near term. But outlook should stay bullish as long as 112013 resistance turned support holds. Current up trend should extend towards 135k mark on resumption, where the real hurdle lies. The level includes double major projection levels, 100% projection of 49008 to 109571 from 74373 at 134946 and 100% projection of 74373 to 112013 from 98148 at 135788.

In Asia, at the time of writing, Nikkei is up 0.10%. Hong Kong HSI is up 0.17%. China Shanghai SSE is down -0.15%. Singapore Strait Times is up 0.27%. Japan 10-year JGB yield is down -0.01 at 1.581. Overnight, DOW fell -0.98%. S&P 500 fell -0.40%. NASDAQ rose 0.18%. 10-year yield rose 0.062 to 4.489.

UK CPI rises to 3.6%, goods prices jump, services sticky

UK inflation came in hotter than expected in June. Headline CPI accelerated from 3.4% yoy to 3.6% yoy, above consensus of 3.4%. Core CPI (excluding energy, food, alcohol, and tobacco)also surprised to the upside, rising from 3.5% to 3.7%, versus expectation of 3.5% yoy.

Goods inflation picked up from 2.0% yoy to 2.4%, its highest since October 2023. Services inflation remained stubbornly high, unchanged at 4.7% yoy.

On a monthly basis, CPI rose 0.3%, adding to signs that disinflationary progress may be stalling.

Fed's Barkin sees inflation stickiness, defends Fed independence

Richmond Fed President Tom Barkin warned that inflation pressures remain persistent, with recent data showing signs of renewed pricing power among suppliers.

Speaking at an event in Baltimore, Barkin noted that many firms—still emboldened by the inflation surge of the past two years—are attempting to pass on rising costs, including those tied to tariffs. However, he cautioned that consumers, fatigued by prolonged inflation, may push back. “You’ve got consumers who are exhausted by inflation, who are already trading down,” he said.

Barkin's comments also touched on the institutional integrity of the Fed amid speculation surrounding Fed Chair Jerome Powell’s future. With Powell’s term set to expire in May next year, US President Donald Trump is widely expected to nominate a more dovish successor.

Barkin emphasized the importance of policy independence, saying he hoped any new appointee would “try to decide the best policy for the country.” He added that rate-setting decisions aren’t necessarily driven by the Fed chair alone.

Fed's Collins favors “actively patient” stance amid tariff-driven inflation risks

Boston Fed President Susan Collins said overnight that the Fed should remain “actively patient” in its stance. Despite the complexity of current conditions, she argued that “solid” fundamentals give the Fed room to carefully assess incoming data before making policy moves. “Calibrating appropriate policy in this context is challenging,” she acknowledged in her speech.

Collins highlighted the inflationary impact of newly imposed trade tariffs, which she said are beginning to show up in the prices of some goods. She projected core inflation to climb toward 3% by the end of the year, while warning that growth and employment may slow as a result.

However, she pointed to mitigating factors—such as firms narrowing profit margins and consumers maintaining spending. "As a result, the adverse impact of tariffs on labor market conditions and economic growth may be more limited," she said.

Fed's Logan cites fiscal tailwinds, inflation risk in case for rate hold

Dallas Fed President Lorie Logan said overnight that she expects a slight pickup in the Fed’s preferred inflation measure following June’s CPI release and warned against easing policy prematurely. With the PCE inflation gauge at 2.3% in May, Logan said the latest CPI data “probably” means it will “move up a bit.” She stressed the need for a longer trend of subdued inflation before being confident in the disinflation process.

At the same time, Logan pointed to a solid labor market, near-record stock prices, and the recently passed Trump fiscal package as "tailwind" for continued economic strength.

Against that backdrop, Logan argued that the Fed can afford to “hold tight for a while longer,” maintaining modestly restrictive policy to ensure inflation returns to target sustainably.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.3353; (P) 1.3410; (R1) 1.3442; More...

GBP/USD recovers mildly ahead of 1.3369 support and intraday bias remains neutral. Outlook is unchanged that strong support is expected from 1.3369 to complete the correction from 1.3787. On the upside, break of 1.3561 support turned resistance will bring retest of 1.3787 high first. Firm break there will resume larger up trend to 100% projection of 1.2099 to 1.3206 from 1.3138 at 1.3813. However, sustained break of 1.3369 will bring deeper correction back to 1.2706/3206 support zone.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3019) holds, even in case of deep pullback.

UK inflation came in hotter than expected in June. Headline CPI accelerated from 3.4% yoy to 3.6% yoy, above consensus of 3.4%. Core CPI (excluding energy, food, alcohol, and tobacco)also surprised to the upside, rising from 3.5% to 3.7%, versus expectation of 3.5% yoy.

Goods inflation picked up from 2.0% yoy to 2.4%, its highest since October 2023. Services inflation remained stubbornly high, unchanged at 4.7% yoy.

On a monthly basis, CPI rose 0.3%, adding to signs that disinflationary progress may be stalling.

Full UK CPI release here.

Key Highlights

• NZD/USD started a fresh decline below the 0.6000 support zone.
• A key bearish trend line is forming with resistance at 0.6000 on the 4-hour chart.
• EUR/USD extended losses below the 1.1650 and 1.1620 levels.
• Ethereum price surged further above the $3,080 resistance zone.

NZD/USD Technical Analysis

The New Zealand Dollar started a fresh decline from 0.6120 against the US Dollar. NZD/USD dipped below the 0.6050 and 0.6020 support levels.

Looking at the 4-hour chart, the pair traded below the 50% Fib retracement level of the upward move from the 0.5883 swing low to the 0.6120 high. There is also a key bearish trend line forming with resistance at 0.6000.

The pair now trades below 0.6000, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). On the downside, immediate support is near the 0.5940 level. It is close to the 76.4% Fib retracement level of the upward move from the 0.5883 swing low to the 0.6120 high.

The next key support sits near 0.5900. Any more losses could send the pair toward the 0.5880 support zone. On the upside, the pair could face resistance near the 0.6000 level and the trend line.

The next key resistance sits near the 0.6030 level and the 100 simple moving average (red, 4-hour). A close above the 0.6030 level could set the pace for another increase. In the stated case, the pair could even clear the 0.6050 resistance. The next major stop for the bulls could be near the 0.6120 resistance.

Looking at EUR/USD, the pair started a fresh decline, and the bulls failed to protect the 1.1650 support zone.

Upcoming Economic Events:

• US Producer Price Index for June 2025 (MoM) – Forecast +0.2%, versus +0.1% previous.
• US Producer Price Index for June 2025 (YoY) – Forecast +2.5%, versus +2.6% previous.

Dallas Fed President Lorie Logan said overnight that she expects a slight pickup in the Fed’s preferred inflation measure following June’s CPI release and warned against easing policy prematurely. With the PCE inflation gauge at 2.3% in May, Logan said the latest CPI data “probably” means it will “move up a bit.” She stressed the need for a longer trend of subdued inflation before being confident in the disinflation process.

At the same time, Logan pointed to a solid labor market, near-record stock prices, and the recently passed Trump fiscal package as "tailwind" for continued economic strength.

Against that backdrop, Logan argued that the Fed can afford to “hold tight for a while longer,” maintaining modestly restrictive policy to ensure inflation returns to target sustainably.

Boston Fed President Susan Collins said overnight that the Fed should remain “actively patient” in its stance. Despite the complexity of current conditions, she argued that “solid” fundamentals give the Fed room to carefully assess incoming data before making policy moves. “Calibrating appropriate policy in this context is challenging,” she acknowledged in her speech.

Collins highlighted the inflationary impact of newly imposed trade tariffs, which she said are beginning to show up in the prices of some goods. She projected core inflation to climb toward 3% by the end of the year, while warning that growth and employment may slow as a result.

However, she pointed to mitigating factors—such as firms narrowing profit margins and consumers maintaining spending. "As a result, the adverse impact of tariffs on labor market conditions and economic growth may be more limited," she said.

Richmond Fed President Tom Barkin warned that inflation pressures remain persistent, with recent data showing signs of renewed pricing power among suppliers.

Speaking at an event in Baltimore, Barkin noted that many firms—still emboldened by the inflation surge of the past two years—are attempting to pass on rising costs, including those tied to tariffs. However, he cautioned that consumers, fatigued by prolonged inflation, may push back. “You’ve got consumers who are exhausted by inflation, who are already trading down,” he said.

Barkin's comments also touched on the institutional integrity of the Fed amid speculation surrounding Fed Chair Jerome Powell’s future. With Powell’s term set to expire in May next year, US President Donald Trump is widely expected to nominate a more dovish successor.

Barkin emphasized the importance of policy independence, saying he hoped any new appointee would “try to decide the best policy for the country.” He added that rate-setting decisions aren’t necessarily driven by the Fed chair alone.