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In focus today

The conflict between Israel and Iran has now entered its second week. In a major escalation termed "Operation Midnight Hammer", the US joined the battle early Sunday morning, targeting Iran's nuclear ambitions with strikes on key sites: Natanz, Isfahan and Fordo using bunker buster bombs. While US officials claim victory, we await the full impact assessment. In our view, Iran's potential closure of the Strait of Hormuz - pending approval from the National Security Council - is a last option due to its economic reliance on the passage and the risk of provoking a strong US military response. However, if Supreme Leader Ali Khamenei perceives no alternatives, he may resort to this extreme action. For an in-depth analysis, see Research Global - What if Iran closes the Strait of Hormuz?, 22 June.

This week's macro data kicks off with a string of PMI releases: euro area manufacturing PMI has had a strong start of the year rising to 49.4 in May from 45.1 in December, while services has been on a declining trend, falling to 49.7 in May. We expect the manufacturing PMI to remain unchanged as the boost of front-loading of exports to the US has likely reversed while the ZEW rose in June in a more positive sign. We expect services to remain below 50 due to the weak consumer confidence that limits spending. We will also keep an eye on the US flash PMIs.

Key events for the rest of the week include the NATO summit and German IFO on Tuesday, with US PCE data set for release on Friday.

Economic and market news

What happened overnight

In the commodity space, Asian markets slipped as investors watched for Iran's response to US strikes. Oil prices briefly hit five-month highs, settling with a 2.0% rise and trading at USD78.5/barrel this morning. The escalation of the Middle East crisis is expected to lead to the traditional safe heaven effects, with rising oil prices, lower equity pricing and a stronger dollar. However, the impact on US Treasuries remains uncertain due to trade deficits, tariffs, and potential increases in Treasury supply from soft fiscal policy.

What happened since Friday

During the weekend, NATO members agreed to increase their defence spending target to 5% of GDP ahead of the summit, as advocated by US President Trump. Spain, however, announced it would not meet this target, aiming for only 2.1% due to social spending concerns - a stance that may heighten tensions with Trump.

In the euro area, consumer confidence declined in June to -15.3 from -15.2, in contrast to expectations of a rise to -14.9. The weak consumer confidence is a drag on activity and dampens growth especially in the services sector. However, a strong labour market, rising real wages and lower rates are helping consumption, which is growing. But consumption growth had been higher if it was not for the weak confidence.

In Denmark, consumer confidence increased from -18.4 to -15.1 in June, reaching its highest level since February, yet still low. This rise is driven by improved perceptions of the Danish economy amid easing international tensions. Despite positive indicators like job growth, consumers remain cautious about personal finances due to inflation fears. Crucially, consumer spending has not sharply declined, supporting domestic growth. April's payroll data revealed a strong increase of 5,400 employees, led by the private sector, despite ongoing tariff uncertainties.

Equities: Despite a barrage of geopolitical developments and a packed calendar of macroeconomic and monetary policy news last week, it is striking how little movement we saw across major asset classes. Yes, equities ended the week marginally lower overall, but the broad picture is one of stability. Cyclical sectors even slightly outperformed, volatility ticked up only marginally, and bond yields moved slightly lower - hardly the kind of response we would expect in such an environment. In the US on Friday, Dow +0.1%, S&P 500 -0.2%, Nasdaq -0.5% and Russell 2000 -0.2%.

FI and FX: Geopolitical tensions escalated over the weekend as the US conducted targeted strikes on three Iranian nuclear sites, which means that the US has now effectively joined Israel in its war in Iran. As a result, the oil price touched the USD80/bbl level as the market opened and traditional safe havens such as the USD and CHF have benefitted while US and European equity futures are trading lower. Key will be whether Iran resorts to closing the Strait of Hormuz from traffic, which would be a big shock the global economy and likely lead to a surge in energy prices and a sharp sell-off in risky assets.

Key Highlights

• EUR/USD started a fresh increase from the 1.1440 zone.
• A major bearish trend line is forming with resistance at 1.1560 on the 4-hour chart.
• GBP/USD corrected gains and traded below the 1.3500 level.
• Bitcoin dipped sharply below $103,000 after the US strike On Iran.

EUR/USD Technical Analysis

The Euro started a downside correction and tested 1.1440 against the US Dollar. EUR/USD found support and now attempts a fresh increase above 1.1500.

Looking at the 4-hour chart, the pair traded above the 1.1480 resistance and settled well above the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour). The pair is now showing positive signs and might aim for more gains.

On the upside, the pair could face resistance near the 1.1550 level. There is also a major bearish trend line forming with resistance at 1.1560 on the same chart.

The next key resistance sits near the 1.1620. The first major resistance sits at 1.1650. A close above the 1.1650 level could set the pace for another increase. In the stated case, the pair could even clear the 1.1720 resistance. The next major stop for the bulls could be near the 1.1800 resistance.

On the downside, immediate support is near the 1.1480 level. The next key support sits near 1.1450 and the 100 simple moving average (red, 4-hour). Any more losses could send the pair toward the 1.1360 level and the 200 simple moving average (green, 4-hour).

Looking at GBP/USD, the pair dipped below the 1.3500 level and now remains at risk of more losses in the near term.

Upcoming Economic Events:

• Germany’s Manufacturing PMI for June 2025 (Preliminary) - Forecast 48.8, versus 48.3 previous.
• Germany’s Services PMI for June 2025 (Preliminary) - Forecast 47.8, versus 47.1 previous.
• Euro Zone Manufacturing PMI June 2025 (Preliminary) – Forecast 49.7, versus 49.4 previous.
• Euro Zone Services PMI for June 2025 (Preliminary) – Forecast 50.0, versus 49.7 previous.
• US Manufacturing PMI for June 2025 (Preliminary) – Forecast 51.0, versus 52.0 previous.
• US Services PMI for June 2025 (Preliminary) – Forecast 52.9, versus 53.7 previous.

WTI crude surged at the start of the week as geopolitical tensions flared after US airstrikes hit Iranian nuclear targets over the weekend. The move marks a dramatic escalation in the long-simmering conflict between Iran and Israel, now drawing in direct US involvement. Investors are now awaiting Tehran’s next move after Iranian officials said “all options” remain on the table in response.

Attention is now centered on the Strait of Hormuz, a strategic waterway through which one-fifth of the world’s oil flows. Iranian lawmakers have approved a non-binding motion to shut down the strait, though the final decision lies with the National Security Council. Any disruption to shipments through Hormuz would have a profound impact on global supply chains and energy prices.

Technically, WTI crude’s surge from the 55.20 low is now approaching a key resistance at 81.01. Barring a broader escalation, the rally could stall here, especially with overbought momentum indicators flashing caution. A break below 73.69 would be an early sign of stabilization and may trigger profit-taking correction.

But if the conflict deepens and prices break decisively above 81.01, the rally could accelerate toward through 38.2% retracement of 131.82 (2022 high) to 55.20 at 84.46. Sustained break above 84.46 would mark a significant reversal of the long-term downtrend from the 2022 high and open the path to 95.50 or even to 61.8% retracement at 102.55.

With tensions high and the market highly headline-sensitive, holding below 80 will be key to preventing a return to 100+ oil—and renewed inflationary concerns worldwide.

Japan’s private sector showed a modest rebound in June, with PMI Composite rising from 50.2 to 51.4, the highest reading since February. The pickup was led by stronger services sector, which rose from 51.0 to 51.5. PMI Manufacturing returned to expansion territory at 50.4, up from 49.4.

Annabel Fiddes of S&P Global noted that business activity gained momentum into quarter-end, but demand conditions remained fragile. New business rose only slightly, while foreign demand for manufactured goods weakened further. Firms cited ongoing concerns over US tariffs and global trade uncertainty, which continued to weigh on client orders and export sales.

Still, there were signs of easing cost pressures, with input prices rising at the slowest pace in 15 months. Employment also improved, with overall job creation accelerating to the fastest rate in nearly a year.

Full Japan PMI flash release here.

Australia’s private sector showed modest improvement in June, with the S&P Global PMI Composite rising from 50.5 to 51.2. PMI Services climbed from 50.6 to 51.3, while PMI manufacturing held steady at 51.0.

According to S&P Global’s Jingyi Pan, forward-looking indicators present a mixed picture. While output expectations remain positive, divergences between sectors were notable. New orders and future output softened more clearly in manufacturing, while services continued to gain traction. Weak external demand remains a concern, with export orders seeing their sharpest drop in nearly a year.

Combined with signs of easing inflation and slower employment growth, the PMI report supports the case for further rate cuts by RBA in the second half of 2025.

Full Australia PMI flash release here.

Brent Crude Oil (BZ) is a major global benchmark for crude oil pricing, primarily sourced from the North Sea between the United Kingdom and Norway. It is a light, sweet crude oil, characterized by a low sulfur content (sweet) and low density (light), making it ideal for refining into gasoline and diesel. Brent Crude is traded on the Intercontinental Exchange (ICE) under the ticker symbol “BZ” and serves as a reference price for approximately two-thirds of the world’s internationally traded oil supplies. In this article, we will look at the Elliott Wave outlook for Brent Crude and when to anticipate the pullback is complete.

Brent Crude Weekly Elliott Wave Chart

The weekly Elliott Wave Chart for Brent Crude indicates a Super Cycle wave (II) low of $15.74 in April 2020 during the COVID-19 selloff. Since then, it has rallied, completing wave I at $137 in March 2022. The wave II pullback concluded on April 9, 2025, at $58.39, with the instrument now advancing in wave III. Anticipate pullbacks to attract buyers at the 3, 7, and 11 swing levels, supporting further upside in the coming months and years.

Brent Crude Daily Elliott Wave Chart

The Daily Chart of Brent Crude Oil illustrates a decline from the wave I peak, unfolding as a double-three Elliott Wave structure. From wave I, wave ((W)) concluded at $70.13, followed by a wave ((X)) rally ending at $97.63 as an expanded flat. The instrument then resumed its decline in wave ((Y)), reaching $58.39, completing wave II in Cycle Degree on April 9, 2025. Brent Crude has since rallied with an impulsive internal subdivision, confirming the low is in place and signaling the start of a new bullish cycle.

Brent Crude Elliott Wave Technical Video

https://www.youtube.com/watch?v=IopjxxWLCnM

AUDCHF is on the verge of completing a multi-decade bearish cycle from April 1992. However, it appears sellers will continue to push in the shorter cycles. Thus, the pair should attract short-term sellers, while long-term sellers should watch out.

AUDCHF has been in a long-term bearish cycle from April 1992 in a somewhat corrective sequence. The structure appears to be a double zigzag — a 7-swing structure. Wave (W) of the supercycle degree ended in October 2008. Afterwards, the corresponding wave (X) bounce followed and ended in August 2012. Since August 2012, the pair has been in another bearish cycle for wave (Y). Meanwhile, wave (Y) has now reached the 100% extension of wave (W) from (X) — which could indicate completion. It’s also notable that wave C of (Y) is completing an ending diagonal structure from September 2014. Overall, the entire cycle from April 1992 may very well end within the 0.5385–0.4213 extreme zone.

A closer look at the diagonal wave C shows its sub-waves — waves ((1)), ((2)), ((3)), and ((4)) — ended in January 2015, February 2017, March 2020, and February 2021 respectively. Thus, the last known bearish cycle within this long-term bearish market is wave ((5)) of C of (Y), which started in February 2021.

AUDCHF Weekly Chart Analysis

AUDCHF Weekly

On the weekly chart above, the wave ((4)) cycle from February 2021 is evolving as a double zigzag structure. Wave (W) of ((5)) ended in August 2023. Afterwards, a corrective bounce for wave (X) followed to the high of May 2024 and then returned to the downside. The break of the wave (W) low opened fresh opportunities for sellers from the extremes of bounces.

The weekly chart shows the price still in wave A of (Y) of ((5)), likely to finish a diagonal structure. A closer look shows price has completed wave ((iv)) of A and is now in ((v)) of A. Thus, it supports selling bounces from the extremes of 3/7/11 swing structures on the shorter cycle, as the wave ((5)) cycle could extend to the 0.4435–0.4043 extreme — which is within the 0.5385–0.4213 extreme.

AUDCHF H4 Chart Analysis

AUDCHF, H4

On the H4 chart above, the wave ((iv)) bounce found resistance at the extreme (blue box), and sellers sold. In the coming days, the pair is expected to reach at least 0.5178–0.5132, where sellers from the blue box could take some profit.

Going forward, sellers should either sell higher if ((iv)) makes a double correction higher, or wait for ((v)) to break below the ((iii)) low and then sell the next 3/7/11 swing bounce off the blue box. Ultimately, the next big opportunity will be to sell off the extreme of wave B, as the weekly chart shows.

GBPUSD: ⬆️ Buy

• GBPUSD reversed from support zone
• Likely to rise to the resistance level at 1.3600

GBPUSD currency pair recently reversed up from the support zone located between the support level 1.3400 (former resistance from April), lower daily Bollinger Band and 50% Fibonacci correction of the upward impulse from May.

The upward reversal from this support zone continues the active daily uptrend from the start of this year.

GBPUSD currency pair can be expected to rise to the next resistance level at 1.3600 (which stopped the previous impulse wave (5) earlier this month).

Week in review: Central Bank Rate decisions and ongoing Israel-Iran conflict

Geopolitical tensions remain high as Iran continues launching ballistic missiles toward Israel, prompting retaliatory strikes from Israel on Iranian military and nuclear infrastructure.

While headlines are still arriving by the minute, the market’s sensitivity has declined somewhat this week, with the conflict increasingly priced in.

Equity indices corrected earlier but rebounded midweek—now selling off again as traders close positions ahead of the weekend, pricing in renewed geopolitical risk.

What has stirred markets more recently is the possibility of U.S. intervention in the conflict. President Trump has indicated a decision may come within the next two weeks, adding a layer of uncertainty.

For position traders, it’s worth noting the elevated risk of price gaps when markets reopen on Sunday evening.

U.S. crude oil is trading higher on the week but has pulled back after a failed breakout attempt near key resistance, closing the week around $75.

On the monetary policy front, major central banks—including the Fed, Bank of England, Swiss National Bank, Bank of Japan, and People’s Bank of China—held rate decisions this week.

Only the SNB moved, cutting rates to 0% and signaling that a return to negative territory remains on the table if the Swiss franc strengthens excessively. This reflects growing concern over a slowing domestic economy and weakening exports.

In forex, the U.S. dollar staged a comeback as dollar selling positions became overcrowded and risk sentiment tilted more cautious. Traders are leaning back into the greenback amid global uncertainty.

The Week ahead: Inflation reports, Central Bank heads scheduled

Keep your expectations for volatility high, with conflict headlines still being released throughout the day in every session and a potential US Intervention that would surely be market moving.

Asia Pacific Markets - Australian CPI and another Inflation data point for Japan

APAC Markets aren't the busiest in the upcoming week but one thing to look at is a reversal of previous week gains on currencies such as the AUD and NZD, which had decent performance since the RBA and RBNZ Rate Decisions.

Tuesday evening should see the release of the Australian May Inflation report expected at 2.4% year-over-year.

Further reports on Japanese Inflation for June are also expected on Thursday at 19:30 ET with the Core data expected at 3.3% y/y.

Economic Data from Europe, UK and North America – US GDP, PCE and Canada CPI

This week also won't be the busiest in terms of data release, however markets will surely brace for both the US GDP and the Core PCE as markets keep assembling data on the effect of US Tariffs on the world's largest economy.

Core PCE data is expected at 0.1% month-over-month (Friday morning 8:30 ET) and the annualized Q1 GDP figure expected at -0.2% on Thursday at 8:30 A.M.

Canada will also see the release of their own CPI report on Wednesday at 8:30, with the Headline data forecasted at 1.5% and Core CPI expected at 2.6%.

Other than data, many Heads of Central Banks will be speaking with ECB's Lagarde on Monday speaking at the European Parliament in Brussels, Fed Chair Powell testifying on Wednesday (usually accompanied with a speech on Monetary outlooks), BOE's Bailey talking at the British Chambers of Commerce Global Annual Conference on Thursday.

FED's Williams will also be speaking on Friday (7:30) in Basel, Switzerland where we will see his own view on the upcoming Rate Decision after this morning's dovish surprise from Chris Waller.

Also, as always, stay in touch with the latest developments in the Middle-East to avoid being on the wrong side of sudden volatility spikes!

For all market-moving economic releases and events, see the MarketPulse Economic Calendar.

US Dollar performance versus other Forex Major counterparts

US Dollar performance vs Major Counterparts, June 20, 2025 – Source: TradingView

Have a good weekend, and Safe Trades for the week ahead!