The Pound to Dollar (GBP/USD) exchange rate opened the new trading week higher after the US and Iran reportedly agreed to end their nearly four-month conflict, boosting risk appetite and reducing demand for the safe-haven US Dollar

At the time of writing, GBP/USD was trading around $1.34, up approximately 0.3% on he market open

DAILY RECAP:

The US Dollar (USD) began the week on the defensive after renewed optimism surrounding US-Iran negotiations reduced demand for safe-haven assets.

Investors reacted positively to comments from US President Donald Trump suggesting that discussions with Tehran were in their “final throes” and that a comprehensive agreement could be reached within days.

This optimism helped improve market sentiment and weighed on the US Dollar through the opening part of the week.

The Greenback remained subdued following the latest US inflation figures, as consumer price growth accelerated broadly in line with expectations and failed to materially alter expectations for Federal Reserve policy.

However, sentiment shifted later in the week as tensions in the Middle East escalated once again.

Fresh exchanges between US and Iranian forces prompted investors to return to defensive positions, helping the US Dollar recover some lost ground.

These gains proved temporary, however, after reports emerged that additional planned US military action had been cancelled and that progress towards a broader diplomatic agreement remained intact.

As a result, the US Dollar ended the week under renewed pressure.

Meanwhile, the Pound (GBP) enjoyed support through much of the week as improving market sentiment and easing UK gilt yields helped underpin Sterling.

Lower borrowing costs provided reassurance to investors after recent volatility in the UK bond market.

However, Sterling’s advance was interrupted by renewed political uncertainty following the surprise resignation of Defence Secretary John Healey, which revived scrutiny of Prime Minister Keir Starmer’s leadership and broader political stability.

The Pound also faced pressure after April’s GDP report showed the UK economy contracted by 0.1%, reinforcing concerns about slowing growth momentum.

Despite these setbacks, Sterling still managed to outperform the US Dollar over the week as geopolitical developments remained the dominant market driver.

Near-Term GBP/USD Forecast: Central Banks and Makerfield By-Election in Focus

The coming week could prove pivotal for the Pound to Dollar exchange rate as investors digest policy decisions from both the Federal Reserve and the Bank of England.

Both central banks are expected to leave interest rates unchanged, placing the emphasis firmly on their guidance for future policy.

Recent US inflation and labour market data may encourage a relatively hawkish tone from Federal Reserve officials, potentially supporting the US Dollar.

Meanwhile, softer UK economic data could encourage a more cautious approach from the Bank of England, limiting support for Sterling.

Investors will also closely monitor developments surrounding the Makerfield by-election, which is expected to attract considerable political attention.

Combined with central bank decisions and ongoing developments in the Middle East, these factors could contribute to heightened volatility in GBP/USD through the week ahead.

Japanese rates would still not be high relative to U.S. rates if the BOJ raised its interest rate to 1%. But this would indicate a shift from ultra-low rates in Japan. It would also demonstrate the BOJ’s shift of focus towards inflation pressures from energy, import prices and the weak yen.

This could have two advantages for the yen. First, from the viewpoint of borrowers, higher rates make it less attractive to borrow yen and buy higher-yielding assets. Second, a hawkish BOJ may soften the mood of traders to keep large short-yen bets close to the 160 level.

BOJ Guidance and Yen Intervention Risk Become Key Near 160

The weak yen is also a political and economic issue in Japan. This increases the import prices and maintains inflationary pressures. This is one reason why BOJ may continue to hike rates. This is also why markets stay on alert to the risk of intervention when USDJPY approaches 160.

The Fed story is also important. The US dollar remains supported as the Fed expects to maintain rates during its next meeting. The dollar still has a solid interest rate advantage from sticky inflation, solid jobs data and a US Treasury yield that remains high. The USDJPY may not be able to extend its declines unless the U.S. yields decline or the BOJ signals a quicker tightening.

However, the balance of risk is changing. The primary focus of the story earlier was rates in the United States. Now, the market has to factor in the inflation problem in Japan and BOJ’s response. The BOJ may not be satisfied with 1% as the rate of producer prices rises further in Japan.

This makes USDJPY more sensitive towards BOJ guidance. Traders will watch Deputy Governor Shinichi Uchida’s comments to see whether he signals a slowdown or a faster pace of tightening.

USDJPY Forecast: 160–162 Breakout Could Open Path Toward 175

The long-term picture for USDJPY remains strongly bullish, as the pair trades within the ascending channel pattern. This bullish structure points to weakness in the yen, which is taking the pair toward the key pivotal level of 160 to 162.

On the downside, the pair has been supported above the 140 level. Each time the pair hits the 140 level, it produces a strong rebound. The rebounds in December 2023, September 2024, and April 2025 have all produced strong rallies to push the pair higher.

2026.06.12 2026.06.12
USD/JPY: Elliott Wave Analysis and Forecast for 12.06.26–19.06.26

Alex Geutahttps://www.litefinance.org/blog/authors/alex-geuta/

Major Takeaways

• Main scenario: Consider short positions from corrections below 160.62 with a target of 152.10–145.50. A sell signal: the price holds below 160.62. Stop Loss: above 161.20, Take Profit: 152.10–145.50.
• Alternative scenario: Breakout and consolidation above the level of 160.62 will allow the pair to continue rising to the levels of 165.00–170.00. A buy signal: the level of 160.62 is broken to the upside. Stop Loss: below 160.00, Take Profit: 165.00–170.00.

Main Scenario

Consider short positions from corrections below the level of 160.62 with a target of 152.10–145.50.

Alternative Scenario

Breakout and consolidation above 160.62 will allow the pair to continue rising to the levels of 165.00–170.00.

Analysis

An ascending third wave of larger degree 3 has formed on the weekly chart, and a bearish correction is developing as the fourth wave 4. On the daily time frame, wave (B) of 4 has presumably been completed, and a descending wave (C) of 4 has started to form. The first wave of smaller degree 1 of (C) is unfolding on the H4 chart. Within this structure, wave i of 1 has been completed, and a local corrective wave ii of 1 has likely formed. Wave iii of 1 is in progress now. If the presumption is correct, USD/JPY will continue to decline to 152.10–145.50 within wave iii of 1. The level of 160.62 is critical in this scenario as a breakout above it will enable the pair to continue rising to the levels of 165.00–170.00.

This forecast is based on the Elliott Wave Theory. When developing trading strategies, it is essential to consider fundamental factors, as the market situation can change at any time.

Price chart of USDJPY in real time mode

The EUR/USD pair managed to close the week in positive territory, but not before trading as low as 1.1499, its lowest since late March and still far below the previous weekly open. The US Dollar (USD) appreciated throughout the first half of the week on the back of renewed tensions between the United States (US) and Iran, changing course on Thursday on headlines indicating an upcoming end to the Middle East conflict.

War drums sounding low and low

The second week of June started with the US and Iran exchanging fire, despite the agreed ceasefire, which escalated after the latter downed an American helicopter, triggering Washington’s response with more strikes and US President Donald Trump’s threats to “hit hard” Iran.

Things changed on Thursday, when Trump announced that an agreement was almost done and that a deal would be signed imminently, subject to Iran’s signature. He also claimed the Strait of Hormuz would reopen shortly after the signing. Crude Oil prices edged sharply lower with the headlines, and the USD fell accordingly as optimism reigned. On Friday, however, hopes began to fade amid reports that Iran’s terms and the US terms are far from near. The USD recovered modestly on Friday as optimism faded, but it has not been lost.

US Dollar before the Federal Reserve

The Greenback surged on safety demand, also boosted by hot US inflation readings, reinforcing speculation that the Federal Reserve (Fed) will have to hike interest rates before the year is over. The US Consumer Price Index (CPI) rose to its highest level in three years at 4.2% in May, following the 3.8% posted in April. Core annual CPI was up 2.9%, after printing 2.8% in the previous month.

The Fed will announce its monetary policy decision on Wednesday. Market participants anticipate the benchmark interest rate will remain unchanged at the current range set at 3.50% to 3.75%. But there are two big ifs: One, it will be the first one chaired by Kevin Warsh, and two, the central bank will release a fresh Summary of Economic Projections (SEP).

The Federal Open Market Committee (FOMC) is between a rock and a hard place. Hiking interest rates is a tool designed to counter consumer-driven inflation, not inflation coming from a supply shock like the one resulting from the Iran war. Even further, the central bank is being pressured to cut rates while data points in the opposite direction.

Finally, it’s worth noting that Chair Warsh is a believer in hard data but skeptical about forward guidance. It’s hard to believe he will announce relevant changes to the ongoing FOMC ways, but everything is possible. His words will be scrutinized to the coma in search of hints on what the Fed may do in the foreseeable future.

Euro after the European Central Bank

In the Old Continent, the European Central Bank (ECB) had a monetary policy meeting, and as expected, ECB officials hiked interest rates by 25 basis points (bps), the first hike in three years. With this decision, the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility stood at 2.4%, 2.65% and 2.25%, respectively.

ECB President Christine Lagarde offered a press conference, in which she hinted at additional hikes amid broadening inflationary pressures, while adding that growth risks are now skewed to the downside. Lagarde failed to surprise investors with the hike decision, mostly seen as symbolic, having no real impact on the Euro (EUR). Fears of stagflation remain at the top of policymakers’ concerns, although Lagarde tempered preoccupations.

Busy calendar ahead

Other data released these days showed that the German Harmonized Index of Consumer Prices (HCIP) rose 2.7% YoY in May, as previously estimated. Across the pond, the US University of Michigan (UoM) reported that the Consumer Sentiment Index rose to 48.9 in June, up from 44.8 in May, according to the preliminary estimate..

In the upcoming sessions, the Fed’s monetary policy decision stands out, yet the macroeconomic calendar will include other relevant figures. Germany will publish the June ZEW Survey on Economic Sentiment and the May Producer Price Index (PPI), while the Eurozone will publish the final estimate of the May HICP. As for the US, the focus will be on May Retail Sales and employment-related data.

Following central banks’ announcements, comments from ECB and Fed officials will be back in fashion.

EUR/USD Technical Outlook:

In the daily chart, EUR/USD trades with a bearish near-term bias as spot remains below the 20-, 100-, and 200-day Simple Moving Averages (SMAs), which cap recovery attempts. Momentum studies reinforce the downside tone, with the 14-period Relative Strength Index (RSI) indicator hovering in the low-40s and the 14-period Momentum indicator in negative territory, both lacking clear directional strength. The lower low, however, hints at mounting selling pressure.

On a weekly basis, EUR/USD is neutral to bearish. The pair holds comfortably above the 100- and 200-week simple moving averages (SMAs) at 1.1279 and 1.0979, but it is capped by the 20-week SMA at 1.1674. The weekly RSI indicator ticks lower at 46.7, while the Momentum indicator seesaws just below its midline, both lacking clear directional strength.

On the topside, initial resistance is located at the 20-week SMA around 1.1674; a sustained break above this barrier would be needed to revive bullish traction toward higher weekly highs, yet as long as the pair remains below 1.1700, the odds for a firmer advance remain limited. On the downside, first support emerges at the 1.1500 threshold, closely followed by the long-term static support area around 1.1470. Once below the latter, sellers are likely to add pressure and push the pair towards 1.1400.

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

• The Forex markets will be paying close attention to this pair, as we are looking for a potential break of a major swing high dating back to 1990.

• The US dollar has been noisy against the Japanese yen during the trading session on Thursday, as we continue to see the dollar reaching an area where the Bank of Japan has intervened.

After all, just about a month ago, we had seen a lot of selling pressure as the Bank of Japan defended the yen, but at this point in time, the interest rate differential remains very high, and because of this, you have to be very concerned about the overall area.

If we can break above the 161-yen level, we will be clear of that, and then I think at that point in time, the only thing that really drives this pair back down would be some type of massive change with the Federal Reserve or the Bank of Japan again. That being said, any intervention by the Bank of Japan will be a short-term move and, quite frankly, offers a buying opportunity in the USD/JPY currency pair. We’ve just seen that, and that’s typically how that works.

Deteriorating Inflation and Long-Term Outlook

With the Japanese seeing deteriorating inflation recently and the inflation numbers in the United States remaining fairly reasonably strong, that means that we probably continue to go to the upside. Furthermore, a lot of people are looking for US dollars at the moment, so when we break the 161 yen level, then we have cleared the 1990 swing high completely, and at that point, we could see the market looking to get to the 224 yen level over the next several years, at least that’s what the technical analysis says.

The swap that you get paid at the end of every day will help build your account as well, and this is one of those situations where, if we do take off from here, this could be an investment, not just a trade. Short-term pullbacks continue to be buying opportunities with the 50-day EMA offering a floor.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

The EUR/GBP exchange rate has moved sideways in the past few days as traders focus on the upcoming European Central Bank (ECB) and Bank of England (BoE) interest rate decisions. It was trading at 0.8627, down from last year’s high of 0.8865. It has formed two major chart patterns, pointing to more downside.

The daily chart shows that the EUR to GBP exchange rate has pulled back in the past few months. It has retreated from a high of 0.8865 in November last year to 0.8628. 

A closer look shows that the pair has found substantial support at 0.8615, its lowest level on February 5,  March 19, and May 25. This support is part of the descending triangle pattern, whose upper side connects the highest swings in November last year and February and May this year. The descending triangle is a common continuation sign in technical analysis

The pair has also formed a small head-and-shoulders pattern, a common bearish sign. Also, it also remained below the 50-day and 200-day Weighted Moving Averages (WMA).

Therefore, the pair will likely have a strong bearish breakout in the near term, potentially to the key support at 0.8545, the 50% Fibonacci Retracement level. 

EUR/USD chart | Source: TradingView

The EUR/GBP pair has come under pressure in the past few days as investors waited for the upcoming ECB interest rate decision. Economists polled by Reuters expect Christine Lagarde and her team to deliver the first interest rate hike of the year. 

If this happens, the bank will hike rates by 0.25% to 2.40% and the deposit facility rate to 2.25%. It will be the first time that the bank has hiked interest rates since September 2023. Also, it will be a big reversal after the bank delivered several interest rate cuts last year.

The bank’s rate hike will come as it combats the elevated inflation, which has continued rising in the past few months. Data shows that the headline CPI rose to 3.2% in May from 3.0% in the previous month. It has jumped sharply from the year-to-date low of 1.7%. Anal

The next key catalyst for the EUR/USD pair will be the upcoming Bank of England interest rate decision scheduled for Thursday. Economists expect the bank to leave interest rates unchanged in its meeting next week.

The most recent data showed that the headline Consumer Price Index retreated to 2.8% in April, helped by the ongoing government actions. Still, Polymarket traders are predicting that the bank will hike interest rates in the coming months as inflation ticks up again.