July 1, 2025 – Written by David Woodsmith

STORY LINK Euro to Dollar Forecast: Another 5pc Fall for USD Around the Corner?

The US Dollar (USD) has remained under pressure in currency markets while the Euro (EUR) has posted further gains on the crosses.

The Euro to Dollar has hit fresh 45-month highs at 1.1830 before consolidating just above the 1.1800 level.

The dollar is being hurt by growth, trade and budget fears.

According to Capital Economics; “We suspect that this could be a pivotal period for the greenback – either it turns around here or there is another 5pc fall around the corner.”

US yields have moved lower with the 10-year yield around 4.20% and close to 2-month lows which has sapped dollar support.

According to ING; “Technically, there’s not much resistance now until 1.1900. But the trend is a little stretched, and we would warn against buying top-side breakouts. Instead, expect good buying to come in should EUR/USD correct back to the 1.1690/1720 area.”

UoB commented; “Based on the current overbought momentum, EUR is unlikely to threaten the next resistance at 1.1850.”

It added; “Support is at 1.1750; a breach of 1.1730 would suggest the upward momentum is fading.”

Against a basket of major currencies, the US currency declined 10.7% in the first half of 2025. This is the weakest first half of a year since the end of the gold standard system in 1973.

The Euro has certainly taken advantage of dollar vulnerability. Looking at a basket against the Dollar, Euro and yen, the Euro has strengthened to the strongest level for 25 years.

On a shorter-term perspective, EUR/USD has strengthened for eight consecutive days and another gain to on Tuesday would equal the record breaking run for the single currency.

This will leave the currency vulnerable to at least a near-term setback.

A key problem for the dollar is that it appears to be vulnerable on multiple fronts.

Luca Paolini, chief strategist at Pictet Asset Management noted valuation problems as the dollar had become “the most expensive asset on almost any measure” at the end of last year.

According to Paolini; “US economic performance had been much better than Europe and China which supported the US currency. “

He added; “We effectively expect Europe and the US to grow at the same rate this year. Retail spending in the US has been flat for five months. You have the Fed cutting rates and you also have dollar outflows because there is all the discussion about taxation and tariffs. The US is a much less interesting and attractive place to invest these days.”

The dollar was unsettled by trade concerns with evidence of a fresh row between the US and Japan, although there is also evidence that the US and EU are close to securing some form of trade deal.

As far as fiscal policy is concerned, the budget bill is still being debated in the Senate after a marathon all-night session.

Commerzbank commented; “If the Republicans can secure a majority in the Senate, the House of Representatives will have to vote on this version again. However, the direction in which we are moving is clear and does not bode well for the US dollar.”

The bank also pointed to the economic data; “If the labour market data is weak, the situation should be relatively straightforward. A significant negative surprise would raise expectations of an interest rate cut in July and further weaken the US dollar.”

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TAGS: Euro Dollar Forecasts

July 1, 2025 – Written by James Fuller

STORY LINK Pound to Euro Forecast: GBP Battles to Match Turbocharged EUR

The Pound-to-Euro exchange rate (GBP/EUR) dipped to 2-month lows close to 1.1640 in early Europe on Tuesday before a recovery to 1.1655.

The Euro has continued to attract support with strength on major crosses amid a loss of confidence in the dollar.

UK political developments will be monitored on Tuesday with a key government welfare-reform vote on Tuesday while speakers at the ECB conference will be potentially important.

According to ING; “EUR/GBP could trade over 0.86 should today’s vote reject the proposed reform.” (GBP/EUR below 1.1630).

SocGen considered the technical outlook and sees scope for further gradual Pound losses; “The pair is unfolding a brief pause; recent pivot low of 0.8500/0.8480 is an important support near term. Overcoming June high of 0.8575 can lead to an extension in rebound towards 0.8610 and projections at 0.8640.” (A target of 1.1575 for GBP/EUR)

The House of Commons vote on welfare reform is scheduled for Tuesday. Despite concessions, there are still reports that a sizeable number of Labour MPs will vote against the Bill. The government may well survive the vote, but strong opposition would reinforce concerns over the medium-term outlook.

ING commented; “The government has already been forced to make about £4bn of concessions to get the bill through – although its passage is not guaranteed. Any failure to get the bill through could hit sterling and gilts on the view that further concessions will have to be made at a time when there is no fiscal headroom.”

Nationwide reported that UK house prices declined 0.8% for June after a 0.4% increase the previous month and compared with expectations of a 0.2% decline. The annual increase slowed to 2.1% from 3.5% previously.

Nationwide’s Chief Economist Robert Gardner commented; “The softening in price growth may reflect weaker demand following the increase in stamp duty at the start of April.”

He added; “Nevertheless, we still expect activity to pick up as the summer progresses, despite ongoing economic uncertainties in the global economy, since underlying conditions for potential homebuyers in the UK remain supportive.”

The UK PMI manufacturing index was unrevised at 47.7.

There was further upward pressure on costs, although selling prices increased at the slowest rate for three months.

Rob Dobson, Director at S&P Global Market Intelligence commented; “Although the downturn in UK manufacturing continued in June, the latest PMI survey provides signs of conditions stabilising.”

He added; “That said, any hoped for stabilisation remains fragile and subject to potential headwinds that could severely impact demand, supply chain reliability and future growth prospects.”

The headline Euro-Zone inflation edged higher to 2.0% for June from 1.9% previously and in line with consensus forecasts.

The core rate also met market expectations with an unchanged rate of 2.3%.

ING commented; “From the ECB side, the market prices one further 25bp ECB cut to 1.75% in December. It seems unlikely that President Lagarde will want to interfere in that pricing today.”

According to MUFG; “Recent strong gains for the euro are starting to attract more attention from ECB policymakers.”

MUFG also considers that the bank is liable to be more dovish; “Inflation is still roughly in line with the ECB’s forecasts but disinflationary pressures support our forecast for two further cuts this year with the next one to be delivered in September.”

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TAGS: Pound Euro Forecasts

July 1, 2025 – Written by Ben Hughes

STORY LINK GBP/USD Price Forecast: Pound Climbs as US Scales Back Trade Goals

The Pound to US Dollar exchange rate (GBP/USD) maintained a positive trajectory on Tuesday, with the pairing propelled to a new multi-year high.

At the time of writing, GBP/USD was trading at approximately $1.3771, up around 0.3% from Tuesday’s opening levels.

The US Dollar slipped on Tuesday following reports that the Trump administration is narrowing the scope of its trade negotiations.

Rather than pursuing a comprehensive set of international trade agreements by the 9 July deadline, US officials are now said to be aiming for more limited bilateral deals.

This apparent shift helped to boost market confidence and eased safe-haven demand for the US Dollar.

Additional downward pressure on USD exchange rates was then driven by speculation that a reduction in trade friction could lead the Federal Reserve to consider cutting rates sooner rather than later.

Although the Pound (GBP) strengthened during Tuesday’s European session, its ascent was checked by comments from Bank of England (BoE) Governor Andrew Bailey.

In an interview ahead of his speech at the European Central Bank’s annual Sintra forum, Bailey acknowledged that the UK labour market is showing signs of weakness and suggested that the path for interest rates remains downward.

These remarks reinforced expectations that the BoE will implement another rate cut in August, limiting the Pound’s upward momentum.

Looking to the days ahead, the focus will shift to Thursday’s non-farm payrolls report, which could drive significant movement in the GBP/USD exchange rate.

Economists predict US job growth slowed to just 110,000 in June, a figure that, if confirmed, would likely cement expectations for a Fed rate cut later this summer and add to pressure on the US Dollar.

Further weakness in the ISM PMIs could reinforce concerns about the resilience of the US economy.

Meanwhile, with a quiet UK data calendar, Pound movement will likely remain at the mercy of broader risk trends and the market’s evolving outlook on BoE policy.

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TAGS: Pound Dollar Forecasts

Pretty much every headline that you hear is how the US dollar is going to disappear. And my experience has been anytime you hear that, you’re getting close to the end. The Japanese yen is a little bit different, mainly due to the fact that the Bank of Japan is stuck with loose policy. Quite frankly, when you have a situation where people aren’t willing to step in and buy your bonds, that’s not a good look.

AUD/USD Technical Analysis

The Australian dollar initially fell, but it looks like it’s going to actually hold the 0.6550 level finally. This is an area that had been a little bit of a problem for some time. So, this is actually a really good sign for the Aussie. At this point in time, I suspect we will try to get to the 0.6650 level, but it’s probably going to be a grind just like the previous 200 pips. This is not a market that has anywhere to be anytime soon. It’s just gradually drifting higher, mainly, I suspect, because of US dollar weakness and not really anything to do with Australia itself. So, with this, I think you just have a grind, perhaps for another 100 pips before it’s all said and done.

For a look at all of today’s economic events, check out our economic calendar.

The EURJPY pair didn’t move anything since yesterday, to notice its fluctuations in sideways range near 196.60 level, attempting to face the negativity of stochastic and finding an exit to resume the bullish attempts until reaching the resistance of the bullish channel at 170.40.

Therefore, we will return to prefer the bullish attempts in the current trading, depending on the stability of the price above 168.70 level, confirming the importance of monitoring its behavior after reaching the targeted resistance, which forms a main key to detect the main trend in the upcoming trading.

The expected trading range for today is between 168.70 and 170.40

Trend forecast: Bullish

• GBP/USD trades at its highest level since October 2021 above 1.3770.
• Comments from central bankers will be watched closely by market participants.
• The pair could encounter strong resistance at 1.3830.

GBP/USD gathers bullish momentum following Monday’s choppy action and trades at its highest level since October 2021 above 1.3770. In the second half of the day, macroeconomic data releases from the US and comments from central bankers could drive the pair’s action.

Following the previous week’s sharp decline, the US Dollar (USD) Index stays under bearish pressure early Tuesday, fuelling GBP/USD’s rally.

The risk-positive market atmosphere and increasing political pressure on the Federal Reserve (Fed) continue to weigh on the USD. White House press secretary Karoline Leavitt said late Monday that US President Donald Trump sent a handwritten note to Fed Chairman Jerome Powell, asking him to lower interest rates. She further noted that Trump believes interest rates should be lowered to about 1%.

Meanwhile, Bank of England (BoE) Governor Andrew Bailey reiterated on Tuesday that the path of interest rates will continue to be gradually downwards.

“The increase in uncertainty is coming through in terms of economic activity and growth,” Bailey added. “Businesses tell me they are putting off investment decisions.” Nevertheless, these comments failed to influence Pound Sterling’s valuation.

Later in the day, JOLTS Job Openings data for May and the ISM Manufacturing PMI data for June will be featured in the US economic calendar. The market reaction to these releases is likely to be straightforward and remain short-lived. In case both of these data offer positive surprises, the USD could stage a rebound and trigger a downward correction in GBP/USD.

Moreover, BoE Governor Bailey and Fed Chairman Powell will participate in a policy panel at the ECB Forum on Central Banking in Sintra, Portugal. In case Powell suggests that they are unlikely to consider a rate cut until September and continue to assess the impact of tariffs on inflation, the USD could stay resilient against its peers.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly above 70, suggesting that GBP/USD is about to turn technically overbought. On the upside, 1.3830 (upper limit of the ascending channel) aligns as an important resistance level before 1.3900 (static level, round level).

Looking south, the first support could be spotted at 1.3730 (20-period Simple Moving Average) ahead of 1.3700 (static level, round level) and 1.3670 (mid-point of the ascending channel).