The Euro to Dollar (EUR/USD) exchange rate has stabilised near 1.1410 after suffering a sharp sell-off during June as stronger US economic data and geopolitical tensions boosted demand for the Dollar.

Berenberg believes the Euro may continue to struggle in the short term, but expects a more supportive backdrop to emerge as economic growth on both sides of the Atlantic begins to converge.

The bank argues that the single currency “lost twice” against the Dollar this year. Not only did the Iran conflict and higher energy prices weaken the Eurozone economy, but the US economy simultaneously received a boost from the AI investment boom and stronger-than-expected economic data.

According to Berenberg, this combination of weaker European growth and stronger US momentum created a powerful tailwind for the Dollar.

Earlier in the year, the Euro had benefited from improving Eurozone data and strong international investment flows into European equity and bond markets, briefly pushing EUR/USD above 1.20 for the first time since 2021.

However, Berenberg believes the medium-term outlook is more balanced. The bank expects growth differentials between the US and Eurozone to narrow as the boost from Germany’s fiscal stimulus gathers pace.

While the bank cautions that “the currency is likely to continue to struggle in the short term”, it believes improving Eurozone growth prospects should provide support for EUR/USD over the medium term as the current divergence in economic momentum begins to fade.

– Written by


Frank Davies

STORY LINK GBP/USD Forecast: Burnham’s Fiscal Pledge, Peace Talks Lift GBP

The Pound US Dollar (GBP/USD) exchange rate advanced on Monday as easing tensions between the US and Iran lifted appetite for risk.

At the time of writing, GBP/USD was trading at around $1.3241, up roughly 0.3% on the day.

The US Dollar (USD) slipped on Monday as improving market sentiment weighed on demand for the safe-haven currency.

Risk appetite strengthened after tensions in the Middle East appeared to ease, with the US and Iran agreeing to pause further attacks following a weekend of retaliatory strikes.

The two countries are due to meet in Doha on Tuesday for further peace talks, helping to reassure markets that the recent escalation may not derail diplomatic efforts.

With investors adopting a more upbeat stance, demand for the safe-haven ‘Greenback’ faded, leaving USD on the back foot at the start of the week.

Meanwhile, the increasingly risk-sensitive Pound (GBP) found support from the brighter market mood, while Sterling also drew strength from a speech by Andy Burnham – who is widely expected to replace outgoing Prime Minister Keir Starmer.

In the address, Burnham set out plans to deliver more balanced regional growth across the UK economy. Importantly for GBP investors, he also reaffirmed his commitment to fiscal discipline, while outlining aims to reindustrialise parts of the country and bring down welfare spending.

Markets welcomed Burnham’s comments, with UK gilt yields edging lower in response. However, as the speech focused more on broad ambitions than concrete policy proposals, the Pound’s upside remained somewhat limited.

Near-Term GBP/USD Forecast: Strong UK GDP to Support the Pound?

Looking ahead, the UK’s finalised first-quarter GDP figures could act as a key driver for the Pound on Tuesday.

If the data confirms that growth accelerated at the beginning of the year, Sterling may find some modest support. However, the release may not trigger much movement if it comes in line with previous estimates.

A revision could spark a sharper reaction. An upward adjustment may strengthen GBP, while a downgrade could drag on the UK currency.

For the US Dollar, Tuesday afternoon brings the latest JOLTS job openings data. Evidence of resilient hiring demand in May could help underpin USD exchange rates.

The latest US consumer confidence index may also influence the ‘Greenback’, with economists expecting household morale to have improved in June.

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The US dollar is slightly positive against the Japanese yen. We continue to see the 162-yen level being an area of difficulty, but once we break above there, we will be free to continue to grind higher. The Bank of Japan did intervene at the end of April, and they have said a few things here and there, but quite frankly, when the market has made up its mind, most of the time, the best a central bank can hope for is slowing down the move, and I think that’s what you kind of have here.

The continuation of the contradiction between the main indicators led to delay the negative attempts of platinum, to form some bullish corrective waves by reaching $1625.00, by the above image, we notice the stability of the trading within minor bearish channel levels, to confirm the stability of the bearish scenario by its stability below the initial resistance at $1745.00.

And that makes us wait for gathering extra negative momentum, which allows it renew the negative attempts that might target $1555.00 and $1510.00, while breaching the resistance and holding above it will provide extra chances for recovering more losses by its rally $1775.00 reaching the next barrier near $1855.00.

The expected trading range for today is between $1515.00 and $1680.00

Trend forecast: Bearish

The EURJPY pair formed some bearish trading, however it didn’t settle for longtime by its stability above 183.40, forming several bullish waves by targeting 184.85 barrier, to settle near 184.20.

In spite of the stability of the price below 184.85 barrier, however the contradiction of the main indicators might force it to provide unstable mixed trading, to keep waiting for gathering extra negative momentum, which allows it to renew the pressure on the mentioned barrier, where breaking it will extend the trading towards the negative stations near 182.90 and 182.20.

The expected trading range for today is between 183.40 and 184.60

Trend forecast: Fluctuating within the bearish trend

The Euro to Dollar (EUR/USD) exchange rate has edged back above 1.14 after rebounding from multi-month lows earlier this week, helped by a softer US Dollar.

Scotiabank believes the Euro is showing signs of stabilising, despite markets trimming expectations for further European Central Bank interest-rate increases.

The bank notes that falling oil prices have reduced inflation concerns across the Eurozone, while the ECB’s one-year inflation expectations measure eased to 3.5% in May from 4.0% previously.

Although this has prompted investors to scale back rate hike expectations, Scotiabank believes the Euro has remained relatively resilient.

From a technical perspective, the bank says the recovery from this week’s low near 1.1325 is encouraging, with EUR/USD already reaching its first upside retracement objective.

Scotiabank believes intraday momentum remains supportive and sees scope for the pair to extend gains towards the 1.1440-1.1450 area in the near term.

While the broader trend remains uncertain, the bank considers the short-term outlook to be neutral-to-bullish as EUR/USD attempts to build on its latest recovery.

Fundamental Analysis & Market Sentiment

I wrote on 21st June that the best trades for the week would be:

1. Long of the USD/JPY currency pair. This pair rose by 0.28% last week.

2. Long of the NASDAQ 100 Index following a daily close above 30,716. This did not set up.

A summary of last week’s most important data in the market:

1. US Core PCE Price Index – as expected.

2. US Final GDP – higher than expected, at an annualized rate of 2.1%.

3. Canadian CPI (inflation) – higher than expected, with a month-on-month increase of 0.7%. This helped the Loonie maintain its value last week.

4. Australian CPI (inflation) – lower than expected, with a fall in the annualized rate to only 4.0%, while 4.3% was expected. This was a dovish tilt for the RBA and helped make the Aussie the weakest major currency last week.

5. Australian Unemployment Rate – as expected, this ticked lower to 4.4%.

While there were a few important data items last which had some effect on the markets as I outlined above, the bigger stories right now are away from macro data and effects. The top story is the strong selloff at the end of last week in semiconductor and technology stocks on a general fear of overvaluation and overbought conditions. This sent some tech-heavy Asian indices, notably the KOSPI Composite in South Korea and the Nikkei 225 in Japan, sharply lower. The technical bull market in tech stocks continues, but it is starting to look shaky. I am on the sidelines here and waiting for the market to stabilize before I consider getting lock of tech stocks again.

US Final GDP has given a small hawkish tilt towards the Fed which has kept the US Dollar relatively strong over the past week, but we saw the weaker Australian inflation data help send the Aussie lower.

The other big story is despite the MoU which has been signed by the USA and Iran, Iran has now for two days fired on shipping transiting the Strait of Hormuz, although the MoU’s main provision was the complete reopening of the Strait. The US again retaliated locally in the Hormuz area last night, making it the second round of US military action against Iran since the MoU was completed towards the end of the previous week. Iran also fired at Kuwait and Bahrain. President Trump is again talking about the possibility that he may have to resort completely to military action if Iran is unable to keep to the terms of the MoU, but his threats won’t have much credibility, at least not until after the US mid-term election in the USA in November, and maybe not even then.

UK prime minister Keir Starmer announced his resignation, but it is a near-certainty he will be replaced by Andy Burnham, a known quantity, so this will not be likely to have much impact upon the British Pound or the British stock market.

The Week Ahead: 29th June – 3rd July

Next week is relatively light. The coming week’s most important data points, in order of likely importance, are:

1. US Average Hourly Earnings

2. US Non-Farm Employment Change

3. US Unemployment Rate

4. US ISM Manufacturing PMI

5. Canadian GDP

It is a public holiday in the USA on Friday, in Italy on Monday, and in Canada on Wednesday.

Monthly Forecast June 2026

Currency Price Changes and Interest Rates

For the month of June, as there was still no clear trend in the US Dollar, I made no monthly forecast.

For the month of July, I forecast that the EUR/USD currency pair will decline in value, and the USD/JPY currency pair will rise in value.

Weekly Forecast 28th June 2026

Last week, I made no weekly forecast.

This week, I again make no forecast, as there were no exceptional price movements last week.

Volatility increased a bit last week, with 30% of the notable currency pairs and crosses moving by more than 1% in value. Next week’s volatility is likely to remain at a similar level, although it might be concentrated in the US Dollar pairs.

You can trade these forecasts in a real or demo Forex brokerage account.

Technical Analysis

Key Support/Resistance Levels for Popular Pairs

Key Support and Resistance Levels

US Dollar Index

The US Dollar printed a bullish candlestick last week, making it the highest weekly close in 1.25 years, so a valid long-term bullish trend has clearly been established. The factors bulls will find concerning are the notable upper wick and the fact that the high was not only a potentially bearish double top, it was also rejecting for a second time the resistance level at 101.39. It would not be a big surprise if the price struggles to get established above that level.

The new bullishness in the US Dollar is partly due to the Federal Reserve’s more hawkish tilt which it made at its policy meeting two weeks ago. Markets are now expecting the Fed will make a rate hike before the end of 2026. This has sent the greenback and its treasury yields higher. Last week provided a further minor hawkish boost, with higher-than-expected US GDP data released.

I think it makes sense to be attentive to trade opportunities over the coming week which are long of the US Dollar, but if the price is already testing 101.38 it might not move much higher over the short term.

US Dollar Index Weekly Price Chart

USD/JPY

The USD/JPY currency pair followed through a little after its long-awaited bullish breakout two weeks ago, rising weakly to a new near 2-year high price, after weeks of declining volatility.

While my analysis of the US Dollar Index above explains why I am bullish on the Dollar, it does not explain why I would be bearish on the Japanese Yen. The answer is long-term weakness from high national debt levels, but it is also true that the authorities in Japan want to raise rates and just hiked by 0.25%. The Yen is also getting a little bid as money comes out of tech stocks as a safe haven currency to park funds for a while. However, as a longer-term trend trade, this pair still looks good.

The major worry anyone long here should have is whether the Bank of Japan might intervene to try to push the price down, as it already has done a few times in recent history.

It might be that Japan feels it cannot justify intervention when the moves do not look speculative or disorderly but reflect changing fundamentals like the recent hawkish Fed tilt.

Trend traders will be long of this currency pair and I am long also.

USD/JPY Weekly Price Chart

EUR/USD

The EUR/USD currency pair made its lowest weekly close in 1.25 years, just like the US Dollar Index. Also just like the Index, it has a wick on the weekly candlestick that could make you a bit nervous about trading with the trend. Despite that, I am short, as this currency has historically trended very reliably. Another factor to consider is that this pair often has deep pullbacks within trends, so don’t worry too much about the lower wick.

There is nothing special going on with the Euro, it has been a relatively stable currency in recent months – not one of the big movers.

Due to its propensity to trend and a strong US Dollar breaking out to new long-term highs, I am happy to be short of this currency pair.

More conservative traders might want to wait for the price to get established below $1.1374 before going short.

EUR/USD Weekly Price Chart

AUD/USD

The AUD/USD currency pair dropped strongly last week – it was at the heart of the Forex market, with the US Dollar the strongest currency of last week, and the Australian Dollar the weakest.

The Aussie is being hit by a double whammy: declining risk-on sentiment, but also a sense that the Reserve Bank of Australia is going to be forced into a more dovish tilt regarding rates, which leaves the Aussie unsupported.

Technically, the weekly price chart below shows a bearish descending linear regression analysis holding the price action of the last few weeks, suggesting there is a further drop to come. The short-term bearish momentum and lack of much of a lower wick on the candlestick reinforces that.

I don’t like to trend trade this currency pair, but day traders might want to watch out for short trades here. Just watch out for the bullish inflection point at $0.6834.

AUD/USD Weekly Price Chart

Gold

Gold has been descending steadily since the start of March. However, although it is clearly bearish, it has reached an area that was previously supportive just below the $4,000 round number. The descending trend line is suppressing the price, but there are initial signs that things might be about to change.

If you are thinking of buying, it will likely be wiser once the trend line I mentioned is decisively broken. Next week, this trend line will be sitting at about $4,300.

The sustained fall in the value of precious metals is getting a tailwind from the more hawkish policies of central banks which have begun to prevail anew in recent months, most notably the Federal Reserve.

I don’t like to go short of Gold anyway, but in the current price area it looks dangerous to do so. Having said that, there are factors working to send it lower, and a bearish trend.

Gold Weekly Price Chart

Brent Crude Oil Futures

Brent Crude Oil again made its lowest close at the end of last week since the war between the USA and Iran broke out last February. This is not surprising as the belligerents have just signed an MoU and practically the only thing the Americans get out of it is the reopening of the Strait of Hormuz. Progress towards this, and the news of the MoU signing, have driven down the price of crude oil and removed a recessionary and inflationary input into the global economy. Having said that, the past few days have seen more belligerence in the Strait of Hormuz with Iran attacking ships doing things it doesn’t like, and the US retaliating against Iran’s military capabilities in the Strait.

This means it is quite possible Crude Oil could open higher and rebound a bit this week on fears that the Hormuz problem has not been properly taken care of – at least for the 60 days the MoU stipulates.

Looking to the downside, the price has arrived in its pre-war area of comfort, albeit maybe at the higher edge of that. So, it might fall by a few more Dollars, but I think it does not have a lot more room to descend technically.

Brent Crude Oil Futures Weekly Price Chart

Bottom Line

I see the best trades this week as:

1. Long of the USD/JPY currency pair.

2. Short of the EUR/USD currency pair.