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.

Some policymakers think that the policy rate in Japan is still low. This indicates that the BOJ could be forced to hike interest rates again in the near future.

But there is still some risk. One policymaker opposed the June increase due to downside risks to output and jobs. The government also wants BOJ to avoid excessive pressure on the economy. This creates uncertainty. But the strong wholesale inflation and the pressure from the weak yen could compel the BOJ to continue tightening.

USDJPY Forecast: Breakout Risk Builds Above 162 Resistance

Fed and BOJ Policy Gap Keeps USDJPY in Focus

The USDJPY now hinges on the spread between the interest rates of the United States and Japan. The Fed funds rate will likely not change until September. But the BOJ has already tightened rates and may raise rates again later this year. This means that both central banks are tightening at different speeds and times.

The dollar could remain strong if markets continue to price a September rate hike by the Federal Reserve. The sticky inflation provides the Fed with a rationale to maintain the hawkish stance. Currently, the 10-year US Treasury yield is dropping to 4.2% due to the lower oil prices. If yields start to rise again after this support, then USDJPY could maintain its strength. This is because the stronger US rates continue to make the dollar attractive against the yen.

But if the BOJ hints at faster rate hikes, the yen could begin to rally. The inflation pressure in Japan is intensifying and being exacerbated by the weak yen. Japanese yields may go up further if the BOJ takes any steps towards the neutral rate. This would narrow the rate spread and may limit upside in USDJPY.

Technical Analysis Points to Breakout Risk Above 162

The daily chart for USDJPY shows that the pair is consolidating at the strong pivotal resistance zone of 160 to 162 in the short term. However, the strong consolidation at the resistance line indicates bullish price action. Therefore, a break above the 162 level will likely trigger a strong move to the upside.

The formation of double bottom pattern in January and February 2026 and then in May 2026 indicates strong bullish price action and supports a bullish rally. But if the pair corrects back towards the 158 to 157 level, it will likely attract a fresh buying opportunity.

The US Dollar to Yen (USD/JPY) exchange rate has climbed to around 161.75, extending its rally to fresh multi-year highs as investors continue to favour the US Dollar.

Citi remains constructive on USD/JPY in the near term, raising its three-month forecast to 161.50, but expects the pair to retreat to 153 over the following six to 12 months.

The bank believes strong gains in Japanese equities have encouraged Yen selling and helped push USD/JPY back towards its 2024 highs. Citi also expects Japanese authorities to continue intervening in the foreign exchange market to support the Yen.

According to the bank, “the JPY-buying intervention since the end of April has already topped JPY11trn”, and it believes intervention “could swell further to around JPY30trn.”

Looking further ahead, Citi expects the policy gap between the Federal Reserve and the Bank of Japan to narrow as the BoJ continues normalising monetary policy while the Fed ultimately falls short of current market expectations for further tightening.

The bank also argues that rising Japanese government bond yields are making domestic assets increasingly attractive for both local and overseas investors, supporting capital inflows into Japan.

In Citi’s view, “USD/JPY will correct lower toward 153 by the end of this year” as narrowing rate differentials and improving capital flows provide stronger support for the Japanese Yen.

– Written by


David Woodsmith

STORY LINK Pound Sterling to Dollar Forecast: USD Rally Pauses, GBP Remains Under Pressure

The Pound to Dollar exchange rate (GBP/USD) attempted to stabilise after falling to seven-month lows below 1.3150, as the recent surge in the US Dollar paused.

While Sterling found some support as Treasury yields eased and oil prices extended their decline, investors continue to favour the Dollar amid expectations of stronger US economic growth, resilient capital inflows and the prospect of higher Federal Reserve interest rates.

GBP/USD Forecasts: Recovery from 7-Month Lows

The Pound to Dollar (GBP/USD) exchange rate dipped to fresh 7-month lows below 1.3150 on Wednesday before a tentative rally to 1.3190 on Thursday.

The dollar has gained further underlying support from reservations over volatility in the tech sector and expectations of underlying capital inflows into US assets. Gold has remained under pressure

US short-term yields, however, have fallen amid further losses in oil prices and this will tend to limit the scope for further dollar gains, especially if equities make headway.

GBP/USD still needs to make further headway to ease downward pressure. UoB commented; “a breach of 1.3200 would indicate that GBP is more likely to range-trade rather than testing 1.3135.” Key support remains around 1.30.

Domestically, markets were looking for further hints on who Burnham would choose as Chancellor if he succeeds Starmer as Prime Minister.

Current Chancellor Reeves has backed Burnham as leader, but the chatter continues to suggest strongly that she will be replaced with markets watching UK bond markets.

ING commented on the US currency; “The dollar seems to have halted its run on some risk sentiment stabilisation, but it’s still early to rule out another leg higher in the greenback. Any new signs of AI jitters could be the catalyst for more safe-haven-related dollar demand.

The bank added; “At the same time, our baseline view remains that we are not far from the peak in this dollar rally.”

According to MUFG; “If the Fed is serious about restoring price stability, a significant tightening of monetary policy will be required so it makes sense that more hikes have been priced in recently encouraging a stronger US dollar.”

It added; “We expect the US dollar to continue to trade at stronger levels until it is either challenged by incoming economic data showing slowing inflation and/or any indications from the Fed that they will not follow through with rate hikes.”

Standard Chartered head of global G10 currency research Steve Englander sees the potential for dollar demand; “We believe the move in rates and the dollar reflects expectations of cyclical and structural U.S. economic outperformance.”

He added; “Strong productivity growth, partly AI-driven, should support higher earnings and lead to dollar-positive capital inflows.”

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TAGS: Pound Dollar Forecasts

2026.06.26 2026.06.26
GBP/USD: Elliott Wave Analysis and Forecast for 26.06.26–03.07.26

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

Major Takeaways

• Main scenario: Consider short positions from corrections below the level of 1.3314 with a target of 1.2936–1.2735. A sell signal: the price holds below 1.3314. Stop Loss: above 1.3355, Take Profit: 1.2936–1.2735.
• Alternative scenario: Breakout and consolidation above the level of 1.3314 will allow the pair to continue rising to the levels of 1.3660–1.3870. A buy signal: the level of 1.3314 is broken to the upside. Stop Loss: below 1.3275, Take Profit: 1.3660–1.3870.

Main Scenario

Consider short positions from corrections below 1.3314 with a target of 1.2936–1.2735.

Alternative Scenario

Breakout and consolidation above 1.3314 will allow the pair to continue rising to the levels of 1.3660–1.3870.

Analysis

On the weekly time frame, an ascending wave of larger degree (A) of B is developing. Within it, wave 1 of (A) formed, and a downward correction completed as wave 2 of (A). On the daily chart, wave 3 of (A) is unfolding, with wave i of 3 formed and bearish correction ii of 3 developing. On the 4-hour chart, wave (c) of ii is continuing to develop, with wave iii of (c) unfolding as its part. If the presumption is correct, GBP/USD will continue to decline to the levels of 1.2936–1.2735. The level of 1.3314 is critical in this scenario as a breakout above it will enable the pair to continue rising to the levels of 1.3660–1.3870.

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 GBPUSD in real time mode

The Japanese Yen remains under pressure despite the Bank of Japan’s latest rate hike, with HSBC arguing that US Dollar strength is overwhelming any support from tighter Japanese monetary policy.

USD/JPY traded near 161.70 on Thursday, close to its highest level of 2026 after climbing more than 1.5% during June. The pair has now moved above the level that previously triggered Japanese currency intervention without provoking a fresh response from authorities.

HSBC says the recent move above previous intervention levels shows there is “no magic number” that automatically triggers action from Japan’s Ministry of Finance.

“USD-JPY has moved above prior FX intervention levels without renewed action.”

The bank believes policymakers are unlikely to stand in the way of broad US Dollar strength, even though intervention risks remain higher for the Yen than for most other currencies.

“Policymakers are unlikely to stand in the way of broad USD gains.”

HSBC argues the Bank of Japan’s recent rate hike is symbolically important but too modest to fundamentally alter the interest-rate gap with the United States.

“The Fed story is more dramatic, likely ensuring USD dominance.”

Yen Forecast Update

HSBC expects the intervention threat to remain the Yen’s main source of support rather than monetary policy.

“Intervention is the only meaningful source of potential support for the JPY.”

The bank believes USD/JPY is likely to stay elevated over the coming weeks, although the Yen could outperform currencies such as the Euro and Swiss Franc on the crosses if intervention risks increase.

The EUR/USD pair fell sharply for a second consecutive week, trading as low as 1.1324 before recovering towards the current 1.1410 price zone. The US Dollar Index (DXY) peaked at 101.80, its highest in little over a year, extending the positive momentum triggered by the Federal Reserve’s (Fed) hawkish hold and easing Middle East tensions. By the end of the week, the Greenback retains most of its gains, with the ongoing modest retracement seen as corrective.

War progress?

Over the last few days, the near-term inflationary outlook improved as progress in the Iran-United States (US) deal has sent Oil prices sharply lower. Still, the chaos from the previous three months is still spilling into global economies, and the Middle East war is far from a closed chapter. A sticky point is Iran’s nuclear power. The Memorandum of Understanding (MoU) signed a couple of weeks ago said that the US and Iran “have agreed to resolve the disposition of stockpiled, enriched material pursuant to a mechanism that will be mutually agreed upon,” yet the International Atomic Energy Agency (IAEA) has repeatedly called for verification to ensure Tehran does not develop nuclear weapons.

Another point of conflict is the passage through the Strait of Hormuz. Sure, at the time, traffic seems almost normal, and the US has begun retreating from the area, yet Iran wants full control of the critical area and demands charging taxes on vessels going through. The Iranian Revolutionary Guard warned that passage through the strait “is only possible via routes announced by Iran.”

The last one is the continued tensions between Israel and Lebanon, with the former still occupying part of southern Lebanon as a buffer zone against Hezbollah.

Markets seem optimistic, as the 60-day pause to allow negotiation is underway. Still, if there are no definitions of those three major issues, there’s a good chance tensions will re-escalate once the truce is over.

Trouble in the Old Continent

The Hamburg Commercial Bank (HCOB) released the preliminary estimates of the June Purchasing Managers’ Indexes (PMIs), which showed that business output remained in contraction territory in the month, with the Composite PMI printing at 49.5, slightly better than the 48.5 posted in May, still worrisome.

Comments from European Central Bank (ECB) officials were mixed. On the one hand, Member of the Executive Board Isabel Schnabel noted that the ECB is not done tightening yet. Schnabel said that based on current conditions, further rate hikes will likely be needed to bring inflation back to the central bank’s goal of 2%. On the other hand, President Christine Lagarde noted that while the inflation shock is too significant to ignore, it remains insufficient to drive up long-term inflation.

United States resilience

US data, on the other hand, supported the USD rally by indicating that the world’s largest economy remains strong despite continued headwinds. The S&P Global Composite PMI came in at 52.2 in June, better than the 51.5 posted in May. Growth was reported in both main sectors, as manufacturing output improved to 55.7 from the previous 55.1, while the Services PMI printed at 51.3, above the 50.7 posted in May.

More relevant, the country published the Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation gauge, which climbed to 4.1% YoY in May from 3.8% in April, as expected. Not good news as inflation doubles the Federal Reserve’s (Fed) 2% goal, but at least in line with expectations. The annual core PCE Price Index also met expectations, printing at 3.4%. Also, the final revision to the Q1 Gross Domestic Product (GDP) indicated that the economy expanded faster than previously anticipated, with the figure coming in at 2.1%, better than the previous estimate of 1.6%.

What’s next in the docket

In the coming days, Germany will release May Retail Sales and the preliminary estimate of the Harmonized Index of Consumer Prices (HICP) for June, forecast at 2.7% YoY. The EU will also publish the June HICP, with annualized inflation, according to the index, expected at 3%, easing from the 3.2% posted in May.

Across the pond, the focus will be on employment. The US will publish May JOLTS Job Openings, the June ADP Employment Change survey, and Challenger Job Cuts for the same month ahead of the Nonfarm Payrolls (NFP) report scheduled for Thursday. Other than that, the ISM Manufacturing PMI is scheduled on Wednesday.

ECB President Christine Lagarde and Fed Chair Kevin Warsh, among other major central bank leaders, will participate in the ECB’s Forum on Central Banking in Sintra, Portugal, and their words will be closely followed for hints on the inflation perspective and future monetary policy.

EUR/USD Technical Outlook:

From a technical perspective, the daily chart for EUR/USD indicates that the bearish trend remains in place despite the latest bounce. Spot holds below the 20-day Simple Moving Average (SMA) at 1.1517 and remains capped by the 100-day and 200-day SMAs at 1.1646 and 1.1662, respectively. The shorter one gains bearish traction below the longer ones, reflecting prevalent selling pressure. At the same time, the Relative Strength Index (RSI) indicator hovers around 36, recovering from oversold territory, while the Momentum indicator aims marginally higher, still below its midline and far from suggesting additional gains ahead.

In the weekly chart, EUR/USD’s bearish case is even clearer. The pair trades beneath the 20-week SMA at 1.1634 and slowly approaches a bullish 100-week SMA at 1.1291, the next downward inflection point. Technical indicators maintain their firm downward momentum within negative levels and far from oversold territory, supporting the case for lower lows ahead.

On the topside, initial resistance is located at the 20-day SMA cluster near 1.1517, with further barriers at the 100-day SMA around 1.1646. The weekly low at 1.1324 provides support ahead of the 100-week SMA at 1.1291. A break below the latter will likely put on the table the psychological 1.1000 mark.

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

No new for Platinum price since yesterday’s trading, keeping its negative stability near $1570.00 level, attempting to gather extra negative momentum, to ease the mission of resuming the negative trend by targeting $1515.00 level, reaching the main support at $1440.00.

Note that stochastic attempt to exit the oversold level might force the price to delay the bearish trend and providing some corrective waves by its rally towards $1640.00, however, it will not affect the main bearish scenario, depending on forming an initial resistance at $1745.00 level.

The expected trading range for today is between $1515.00 and $1630.00

Trend forecast: Bearish