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A collection of positive and negative news that affects the foreign exchange market
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Hello everyone, today XM Foreign Exchange will bring you "【XM Foreign Exchange Official Website】: Collection of positive and negative news that affects the foreign exchange market". Hope it will be helpful to you! The original content is as follows:
1. Some internal differences within the Federal Reserve are intensifying, and short-term support and long-term pressure coexist.
The recent differences between Federal Reserve officials over the path of interest rate cuts continue to ferment, becoming the core variable affecting the trend of the US dollar. New York Fed Chairman Williams said on June 25 that U.S. economic growth is expected to slow to 1%, inflation may rise to 3% due to tariffs, and it will take two years to fall back to the 2% target. This remark strengthened the "waiting and watching" stance and pushed the US dollar index to rise by 0.3% during the European session. Meanwhile, Fed governors Waller and Bowman tend to cut interest rates in July, believing that current inflationary pressure has been controlled. This internal discrepancy has led to the US dollar trend showing the characteristics of "short-term strong and long-term weak" - Goldman Sachs and other institutions predict that as the foreign exchange hedging ratio rises, the US dollar may continue to weaken for the rest of 2025.
From economic data, the number of initial unemployment claims in the United States maintained a high of 245,000 in the week of June 21, indicating that the labor market has deteriorated marginally. However, the data of 139,000 new non-agricultural population in May and the unemployment rate was 4.2% still indicates that the economy has not yet fallen into recession. The market's expectations of Fed policy have led to the US dollar index fluctuating around the key resistance level of 99.60. If it breaks through this level, it may open upward space, and otherwise it will face pullback pressure.
2. The game between the weak economy and the policy bottom of the euro zone, the euro is under short-term pressure but has long-term support.
The current situation of weak economic growth in the euro zone forms a game between the European Central Bank's policy bottom. The initial value of manufacturing PMI fell to 49.4 in June, while the PMI in the service industry was only 50, and economic activity was close to stagnation. Data from the European Union Statistics Office showed that the eurozone GDP grew by 0.4% month-on-month in the first quarter of 2025, but global trade tensions andGeopolitical risks have exacerbated downward pressure. Although the European Central Bank cut interest rates by 25 basis points to 2.00% on June 5, it implies that the interest rate cut cycle is xmserving.coming to an end, and the policy bottom provides structural support for the euro.
The changes in the international trade situation further affect the euro. European and American tariff negotiations are at a deadlock, and the EU may accept 10% reciprocity tariffs to prevent tariffs from soaring to 50% after July 9. If negotiations break down, European automobile, machinery and other industries will suffer a heavy blow, and the euro may be under further pressure. But fiscal stimulus plans such as the 46 billion euro corporate tax exemption in Germany, as well as the eurozone's inflation rate drop to a moderate level of 1.9% in May, provide a buffer space for the euro.
3. Geopolitical risks escalate, and the differentiation of safe-haven currencies is obvious. The situation in the Middle East continues to be tense, and the escalation of conflict between Israel and Iran pushes up risk-haven currencies, but the trend of safe-haven currencies has differentiated. The yen fluctuated around 138.00 due to the Bank of Japan's ultra-loose policy restrictions on appreciation space. The Swiss franc turned to expectations due to the Swiss National Bank's policy, becoming the main choice for capital hedging, with the US dollar/ Swiss franc falling to 0.8963. In addition, the shipping risks in the Strait of Hormuz have intensified, and the price of Brent crude oil remains at a high of US$76 per barrel, which may be transmitted to inflation through energy costs, affecting the monetary policies of relevant countries.
Iran announced its victory against Israel on June 26 and suspended cooperation with the International Atomic Energy Agency, further exacerbating regional uncertainty. The U.S. Defense Intelligence Agency assessed that bombing of Iran's nuclear facilities only caused a "delay of months" and that the White House and Congress may trigger market repricing of geopolitical risks.
IV. Trends and market sentiment of other major currencies
The British pound was suppressed by the weak British economy and expectations of interest rate cuts, and the pound/USD fell to 1.3623. Bank of England Deputy Governor Ramsden said on June 24 that the UK faces a challenging fiscal environment and the market expects further interest rate cuts for the rest of the year. The Bank of Japan kept interest rates unchanged at its June 17 meeting, but slowed down the pace of reducing bond purchases. Some members supported interest rate hikes, and the yen was still dragged down by policies in the short term.
In terms of international trade, progress has been made in Sino-US negotiations, relaxing restrictions on exports of rare earths and chips, eased market concerns about the escalation of trade frictions. Canada's plan to impose tariffs on US steel and aluminum products may trigger further adjustments to global supply chains.
5. Institutional views and operational suggestions
Investment banks such as Goldman Sachs predict that the US dollar will continue to decline due to the rise in foreign exchange hedging ratio, and demand for the euro and the Japanese yen may increase. Cross-currency basis swaps show that investors' preference for dollar assets has declined, while euro and yen-denominated assets have increased. Investors are advised to pay attention to the following trading opportunities:
Euro/USD: Pay attention to the 1.0950 support level in the short term, and if it falls below, it may fall below 1.0800; it can be laid off in the long term, and the European Central Bank policy bottom and fiscal stimulus may drive the euro to rebound.
U.S./JPY: Geo-risk escalation may push the exchange rate down 136.00, but the Bank of JapanPolicy shifts to expectations to limit the decline.
GBP/USD: Weak UK economic data and expectations of interest rate cuts may push the exchange rate to fall by 1.3500, and it is necessary to pay attention to speeches by Bank of England officials.
Dollar Index: If it breaks through the 99.60 resistance level, it may open upward space to 100.50; otherwise, it may fall back to 98.50.
Risk warning: The geopolitical situation, the shift in the Federal Reserve's policy, and the progress of global trade negotiations may cause severe market fluctuations. Investors need to pay close attention to the trends of related events and flexibly adjust their positions.
The above content is all about "【XM Forex Official Website】: Collection of Positive and Negative News that Influence the Foreign Exchange Market". It was carefully xmserving.compiled and edited by the XM Forex editor. I hope it will be helpful to your trading! Thanks for the support!
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