📊 Euro rises on expectations of dovish Fed rhetoric

The euro (EUR) gained 0.49% against the U.S. dollar (USD) on Monday. EURUSD rose after dovish remarks from Federal Reserve (Fed) Governor Michelle Bowman, who suggested that the central bank may soon need to consider interest rate cuts.

👉 Possible effects for traders

Bowman's shift in tone was particularly notable, given her traditionally hawkish stance on monetary policy. She highlighted concerns over a weakening labour market and appeared less concerned about inflationary pressures from trade tariffs, signalling a potential pivot towards policy easing. Her comments sparked a sell-off in the U.S. dollar (USD), as markets interpreted them as a strong indication that rate cuts could happen sooner than expected. Helen Given, Director of Trading at Monex USA, emphasised the impact of Bowman's comments, noting that her hawkish reputation made the dovish shift especially impactful. 'Any indication that she's leaning toward rate cuts is enough to put downward pressure on the dollar', Given said. Broader geopolitical relief also supported the rise of the euro. Investors expect Iran's response to recent U.S. strikes on its nuclear infrastructure to be measured and contained, further diminishing safe-haven demand for the U.S. dollar.

Meanwhile, eurozone economic data added another layer of complexity to the global monetary outlook. Flash Purchasing Managers' Index (PMI) data indicated a steeper-than-expected contraction in private sector activity. This reinforced expectations that the European Central Bank will implement a 25-basis-point rate cut in September, potentially lowering the deposit rate to around 1.75%. Despite the eurozone's soft data, the dovish shift in the Fed's rhetoric provided enough contrast to keep the U.S. dollar under pressure in Monday's trading session.

EURUSD continued rising during the Asian and early European trading sessions. Today, investors should focus on Fed Chair Jerome Powell's speech at 5:00 p.m. UTC. Traders are speculating whether he will adopt an unexpectedly dovish stance or maintain a more neutral, balanced approach. Key levels to watch are resistance at 1.16300 and support at 1.14500.

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📊 Gold declines as Middle East conflict de-escalates

Gold prices (XAU) fell towards $3,350 on Tuesday, pressured by easing geopolitical tensions in the Middle East.

👉 Possible effects for traders

The precious metal, typically seen as a safe-haven asset during geopolitical uncertainty, lost some appeal following the announcement of a ceasefire between Israel and Iran. The resolution significantly reduced immediate risk premiums priced into the market, prompting investors to return to riskier assets.

The de-escalation followed late Monday remarks from U.S. President Donald Trump, who confirmed that Iran had agreed to an immediate ceasefire, with Israel expected to follow 12 hours later. The agreement came after Iran launched a symbolic retaliatory strike on a U.S. base in Qatar, which resulted in no casualties. Markets interpreted the limited scope of the response and the swift move toward de-escalation as a sign that both sides were aiming to avoid a broader confrontation.

XAUUSD continued falling during the Asian and early European trading sessions. Market participants are now shifting focus to monetary policy developments, particularly the upcoming testimony by Federal Reserve (Fed) Chair Jerome Powell before Congress. Powell's testimony on Tuesday and Wednesday is expected to provide further clarity on the Fed's policy stance amid persistent inflation concerns and mixed economic data. Any hints of rate cuts or shifts in policy trajectory could further influence the direction of gold prices. Key levels to watch are support at $3,340 and resistance at $3,400.

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📊 USDJPY declines after BoJ's hawkish rhetoric

USDJPY declined towards 145.000 on Tuesday, hovering near a one-week low as markets reacted to the Bank of Japan's (BoJ) latest Summary of Opinions.

👉 Possible effects for traders

Despite ongoing global uncertainties—such as persistent trade tensions and geopolitical risks—the BoJ signalled a cautious but potentially hawkish tilt. One policymaker suggested the possibility of 'decisive' rate hikes if inflation and growth align with projections. However, the broader consensus within the central bank emphasised patience, with officials reiterating that any policy tightening would depend on the economy sustainably meeting the BoJ's targets.

Policymakers highlighted ongoing uncertainty in the global outlook, particularly amid tensions surrounding U.S. trade policy. Several members advocated for maintaining accommodative conditions in the near term, citing fragile external demand and volatile commodity markets. While the hawkish remarks caught market attention, the BoJ's overall tone remained balanced, reinforcing the view that any shift in rates will be gradual and data-dependent.

On the trade front, Japanese negotiator Ryosei Akazawa is reportedly planning his seventh visit to Washington later this month as Tokyo seeks the removal of U.S. tariffs. Meanwhile, the U.S.-brokered ceasefire between Israel and Iran largely held despite sporadic incidents. However, new intelligence reports suggest that recent U.S. missile strikes caused only limited damage to Iran's nuclear facilities, indicating that regional risks remain elevated. These developments continue to complicate Japan's policy outlook, which must balance domestic recovery against external fragility.

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📊 Euro rises on dovish Fed rhetoric

The euro (EUR) rose by 0.1% on Tuesday, nearing 1.16250 and reaching an intraday high of 1.16410—the highest level since October 2021. The pair strengthened as the U.S. dollar (USD) softened slightly in response to dovish comments from Federal Reserve (Fed) Chair Jerome Powell and weaker-than-expected U.S. economic data.

👉 Possible effects for traders

In testimony before the House Financial Services Committee, Powell noted that elevated tariffs could add upward pressure to inflation as early as this summer. He emphasised that the coming months will be crucial in determining whether the Fed should move towards cutting interest rates. While maintaining a data-dependent stance, Powell left the door open to potential easing if inflation moderates or economic risks grow.

Meanwhile, U.S. consumer confidence unexpectedly declined in June, reinforcing concerns about a cooling labour market and economic momentum. As a result, markets have modestly raised expectations for a near-term policy shift, with the CME FedWatch Tool now showing an 18% chance of a July rate cut. These developments supported the euro as traders reassessed the diverging monetary policy outlooks of the Fed and the European Central Bank.

EURUSD continued rising during the Asian and early European trading sessions. 'The market is complacent about some of the downside risks', said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia. 'The thing I get is this issue is not over, which means it could come back to be a driver of commodity prices and currency markets again'. Key levels to watch are resistance at 1.16300 and support at 1.14500.

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📊 Gold slips as geopolitical tensions ease

Gold prices declined by 1.33% on Tuesday as investor demand for safe-haven assets weakened after U.S. President Donald Trump announced a ceasefire between Israel and Iran.

👉 Possible effects for traders

The Washington-brokered truce temporarily reduced risk premiums across global markets, prompting a pullback in gold prices. However, sentiment remains cautious, suggesting that both sides have already violated the ceasefire, highlighting the fragile nature of the agreement. Adding to market unease, a preliminary intelligence assessment indicated that recent U.S. strikes on Iranian nuclear facilities only temporarily hindered Tehran's progress in developing nuclear weapons. This could renew tensions in the region, eventually reigniting the demand for gold. Nevertheless, markets appear to be pricing in a short-term pause in the conflict, encouraging risk-on positioning and putting downward pressure on gold.

Attention has now shifted to U.S. monetary policy, with Federal Reserve (Fed) Chair Jerome Powell delivering a cautious outlook during his congressional testimony. Powell signalled that interest rates will likely remain unchanged for now, citing uncertainty around the economic impact of new tariffs. Nonetheless, he didn't dismiss the possibility of a rate cut in July entirely, particularly if inflation softens further or labour market conditions deteriorate. His position appears more neutral than that of other Fed officials, some of whom have openly called for rate cuts amid increasing signs of economic slowdown.

XAUUSD started to rise during the Asian and early European trading sessions. Today, investors await comments from Fed Chair Jerome Powell in his speech at 2:00 p.m. UTC for more clues on the U.S. interest rate path. Key levels to watch are support at $3,295 and

resistance at $3,340.

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📊 AUD rises for fourth consecutive session

The Australian dollar climbed towards 0.65100 on Wednesday, marking its fourth consecutive daily gain. AUDUSD reached a one-week high, supported by improving global risk sentiment.

👉 Possible effects for traders
The fragile U.S.-brokered ceasefire between Israel and Iran continued to support market stability. Traders remain cautiously optimistic ahead of U.S.–Iran talks scheduled next week. Despite U.S. President Donald Trump’s scepticism towards diplomatic engagement, the truce has held so far, offering a temporary reprieve from geopolitical volatility.

Global monetary policy developments also influenced market sentiment. Federal Reserve (Fed) Chair Jerome Powell reiterated on Wednesday that the central bank isn't rushing to cut rates, even as markets increasingly price in multiple reductions by year-end. Powell's measured tone helped temper aggressive easing expectations, supporting risk-sensitive assets such as the Australian dollar by easing concerns over U.S. economic instability while maintaining policy flexibility.

AUDUSD rose during Asian and early European trading sessions. Softer inflation data and weaker-than-expected Q1 Gross Domestic Product (GDP) figures reinforced expectations that the Reserve Bank of Australia will implement a 25-basis-point rate cut in July. Investors are now pricing in a total of 73 basis points of rate cuts by end-2025, highlighting the combined influence of global and domestic factors on the Australian dollar's trajectory.

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📊 Euro hits three-year high

The euro (EUR) rose to approximately 1.66000 on Wednesday, marking its highest level in over three years. A combination of easing geopolitical tensions, dovish signals from the Federal Reserve (Fed), and mounting fiscal concerns weighed on the U.S. dollar (USD) and bolstered the euro.

👉 Possible effects for traders
The euro's rise reflects growing investor confidence in the de-escalation of the Middle East tensions. U.S. and Iranian officials are scheduled to meet next week to discuss Tehran's nuclear programme. The apparent stability of the Israel–Iran ceasefire has further reduced demand for the U.S. dollar as a safe-haven asset.

Meanwhile, Fed Chair Jerome Powell maintained a cautious stance, reaffirming that interest rates are likely to remain steady in the near term. He warned that U.S. President Donald Trump's trade tariffs could fuel inflation, making it premature to commit to immediate policy easing. However, Powell acknowledged that without tariff-related inflation risks, the Fed would likely have continued cutting rates—highlighting the central bank’s underlying dovish bias. Markets have responded by increasing expectations for policy easing, with traders now pricing in over 60 basis points of rate cuts by year-end and the next reduction anticipated in September.

EURUSD continued rising during the Asian and early European trading sessions. Attention is now shifting back to the U.S. fiscal landscape as Congress works towards finalising a major tax and spending package. Trade policy also remains in focus ahead of President Trump’s 9 July deadline for progress on key negotiations, adding another layer of uncertainty to the U.S. dollar’s outlook. Key levels to watch for EURUSD traders are resistance at 1.16300 and support at 1.14500.

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📊 Gold rises due to weak dollar

Gold prices (XAU) rose by 0.35% on Wednesday, supported by a weaker U.S. dollar (USD) and declining Treasury yields, which enhanced the metal’s appeal. The shift in investor sentiment followed a pullback in U.S. yields amid growing concerns over economic softness and speculation around future monetary easing.

👉 Possible effects for traders
Gold’s rally also reflected investor caution surrounding geopolitical developments in the Middle East. Although the ceasefire between Iran and Israel remained intact, markets are wary of its fragility. Next week's planned meetings between U.S. and Iranian representatives—aimed at curbing Tehran's nuclear ambitions—provided a short-term de-escalation signal, helping stabilise risk sentiment. However, lingering doubts about the ceasefire’s durability and broader regional stability continued to support safe-haven demand for gold.

On the monetary front, Federal Reserve (Fed) Chair Jerome Powell maintained a measured tone during the second day of congressional testimony. He acknowledged that while the Fed can handle inflation linked to new tariffs, it isn't yet ready to cut interest rates. His remarks, combined with soft U.S. consumer confidence data for June, hinting at labour market vulnerabilities and uncertainty around trade policy, challenged the Fed's resistance to easing.

XAUUSD rose during the Asian and early European trading sessions. Investors are now awaiting key macroeconomic data due at 12:30 p.m. UTC, including GDP growth and jobless claims figures. The data could further influence the policy outlook and gold's trajectory. Key levels to watch are support at $3,295 and resistance at $3,340.

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