Tuesday’s FX session was marked by cautious optimism and range-bound trading as market participants awaited high-profile catalysts. Day 2 of U.S.-China trade negotiations in London kept risk sentiment in flux, though President Trump’s upbeat remark about getting “good reports” from Monday’s meeting lent a slight bid to the US dollar early on. Meanwhile, anticipation built for Wednesday’s U.S. inflation data (CPI) and other key releases, curbing any major currency breakouts ahead of the events. In the UK, traders parsed a fresh employment report – especially wage growth figures – for clues on the Bank of England’s path, with any cooling in pay seen as easing pressure for rate hikes. The Japanese yen found support from an upward revision in Japan’s Q1 GDP and signs of rising inflation, fueling bets that the Bank of Japan might stay hawkish. Overall, the U.S. dollar remained underpinned by last week’s strong payrolls data (which dimmed hopes of imminent Fed rate cuts), leaving USD/JPY, GBP/USD, and EUR/USD largely in consolidation as traders positioned ahead of upcoming macro triggers.
USD/JPY
USD/JPY 5-minute chart up to June 10, 2025. Price spiked to 145.20 overnight before easing.
Technicals in Focus
The USD/JPY pair resumed its bullish bias, touching fresh highs near the ¥145.00 handle before a slight pullback. Notably, the price action remains supported above its 50-period moving average on short-term charts, signaling ongoing upward momentum. In fact, the pair broke above a minor bearish correction line, reinforcing the uptrend after it “offloaded” earlier overbought conditions – as seen by the Relative Strength Index (RSI) cooling and then turning positive again. Momentum oscillators reflect this reset: RSI is now hovering just below overbought levels (mid-60s) and rising, while MACD stays in positive territory. The Stochastic oscillator has eased from extreme levels, indicating the pair digested its recent rally and may be gathering steam for the next move. Key resistance is immediately around the psychological ¥145.00 zone (coinciding with the recent peak); a break above ~¥145.35 would confirm a bullish breakout and could open the door toward the ¥147.00 area. On the flip side, initial support lies at approximately ¥144.20 (the area of the last consolidation). A drop below that could test deeper support around ¥143.25 – a level whose breach would invalidate the current bullish structure and signal a larger correction, potentially toward the lower ¥141s.
Trading Strategy
- Buy above ¥145.35 – A decisive push above 145.35 (recent high/triangle top) would signal fresh bullish momentum. Consider going long on a breakout, targeting ¥147.00 with a stop-loss around ¥144.80 (just under near-term support). This trade aims to ride any upside follow-through if risk sentiment remains positive and U.S. yields support the dollar.
- Sell below ¥143.25 – If USD/JPY slips under 143.25 support, a deeper pullback is likely. A short position could be taken below this level, aiming for the ¥142.00 area, with a stop-loss near ¥144.00 to manage risk. This strategy would capitalize on any yen strength from safe-haven flows or disappointment in U.S. data, which might spur a correction from recent highs.
GBP/USD
GBP/USD 5-minute chart up to June 10, 2025. Cable failed to hold early gains above 1.3580.
Technicals in Focus
The British pound’s rally paused, as GBP/USD retreated from the 1.3580 resistance region that capped Monday’s surge. Technically, the pair remains in an uptrend on a short-term basis – still trading above its rising 50-period EMA, which provides dynamic support. However, momentum has moderated: in the latest pullback, the RSI turned down from overbought territory, flashing negative signals after peaking above 70. This dip in RSI from overbought levels indicates bullish momentum was overstretched and is now cooling off. The stochastic oscillator likewise rolled over from above 80, reinforcing the view of waning upside momentum near the recent highs. Despite this, the broader structure is constructive; higher lows persist and the main trend is still bullish in the short term. Price action is forming what appears to be a wedge pattern – reflecting consolidation after the strong upswing to 1.3615 (last week’s high). Immediate resistance is the 1.3585–1.3615 zone (Monday’s high and the peak since early 2022). Bulls would need to clear this hurdle convincingly to extend the advance. Above 1.3615, the next resistance level comes in around 1.3745 (a level that, if reached, would indicate a significant bullish breakout from the wedge). On the downside, initial support lies at the 1.3500 psychological level, which roughly coincides with the mid-point of the recent range. Stronger support is seen at ~1.3405, the lower boundary of the prevailing wedge pattern. A drop below 1.3400–1.3410 would break the series of higher lows, confirming a trend shift to the downside and potentially targeting the low-1.33s or even 1.3300 in extension.
Trading Strategy
- Buy above $1.3615 – A bullish continuation is favoured if GBP/USD can decisively break above last week’s high (1.3615). A long entry above this level could target $1.3740 (next resistance/top of the wedge), with a stop-loss placed around $1.3550 to guard against a false breakout. This trade would capitalize on any resurgence of pound strength (for instance, on improved risk sentiment or hawkish UK cues) once the 1.36 hurdle is cleared.
- Sell below $1.3500 – Failure to hold the 1.3500 handle would suggest a deeper correction. A short position below $1.3500 (confirmed by a 4H or daily close beneath) targets the $1.3400 area (major support) and possibly $1.3330 thereafter, with a protective stop around $1.3570. This strategy aligns with the recent loss of upward momentum and would play into dollar strength if U.S. data surprises to the upside. (One analysis earlier in the day recommended a sell from $1.3535 with a target of $1.3335 and stop at $1.3635, reflecting a similar bearish bias off the highs.)
EUR/USD
EUR/USD 5-minute chart up to June 10, 2025. The euro remained range-bound near 1.1400.
Technicals in Focus
The EUR/USD pair was confined to a tight range on Tuesday, reflecting indecision and a “wait-and-see” approach ahead of incoming data. Price action has been oscillating roughly between $1.1350 and $1.1450 in recent sessions, with neither side managing a decisive breakout. This 100-pip range encapsulates the tug-of-war: buyers have repeatedly supported the euro on dips into the mid-1.13s, while sellers cap rallies in the mid-1.14s. Technical indicators paint a neutral-to-mildly bullish picture. On the daily chart, the euro continues to trade above key moving averages and even above the mid-line of its Bollinger Bands, hinting at an underlying bullish bias. The 14-day RSI has edged above the 50 mark (out of bearish territory) and is gradually rising, yet it remains comfortably below overbought levels. This suggests there’s scope for further upside momentum if a catalyst emerges. The MACD histogram on daily timeframes is slightly positive, and MACD signal lines are trending upward, reflecting the euro’s recovery from its late-May lows. However, without fresh impetus, the pair is stuck in sideways trade – essentially a “calm before the storm.” Important resistance is seen at 1.1445–1.1460, the upper boundary of the current range and just shy of the year-to-date high. A break above this zone would indicate a bullish breakout, exposing the psychological 1.1500 level next (a level bulls have been eyeing). Above 1.1500, stronger resistance sits around 1.1545 (a pivot that, if surpassed, would invalidate the medium-term bearish scenarios and open up a larger up-move toward 1.17). On the downside, support begins at approximately 1.1350–1.1345, aligning with the bottom of the recent range and the 200-hour moving average. Below there, the 1.1300 figure is the next notable support (coinciding with the 200-day moving average and previous breakout level). A sustained drop under 1.1300 would signal a bearish reversal out of the range, initially targeting 1.1220 and 1.1145 (projected pattern objective).
Trading Strategy
- Buy above $1.1460 – Consider going long on a clear break above the 1.1450/60 resistance zone. A move above $1.1460 would mark an escape from the recent range, validating bullish momentum. The initial upside target would be $1.1545 (near the April high), with a stop-loss around $1.1420 to manage risk on a pullback. This trade banks on a potential volatility boost (e.g., from dovish US data or improved Euro-area sentiment) propelling EUR/USD higher.
- Sell below $1.1340 – If euro-dollar slips below $1.1340 (range support), it would signal a bearish breakdown. A short position can be deployed under this level, aiming for $1.1250 (midpoint of the next support zone down) and possibly $1.1200, with a stop-loss set near $1.1390. This strategy positions for a downside move should upcoming news (such as a strong U.S. CPI print) rekindle dollar strength. Notably, one daily analysis suggested buying at $1.1340 with a target of $1.1420 (stop $1.1300) or selling at $1.1460 with a target of $1.1200 (stop $1.1510), highlighting how crucial a break of this range could be for direction.
Market Outlook
Looking ahead, currency markets are bracing for a potential surge in volatility as several high-impact events loom. The immediate focus is on Wednesday’s U.S. Consumer Price Index (CPI) release for May, which traders view as a critical input for the Federal Reserve’s policy meeting next week. Any surprise in the inflation numbers could jolt the dollar and set the tone for USD pairs across the board. Later in the week, U.S. Producer Price Index (PPI) data and the University of Michigan consumer sentiment survey (with inflation expectations) are on tap, which will further inform the market’s view on the Fed’s trajectory. Meanwhile, the outcome of the US-China trade talks in London remains a wildcard – any breakthrough or breakdown in negotiations could swiftly alter risk sentiment globally.
In Europe, traders will keep an eye on the Eurozone industrial output figures and any ECB speakers (though the ECB has just met, any guidance will be watched in context of growth risks). For the UK, attention shifts to domestic data later in the week: the monthly UK GDP report and industrial production numbers (due Thursday) will be scanned for signs of economic momentum or weakness that could influence the Bank of England’s stance. With the Fed (June 18) and BoE (June 19) policy decisions on the horizon, expect markets to become increasingly sensitive to data surprises and official commentary. In the near term, volatility is likely to pick up from the subdued trading seen today – a classic calm before the storm scenario as traders position for the next big move.