The week kicks off with a cautiously optimistic mood in the forex market. Risk appetite improved in Asian trading, buoyed by upbeat U.S. jobs data and hopes for thawing U.S.–China trade relations. Equities climbed and safe-haven flows receded, sending the U.S. dollar slightly lower from last week’s highs – the euro is up around 0.2% to $1.142, while USD/JPY has pulled back toward ¥144.4 after Friday’s jump. Meanwhile, the euro finds support from a shifting macro backdrop: the European Central Bank’s latest rate cut (to a 2.0% deposit rate) came with hints of a pause in easing as inflation nears target. This has tempered eurozone recession fears, though growth remains fragile. Today’s economic calendar is relatively light – Australia observes the King’s Birthday holiday (dampening Asia-Pacific liquidity), and traders are eyeing ECB policymaker Elderson’s speech in Europe and the NY Fed’s May Survey of Consumer Inflation Expectations in the U.S. (previous one-year-ahead inflation at 3.6%). With U.S. CPI data due mid-week, markets are on guard for any headlines that could sway Fed rate cut expectations. Overall, a tentative but positive tone prevails as the new week begins.
EUR/USD
EUR/USD 5-minute chart as of June 9, 2025. After falling late last week, the pair is rebounding from support in the mid-$1.13s.
Technicals in Focus
EUR/USD is attempting to rebound after last week’s pullback, with bulls defending the $1.14 area. Short-term candlesticks show a basing pattern – the euro carved out a potential double-bottom near $1.1370 late last week, evidenced by multiple long-tailed candles rejecting that support zone. Momentum indicators are gradually turning positive on intraday timeframes. The 14-period RSI has climbed back to about 50–53, reflecting neutral to slightly bullish momentum. Likewise, fast oscillators like the Stochastic are ticking higher from oversold levels (Stoch %K ~60, indicating an upswing). The MACD on the 5-minute chart is flattening out after a bearish phase and is close to a bullish crossover (histogram hovering around zero). Support is firm at $1.1400–1.1370, a zone reinforced by last week’s lows. A break below 1.1370 could expose the next support around $1.1360 and even $1.1315, but for now buyers have held the line. On the upside, initial resistance comes at $1.1450–1.1460 – roughly the peak of Friday’s bounce. Above that, the late-May/early-June high around $1.1490 is the next hurdle (also a monthly high). Notably, intraday price action shows smaller bullish candles building higher lows, suggesting euro bears are in retreat for the moment.
Trading Strategy
Given the technical backdrop, a neutral-to-bullish bias is warranted for EUR/USD unless support fails. A tactical long trade could be considered:
- Bias: Neutral-to-Bullish (mild upside momentum above $1.1370 support)
- Entry (Buy): $1.1410 – $1.1430, on a minor dip or hold above $1.1400
- Take Profit: $1.1490, with a secondary target at $1.1530 if bullish momentum accelerates
- Stop Loss: $1.1370 (below last week’s low and key support)
This setup plays for a continuation of the rebound. Conversely, if EUR/USD slips under $1.1370, bullish bets should be sidelined – a deeper pullback toward $1.1300 could then unfold.
GBP/USD
GBP/USD 5-minute chart as of June 9, 2025. The pair is bouncing after sliding into the mid-$1.35s last week.
Technicals in Focus
GBP/USD (the “cable”) is showing signs of life after a notable decline late last week. The pair found support around $1.3520 – a level corresponding to the prior week’s swing low – and has since inched back up into the mid-$1.35s. The recent candlesticks include a few hammer/long-tailed candles near 1.3520, indicating sellers exhausted their momentum at that floor. On the upside, resistance in the $1.3580–1.3600 region has capped rebounds (GBP/USD briefly peaked near $1.361 on June 5 before retreating). Momentum indicators reflect the pair’s nascent recovery. The 14-period RSI, which was languishing around 39 (oversold) at last week’s trough, has now climbed back above the midline to ~56–57 – a shift to bullish territory. The stochastic oscillator is mid-range, neither overbought nor oversold (~50), after moving up from low levels. Notably, the Commodity Channel Index (CCI) on the 5-min chart spiked above +100 during today’s bounce (CCI ~+295 intraday), an overbought short-term reading that reflects the sharpness of the rebound. Similarly, fast oscillators like the StochRSI hit 100 (maxed out) during the rally, so some cooling is possible. Still, trend indicators hint at a positive bias: for instance, the ADX is around 30 and turning up, suggesting the emergence of a modest uptrend. All short-term moving averages (MA 5, 10, 20) are turning upward and clustering near $1.3540 as price trades just above them. In summary, GBP/USD is in a corrective bounce within its recent range. Support remains $1.3520–1.3500, with stronger backup around $1.3450 if that zone fails. Resistance is seen at $1.3580, then the psychological $1.3600 level – also near last week’s high. A break past 1.3600 could open the door toward $1.3700 (though that might require a fresh fundamental catalyst).
Trading Strategy
The near-term bias for GBP/USD is neutral-to-bullish as it recovers, though upside may be capped unless it clears 1.36 convincingly. A possible range trade or dip-buying strategy is as follows:
- Bias: Neutral, turning Bullish above $1.3520 (looking to buy dips in upmove)
- Entry (Buy): $1.3540 area, on a slight pullback (or accumulate longs above $1.3520 support)
- Take Profit: $1.3600, with an extension target at $1.3650 if momentum continues
- Stop Loss: $1.3490 (just under $1.3500 and recent support zone)
This trade setup aims to capitalize on the pair’s positive momentum while keeping risk defined just below support. If instead GBP/USD rallies into the high-$1.36s and falters, short-term traders might switch to a sell bias (with tight stops), given the pair’s broader range-bound character in recent weeks.
USD/JPY
USD/JPY 5-minute chart as of June 9, 2025. The pair pulled back from the ¥145 area, consolidating gains from last week’s surge.
Technicals in Focus
USD/JPY surged late last week to ¥145+, a level not seen in months, before easing back as the new week begins. The uptrend remains intact on higher-time frames (the pair still trades above its 50, 100, and 200-period moving averages), but short-term charts show a needed breather for the overbought dollar. A near-term top formed on Friday around ¥145.1, with a pronounced shooting star / long upper wick candlestick hinting at profit-taking there. Since then, the pair has dipped to as low as the mid-¥144.2 area in early Monday trade. Momentum indicators reflect this pullback: the 14-period RSI has cooled from overbought levels >70 and is now hovering around 49–50 (neutral), indicating the recent bullish momentum has faded for now. The Stochastic oscillator is in a downward swing, with %K in the upper-30s (a sell signal on that short timeframe). Notably, very fast metrics like the StochRSI are showing oversold readings (StochRSI at 0) after the dip, and the Williams %R is near -92 (deep oversold) – suggesting the dollar-yen may be short-term oversold following its rapid drop from 145. On the histogram, MACD remains slightly positive (green) despite the price dip, with a value around +0.16, which implies the larger upward bias has not fully reversed. Support levels: The first support is around ¥144.0–144.2 (recent intraday lows and a minor pivot) followed by ¥143.5. Below there, the ¥142.5 zone is a crucial support on a wider view – this level has served as a strong floor since late April. Indeed, multiple bullish reversal patterns (e.g. morning star, bullish engulfing) formed around ¥142.50 in prior weeks, underlining its importance. Resistance: Immediate resistance is the ¥145.0–145.2 region (Friday’s high). If the dollar regains traction, a break above 145.2 would have bulls targeting ¥146.0 next – a level flagged as an upside objective by recent wave analysis and roughly where intervention concerns might grow. In short, USD/JPY’s trend is up, but it’s in a consolidation phase as traders balance overbought conditions against the still-positive yield and policy backdrop favoring the dollar.
Trading Strategy
The strategic bias for USD/JPY remains bullish overall, but with a cautious eye on near-term consolidation. One tactical approach is to buy on dips, aligning with the prevailing uptrend, while another is to fade extreme rallies given intervention risk around mid-¥145. A dip-buying setup could be:
- Bias: Bullish (preferring long positions on pullbacks, given uptrend)
- Entry (Buy): ¥144.00 – ¥144.20, on a pullback into support (or a confirmed bounce off ¥144)
- Take Profit: ¥145.50, with a stretch goal at ¥146.00 if bullish momentum resumes
- Stop Loss: ¥143.50 (below the next support and recent swing lows)
This long trade aims to capture another leg higher, assuming the dollar’s uptrend continues as long as ¥142.5–144 support holds. Alternatively, short-term traders could consider a countertrend sell if USD/JPY spikes back toward ¥145.5–146.0 without fundamental justification – using a tight stop (e.g. above ¥146.5) – to play a potential double-top or intervention-related pullback. In all cases, manage position sizes carefully: volatility may increase if U.S. data or Fed commentary spurs speculation, and the Bank of Japan’s presence looms if yen weakness becomes excessive.
Market Outlook
Looking ahead, traders should stay vigilant as several high-impact events later this week could stir forex volatility. Inflation data takes center stage: the U.S. May CPI report (due Wednesday) is a critical piece – any surprise uptick or downside miss will “feed into expectations for the timing of any Fed rate cuts”. Given that markets are already debating if the Fed is done hiking and when easing might begin, USD pairs could see sharp moves on the inflation print. The New York Fed’s consumer inflation expectations (out today) serve as a prelude, but Wednesday’s CPI and even Thursday’s U.S. PPI will carry more weight for dollar sentiment.
Central bank speak is another focal point. In Europe, ECB President Christine Lagarde’s Tuesday speech will be parsed for confirmation of a likely pause in rate cuts after last week’s dovish move. The euro could be sensitive to any rhetoric on growth or inflation outlook – recall that the ECB has “lowered borrowing costs eight times” in the past year to prop up the economy, so any sign of policy reassessment or optimism on growth may buoy the common currency. A slew of other ECB officials (Elderson today, Lane and Schnabel mid-week) are on the docket as well, potentially providing a drip-feed of insight into the Bank’s thinking. Over in the US, the Fed is in its pre-meeting quiet period by mid-week, but traders will still infer Fed policy clues from incoming data – especially with the FOMC meeting looming (next week). Shifts in U.S. rate expectations will not only move USD crosses but also influence USD/JPY via Treasury yield swings.
Elsewhere, keep an eye on the British pound for U.K.-specific drivers. While GBP/USD has largely tracked broad dollar moves recently, any fresh data on the UK front (such as monthly GDP or the upcoming inflation report due next week) could spark independent moves. The yen will take cues from global risk sentiment and yields; notably, any escalation in risk-off themes (geopolitics, equity selloffs) tends to strengthen JPY, whereas continued calm or improving risk appetite (like we saw today) could reapply pressure to the yen. Market participants are also wary of official jawboning or intervention talk if USD/JPY makes a fast approach toward the ¥150 level.
In summary, the forex market enters this week with a tentative optimism, but plenty of event risk lies ahead. Inflation readings (U.S. and also final Eurozone CPI on Friday) and how they impact central bank trajectories will be paramount. Traders should monitor these data releases closely, along with any surprises in economic indicators or shifts in tone from policymakers. With volatility likely to pick up around the mid-week data rush, ensure stop-loss orders are in place and be prepared for choppier price action. The sensitivity to inflation and growth signals is high – a hotter U.S. CPI could revive dollar strength abruptly, while signs of cooling prices or softer U.S. activity might fuel talk of Fed easing, undermining the dollar. Similarly, any deterioration in Eurozone growth indicators would test the euro’s resilience. Stay alert and nimble as the week progresses, as the FX landscape can change quickly once the key numbers hit the wires.