As we head into Monday, July 1, 2025, global markets are positioned for a potentially turbulent session following last week’s politically charged headlines and macroeconomic surprises. While geopolitical risks have temporarily eased, traders are far from relaxed as critical U.S. labor data and central bank commentary loom large. The U.S. dollar weakened across the board as risk appetite grew, pressuring safe-haven flows. However, volatility remains a key theme heading into the week.
In the currency markets, the EUR/USD pair surged to fresh short-term highs amid a softer dollar and growing speculation that the Federal Reserve may delay rate hikes. At the same time, euro bulls found confidence in hawkish ECB rhetoric despite mixed European data. The USD/CAD pair, on the other hand, continued its bearish breakdown, with higher oil prices and favorable Canadian trade developments lifting the loonie. Meanwhile, GBP/USD and USD/JPY saw outsized moves as traders responded to a sharp shift in global risk sentiment, speculation on central bank divergence, and growing anxiety around upcoming U.S. non-farm payrolls.
EUR/USD
Technicals in Focus
The EUR/USD pair continued its bullish momentum, closing near 1.1684, after briefly spiking toward 1.1715. Technically, the MACD histogram is rising above the zero line, indicating growing bullish momentum. The Stochastic Oscillator sits in overbought territory but has yet to cross down, showing continuation potential. RSI is near 70, reflecting elevated bullish strength with some risk of short-term exhaustion.
Trading Strategy: Neutral to Buy
Buy above 1.1670–1.1680 with upside targets at 1.1715–1.1740, and a stop loss below 1.1645. Alternatively, consider selling below 1.1640, targeting 1.1600–1.1575, with a stop above 1.1690.
GBP/USD
Technicals in Focus
The pound exploded higher, rising to 1.3720 before settling around 1.3702. This bullish breakout was supported by strong MACD momentum and rising RSI, currently above 65. The Stochastic Oscillator is still pointing upward, indicating room for continued strength.
Trading Strategy: Buy on Pullback
Buy on dips above 1.3680–1.3700, targeting 1.3740–1.3765, with a stop below 1.3640. If the pair drops below 1.3640, consider selling toward 1.3600–1.3575, with a stop above 1.3680.
USD/JPY
Technicals in Focus
USD/JPY reversed sharply, slipping below 144.00 amid broad dollar weakness. MACD has turned negative, confirming the shift in momentum. RSI remains bearish below 50, and the Stochastic Oscillator crossed down into negative territory, pointing toward deeper downside.
Trading Strategy: Neutral to Sell
Sell below 143.80–143.50, with targets at 143.00–142.40, and a stop above 144.20. A recovery above 144.20 may offer short-term longs toward 144.70–145.00, with a stop under 143.80.
Market Outlook
Looking ahead, the U.S. employment data, particularly ADP jobs and Friday’s non-farm payrolls, will dominate the narrative. After recent dovish Fed commentary, any signs of labor market softening could reinforce expectations of a rate cut before the end of the year. At the same time, the Bank of Canada’s policy path remains under scrutiny following positive trade signals and stronger oil prices.
Political tensions remain a background threat. While the recent truce in the Middle East has calmed immediate fears, markets remain on edge. Any deterioration in global security could reignite safe-haven flows, driving sudden reversals in USD/JPY and gold.
Risk sentiment continues to be the dominant theme. If U.S. data disappoints, risk-on trades like GBP/USD and EUR/USD could extend their rallies. However, stronger-than-expected figures may breathe new life into the dollar. Traders should brace for wide intraday swings and heightened sensitivity to headlines as the week unfolds.