Market participants should brace for a volatile session on Friday. The unusual triple witching expiration (stock options, index options and futures) falls on this day, and it comes right after the Juneteenth holiday – a setup that experts warn could unleash unusually large swings. In addition, recent U.S. data and central bank decisions add to the drama. Fed officials held rates steady in the 4.25–4.50% range (adding in cuts later this year), and U.S. retail sales unexpectedly dropped 0.9% in May, underscoring a softening economy. Geopolitical tensions (notably Middle East conflicts) and tariff uncertainty also keep sentiment fragile (the VIX is back above 20). Together, these factors set the stage for choppy FX markets.
EUR/USD
Technicals in Focus
On the EUR/USD chart, the pair recently reversed sharply after dipping near 1.1460 earlier this week. Today’s action shows a break above the mid-June congestion around 1.1500, with prices climbing toward the 1.153–1.1550 zone. This has turned previous resistance (around 1.1500) into near-term support. Key resistance lies at the 1.1550–1.1570 area (the May high), and further out near 1.1600. On the downside, support is seen around 1.1480–1.1490 (prior swing lows). Overall, the short-term bias has flipped modestly bullish as the euro rallied off support, but it’s approaching significant supply.
Trading Strategy
We favor a breakout‐style long trade while EUR/USD holds above 1.1500. For example:
- Entry: Buy on a firm move above 1.1500 (e.g. ~1.1505 on confirmation).
- Targets: First profit at ~1.1570 (mid‐June highs), then a second at 1.1600 if momentum continues.
- Stop Loss: A tight stop below 1.1480 protects against a false breakout.
If EUR/USD instead fails at 1.1550 and falls back under 1.1490, an alternate plan would be a short targeting ~1.1450 (stop above ~1.1520). But as long as price stays above 1.1500, look for long entries aiming at the upper resistance zone.
USD/JPY
Technicals in Focus
USD/JPY has traded in a wide range from ~144.37 (the lows from June 18) up to ~145.75 (the peak on June 19). The pair recently retreated from 145.75 to about 145.10 but has since rebounded toward 145.35. In effect, USD/JPY is oscillating between support at 144.70–144.80 and resistance at 145.75–145.80. Short-term momentum is mixed: the recent pullback found buyers around 145.10, but there’s no clear breakout yet. On the upside, a break above 145.75 would open the way toward 146.00–146.20. On the downside, a drop below 144.70 would expose the swing lows near 144.00. Notably, the Bank of Japan left policy unchanged (yield curve control eased next year) and the yen stayed near ¥145 per dollar, so the technical range on USD/JPY is key.
Trading Strategy
A range strategy can work here while price remains stuck. For example:
- Long Entry: Buy near 144.75 (support area) with an initial target of 145.20 (mid-range) and a larger target at 145.75 (recent high).
- Short Entry: Sell short near 145.70–145.75 (resistance) with a target at ~145.00, tightening if 144.70 breaks.
- Stops: Use ~30–50 pips stops (e.g. stop long at 144.50, stop short at 146.00).
Alternatively, trade the breakout: a confirmed move above 145.80 could be traded long to 146.20 (stop ~145.50), while a break under 144.70 could be shorted toward 144.00 (stop ~145.00). Given USD strength (from Fed hold) and fading yen support, the bias is slightly toward buying dips in USD/JPY, but caution around the key 145.75 resistance.
GBP/USD
Technicals in Focus
GBP/USD staged a strong recovery from mid-week lows. The pair rallied from about 1.3380 (June 18 low) up to 1.3495 in early Asia trade. The uptrend is marked by higher highs and lows on the 5-min chart, with the 1.3450 level providing recent support. The round number 1.3500 is the next upside barrier, with a more significant target at the May high near 1.3560. On the downside, expect support around 1.3420–1.3450 (the recent swing base). The Bank of England kept rates at 4.25% in a split vote, which has left sterling subdued; but GBP/USD’s recovery suggests bargain-hunting or dollar weakness is playing a role.
Trading Strategy
Lean toward long positions on pullbacks, given the bounce off support. For example:
- Entry: Buy GBP/USD on a dip to 1.3450 (or on strength above 1.3500).
- Targets: First target around 1.3550 (psychological zone), with a stretch target at 1.3560–1.3580 (recent May high).
- Stop Loss: Place a stop just below 1.3400 (the June 18 low area) to limit risk.
Alternatively, a breakout trade: a decisive move above 1.3500 could be entered with a stop near 1.3470 and targets toward 1.3560. If sterling falters (e.g. GBP/USD drops below 1.3420), a short down to 1.3350 could be considered (stop above 1.3470). Overall, a bullish edge is favored as long as GBP/USD sustains above the 1.3450 zone.
Market Outlook
Friday’s session is laden with catalysts. The triple-witching derivatives expiry on June 20 is a rare event that historically spikes volatility – this one is even more potent coming right after the Juneteenth holiday. In practice, that means wider ranges and erratic swings are likely, especially into the afternoon U.S. close. Traders should watch for end-of-day moves as large stock and index positions roll over.
On the data front, Philadelphia Fed manufacturing (at 8:30am NY) and Eurozone consumer confidence (10:00am) are due, but the headlines will probably be dominated by risk sentiment. Geopolitical headlines, such as tensions in the Middle East, have already lifted the VIX above 20, a warning of rising fear. Such risk-off flows could underpin USD/JPY and USD/CHF, while weighing on commodity-linked FX.
Central bank news is now behind us: Fed held rates steady as expected, likely cementing a near-term floor under the USD. The Bank of Japan also kept policy on hold (10-year JGB yields ticked up, yen just above 144), and the BoE held (a more dovish split vote, but no rate move). These inaction decisions suggest that except for any renewed risk aversion, the USD should remain firm.
In summary, expect a jittery Friday. EUR/USD will be watched for a test of 1.1550 resistance or a pullback toward 1.1480; USD/JPY may remain in its 144.7–145.8 range (or extend if equities tumble); GBP/USD will track UK retail data and pound sentiment, eyeing 1.3560 overhead. With volatility elevated, traders should use strict risk controls on these setups and keep an eye on broad market flows.