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Hello everyone, today XM Foreign Exchange will bring you "【XM Official Website】: Collection of positive and negative news that affects the foreign exchange market". Hope it will be helpful to you! The original content is as follows:
In mid-June 2025, the global foreign exchange market will usher in a key node - the Federal Reserve's June interest rate meeting (June 18-19) was implemented, the European Central Bank's quarterly economic outlook was released, the Bank of Japan may release a clear signal of "exiting negative interest rates". Coupled with the lagging correction of US inflation/employment data in May, and marginal changes in the geopolitical situation, under the interweaving of long and short factors, the volatility of the US dollar, euro, yen and stofoco.commodity currencies may be significantly amplified. The following is to sort out the core drivers from the perspective of positive and negative aspects, providing reference for intraday and short-term trading.
Although US inflation (core PCE) in the first half of 2025 was still higher than the 2% target (the market expected core PCE in May 3.8% year-on-year, 4.0% in the previous value), the cooldown in the employment market (only 150,000 new non-agricultural new year in May, lower than the expected 180,000) and the continued contraction of the manufacturing PMI (ISM manufacturing PMI in May was 49.5, lower than the boom-bust line for three consecutive months) have weakened the Federal Reserve's confidence to "maintain high interest rates for longer." At the June interest rate meeting, the dot chart may lower the interest rate forecast at the end of 2025 to 4.25%-4.5% (currently 4.75%-5.0%), implying a two-time interest rate cut this year (25BP each time). If Powell states that "the inflation decline trend is clear and the policy interest rate has reached a restrictive high", the US dollar index (DXY) may quickly fall to 103-102 support level, which will directly benefit the euro, pound and gold.
Eurozone manufacturing PMI rebounded for four consecutive months in 2025 (May 51.2, a 15-month high), and Germany's IFO business prosperity index rebounded to 93.5 (formerly value 91.0), indicating that industrial production recovery accelerated after the energy crisis eased. The ECB's June quarterly report may raise its GDP growth forecast in 2025 to 1.2% (formerly 1.0%), and emphasized the "two-way inflation risk" (core HICP was 2.9% year-on-year, lower than the previous value 3.2%). If ECB Governor Lagarde stated that "it is not ruled out that interest rate cuts will begin in July", the euro/dollar is expected to break through the 1.09 resistance level and move towards the 1.10-1.11 range.
Japan's core CPI in May was 2.9% year-on-year (higher than 2% for 22 consecutive months), and the Chundou salary negotiations reached a 5.2% increase (the highest since 1993). In addition, housing prices in the core area of Tokyo rose by 6.8% year-on-year (set a 30-year high), inflation "stickiness" has met the conditions for the Bank of Japan to withdraw from easing. The market expects that on June 14, the Bank's resolution will announce a "July interest rate hike" (the policy interest rate rose from -0.1% to 0%). If President Kazuo Ueda stated that "end negative interest rates is the first step to exit easing", the yen may start a trend appreciation, and the US dollar/JPY may fall to 155-153 key support.
If the US industrial output in May was announced on June 18 -0.5% month-on-month (expected -0.2%), plus the sales of primary houses -4.0% month-on-month (previous value +3.0%), the market may correct the expectation of "the Federal Reserve cut interest rates twice this year" and turn to pricing "only one interest rate cut may be postponed to September". The US dollar index may rebound to the range of 104.5-105, the euro/dollar fell below 1.08, and the pound/dollar may fall below 1.26 support.
If the Bank of Japan only announced in June that it would "keep interest rates unchanged, but delete the wording of 'increasing easing if necessary'", the market may interpret it as "gradual interest rate hikes" rather than radical turn. In addition, the heavy rains in Tokyo in June triggered risk aversion (Nikkei 225 index fell 2%), the yen may only appreciate slightly (USD/Yen fell 156-155), making it difficult to break through the 153 key position.
On June 15, Iran launched a missile attack on Israel, the risk of spillovers in the Middle East intensified, international oil prices soared by 3% during the session (Bertel oil broke through US$90), and risk aversion sentiment heated up. The US dollar/CHF may fall to 0.88 support (CHF has strengthened its risk aversion attribute), and gold rose simultaneously (US$2380/ounce), suppressing the trend of risky currencies (Australia, New York).
Dollar Index: Before the Federal Reserve’s resolution on June 18, pay attention to the 103.5-104.5 range oscillations. If the dove figure exceeds expectations, you can short the US dollar; if the data is strong, you can have a light position and a long US dollar.
Euro/USD: If you break through 1.0950, you can follow up long positions, and the target is 1.1050; if it falls back to 1.0880 and stabilizes, you can buy at a low price.
U.S./JPY: If the Japanese silver clearly raises interest rates in July, it can shorten the yen (target 154); if only fuzzy signals are released, beware of a callback to 157.
Australia/USD: Against the backdrop of industrial metal rebound, long positions are laid out around 0.6680, and stop loss is 0.6650.
Summary: June 18, 2025 is a key day for "policy expectations game + economic data verification". Traders need to focus on the Federal Reserve's interest rate resolution, Japanese bank policy signals and progress in the Middle East, and respond flexibly with technical signals to avoid unilateral bets.
The above content is all about "【XM official website】: Collection of positive and negative news that affects the foreign exchange market". It was carefully stofoco.compiled and edited by the XM Forex editor. I hope it will be helpful to your trading! Thanks for the support!
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