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EUR/GBP Price Languishes below 0.8550 with bullish attempts subdued

  • EUR/GBP treads water around 0.8530, a few pips above one-year lows, at 0.8519.
  • German Trade Balance surplus beat expectations in May, yet with no impact on the Euro.
  • Rising geopolitical tensions and higher Oil prices are keeping Euro bulls subdued.

The Euro (EUR) keeps treading water right above one-year lows against the British Pound (GBP) on Thursday. The EUR/GBP is trading flat in the area of 0.8530 at the time of writing, weighed by rising tensions between the US and Iran and the rebound in oil prices.

In the Eurozone, German Trade Balance data beat expectations with a EUR 19.1 billion surplus in May, from the 14.5 billion surplus seen in April, as exports grew against expectations. The data, however, has failed to provide any significant support to the Euro.

Meanwhile, the US has launched a new round of attacks in Iran, which targeted US bases in Gulf countries in retaliation. US President Donald Trump said on Wednesday that the ceasefire was over, and Crude prices have bounced up nearly10% with Brent Oil hitting the $80 level on Wednesday, after bottoming near $70.00 last week.

Technical Analysis: EUR/GBP bears have lost momentum

Chart Analysis EUR/GBP

EUR/GBP shows a bearish near-term tone, although sellers seem to have lost momentum. The Relative Strength Index (14), now near 28, highlights a bullish divergence, while the Moving Average Convergence Divergence (MACD) indicator stabilizes around the zero line, hinting at consolidation rather than a decisive bullish reversal.

Bulls, however, must break above the previous yearly low, at 0.8533 (Jul 7 low), and the top of the descending wedge pattern from mid-June highs, now around 0.8555, to confirm a bullish correction.

On the downside, below the mentioned Wednesday’s low at 0.8519, the confluence of the wedge bottom and late June 2025 lows, just above 0.8500, is likely to test bulls. Further down, there is no clear support until the early June 2025 lows, in the area of 0.84100.8863.

Euro Price This week

The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD0.03%-0.46%0.65%-0.20%-0.03%-0.32%0.38%
EUR-0.03%-0.51%0.61%-0.26%-0.03%-0.39%0.30%
GBP0.46%0.51%1.00%0.26%0.47%0.13%0.82%
JPY-0.65%-0.61%-1.00%-0.87%-0.55%-0.93%-0.28%
CAD0.20%0.26%-0.26%0.87%0.30%-0.07%0.56%
AUD0.03%0.03%-0.47%0.55%-0.30%-0.36%0.33%
NZD0.32%0.39%-0.13%0.93%0.07%0.36%0.69%
CHF-0.38%-0.30%-0.82%0.28%-0.56%-0.33%-0.69%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

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AUD/JPY Price Weakens to near 112.50, but uptrend remains constructive

  • AUD/JPY weakens to near 112.62 in Thursdayโ€™s early European session.
  • The cross keeps a constructive bullish bias, but further consolidation cannot be ruled out with neutral RSI momentum.
  • The initial support level is located at 112.55; the immediate resistance level to watch is 113.55.

The AUD/JPY cross trades in negative territory around 112.62 during the early European trading hours on Thursday. The Japanese Yen (JPY) edges higher against the Australian Dollar (AUD) amid escalating tensions in the Middle East after US President Donald Trump said an interim agreement to end the war with Iran was โ€œover.โ€

Traders are also on high alert for possible intervention from Japanese officials. โ€œThe yenโ€™s current weakness is excessive and fails to reflect the strong fundamentals of the Japanese economy, a misalignment that could prompt major central banks to launch coordinated intervention,โ€ said Michael Nizard, head of multi-asset and overlay at Edmond de Rothschild Asset Management.

Chart Analysis AUD/JPY

Technical Analysis:

In the daily chart, AUD/JPY holds above the 100-day moving average (MA) and the Bollinger Bandsโ€™ 20-day simple moving average (SMA), which together suggest a constructive bullish bias after the recent pullback. Price also remains comfortably above the lower Bollinger band, while the upper band marks the next upside objective as the pair grinds higher; the Relative Strength Index (14) near 50 keeps momentum neutral, hinting at consolidation rather than exhaustion for now.

On the downside, initial support is seen at the 100-day MA at 112.55, followed by the Bollinger midline around 112.42 and then the lower band at 111.15, where buyers would likely defend the broader uptrend. On the other hand, the first upside barrier emerges at the June 16 high of 113.55. The next hurdle is seen at the upper Bollinger band at 113.70, en route to the May 13 high of 114.74.

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GBP/USD Price – Holds a constructive bullish tone above 1.3400 as UK political risk eases

  • GBP/USD gathers strength to near 1.3405 in Thursdayโ€™s early European session.
  • The pair maintains constructive bias, with a mildly bullish RSI momentum.
  • The first upside barrier emerges at 1.3470; the initial support level to watch is 1.3300.

The GBP/USD pair trades in positive territory around 1.3405 during the early European trading hours on Thursday. Fading political uncertainty in the United Kingdom (UK) provides some support to the British Pound (GBP) against the US Dollar (USD).

Following the resignation of Keir Starmer in late June, UK political risk has eased significantly. The formal race to replace outgoing Prime Minister Keir Starmer begins on July 9. Frontrunner Andy Burnham is widely expected to become Prime Minister by July 20.

Chart Analysis GBP/USD

Technical Analysis:

In the daily chart, GBP/USD holds a mildly bullish near-term bias as price sits above the Bollinger middle band and the 100-day simple moving average (SMA). The pair is pressing the upper half of the recent range, with the Bollinger Bands (20, 2) still widening modestly, while the Relative Strength Index (14) at 57.6 suggests constructive but not overextended upside momentum.

On the topside, initial resistance is aligned with the Bollinger upper band at 1.3470, where buyers could hesitate. On the downside, immediate support is provided by the Bollinger middle band near 1.3300, while a deeper pullback would likely be contained by the Bollinger lower band around 1.3130.

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AUD/USD Price – 0.6860 is key support level amid geopolitical risks

  • The Australian Dollar edges up against the US Dollar despite multiple headwinds.
  • Middle East war may last longer due to US attacks on Iranian infrastructure.
  • The FOMC minutes show that several policymakers see the need for monetary policy tightening.

The Australian Dollar (AUD) trades marginally higher at around 0.6935 against the US Dollar (USD) during the European trading session on Thursday. The Aussie pair edges up as the US Dollar ticks lower despite escalating Middle East risks and hawkish Federal Open Market Committee (FOMC) Minutes of the June policy meeting.

At press time, the US Dollar Index (DXY), which gauges the Greenbackโ€™s value against six major currencies, trades 0.13% lower to near 100.92.

The attacks on Iranian infrastructure by United States (US) military forces signal that the restart of the war would last long, a scenario that might keep oil prices higher and the appeal of safe-haven assets upbeat. According to Axios, the US Air Force bombed two railway bridges in Iran on Wednesday.

Meanwhile, the FOMC Minutes showed on Wednesday that policymakers are concerned about upside inflation risks and several of them see the need to tighten monetary conditions to ease price pressures.

In the Australian region, traders might consider raising hawkish Reserve Bank of Australia (RBA) bets again as Assistant Governor Sarah Hunter has reiterated that the central bank would act, if needed, for inflation to return to target and maintain sustainable full employment.

Lately, traders pared hawkish RBA bets as the Australian monthly Consumer Price Index (CPI) has cooled down in the last two months.

AUD/USD technical analysis

AUD/USD trades slightly higher at around 0.6936, but maintains a bearish near-term tone as it remains below the 20-period exponential moving average (EMA) at 0.6963.

The pair has been unable to reclaim this short-term trend proxy, suggesting that rallies are likely to be capped while price holds under the EMA. The Relative Strength Index (RSI) at 41.46 stays below the midline, hinting at persistent, though not extreme, selling pressure.

On the topside, initial resistance is defined by the 20-period EMA at 0.6963, which is the first level bulls would need to overcome to ease the current downside bias. Above the moving average, the next resistance for the pair will be the psychological level of 0.7000. Looking down, the June low at 0.6865 is the key support level; a break below that would expose the pair to the March low at 0.6833.

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Rupee Pauses Decline After RBI FX Intervention

The Indian rupee hovered around 95.5 per dollar, pausing losses as traders pointed to likely intervention by the Reserve Bank of India through dollar sales to temper volatility. The currency remained under pressure, however, amid renewed geopolitical tensions after fresh US military strikes on Iran and retaliatory attacks on Kuwait and Bahrain fueled concerns over oil supplies. Brent crude remained on the rise, gaining more than 8% over the previous two sessions. Broader market caution also weighed on domestic assets, sending the benchmark 10-year government bond yield up 7 basis points on Wednesday, its biggest one-day rise in over three months, while Indian equities fell 2%, their steepest drop over the same period. Meanwhile, Fed meeting minutes reinforced expectations of tighter US monetary policy, with futures implying a one-in-three chance of a rate hike this month and a two-in-three probability by September.

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Offshore Yuan Snaps 3-Day Losing Streak

The offshore yuan rose to around 6.79 per dollar on Thursday, snapping a three-session losing streak, as stronger producer-price growth reinforced expectations that deflationary pressures are easing despite still-muted consumer demand. Annual producer inflation rose to 4.1% in June from 3.9% in May, marking the fastest pace since July 2022, supported by higher commodity and energy costs amid the Middle East tensions. Meanwhile, annual consumer inflation eased to a three-month low of 1% from 1.2% in May. While rising global prices for oil, semiconductors, and industrial metals have lifted factory-gate prices, weak domestic demand has limited cost pass-through to consumers, keeping pressure on profit margins. On the monetary policy front, the central bank reiterated its commitment to maintaining an appropriately accommodative stance and strengthening financial support for domestic consumption, while acknowledging the persistent imbalance between robust supply and relatively weak demand.

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Yen Pressured by US-Iran Tensions

The Japanese yen traded around 162.5 per dollar on Thursday, hovering near 40-year lows as renewed conflict between the US and Iran drove oil prices higher, adding pressure to Japanโ€™s oil-dependent economy and weighing on the currency. The US military confirmed it had carried out strikes on Iran for a second straight day, while Tehran threatened a large-scale retaliatory operation against US military bases across the region. Meanwhile, traders continued to maintain bearish positions on the yen amid the absence of intervention from Japanese authorities despite repeated warnings from Tokyo. Investors are now awaiting official intervention data later this month to determine whether the government was behind the yenโ€™s sharp but short-lived rally on July 2. Separately, Japanโ€™s government revised its latest draft of the annual policy agenda, calling for appropriate monetary policy that supports stable price growth.

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Dolar snaps back – the return of Middle East hostilities drains currency markets

ge market has turned defensive following a sudden escalation in the conflict between Iran and the United States. Iranโ€™s attack on commercial vessels in the Strait of Hormuz brought an end to the month-long ceasefire that had been in place. As a result, the geopolitical risk premium has returned to the FX market, draining capital from most currencies and redirecting it toward the U.S. dollar. Timeline of the escalation: How did the memorandum collapse?

The renewed escalation followed the sequence of events below:

  • Signing of the memorandum: Last month, the United States and Iran reached a temporary 60-day agreement. The deal guaranteed safe, toll-free passage for ships through the Strait of Hormuz in exchange for the temporary suspension of U.S. sanctions on Iranian oil exports and the launch of negotiations over Tehranโ€™s nuclear program.
  • Iran attacks commercial vessels (beginning of the escalation): Iran violated the agreement by targeting three commercial ships transiting the Strait of Hormuz, including an LNG tanker carrying liquefied natural gas.
  • U.S. retaliation: In response to the attacks on commercial shipping, U.S. forces launched a large-scale retaliatory strike against more than 80 targets across Iran. Washington also immediately reinstated sanctions on Iranian oil trade.
  • Iranian counterattack: Tehran responded with another wave of strikes, this time targeting sites in Bahrain and Kuwait.
  • Official end of the ceasefire: Speaking to reporters during the NATO summit in Ankara, Donald Trump ended any speculation by declaring that the ceasefire was over (“as far as I’m concerned, it’s over”). The President sharply criticized the Iranian leadership, calling them “scum” and “liars,” effectively ruling out any near-term return to diplomacy.

FX market reversal: Risk aversion weighs on emerging-market currencies

Smaller emerging-market currencies are the biggest losers of today’s session, rapidly surrendering the gains accumulated during the past several weeks of relative geopolitical calm. The Hungarian forint is the weakest performer today ( EUR/HUF: +0.85%, USD/HUF: +1.0% ), falling to a two-month low against the euro and a three-month low against the U.S. dollar. However, the forint entered this new phase of the Middle East conflict from a position of considerable strength, retreating from multi-year highs reached on the back of investor optimism following Peter Magyar’s party’s victory in the parliamentary elections. For the HUF, the current move may represent a justified correction after most positive developments had already been priced in. Any further appreciation will likely depend on more structural improvements in the Hungarian economy, particularly stronger foreign direct investment. Alongside the forint, the South African rand (USD/ZAR: +0.6%, EUR/ZAR: +0.4%) and the Indian rupee (USD/INR: +0.5%) are also posting broad losses. India remains directly dependent on crude oil shipments passing through the Strait of Hormuz, while South Africa relies heavily on refined petroleum products. Meanwhile, the Polish zloty is down around 0.3% against both the euro and the U.S. dollar.

Chart 1: EUR/HUF and USD/HUF exchange rates (yellow)

Wykres 1: Kurs EURHUF oraz USDHUF (ลผรณล‚ty)

Source: xStation5

EUR/USD: Bears regain the upper hand

The increase in risk aversion is also weighing on the broader G10 currency complex. The only notable exceptions are the New Zealand dollar , supported by the Reserve Bank of New Zealand’s recent rate hike to 2.50% and hawkish remarks from the RBNZ Governor, and the Norwegian krone , which continues to benefit from renewed upward pressure on oil prices. The resumption of hostilities in the Middle East has effectively erased a week’s worth of gains on EUR/USD. The world’s most traded currency pair has declined by roughly 0.4% since yesterday and, despite relatively flat trading today, remains vulnerable to further downside. This is especially true given that the European Central Bank is unlikely to respond with the kind of reactive hawkish rhetoric that would provide meaningful support for the euro. Options market participants are also increasingly hedging against further EUR/USD declines. The one-month Risk Reversal indicator has remained below zero almost continuously since March 2026, indicating that demand for EUR/USD put options exceeds demand for call options. In other words, investors are showing a greater preference for contracts that protect against further euro weakness.

Chart 2: One-month EUR/USD Risk Reversal and EUR/USD spot

Wykres 2: Risk Reversal 1M dla EURUSD oraz Spot EURUSD

Source: Bloomberg Finance LP

On the other hand, developments in the bond market may provide fundamental support for EUR/USD. Yields on two-year German government bonds have rebounded much more sharply (around +10 bps) than their U.S. counterparts, reflecting the euro area’s significantly greater sensitivity to a prolonged energy shock. If military tensions persist over the longer term, the ECB may be forced to adopt a more hawkish, inflation-focused stance. Even without additional rate hikes, such a shift in communication could help EUR/USD defend support around 1.1400. Chart 3: EUR/USD and the yield spread between two-year German and U.S. government bonds

Wykres 3: EURUSD oraz spread rentownoล›ci miฤ™dzy 2-letnimi obligacjami (Niemcy - USA)

Source: Bloomberg Finance LP