Fed’s Kashkari says AI will force a rate hike; EURUSD and USD reverse early moves
s now losing buying momentum. In the second half of the session, the momentum has clearly shifted to the sellers. The US100, on the other hand, reflects relative strength—the index has gradually lost its downward momentum and is stabilizing in the second half of the day, ignoring some of the negative market signals.
The main topic of the day in the tech world is the potential delay of OpenAI’s IPO — reports in the NYT about the debut being pushed back to next year (in part due to SpaceX’s poor performance following its IPO) have hit the entire semiconductor sector hard. Micron, AMD, and Intel are down about 2% each, while Oracle is down more than 1%. The ripple effect was particularly evident in Asia: SoftBank, a key investor in OpenAI, plummeted by more than 12% , the Nikkei 225 lost 4.15% , and South Korea’s Kospi plunged by 5.81% .
JPMorgan warns outright that the IPO delay “could slow the pace of spending on AI infrastructure.” On the other hand, however, postponing the launch date will keep market expectations alive, which, paradoxically, could have a positive effect on market returns given the narrative being built and the promises of increasingly advanced AI development.
The main risk factor on the geopolitical front, however, is the U.S.-Iran situation. Trump reported on Truth Social that Iran had launched at least four kamikaze drones at ships in the Strait of Hormuz. One struck the deck of a large container ship—the vessel sustained damage but continued its voyage. The other three drones were shot down. Trump called the incident a “stupid violation of the ceasefire agreement.” The Strait of Hormuz is a key route for about 20% of global oil supplies—any escalation in this region immediately catches the attention of commodity markets.
At the same time, Fed’s Kashkari spoke out on inflation—according to him, the labor market is not currently a source of inflation. Price pressures are being driven by the supply side, and one of the factors he mentioned is… the expansion of AI infrastructure. Kashkari of the Fed said that the development of artificial intelligence likely means the Fed will have to raise interest rates.
Source: xStation
Intraday USD correction, but UBS sees the greenback regaining a new trend — what’s next for EUR/USD?
hursday’s and Friday’s trading sessions saw a sharp rebound in the EUR/USD pair, which is now attempting to consolidate above 1.14 after a series of strong bullish daily candles in recent weeks pushed the dollar to levels not seen since May 2025. Meanwhile, UBS analysts take the opposite view—arguing that the current weakness of the USD is a temporary phenomenon, not a structural one.
UBS vs. the Market — A Discrepancy in Narratives
UBS lowered its forecast for the EUR/USD exchange rate at the end of 2026 to 1.12 from the previous 1.14 , signaling that the bank expects the current trend to reverse. This view is based on a reassessment of U.S. interest rate expectations—the market is beginning to price in the possibility that the Fed may maintain a restrictive monetary policy for longer than previously anticipated. UBS notes that the DXY index has the potential to test the 102 level, which was last seen in May 2025. Although long positions in the dollar have increased, the bank assesses that they are far from the extreme levels seen in 2024—which means there is still room for further USD buying.
Fed vs. ECB — The Divergence Persists
The key driver for the EUR/USD pair remains the divergence in monetary policy on both sides of the Atlantic.
The Fed —despite some market expectations of rate cuts—maintains a hawkish stance, emphasizing the resilience of the U.S. economy and labor market.
The ECB , in turn, is continuing its easing cycle, and further rate cuts are almost fully priced in by the market for the second half of the year. This asymmetry naturally favors the dollar over the euro in the medium term. Today’s rebound in EUR/USD can therefore be interpreted as a technical correction following an extremely rapid move, rather than a change in the pair’s fundamental outlook.
Technical Context and Carry Trade
It is worth noting that, in the same analysis, UBS points to the Swiss franc as a currency that may weaken in the short term due to its growing role as a carry trade funding currency—which indirectly supports risk appetite and may temporarily curb the dollar’s strength. The Australian dollar’s target was lowered to 0.68 from 0.74 , reflecting the global context: weaker macroeconomic data outside the U.S. and narrowing interest rate differentials are boosting the greenback against commodity and emerging-market currencies.
Technical Analysis: EURUSD D1
The pair is currently testing a key level at 1.1392—a break below or above this level could determine the pair’s trajectory for the coming sessions. On the upside, resistance comes from the 50/100/200 EMAs clustered around 1.1560–1.1615. The RSI, at 34.4, is approaching the oversold zone (30)—similar to February 2026—which could trigger a short-term technical rebound. Nevertheless, as long as the pair does not close the day clearly above 1.1392, technical analysis favors a continuation of the downtrend. It is worth noting, however, that the pair has been highly volatile in recent days, so price movements may remain chaotic in the near term.
Trade of The Day: GBP/USD
Facts
- GBPUSD has been trading below the EMA10 on the D1 timeframe for the ninth consecutive session.
- RSI has returned to the 40 level.
- The Guardian reports that a change of the UK Prime Minister could occur as early as July 2026.
Recommendation
- Trade: Short (SELL) on GBPUSD at market price
- Target Price (Take Profit; TP): 1.30900 (TP1), 1.30000 (TP2)
- Stop Loss (SL): 1.33090
Source: xStation5
Opinion
The GBP/USD rate is rebounding slightly as the dollar (specifically the dollar index, USDIDX) corrects across the broader market after breaking out to a 13-month high. Technically, however, we are far from breaking the downward trend on GBPUSD. Even after the recent bounce, the price has been moving below the 10-day exponential moving average (EMA10; yellow) for 9 days. Furthermore, the cascade of the remaining EMAs (longer over shorter: EMA100 over EMA30, and EMA30 over EMA10) signals a clear downtrend, the reversal of which would require a series of bullish turnarounds. The chances of a strictly pro-pound turnaround remain slim. The British currency is primarily weighed down by a period of political uncertainty and the ongoing leadership transition within the ruling Labour Party following Prime Minister Starmer’s resignation.
The Guardian reported that according to preliminary internal party plans, Burnham could assume the office of Prime Minister as early as July 17. However, the anticipation—especially regarding the appointments of key cabinet members such as the Chancellor—should continue to test the pound. On the dollar side, we see a persistently hawkish Fed narrative, an increase in core PCE inflation to 3.4%, and a Q1 2026 GDP revision from 1.6% to 2.1%. The backdrop of a gathering momentum in the US economy alongside elevated inflation contrasts sharply with stagflationary tendencies in the UK. This divergence should extend the current trend on GBPUSD and the UK/US 10-year bond yield spread, until potential wage effects emerge from the recent UK energy shock, which could force the Bank of England into a more hawkish monetary policy stance. However, UK policy is already restrictive, which limits the potential for a sharp pivot.
Methodology
This recommendation was prepared based on a technical analysis of the GBPUSD chart and a fundamental analysis of the economies in question (monetary policy in the United Kingdom and the United States). The directional bias of the recommendation was determined using moving averages and market expectations regarding central bank policies. Take Profit and Stop Loss levels were established using Fibonacci retracements and price action:
- TP1 and TP2 are located at the nearest support levels from November 2025.
- SL is placed halfway between the EMA10 and EMA30, as well as between the 23.6% and 38.2% Fibo levels.
GBP/USD Price – Struggles to build on move beyond 1.3200 amid bearish setup
- GBP/USD attracts some buyers for the second straight day amid a mildly softer US Dollar.
- The UK political crisis holds back GBP bulls from placing fresh bets and caps spot prices.
- The bearish technical setup suggests that a further move up is more likely to be sold into.
The GBP/USD pair sticks to its positive bias for the second straight day, though it lacks bullish conviction and trades just above the 1.3200 mark during the early European session on Friday. The US Dollar (USD) remains depressed below its highest level since May 2025, touched on Thursday, and acts as a tailwind for spot prices.
However, the UK political crisis holds back traders from placing aggressive bullish bets around the British Pound (GBP) and caps the upside for the GBP/USD pair. Furthermore, a bearish technical setup warrants caution before positioning for any meaningful recovery from the 1.3140 area, or the lowest since November, set on Wednesday.
Against the backdrop of the recent repeated failures near the 200-period Simple Moving Average (SMA) on the 4-hour chart, this week’s break below the 1.3300 mark was seen as a key trigger for the GBP/USD bears. Moreover, the Relative Strength Index (RSI) is at 47, suggesting consolidative conditions rather than clear trend strength.
However, the Moving Average Convergence Divergence (MACD) indicator shows the MACD line modestly above the signal line and hovering around zero. This hints at tentative bullish momentum that is not yet strong enough to challenge the GBP/USD pair’s dominant downtrend witnessed over the past two months or so.
On the topside, initial resistance is located at the 200-period SMA at 1.3384, and spot prices would need a sustained break above this level to ease the broader bearish bias and open the way for a more constructive recovery phase. On the downside, intraday setbacks are likely to be driven more by price action than by clearly defined structural supports.
Meanwhile, traders will be watching the recent lows around the mid-1.3100s as a provisional near-term floor for the GBP/USD pair until fresh technical levels emerge.
(The technical analysis of this story was written with the help of an AI tool.)
GBP/USD 4-hour chart
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | -0.07% | -0.10% | -0.04% | 0.29% | 0.04% | -0.22% | |
| EUR | 0.14% | 0.07% | 0.06% | 0.13% | 0.44% | 0.16% | -0.07% | |
| GBP | 0.07% | -0.07% | 0.00% | 0.06% | 0.38% | 0.12% | -0.13% | |
| JPY | 0.10% | -0.06% | 0.00% | 0.06% | 0.39% | 0.11% | -0.12% | |
| CAD | 0.04% | -0.13% | -0.06% | -0.06% | 0.33% | 0.05% | -0.20% | |
| AUD | -0.29% | -0.44% | -0.38% | -0.39% | -0.33% | -0.26% | -0.52% | |
| NZD | -0.04% | -0.16% | -0.12% | -0.11% | -0.05% | 0.26% | -0.24% | |
| CHF | 0.22% | 0.07% | 0.13% | 0.12% | 0.20% | 0.52% | 0.24% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Swiss Franc declines as Fed hike bets lift US Dollar
- USD/CHF gains ground amid rising expectations of a Fed rate hike.
- The CME FedWatch tool shows that markets are pricing in a 63.4% probability of an interest rate increase in September.
- Swiss investor sentiment plunged to -25.0 in June from -11.1 in May, remaining deeply in negative territory.
USD/CHF gains ground after registering nearly 0.30%, trading around 0.8100 during the Asian hours on Friday. The pair rises as the US Dollar (USD) finds support from growing expectations of a Federal Reserve (Fed) rate hike. According to the CME FedWatch tool, markets have priced in a 63.4% probability that the Fed will raise interest rates during its September 15–16 meeting.
This hawkish sentiment is fueled by accelerating inflation data, with the headline Personal Consumption Expenditures (PCE) Price Index climbing to 4.1% year-over-year in May, up from 3.3% in April. This surge, the first time the headline figure has breached 4.0% in three years, is largely attributed to rising energy prices stemming from the Middle East conflict, keeping the prospect of further rate increases this year firmly on the table.
Furthermore, the Fed’s preferred inflation gauge, the core PCE index, rose to 3.4% year-over-year, up from 3.3%. This represents the highest annual core reading since October 2023.
Swiss investor sentiment worsened significantly in June 2026, dropping to -25.0 from -11.1 in May and remaining deeply negative. According to the latest UBS & CFA Society Switzerland survey, the economic expectations index experienced a sharp month-on-month decline of 13.9 points.
The Swiss National Bank (SNB) elected to keep its benchmark policy rate unchanged at 0% for the fourth consecutive meeting, reiterating that its current monetary stance supports both economic growth and price stability. However, the central bank also raised its inflation forecasts and reminded markets that it remains fully prepared to step into the foreign exchange markets if currency pressures demand it.
EUR/USD Price – Holds above mid-1.1300s amid Hormuz risks, bearish setup
- EUR/USD struggles to lure buyers on Friday as Hormuz risks support the safe-haven USD.
- Receding Fed rate hike bets keep a lid on the USD appreciation and limit losses for the pair.
- The bearish technical setup suggests that the path of least resistance is to the downside.
The EUR/USD pair struggles to capitalize on the previous day’s modest recovery gains and oscillates in a narrow band during the Asian session on Friday. Spot prices, however, hold above mid-1.1300s and the lowest level since May 2025, set on Thursday, warranting some caution for bearish traders.
Reports that Iran’s Islamic Revolutionary Guard Corps (IRGC) attacked a Singapore-flagged cargo ship in the Strait of Hormuz reignite worries about the sustainability of an interim US-Iran peace deal and support the safe-haven US Dollar (USD). This, in turn, is seen as a key factor acting as a headwind for the EUR/USD pair.
Meanwhile, traders trimmed their bets for interest rate hikes by the US Federal Reserve (Fed) this year amid expectations that inflation likely peaked last month or is close to doing so in the face of the recent fall in Crude Oil prices. This caps the upside for the USD and helps limit any further downside for the EUR/USD pair.
The recent repeated failures to find acceptance above the 100-period Simple Moving Average (SMA) on the 4-hour chart and the EUR/USD pair’s inability to gain any meaningful traction favor bears. Moreover, the Relative Strength Index (RSI) near 42 hints at a gradual recovery from oversold conditions rather than a bullish shift.
Meanwhile, the Moving Average Convergence Divergence (MACD) has now turned modestly positive, though the EUR/USD pair remains structurally pressured in the near-term. This, in turn, suggests that any meaningful recovery attempt might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly.
Immediate resistance is located at the 1.1440 region, and a break above could lift the EUR/USD pair back to the 100-period SMA at 1.1514. A move beyond this hurdle is needed to ease the current bearish tone and open the way for a more meaningful correction higher. Until then, the pair seems vulnerable to test fresh lows.
(The technical analysis of this story was written with the help of an AI tool.)
EUR/USD 4-hour chart
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.02% | -0.05% | -0.10% | -0.06% | 0.25% | 0.14% | -0.08% | |
| EUR | 0.02% | -0.05% | -0.06% | -0.02% | 0.27% | 0.12% | -0.06% | |
| GBP | 0.05% | 0.05% | 0.00% | 0.00% | 0.32% | 0.19% | -0.02% | |
| JPY | 0.10% | 0.06% | 0.00% | 0.02% | 0.33% | 0.19% | -0.01% | |
| CAD | 0.06% | 0.02% | 0.00% | -0.02% | 0.31% | 0.16% | -0.05% | |
| AUD | -0.25% | -0.27% | -0.32% | -0.33% | -0.31% | -0.13% | -0.35% | |
| NZD | -0.14% | -0.12% | -0.19% | -0.19% | -0.16% | 0.13% | -0.20% | |
| CHF | 0.08% | 0.06% | 0.02% | 0.00% | 0.05% | 0.35% | 0.20% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Australian Dollar drops to fresh lows since April vs USD amid global risk-off impulse
- AUD/USD meets with a fresh supply on Friday, though the RBA’s hawkish tilt limits losses.
- Hormuz risks and Fed rate hike bets revive USD demand, exerting pressure on spot prices.
- Traders now look to the US Consumer Sentiment Index and Fedspeak for a fresh impetus.
The AUD/USD pair attracts fresh sellers following the previous day’s modest gains and drops to a fresh low since early April during the Asian session on Friday. Spot prices, however, recover a few pips in the last hour and currently trade just below the 0.6900 mark, still down over 0.25% for the day.
According to the third and final reading published by the US Bureau of Economic Analysis on Thursday, the economy grew at an annualized rate of 2.1% in the first quarter of 2026 compared to the second estimate of 1.6% rise. Adding to this, the US Personal Consumption Expenditures (PCE) Price Index highlighted persistent inflationary pressures, keeping an interest rate hike by the US Federal Reserve (Fed) this year firmly on the table. Apart from this, the cautious market mood helps the safe-haven US Dollar (USD) stall its corrective pullback from the highest level since May 2025, touched on Thursday, and exerts downward pressure on the AUD/USD pair.
Reports suggested that Iran’s Islamic Revolutionary Guard Corps (IRGC) attacked a Singapore-flagged cargo ship in the Strait of Hormuz. The latest development reignites worries about the sustainability of the preliminary US-Iran peace deal. Apart from this, the recent tech-driven selloff in the equity markets has triggered global risk aversion, which is seen as another factor behind the Greenback’s relative outperformance against the perceived riskier Australian Dollar (AUD). That said, expectations that the Reserve Bank of Australia (RBA) will stick to its hawkish stance hold back bearish traders from placing aggressive bets around the AUD/USD pair.
Traders now look forward to the release of the revived University of Michigan US Consumer Sentiment Index, which, along with Fedspeak, might influence the USD price dynamics. The focus will then shift to RBA Governor Michele Bullock’s speech on Sunday, which should provide a fresh impetus to the AUD/USD pair at the start of a new week. Nevertheless, spot prices remain on track to register heavy weekly losses, also marking the second straight week of a negative move.
