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A collection of positive and negative news that affects the foreign exchange market
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Hello everyone, today XM Foreign Exchange will bring you "【XM Foreign Exchange】: 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 eouu.cnmodity 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.
1. Core benefits: key variables supporting risky assets and non-US currencies
1. The Fed's "dove-turn" expectations have heated up, and the US dollar is under short-term pressure
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.
2. The European economy "resilience exceeds expectations", and the euro is supported by fundamentals
In 2025, the eurozone manufacturing PMI rebounded for four consecutive months (May 51.2, a 15-month high), and the German IFO business prosperity index rebounded to 93.5 (previous value of 91.0), indicating that the energy crisis has eased and the recovery of industrial production has accelerated. The ECB's June quarterly report may raise its GDP growth forecast for 2025 to 1.2% (original 1.0%), and emphasized the "two-way inflation risk" (core HICP was 2.9% year-on-year, lower than the previous value of 3.2%). If ECB Governor Lagarde states 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.
3. The Bank of Japan's "exit negative interest rate" has entered the countdown, and the probability of a reversal of the yen has increased
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 rises from -0.1% to 0%). If President Ueda Kazuo said that "end of negative interest rates is the first step to exit easing", the yen may start a trend appreciation, and the US dollar/yen may fall to 155-153 key support.
4. eouu.cnmodity currencies benefited from the rebound of eouu.cnmodities, and the Australian dollar/Canada dollar has room for improvement
In June 2025, China's "stable growth" policy increased (new 1 trillion local bond issuance and the loosening of real estate purchase restrictions) promoted the rise of expectations of industrial metal demand, and LME copper prices rebounded to US$9,200/ton (8% higher than the May low), and Brent crude oil stabilized at US$85/barrel (OPEC+ extended production cuts to the end of 2025). Australia's employment data in May exceeded expectations (unemployment rate 3.6%, the previous value 3.8%), Canada's retail sales increased by 0.8% month-on-month in April (0.3% better than expected), the Australian dollar/USD may break through the 0.67 resistance level, and the Canadian dollar/USD may rebound to the 1.36-1.35 range.
2. Core negative news: suppressing potential variables of non-US currencies and risky assets
1. The "soft landing" of the US economy is falsified, and the US dollar's safe-haven demand counterattacks
If the US industrial output in May was announced on June 18 -0.5% month-on-month (expected -0.2%), plus a bonus house sales -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 back below 1.08, and the pound/dollar may fall below 1.26 support.
2. The risk of "stagflation" in Europe is looming, and the upward space of the euro is limited.
Italy's CPI in May was 4.2% year-on-year (higher than the euro zone average), and Greece's sovereign debt rating was downgraded by S&P (BBB-→BB+), concerns about fiscal sustainability in southern European countries are rising. If ECB President Lagarde stresses that "inflation is slower than expected, and interest rate cuts need to be cautious", the euro/dollar may rise and fall, and it will be difficult to break the 1.10 mark in the short term.
3. The Bank of Japan "double eouu.cnpromise", the rebound momentum of the yen weakens
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.
4. The geopolitical situation escalates, safe-haven funds return to the US dollar/CHF
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).
3. Trading strategy suggestions: Focus on the event window and seize the band opportunities
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 Forex】: Collection of positive and negative news that affects the foreign exchange market". It was carefully eouu.cnpiled and edited by the XM Forex editor. I hope it will be helpful to your trading! Thanks for the support!
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