Today market outlook

[Zeologic]

EUR/JPY extends gains, nearing the 186.315 peak

The EUR/JPY cross-currency pair is displaying interesting price dynamics. The pair has risen for five consecutive days, reflecting the Japanese Yen's weakness against the Euro. The price currently hovers around the 185.725 level on the FXOpen chart, up from a low of 184.635 during Tuesday's trading session.

EUR/JPY price movements reflect a fierce tug-of-war between easing inflation in the Eurozone and the threat of market intervention by Japanese authorities.

On the Eurozone front, inflation is cooling, easing pressure for a hawkish stance. German CPI data released yesterday showed a decline to 2.3% year-on-year, down from the previous 2.5%. Germany's HICP index also fell to 2.4%. The easing of inflation in Europe's economic powerhouse provides an early indication that inflation across the Eurozone is also cooling.

These moderating inflation figures reduce pressure on the ECB to adopt an overly aggressive stance going forward. Market expectations for further interest rate hikes are very limited, generally capping the Euro's potential for appreciation.

Regarding the Japanese Yen, there are threats of verbal intervention and the risk of actual market action. EUR/JPY touched a high near 185.74 yesterday. The Yen's excessive weakness has triggered alarm bells in Tokyo. Japanese Finance Minister Satsuki Katayama and Chief Cabinet Secretary Minoru Khara have again issued stern warnings that they are prepared to take action in the forex market to stabilize the Yen's movements.

The threat of currency intervention has caused investors to hold back, limiting aggressive buying of EUR/JPY due to the high risk of a sudden price reversal triggered by such intervention. Meanwhile, Japan's core inflation remains at 1.4%—below the Bank of Japan's (BoJ) target—meaning the BoJ is in no rush to drastically raise interest rates.

At the ECB forum held in Sintra, Portugal, from June 29 to July 1, 2026, ECB President Christine Lagarde signaled a crucial shift, stating that the ECB's monetary policy has returned to fundamental principles. The current focus is on controlling inflation via benchmark interest rates, eliminating the need for the non-standard emergency instruments—such as massive post-pandemic asset purchases—used previously.

Lagarde emphasized that the ECB no longer needs to act aggressively. Any future interest rate cuts or adjustments will be implemented gradually and cautiously, remaining highly dependent on economic data released ahead of each meeting.

From a technical perspective, the EUR/JPY pair is currently in overbought territory on the daily chart and is being constrained by psychological barriers due to the risk of intervention. EUR/JPY is expected to trade within a range of approximately 183.80–186.20. Immediate support lies around 184.50, with the next target at 183.40. Immediate resistance is around 185.80, with the next target in the 186.20 range. This forecast could be wrong.

[Zeologic]

Oil prices drop sharply following reports of US-Iran talks

Oil prices are currently exhibiting interesting dynamics, driven by a major shift from geopolitical sentiment to concerns over abundant supply. WTI crude is trading around $68.05 on the FXOpen chart, marking a decline of approximately 30%—the steepest drop since 2020.

This bearish sentiment is primarily driven by significant progress in indirect talks held in Doha, Qatar, between Iranian officials and a US delegation led by Jared Kushner and Steve Wytkoff. These negotiations aim to de-escalate tensions in the Strait of Hormuz.

After being disrupted by mutual attacks last weekend, tanker shipping lanes in the Strait of Hormuz are recovering rapidly. This has allowed oil supplies previously bottled up in the Persian Gulf to flow back into the global market.

Iran reports exporting over 40 million barrels of oil since the US eased its naval blockade. Additionally, sustained record-high output from Russia and the US has led to a sharp surge in floating oil inventories.

However, Iran continues to insist on maintaining independent regulatory control over maritime traffic in the Strait of Hormuz—a stance opposed by the US and its Western allies. This unresolved political tension is preventing oil prices from falling significantly below the $65 mark.

Separately, reports indicate a 3.8-million-barrel drop in US crude inventories, suggesting that domestic demand remains robust. The summer season in the US typically boosts fuel consumption, further limiting the extent of the price decline.

From a technical perspective, the XTIUSD daily chart remains dominated by a bearish trend, with the price trading below the 50-day moving average. The forecast for WTI crude today places the price within a $65–$72 range; immediate support lies near $68.00, with the next target around $67.20. Immediate resistance is around $69.80, with the next target around $70.80. This forecast could be wrong.

[Zeologic]

The New Zealand Dollar has tended to strengthen this week.

The NZD/USD commodity currency pair rose after the US released employment data showing that Non-Farm Payrolls (NFP) increased by only 57k in June—well below the market expectation of 110k. The May figure was revised down to 129k from the previous 179k. The US unemployment rate unexpectedly fell to 4.2% from 4.3%, while the labor force participation rate dropped to 61.5% from 61.8%. Annual wage growth, measured by average hourly earnings, rose slightly to 3.5%, in line with expectations.

The New Zealand Dollar strengthened following the disappointing US employment data. NZD/USD climbed from a low of 0.56664 to a high of 0.57168. According to FXOpen price charts, NZD/USD hit a low of 0.56263 on June 26; the price subsequently rebounded, forming a bullish candle on the weekly timeframe as of this writing. NZD/USD has tended to form higher lows over five consecutive days, reflecting a robust rebound.

The US Department of Labor released the NFP data on Thursday, July 2, because the US was observing Independence Day on Friday; consequently, market volume was expected to be lower during Friday's New York session. With no new US data forthcoming, the market has shifted its focus entirely to the upcoming Reserve Bank of New Zealand (RBNZ) interest rate decision on July 8.

NZD/USD is currently benefiting from a tailwind that supports the continuation of its technical rebound, as yesterday's NFP data weakened the USD. Following the NFP release, the US Dollar Index (DXY) fell to 100.558 from 101.800. From a technical standpoint, the DXY remains above the 100 level, leading some analysts to maintain that the US Dollar Index remains strong. Markets are scaling back expectations for near-term policy tightening by the Fed, causing the US dollar to lose some of its support.

The current drop in oil prices exerts two opposing influences on the NZD. Lower oil prices reduce global inflationary pressure, thereby dampening expectations that the RBNZ will raise interest rates—a factor that would otherwise support an NZD rise.

On the other hand, the decline in oil prices—driven by easing tensions in the Middle East and the normalization of supplies through the Strait of Hormuz—typically boosts investor appetite for risk assets, including commodity currencies like the NZD.

The forecast for NZD/USD movement today places the pair within a reasonable range of 0.56000–0.57000. Immediate support lies around 0.56400, with the next target in the 0.56000 range. Immediate resistance is around 0.56850, with the next target in the 0.57000 range. This forecast could be wrong

[Zeologic]

Gold stages a solid rebound following weaker-than-expected US employment data

Gold prices staged a solid rebound late last week after facing downward pressure over the preceding weeks. This recovery was driven by US employment data (NFP) that came in well below expectations.

Gold prices rose to the $4,195 level on the FXOpen chart, moving away from the low of $3,942 recorded in late June. Gold formed bullish candles for three consecutive days and successfully broke above the middle band line, although it remains technically below the 50-day moving average.

The NFP data released last Thursday showed US job growth of only around 57k, far below the market expectation of 110k. This marked the lowest growth rate in four months.

Before the NFP release, the market was highly confident that Fed Chair Kevin Warsh would raise interest rates in September to curb inflation, which stood at 4.2%; the probability of a rate hike was estimated at around 66%–67%. However, following the release of this weak employment data, the probability of a rate hike plummeted to the 50% range.

Consequently, the US Dollar fell sharply; the US Dollar Index (DXY)—which measures the greenback's performance against six major currencies—dropped approximately 0.52% to settle at 100.878.

This week, traders will be awaiting and analyzing the FOMC minutes, while also looking ahead to the US inflation report due on July 14. Other data points drawing attention include the ISM Services PMI and Initial Jobless Claims, which are projected to rise to 219k from the previous 215k.

Progress in indirect talks between the US and Iran, alongside the restoration of shipping lanes in the Strait of Hormuz, had briefly weighed on oil prices and eased short-term inflation concerns. However, a drop in US bond yields—driven by Non-Farm Payroll (NFP) data—became the primary catalyst propelling gold prices back into the $4,170–$4,176 range ahead of this week's market opening. Fundamentally, the short-term outlook for gold has turned positive due to a cooling of the US central bank's hawkish stance.

Technically, gold has just broken a monthly downtrend after forming a bullish divergence on momentum indicators and breaking out of a wedge pattern structure on lower timeframes.

Gold prices are projected to trade within a reasonable range of $4,096–$4,254. Immediate support lies around $4,157, with the next target at $4,114. Immediate resistance is around $4,202, with the next target at $4,254. This forecast could be wrong.

Edited yesterday at 10:44 PM by Zeologic

[Zeologic]

GBP/JPY is trading at multi-year highs around the 217.159 level.

The GBP/JPY cross-rate exhibited compelling movement during yesterday's trading session. The pair surged, trading near multi-year highs in the 216.00–217.00 range. According to FXOpen charts, the price rose from a low of 214.988 to a high of 217.159, closing at 217.027; the upward movement formed a long-bodied bullish candle with virtually no wicks.

GBP/JPY price dynamics are driven by several key fundamental factors. The appeal of the carry trade for this pair remains strong. Although the Bank of Japan (BoJ) recently raised its benchmark interest rate to 1.00%—the highest level since 1995—the interest rate differential with the UK remains substantial. The Bank of England (BoE) is currently maintaining rates at 3.75%. This spread of approximately 275 basis points continues to fuel carry trade activity—borrowing low-yielding Yen to purchase the higher-yielding Pound Sterling—thereby putting downward pressure on the JPY.

The JPY briefly touched new lows against major currencies, sparking intense speculation that Japan's Ministry of Finance and the BoJ could intervene directly in the market at any moment to boost the Yen. Last week's trading saw a sudden, sharp drop from the 216.08 area, suspected to be the result of market intervention. This speculation acts as the primary check preventing GBP/JPY from surging uncontrollably higher.

The new UK government's commitment to a tight policy stance has provided positive sentiment for the GBP, making it resilient against weaker currencies like the JPY.

The Pound Sterling remains supported by expectations that BoE interest rates will stay relatively high, as inflation has not yet fully subsided. Conversely, the JPY remains under pressure as carry trade strategies continue to drive GBP/JPY higher. The only factor keeping the market cautious is the potential for Japanese government intervention should the Yen's depreciation go too far. Today, market participants are also monitoring Japanese economic data and comments from central bank officials, which could trigger volatility.

From both technical and fundamental perspectives, the broader trend for GBPJPY remains bullish; however, the risk of sudden intervention creates a high probability of two-way volatility.

GBPJPY is expected to trade within a range of approximately 215.30–218.00. Immediate support lies around 216.00, with the next target at 215.00. Immediate resistance is near 217.30, with the next target at 218.00. A move into this area could easily trigger profit-taking or sudden intervention by Japanese authorities. This forecast could be wrong.