Top 6 Market Analysis – July 03, 2025

27 mins well spent

GBPUSD is falling from the retest area of the broken box pattern

Daily Forex Trade Setups July 3, 2025

Stay on top of market trends with our Daily Forex Trade Setups (July 03, 2025)

GBPUSD Reclaims Strength After Reeves Speculation Sparks Volatility

The British Pound has been on a bit of a rollercoaster lately—and not in a good way. After a sharp drop earlier this week, the Pound has been wobbling, struggling to regain stability. But what’s really driving this turbulence? A lot of it boils down to politics—specifically, growing questions around the future of Chancellor Rachel Reeves.

Investors don’t like uncertainty. And when rumors started swirling that Reeves might be on her way out, the markets reacted swiftly. Why such a strong reaction? Well, Reeves has built a reputation as a steady hand, someone committed to keeping public finances in check. Any sign that she might be replaced sends alarm bells ringing, especially when the UK economy is already walking a tightrope.

For a moment, it looked like Reeves might actually be out. But Prime Minister Keir Starmer stepped in to calm things down. In a bold statement, he reassured everyone that Reeves is staying put. That statement helped prevent a total meltdown—but the damage had already been done. Trust takes time to rebuild, and in the fast-moving world of currency markets, even a few hours of doubt can cause ripples.

Welfare Spending Spree Sparks Economic Jitters

The Hidden Cost of Helping Handouts

Here’s where things get even more interesting. The UK government recently announced an increase in welfare spending, including changes to Universal Credit that are meant to help low-income families. While that sounds like a good thing on the surface—and from a social standpoint, it probably is—the financial implications are huge.

By increasing welfare benefits, the government is adding billions in extra expenses to the national budget. According to estimates from the Institute for Fiscal Studies (IFS), these new welfare reforms could eliminate savings of up to £5.5 billion that the government had planned to achieve by 2030. That’s not small change.

This sudden surge in spending has triggered fears about the long-term health of the UK’s finances. The bond market reacted immediately. Yields on UK government bonds, also known as gilts, shot up. Why does that matter? Because higher yields mean higher borrowing costs for the government. And higher borrowing costs mean less money for everything else—from education to infrastructure.

So now, instead of showing signs of a tighter, more responsible budget, the UK is heading in the opposite direction. And for investors, that’s a big red flag. No wonder the Pound is struggling to hold its ground.

All Eyes on U.S. Jobs Data: Why It Matters for the Pound Too

Even though we’re talking about the British Pound, what happens across the Atlantic in the U.S. has a surprising amount of influence.

This week, everyone’s waiting on the U.S. Nonfarm Payrolls (NFP) data. This monthly report tells us how many jobs were added to the U.S. economy. Why is this such a big deal? Because strong job numbers could mean the U.S. economy is still running hot, while weak numbers might signal trouble ahead.

Fed officials in the U.S. have been dropping hints that they’re becoming more concerned about the health of the labor market. One official even suggested it’s time to consider adjusting interest rates sooner rather than later.

If the U.S. labor market starts showing signs of weakness—fewer jobs added, rising unemployment, or slower wage growth—it could open the door to rate cuts. And if the Fed does cut rates, it affects the global market, including the Pound. Investors may shift money out of the U.S. Dollar and into other currencies, possibly giving the Pound some breathing room.

On the flip side, if U.S. job growth remains solid, the Dollar could stay strong—and that means continued pressure on the Pound.

Bank of England’s Dilemma: Cut Now or Wait and Watch?

Conflicting Views Create Market Confusion

Back in the UK, the Bank of England (BoE) is facing a tough decision. Inflation has cooled a bit, and the economy is showing signs of fragility. So, naturally, there’s a debate raging over whether it’s time to start cutting interest rates.

One BoE policymaker, Alan Taylor, recently spoke at an event hosted by the European Central Bank. He argued in favor of five rate cuts this year—more than what most in the market are currently expecting. His main concern? Weak demand and the risk of trade disruptions hitting the UK economy hard in 2026.

Taylor wasn’t alone in his thinking either. He was one of three officials who supported a rate cut in the most recent policy meeting. His comments added more fuel to the fire, stirring up market speculation and adding to the Pound’s woes.

 

GBPUSD is moving in an Ascending channel, and the market has fallen from the higher high area of the channel

The big problem here is that there’s no clear direction. Some officials want to play it safe and hold rates steady for a while longer. Others say the risks of doing nothing are greater than the risks of moving too soon. This kind of mixed messaging doesn’t help markets stay calm—it does the exact opposite.

The Bigger Picture: A Perfect Storm of Uncertainty

So where does this leave us? In short, the Pound is caught in a perfect storm.

• Political instability is shaking investor confidence.

• Welfare spending is straining government finances.

• Global uncertainty—especially from the U.S.—is making investors nervous.

• Conflicting messages from the Bank of England are leaving everyone confused.

All of these elements are combining to create an environment of caution. And when investors get cautious, they tend to pull back. That means less demand for the Pound, which keeps the currency weak.

It’s not all doom and gloom, though. If the government can reinforce fiscal discipline, and if the BoE can deliver a clear roadmap for future policy decisions, things might start looking up. But for now, the Pound has a long road ahead.

Final Summary

The British Pound has taken a hit lately—and for good reason. Political drama around Chancellor Rachel Reeves, sudden spikes in welfare spending, and rising government borrowing costs have all played their part. Add to that global uncertainty and mixed signals from the Bank of England, and it’s no surprise the Pound is having a tough time.

Investors hate surprises. And right now, the UK is offering a few too many. Until there’s more clarity—both in leadership and economic direction—expect the Pound to remain under pressure. Whether you’re a casual observer or someone keeping an eye on global markets, it’s worth staying tuned. What happens next could reshape not just the Pound, but the broader economic outlook for the UK in the months to come.

EURUSD Hovers Near Highs as Focus Shifts to US Labor Numbers

When we talk about currencies like the Euro and the US Dollar, their values are not just affected by economics—they’re tied to politics, jobs, and even international relations. Right now, the Euro is standing pretty strong, while the US Dollar is showing signs of weakness. But why is that happening? Let’s break it down in a simple, casual way so you don’t have to be a financial expert to get it.

EURUSD is moving in an Ascending channel, and the market has reached the higher high area of the channel

The Calm Before the Storm: Everyone’s Waiting on the Jobs Report

You might notice that investors aren’t making big moves right now. That’s because they’re holding their breath for the latest US Nonfarm Payrolls (NFP) report. This monthly report shows how many new jobs were added in the US (not including farm work, hence the name). It’s kind of a big deal because it gives us a clue about how the economy is doing and what the Federal Reserve might do next with interest rates.

Earlier in the week, a smaller jobs report called the ADP Employment Report came out—and the numbers were pretty disappointing. Instead of hiring, it showed a drop in jobs. That got people thinking: “Is the economy slowing down? Will the Fed lower interest rates?” And those thoughts are exactly what weakened the US Dollar.

When job numbers disappoint, it increases the chances that the Fed might cut interest rates to give the economy a little boost. Lower interest rates generally make the US Dollar less attractive to investors, and that’s why it’s been a bit shaky lately.

The Trade Deal with Vietnam: A Temporary Lift

Midweek, things got a little more interesting. The US announced a trade deal with Vietnam, and that brought a short burst of optimism. Some thought this could be the beginning of more trade wins for the US, especially after a long time of tense talks with many Asian countries.

But that optimism didn’t last long.

Other Asian countries quickly expressed their frustration with how complex and inconsistent the US trade negotiations have been. And just like that, the boost the Dollar got from the Vietnam deal started to fade away. Investors went back to playing it safe, waiting to see what would happen with the upcoming jobs report.

Political Drama Isn’t Helping the Dollar Either

Let’s not forget the ongoing political tension in the US. President Trump has been openly critical of the Federal Reserve and its chairman, Jerome Powell. In fact, he recently asked Powell to resign—something that’s pretty unheard of.

This kind of political drama shakes investor confidence. Why? Because the Federal Reserve is supposed to be an independent body, making decisions based on economic data—not politics. When a president openly attacks the Fed, it creates uncertainty about whether the Dollar can remain stable in the long term.

That uncertainty is another reason why the US Dollar isn’t doing so well right now.

What’s Happening in the Eurozone?

While all of this is going on in the US, Europe is dealing with its own set of issues. Recently, unemployment numbers in the Eurozone came out worse than expected, which was a bit of a surprise. At the same time, inflation remains low, which worries policymakers at the European Central Bank (ECB).

One reason for this low inflation? The Euro itself. A stronger Euro can make European exports more expensive, which can slow down growth and lower inflation. Combine that with lower energy prices, and you’ve got a situation where inflation struggles to pick up.

Still, despite these concerns, the Euro is holding its ground. Why? Because compared to the Dollar—dragged down by weak job reports and political noise—the Euro looks like a more stable option right now.

The Real Focus: What’s Coming Next

All Eyes on the NFP Report

The main thing on everyone’s radar is still the NFP report. It’s expected to show around 110,000 new jobs added in June, which is a bit weaker than the previous month’s number. If the actual report comes in below that, it would pretty much seal the deal in the minds of investors that the Fed will cut interest rates soon.

And what happens if the Fed cuts rates? The US Dollar is likely to weaken even more.

What About Services Data?

Later on, we’ll also get another report that looks at how the services sector in the US is doing. It’s expected to show a slight bounce back after a small dip last month. But honestly, unless it’s a big surprise, it probably won’t move the needle much compared to the jobs data.

Meanwhile, Back in Europe…

On the European side, a services report will also be released, showing how businesses in that sector are doing. The forecast is that it’ll show a flat performance—neither growing nor shrinking. Not amazing, but not disastrous either. So again, the Euro might not see much movement based on that alone.

EURUSD has broken the descending channel on the upside

Final Summary

Right now, the Euro is looking more stable than the US Dollar—and that’s not necessarily because Europe’s doing amazing, but because the US is going through a rough patch. Disappointing job numbers, political tension, and uncertainty about interest rates are all making investors cautious about holding on to the Dollar.

Meanwhile, the Euro, despite its own issues with inflation and employment, is benefiting simply by not being the US Dollar. As investors wait for more data—especially the big Nonfarm Payrolls report—they’re playing it safe. And for now, that means the Euro gets to stay near its recent highs while the Dollar tries to find its footing.

So, if you’re keeping an eye on currency trends, this is definitely a week to watch. The next big move might not come from political headlines or trade deals—but from something as simple as a jobs report.

USDJPY Pauses as Yen Weakens; Eyes on Upcoming US Payroll Report

If you’ve been watching the currency markets lately, you might’ve noticed the Japanese Yen hasn’t been doing so well. At the same time, the US Dollar doesn’t seem to be having a great time either. What’s going on here? Let’s break it down and explore why the Yen is under pressure, what’s happening in the U.S., and what traders are looking out for in the days ahead.

A New Twist in the Trade Game: US-Vietnam Deal Shakes Things Up

For a long time, the Japanese Yen has had this safe-haven reputation. When things get tense around the world—whether it’s political drama or economic uncertainty—investors tend to run toward the Yen. But recently, that story has taken a twist.

USDJPY is moving in an Ascending channel

A new trade agreement between the United States and Vietnam has calmed some of those global tensions. And when things feel a little less risky, investors naturally move away from safe-haven currencies like the Yen and toward assets with more growth potential. That’s exactly what’s happening now.

On top of that, former U.S. President Donald Trump threw another curveball into the mix by threatening to slap more tariffs on Japan, especially over their reluctance to buy American-grown rice. These kinds of trade threats add a layer of uncertainty, but oddly enough, they’re hurting the Yen rather than helping it. Usually, uncertainty pushes the Yen higher. But because the threat is aimed directly at Japan, it’s making the currency look weaker instead.

What’s Up With the Bank of Japan?

BoJ’s Rate Hike Talk Is Keeping the Yen Afloat (Barely)

The Bank of Japan (BoJ) has been pretty careful with its monetary policy, especially compared to Western central banks. But now, things might be shifting.

Kazuo Ueda, the BoJ Governor, recently said that Japan’s interest rates are still below neutral—which means there’s room to raise them. And with inflation in Japan consistently running above 2% for several years now, the pressure is on the BoJ to act.

Japanese companies are still passing on higher raw material costs to consumers, and this has kept inflation stubbornly high. That adds more fuel to the idea that the BoJ might actually follow through with a rate hike. If they do, that could offer some much-needed support to the struggling Yen.

The Fed’s Dovish Lean Is Not Helping the Dollar Much

A Fed Rate Cut Might Be Coming Sooner Than Expected

Meanwhile, over in the U.S., the Federal Reserve is singing a different tune. Fed Chair Jerome Powell was recently asked whether it’s too soon to start thinking about cutting rates. His response? It depends on the data. That’s always a favorite line from central bankers, but the markets heard something else.

Traders are now betting that there’s a real chance—around 25%—that the Fed will start cutting interest rates as early as late July. And a September cut is looking even more likely, with many expecting two full rate cuts before the end of the year. That’s a big change from the more aggressive rate hike outlook just months ago.

Political Drama Isn’t Helping Confidence in the Fed

To make matters more complicated, Donald Trump recently took a shot at Fed Chair Powell, calling for him to step down. That kind of political pressure raises eyebrows and casts doubt on the Fed’s independence. Investors don’t like when politics start interfering with monetary policy, and it’s another reason why people are feeling cautious about the U.S. Dollar.

Weak Job Data Makes Traders Nervous

The latest jobs data from the U.S. didn’t do the Dollar any favors either. According to the ADP report, private employers in the U.S. actually cut 33,000 jobs in June. Even worse, the May numbers were revised downward, showing fewer jobs added than originally reported.

This kind of weak hiring data suggests that the U.S. job market might be slowing down. And if that’s true, the unemployment rate could creep up from 4.2% to 4.3% or more. This just adds more weight to the idea that the Fed will cut rates soon. That’s why traders and investors are now glued to the upcoming Nonfarm Payrolls (NFP) report. This report could confirm whether the job market really is losing steam—and whether the Fed might have to act even sooner.

Why the USD/JPY Pair Is in a Tug-of-War

So here’s the big picture. On one side, you have the Japanese Yen, which is getting pushed down by better global trade news and political pressure from the U.S. But at the same time, hopes for a rate hike from the Bank of Japan are giving it some strength.

On the other side, the U.S. Dollar isn’t exactly charging ahead either. With the Fed looking more likely to cut rates, weak job numbers, and a little bit of political chaos, the Dollar is losing its edge. That’s why the USD/JPY currency pair is bouncing around—neither side is strong enough to take control.

USDJPY is moving in a symmetrical Triangle pattern, and the market has reached the higher low area of the channel

All Eyes on the Next Big Report: What’s Coming Next?

The next big moment in this story is the release of the U.S. Nonfarm Payrolls report. This data has the power to shift the entire mood of the market. If the report shows a strong labor market, it might delay those Fed rate cut expectations. That would give the Dollar a boost and push the Yen lower again.

But if the NFP report comes in weak—just like the ADP numbers did—it could be the final nudge the Fed needs to go ahead with cutting rates. In that case, the Dollar could slide even further, and the Yen might regain some lost ground, especially if the BoJ stays on track with its rate hike plans.

Wrapping It All Up

Right now, the Japanese Yen is feeling the heat from several angles: improved global trade conditions, political tension with the U.S., and a market that’s just not very interested in safe-haven assets. At the same time, the U.S. Dollar is under its own set of pressures—especially from a weakening job market and growing expectations of rate cuts.

It’s like a balancing act. Neither currency has a clear upper hand, and everything hinges on the next round of economic data, especially the all-important jobs report. Until then, traders are likely to stay cautious, waiting for that next clear signal before jumping in with big moves. So, if you’re keeping an eye on USD/JPY, buckle up—the ride isn’t over yet.

AUDUSD Slides as Traders Brace for US Jobs Report Impact

The Australian Dollar (AUD) hasn’t had the best run lately. Despite some decent economic activity in Australia, the currency continues to lose ground, especially against the US Dollar (USD). You might wonder why that’s happening—especially when the headlines look like a mixed bag. So let’s walk through all the moving parts together, piece by piece.

AUDUSD is moving in an Ascending channel, and the market has reached a higher high area of the channel

What’s Really Going On With Australia’s Economy?

You’ve probably heard that Australia’s trade surplus took a big hit recently. That’s one of the first pieces of the puzzle.

Trade Surplus Shrinks—And That’s Not Great News

Australia’s trade surplus in May came in way below expectations. A surplus simply means the country is exporting more than it’s importing, which is usually a good sign. But in May, that gap narrowed significantly. Exports actually dropped while imports surged. That combo didn’t sit well with investors, especially those watching the Australian Dollar closely.

When a country’s trade surplus falls, its currency can often weaken. It signals less money is flowing into the country from exports, and that can make the currency less attractive to hold.

Retail and Building Sectors Aren’t Exactly Booming

There was also disappointing news from retail sales and building permits. Retail sales were up, but just barely—and they didn’t meet what analysts were hoping for. Meanwhile, building permits rebounded slightly, but again, they fell short of expectations. These sectors are closely watched because they reflect how confident consumers and businesses are about the future.

If consumers aren’t spending and builders aren’t building as much as expected, it usually points to hesitation about the economy. That kind of caution trickles into currency markets, and it’s another reason the AUD has remained soft.

Australia’s Business Surveys Offer Some Hope

Now, it’s not all bad news. Business activity in Australia actually showed some improvement, especially in the services sector.

Services Sector Gaining Momentum

The Services Purchasing Managers’ Index (PMI)—which basically tracks how busy companies are—climbed to its highest level in over a year. That’s a pretty good sign. It tells us that service-oriented businesses are seeing more activity, and they’re growing at a faster pace than before.

What’s even better is that this marked the ninth straight month of expansion for the services and composite sectors. If that continues, it could eventually give the Aussie Dollar a bit of a boost. But for now, the effect is being overshadowed by some of the global factors we’ll dive into next.

The Global Picture: China, the US, and What They Mean for AUD

Australia doesn’t exist in a vacuum—far from it. What happens in major economies like China and the US can heavily influence the AUD, especially since Australia trades closely with both.

China’s Momentum Slowing Down

China’s economy is facing its own set of issues. Recently, a key services sector reading there (the Caixin Services PMI) slipped more than expected. For a country that relies heavily on its service industry as well as manufacturing, that kind of slowdown matters.

And because Australia is such a major trading partner with China—especially in natural resources and commodities—a slowdown there often hits Australia’s economy by extension. Less Chinese demand for Australian goods? That can weigh on the AUD fast.

US Labor Data and Interest Rate Expectations Stir Things Up

Across the Pacific, the US is also making waves. And those waves are crashing right into AUD/USD.

Markets were recently shaken by weaker-than-expected job numbers in the US. A private-sector payroll report came in much softer than forecasted. That kind of data raises questions about the strength of the US economy and fuels speculation that the Federal Reserve might start cutting interest rates sooner than expected.

AUDUSD is rebounding from the major support area

Lower interest rates in the US usually mean a weaker US Dollar. And that’s typically good news for AUD/USD. But oddly enough, the AUD isn’t taking off. Why? Because investors are still hesitant. They want to see more confirmation before they make bold moves.

Political Noise in the US Adds to the Confusion

To make things even more unpredictable, politics in the US have added uncertainty. There’s been intense debate around new spending plans and budget approvals. A closely passed budget bill, and talk of increasing the national debt, are raising eyebrows globally. Investors tend to pull back from riskier currencies like AUD when there’s too much noise from Washington.

What to Watch Going Forward

So where does all of this leave the Australian Dollar?

Upcoming US Job Data Could Be a Game-Changer

One of the biggest events on the horizon is the US Nonfarm Payrolls report. That’s the big monthly snapshot of how many jobs were added to the American economy. If it comes in much lower than expected, it could give the Fed more reason to start cutting rates. And that could finally give AUD a leg up.

China’s Next Move Will Be Crucial

Keep an eye on China too. Any signs that its economy is stabilizing or picking up pace could spark a rally in commodities—and that would likely lift the Australian Dollar. But if China continues to struggle, it will likely drag the AUD down further.

Australia’s Domestic Data Still Matters

Back home, Australia needs stronger retail sales, more building activity, and consistent business growth to really support the currency. If those numbers start to improve meaningfully, confidence in the AUD will rise.

Final Summary: Where We Stand with AUD/USD

In short, the Australian Dollar is caught in a bit of a tug-of-war right now. Weak trade numbers, underwhelming consumer data, and a cooling Chinese economy are all pulling it down. On the flip side, steady growth in services and the potential for a more dovish US Federal Reserve could help support it.

But the path forward isn’t clear just yet. Traders are waiting on more signals—especially from upcoming labor reports and economic developments in both the US and China. Until then, expect the Aussie Dollar to remain under pressure, but with potential for a turnaround if global and local data start moving in its favor.

So if you’re keeping an eye on AUD/USD, stay tuned. The next few weeks could be critical.

NZDUSD Faces Selling Pressure Ahead of Crucial NFP Release

The NZD/USD pair has been showing signs of weakness recently, and traders are starting to pay attention. If you’re wondering why the New Zealand Dollar (often called the “Kiwi”) has been falling against the US Dollar, you’re not alone. One major reason behind this recent drop is related to China—yes, seriously!

NZDUSD is moving in an uptrend channel, and the market has fallen from the higher high area of the channel

China’s economy plays a massive role in shaping the performance of many global currencies, especially those tied closely to trade. New Zealand exports a lot to China, so when things aren’t looking great over there, it tends to have a ripple effect.

One of the key updates this week is that China’s services sector just posted its slowest growth in the past nine months. Not exactly the kind of news markets want to hear. And that’s why the Kiwi is getting dragged down along with it.

China’s Services Sector Stumbles – Why It Matters to New Zealand

Let’s dig a little deeper into China’s economic update. The latest data showed that the country’s services sector is barely expanding. To put that in perspective, economists use something called the PMI (Purchasing Managers’ Index) to measure this. Anything above 50 means the sector is growing. The latest figure? A lukewarm 50.6 – the slowest growth since September of last year.

This signals that consumer demand and business activity in China are not exactly firing on all cylinders. With ongoing problems like deflationary trends and property market troubles, China’s overall economic momentum is cooling down.

So, how does this affect New Zealand?

Well, China is New Zealand’s biggest trading partner. When China slows down, its appetite for goods and services from other countries—like New Zealand—also drops. That translates into lower export revenues and weakens the Kiwi Dollar as a result.

The Market’s Eyes Turn Toward the US Job Report

While the China angle explains part of the picture, there’s another side to this coin—the United States.

Traders are closely watching the upcoming US employment data. This report has the potential to swing market sentiment quickly, especially since it’s one of the key indicators that the Federal Reserve considers when deciding whether to cut interest rates.

A strong US jobs report could mean the Fed decides to hold off on rate cuts, which would support the US Dollar. A weak one might push them to start easing monetary policy sooner, which could work against the Dollar and provide some breathing room for currencies like the Kiwi.

But here’s where it gets interesting: Fed Chair Jerome Powell recently hinted that they might be open to interest rate cuts depending on how new economic data shapes up. In other words, the Fed isn’t completely locked in—they’re watching the numbers just like the rest of us.

This kind of uncertainty can stir up volatility. That’s why the NZD/USD is sitting in a sort of tug-of-war right now.

What Could Be Coming Next?

1. More Volatility Ahead

With China’s slowdown and the US job report on deck, there’s plenty of room for sudden moves. Currency traders are likely to stay cautious and responsive to any surprise data releases.

2. Global Growth Concerns

The weakness in China is more than just a local problem—it’s a signal that global economic growth could be facing more hurdles. That, in turn, tends to reduce risk appetite, and investors often flee to safer assets like the US Dollar during uncertain times.

3. Kiwi’s Dependence on China

Don’t forget: the New Zealand economy depends heavily on its export relationships. Dairy, meat, and other agriculture exports to China make up a huge chunk of the country’s income. So whenever China sneezes, the Kiwi often catches a cold.

4. Fed’s Mixed Signals

While the Fed isn’t confirming a rate cut just yet, the fact that analysts like those at Goldman Sachs are now expecting multiple rate cuts in 2025 means there’s a shift in expectations. That may eventually offer some lift to NZD/USD—though not right away.

What This Means for Traders and Everyday Observers

If you’re trading NZD/USD or just watching it for economic insight, here are some takeaways:

• Stay Tuned to US Data: The labor market data from the US is one of the most important updates this week. It can directly shape expectations about the Fed’s next move, which has ripple effects across all major currencies.

• Watch for China’s Next Steps: Whether Beijing rolls out new stimulus or changes interest rates to boost growth could help stabilize the Kiwi Dollar in the medium term.

• Don’t Expect Immediate Recovery: With a mix of soft Chinese data and a cautious Federal Reserve, NZD/USD might remain under pressure in the short term.

This doesn’t mean things are all doom and gloom—it just means the market is moving through a cautious phase where every economic signal matters a bit more than usual.

NZDUSD is moving in a descending channel, and the market has rebounded from the lower low area of the channel

Wrapping It Up

The NZD/USD pair has been sliding largely because of weak Chinese economic data, especially from its services sector, and the looming uncertainty around the US job market. The Kiwi is highly sensitive to China’s growth, and when there’s even a hint of slowdown, traders react quickly.

At the same time, the US Dollar isn’t standing still. With speculation around potential rate cuts and comments from Fed Chair Powell, markets are in wait-and-see mode. That means any big surprises—positive or negative—can shift the direction fast.

For now, the New Zealand Dollar remains under pressure. But the global outlook, especially from two giants like the US and China, will ultimately shape where this pair goes next.

If you’re watching or trading this pair, this is the moment to stay sharp, stay informed, and stay flexible.

EURJPY Rallies Near Year’s Top as Traders Eye Fresh Momentum

If you’ve been keeping an eye on the forex world, you might have noticed the EUR/JPY pair making some interesting moves lately. It’s been going up for the second day in a row, and that’s caught the attention of many traders. But what’s really driving this movement?

EURJPY is moving in a box pattern, and the market has fallen from the resistance area of the pattern

Well, it all starts with the Japanese Yen losing some of its strength. And when the Yen weakens, other currencies like the Euro tend to take advantage and rise in value when paired with it. But there’s more to the story than just simple currency strength.

Let’s break it all down and see what’s really going on here.

The Ripple Effect of Global Trade News

US-Vietnam Trade Deal Sparks Confidence

One of the big reasons behind the Euro gaining ground against the Yen is a new trade agreement between the United States and Vietnam. While that may sound unrelated to Europe or Japan, it actually has a big impact.

Here’s how: Trade deals like this tend to calm investors’ nerves. They reduce the fear of global trade conflicts, which often push people to seek safer currencies like the Yen. So when tensions cool down, traders are more willing to take risks — and that means moving money into currencies like the Euro and out of safe-havens like the Yen.

This shift in confidence has made the Yen less attractive, especially with investors feeling more optimistic.

A Risk-On Sentiment Returns

That upbeat mood has created what’s known as a “risk-on” environment. In simpler terms, when investors feel that the world economy is stable and opportunities are rising, they’re more willing to move their money into investments with higher potential returns—even if they carry more risk.

This shift is good for the Euro, which benefits from risk appetite, and not so great for the Yen, which typically thrives when markets are nervous.

What’s the Bank of Japan Up To?

A Careful Approach To Rate Hikes

Now, let’s talk about the elephant in the room: the Bank of Japan (BoJ).

For years, the BoJ has kept interest rates extremely low. But recently, there have been hints that Japan may slowly start to increase rates again. That’s a big deal. Higher interest rates usually mean a stronger currency because investors can earn more by holding it.

But here’s the catch — Japan isn’t in a rush.

BoJ board member Hajime Takata recently made a statement saying the central bank is simply “pausing” its rate hike cycle. They’re not done raising rates, but they’re being cautious. They’re taking a “wait and see” approach, especially with inflation gradually picking up in Japan.

This careful stance has left the Yen in a bit of a limbo. On one hand, there’s a chance rates could go up again soon, which would normally support the Yen. But on the other hand, the delay in action makes the Yen less appealing in the short term.

Inflation Could Shift the Balance

Inflation is another key factor. If prices continue to rise in Japan, the BoJ may be forced to take action sooner rather than later. That would likely support the Yen and potentially stop the EUR/JPY pair from climbing too high.

So while the Yen is currently weakening, that downside may be limited — and that’s something traders are watching closely.

Where Does the Euro Stand in All This?

ECB Playing It Cool

While the Japanese side of the equation is all about uncertainty and cautious moves, the Eurozone has its own set of issues.

The European Central Bank (ECB) has made it clear that it’s nearing the end of its interest rate hiking cycle. Some policymakers have even hinted that rate cuts could be on the table in the future. That’s not exactly a bullish signal for the Euro.

So while the Euro is benefiting right now from the weak Yen, its own fundamentals aren’t particularly strong. The dovish tone from the ECB could weigh on the Euro in the longer term — especially if inflation in the Eurozone starts to cool down and growth slows.

What Should Traders Be Watching Next?

Upcoming Eurozone Data

The next big item on the calendar for EUR/JPY watchers is the release of the final Services PMI data from the Eurozone. This gives a snapshot of how the services sector — a major part of the economy — is doing.

EURJPY is moving in an Ascending channel, and the market has reached a higher high area of the channel

That said, many experts believe this data won’t have a huge impact on the market. It’s likely already priced in. Still, it’s worth keeping an eye on, especially if there’s a surprise result that changes the tone for the Euro.

BoJ Comments and Inflation Reports

On the Japanese side, future comments from BoJ members and upcoming inflation numbers will be critical. If the bank gives stronger hints about raising rates soon, that could quickly strengthen the Yen and bring the EUR/JPY rally to a halt.

Final Thoughts: A Cross With Two Stories

EUR/JPY is definitely one to watch right now, but it’s not as simple as one currency getting stronger while the other gets weaker. What’s really driving the pair is a mix of:

• A weaker Japanese Yen, pressured by global risk appetite and delayed BoJ action.

• A Euro that’s benefiting from that weakness, even though its own outlook isn’t super strong.

• Global developments like trade deals that make investors more confident.

In the short term, the Euro may continue to ride the wave of a soft Yen. But with the BoJ not ruling out further rate hikes and the ECB cooling its policy stance, the longer-term picture is less clear.

So if you’re watching EUR/JPY or thinking about trading it, keep your eyes on the broader story. Interest rate paths, inflation trends, and global trade relations are all pieces of this complex puzzle.

This isn’t just a technical trade — it’s a real reflection of shifting dynamics between two major economies. And that’s what makes it such an interesting pair to follow.