The GBP/USD currency pair traded calmly on Thursday, moving slowly and without much concern. Looking at the chart below, in the past 18 days, volatility exceeded 88 pips only once and surpassed 80 pips 3 times. 80 pips per day is certainly not insignificant, but over the previous 13 days, the GBP/USD pair traded more volatile than 88 pips on 11 occasions. Thus, the decline in market activity is evident. At the same time, the British pound has stopped declining. Recall that the key drop in recent weeks was not linked to geopolitics. It occurred between May 11 and 18, during which time the UK faced another political crisis, the consumer price index, contrary to forecasts and common sense, began to slow, and, in general opinion, the Bank of England abandoned its hawkish outlook. These three events led to the collapse of the British pound.

However, more than three weeks have passed since then, and the British pound has only collapsed once—when the US Nonfarm Payrolls report was published. For the rest of the time, the pound has either risen or remained stable. So why is the market not reacting to escalating news from the Middle East? Recall that this week, Iran distinguished itself by shooting down an American military helicopter. Donald Trump has issued bombing orders for Iran twice (which the US military successfully executed), and Iran has begun once again to bomb American military bases in the region. The geopolitical factor has a shelf life. In recent weeks, we have been consistently stating that the influence of geopolitics on the market is weakening. Traders are still closely monitoring the Iranian case, but are no longer prepared to respond to every new attack in the Middle East or every new promise from Trump to sign a deal with Iran.

The key points of this conflict remain:

1. The conflict persists.
2. Negotiations are nevertheless ongoing.
3. The Strait of Hormuz remains blocked.
4. The parties cannot reach an agreement.

Thus, all attacks in the Middle East, provocations, new threats, and promises from Trump have no impact on the key points listed above. We believe that only changes to one of these four points can prompt traders to act. All other news represents ordinary noise.

Shifting to the daily timeframe makes it clear that the GBP/USD pair has been trading in a range for nine months. While this may not be the most classic flat that traders have ever seen, the movement is sideways, and this is a fact. Therefore, no matter how much some may want it, the dollar cannot show a trend under these circumstances, even with a favorable fundamental and geopolitical backdrop. We still do not expect any significant strengthening of the American currency. The dollar's maximum right now is a correction.

The average volatility of the GBP/USD pair over the last five trading days as of June 12 is 85 pips, which is considered "average." On Friday, June 12, we expect the pair to move within the range bounded by 1.3253 and 1.3423. The upper channel of the linear regression has turned upwards, indicating a potential recovery of the upward trend. The CCI indicator entered the overbought area, warning of a possible end to the downward trend.

Closest Support Levels:

• S1 – 1.3306
• S2 – 1.3245
• S3 – 1.3184

Closest Resistance Levels:

• R1 – 1.3367
• R2 – 1.3428
• R3 – 1.3489

Trading Recommendations:

The GBP/USD currency pair has resumed its downward movement. Trump's policies will continue to exert pressure on the US economy, so we do not expect growth in the US dollar in the long term. However, 2026 appears to be quite positive for the dollar due to geopolitical factors. Thus, long positions targeting 1.3489 and 1.3550 can be considered when the price is above the moving average. A price below the moving average will allow for trading bearish with targets at 1.3306 and 1.3253. Market conditions are frequently changing, and the market continues to primarily track geopolitical news, which is not uniform.

Notes on Illustrations:

• Linear regression channels help determine the current trend. If both are pointing in the same direction, it indicates a strong trend.
• The moving average line (settings 20,0, smoothed) determines the short-term trend and the direction in which trading should currently be conducted.
• Murray levels are target levels for movements and corrections.
• Volatility levels (red lines) indicate a probable price channel within which the pair will operate over the next day, based on current volatility indicators.
• The CCI indicator: its entry into oversold (below -250) or overbought (above +250) areas indicates an approaching trend reversal in the opposite direction.

The EUR/USD currency pair traded quite sluggishly on Thursday, despite a truly significant event—the European Central Bank meeting and the first rate hike since 2023. Recall that the ECB was essentially forced to raise refinancing rates to curb the uncontrolled growth of consumer prices triggered by the conflict in the Middle East, which has driven a sharp rise in energy prices. At the same time, neither the Federal Reserve nor the Bank of England is preparing for policy tightening, although they will hold their meetings next week.

On one hand, the market's passivity is easily explained. The ECB's rate hike was known in advance, and the market could have priced it in ahead of time. However, it did not do so, as the euro has rarely shown growth in recent weeks. As a result, the ECB meeting was ignored, just like many other recent fundamental and macroeconomic events.

On the other hand, this is not an ordinary event or an ordinary decision. The ECB has become the first G7 central bank to implement a tightening. Although inflation in the eurozone is lower than, for example, in the US, the US has its own issues. The Fed is in no rush and, according to statements from monetary committee representatives, is in a favorable position to wait and observe the situation. We find it hard to understand what is advantageous about maintaining a position while inflation has nearly doubled in three months, but that is the Fed's stance.

The market remains fully focused on the geopolitical conflict in the Middle East, but as only secondary news or unverified information has been coming in lately, it has not reacted to it at all. Traders are waiting for a clear, public resolution to the conflict. Either Tehran and Washington start a new war, or they sign a peace agreement. Currently, both sides are stuck somewhere between these two options. As there is no specificity on this topic at this time, the market is hesitant to open long or short positions.

So what is left for traders in this situation? In our view, they can only wait for truly significant and resonant events, such as a political crisis in the UK, the resumption of war in the Middle East, a ceasefire between Iran and the US, or a Fed rate hike. All other data are secondary at the moment, and it is unlikely the market will react to them.

On the daily timeframe, it is clear that the EUR/USD pair has been in a sideways channel between 1.1440 and 1.1850 for 10 months, having only briefly exited it once. Thus, while the flat may not be the most classic traders have ever seen, it is nonetheless a flat. The price is currently very close to the lower boundary of the sideways channel, but without geopolitical support, the euro will struggle to start a new upward phase. However, its long-term prospects remain unchanged, with the currency strengthening against the US dollar.

The average volatility of the EUR/USD currency pair over the last five trading days as of June 12 is 63 pips, which is considered "average." We expect the pair to move between 1.1460 and 1.1586 on Friday. The upper channel of the linear regression has shifted upward, indicating a potential upward trend. The CCI indicator has entered the overbought area and formed two bearish divergences, warning of the onset of a downward correction that has not yet completed. On Friday, it entered the oversold area, signaling a possible end to the correction.

Closest Support Levels:

• S1 – 1.1475
• S2 – 1.1414
• S3 – 1.1353

Closest Resistance Levels:

• R1 – 1.1536
• R2 – 1.1597
• R3 – 1.1658

Trading Recommendations:

The EUR/USD pair continues its downward movement, which is presumably a correction within the global upward trend. The global fundamental background for the dollar remains extremely negative, and only geopolitical factors regularly support it. When the price is below the moving average, short positions can be considered with targets at 1.1475 and 1.1460. Above the moving average line, long positions are relevant with targets at 1.1719 and 1.1780. The market continues to move away from geopolitical factors, but in recent weeks, the dollar has been in demand as hopes for peace in the Middle East have weakened.

Notes on Illustrations:

• Linear regression channels help determine the current trend. If both are pointing in the same direction, it indicates a strong trend.
• The moving average line (settings 20,0, smoothed) determines the short-term trend and the direction in which trading should currently be conducted.
• Murray levels are target levels for movements and corrections.
• Volatility levels (red lines) indicate a probable price channel within which the pair will operate over the next day, based on current volatility indicators.
• The CCI indicator: its entry into oversold (below -250) or overbought (above +250) areas indicates an approaching trend reversal in the opposite direction.

The GBP/USD pair also experienced slight declines on Thursday, with the pivotal area remaining at 1.3301-1.3309. As long as it is not breached, talking about a continued decline is futile. We have already mentioned that despite ongoing violations of the truce in the Middle East and open attacks by adversaries in recent days, full-scale war has not resumed. The market, in any case, is not going to start a second wave of risk aversion. Therefore, we do not believe in a strong rise of the US dollar, but at the same time, the market seems to have no choice but to hold off on selling the American currency. Yesterday, the Producer Price Index (PPI) in the US was released, which confirmed the worst fears. Inflation in the US is rising across the board. The Consumer Price Index accelerated in May to 4.2%, core inflation to 2.9%, and the PPI to 6.5%. Thus, we would expect further growth in the core indicator in the coming months.

From a technical perspective, the downward trend continues, with the price located below the Ichimoku indicator lines. As we predicted, the pair's growth on Friday was an exception to the rule, as the market has not been paying attention to macroeconomic data for some time. Geopolitics also does not support the dollar as strongly as before, but it continues to compel traders, at the very least, to refrain from selling the dollar.

On the 5-minute timeframe on Thursday, two trading signals were formed. During the night, the pair broke through the 1.3369-1.3377 area from below to above, and during the European trading session, it moved from above to below this area. The first signal was not worth trading, as a critical line lay 20 pips above. The second signal could have been executed as a short position, yielding a 25-pip profit by the end of the day.

COT Report

COT reports on the British pound indicate that commercial traders' sentiment has been constantly changing in recent years. The red and blue lines, which represent the net positions of commercial and non-commercial traders, frequently cross each other and are mostly close to the zero mark. Currently, the lines are moving apart, with non-commercial traders still predominantly holding... sell positions. Given the events in the Middle East, it is not surprising that demand for riskier currencies is low.

In the long term, the dollar continues to decline due to Donald Trump's policies, which is clearly visible on the weekly timeframe (illustration above). The trade war will continue in one form or another for a long time, and Trump's policies are aimed directly and indirectly at weakening the American currency. However, geopolitical factors are currently taking precedence, which have recently provided strong support for the dollar. Since the conflict in the Middle East is not yet resolved, the US dollar may still see further growth. According to the latest COT report (dated June 2), the "Non-commercial" group closed 4,300 BUY contracts and 13,500 SELL contracts. Consequently, the net position of non-commercial traders increased by 9,200 contracts over the week.

Analysis of GBP/USD 1H

On the hourly timeframe, the GBP/USD pair has completed its upward trend due to renewed tensions around the Strait of Hormuz and in US-Iran relations. The macroeconomic and fundamental background continues to have little impact on the pair's movements (with rare exceptions). We do not believe that, without a real escalation of the conflict in the Middle East, the dollar can show a strong trend, but the market is currently finding it psychologically difficult to sell the American currency.

For June 12, we identify the following important levels for trading: 1.3096-1.3115, 1.3179-1.3187, 1.3301-1.3309, 1.3369-1.3377, 1.3465-1.3480, 1.3588, 1.3671-1.3681, 1.3751-1.3763. The Senkou Span B (1.3396) and Kijun-sen (1.3396) lines may also serve as signal sources. It is recommended to set the Stop Loss at breakeven when the price moves in the correct direction by 20 pips. The Ichimoku indicator lines may shift throughout the day, which should be considered when determining trading signals.

On Friday, the UK is scheduled to release monthly GDP and industrial production data for April. These are secondary data in the current circumstances, as is the University of Michigan consumer sentiment index in the US.

Trading Recommendations:

Today, traders may consider short positions targeting 1.3179-1.3187 if the price consolidates below the 1.3301-1.3309 area. Long positions will become relevant if there is a bounce from the 1.3301-1.3309 area, targeting 1.3369-1.3377.

Notes on Illustrations:

• Price levels of support and resistance are thick red lines near which movement may end. They are not sources of trading signals.
• The Kijun-sen and Senkou Span B lines are lines from the Ichimoku indicator shifted to the hourly timeframe from the 4-hour timeframe. They are strong lines.
• Extremum levels are thin red lines from which the price previously bounced. They serve as sources of trading signals.
• Yellow lines represent trend lines, trend channels, and any other technical patterns.
• Indicator 1 on the COT charts shows the size of the net position of each category of traders.

The EUR/USD currency pair continued its weak decline on Thursday, with low volatility and uncertain prospects. The market ignored yet another important fundamental event, simply brushing aside the European Central Bank meeting, the rate hike, and Christine Lagarde's speech. As we warned, the market reaction was merely "for show." During the two-hour timeframe surrounding the ECB meeting, the euro was tossed back and forth by 10-15 pips, and that was it. Regarding the prospects for the US dollar, it is also rising very weakly, despite the full resumption of the conflict in the Middle East. Of course, negotiations between Tehran and Washington may resume tomorrow, but for now, we only hear Trump's statements about an impending new attack on Iran. Therefore, the dollar remains in a more advantageous position, but we still do not expect strong growth. The market appears reluctant to buy the dollar but has no other choice.

From a technical perspective, the downward trend has resumed, but whether it will continue is a big question. If Tehran and Washington miraculously sign a deal, demand for the US currency will decline. However, at present, the parties are much closer to resuming war, so the dollar remains strong across the market.

On the 5-minute timeframe on Thursday, movement was weak, but the pair still formed two trading signals. Early in the night, the price breached the 1.1536-1.1542 area but failed to advance significantly. During the European trading session, the price consolidated below the specified area and then bounced off it several times to confirm the move. Thus, traders had the opportunity to open short positions, which can be carried over to Friday.

COT Report

The latest COT report is dated June 2. The illustration for the weekly timeframe clearly shows that the net position of non-commercial traders remains "bullish" but has declined significantly due to geopolitical events. Traders have been offloading the European currency in favor of the US dollar in recent months. Trump's policy has not changed, but for some time, the dollar has been regarded as a "reserve currency." However, this process may already be complete.

We still do not see any fundamental factors for strengthening the euro, while there are sufficient factors for the decline of the American dollar. The war in the Middle East made the dollar temporarily super-attractive, but when this factor reaches its "expiration date," everything will return to normal. That date may have already expired. In the long term, the euro could fall to $1.08 (the trend line), but the upward trend will still remain relevant. The pair has not come particularly close to this line in recent months.

The positioning of the indicator's red and blue lines indicates parity between bulls and bears. Over the last reporting week, the number of longs in the "Non-commercial" group increased by 12,400, while the number of shorts decreased by 7,000. Consequently, the net position increased by 21,400 contracts over the week.

Analysis of EUR/USD 1H

On the hourly timeframe, the EUR/USD pair has resumed its downward trend. The situation in the Middle East remains tense, but there has been no resumption of full-scale war, nor have there been any peace deals. Thus, there are currently no sufficient reasons for the dollar to rise, nor are there substantial reasons for the euro to grow. However, considering ongoing geopolitical changes, such reasons may emerge.

For June 12, we identify the following levels for trading: 1.1362, 1.1426, 1.1536-1.1542, 1.1585, 1.1657-1.1666, 1.1750-1.1760, 1.1786, 1.1830-1.1837, 1.1907-1.1922, as well as the Senkou Span B line (1.1637) and the Kijun-sen line (1.1573). The Ichimoku indicator lines may shift throughout the day, which should be considered when determining trading signals. Remember to set a stop-loss order at breakeven if the price moves in the correct direction by 15 pips. This will safeguard against potential losses if the signal proves false.

On Friday, the Eurozone will publish the second estimate of the inflation report for Germany, while the US will release the University of Michigan consumer sentiment index. We consider both reports secondary, especially now that the market is ignoring 90% of economic data.

Trading Recommendations:

Today, traders may remain in short positions with a target of 1.1444, as the price has consolidated below the area of 1.1536-1.1542. Long positions can be opened if there is consolidation above 1.1585, targeting 1.1637.

Notes on Illustrations:

• Price levels of support and resistance are thick red lines near which movement may end. They are not sources of trading signals.
• The Kijun-sen and Senkou Span B lines are lines from the Ichimoku indicator shifted to the hourly timeframe from the 4-hour timeframe. They are strong lines.
• Extremum levels are thin red lines from which the price previously bounced. They serve as sources of trading signals.
• Yellow lines represent trend lines, trend channels, and any other technical patterns.
• Indicator 1 on the COT charts shows the size of the net position of each category of traders.

On the one hand, Governor Tiff Macklem stated that the existing risks are two-sided (an economic slowdown amid rising inflation), and the central bank is trying to maintain a fragile balance under the circumstances. On the other hand, he outlined the bank's priorities, making it clear that, in the conflict between price stability and supporting economic activity, the central bank would be prepared to "sacrifice" growth rates to contain inflation.

In other words, it's about "putting out the inflation fire" first, then raising GDP.

The main trigger for the tightening rhetoric was high oil prices driven by the ongoing conflict in the Middle East. At the time of the meeting, the price of crude oil was approximately $10 higher than what the Bank of Canada assumed in its spring forecasts. Overall inflation jumped to 2.8% in April, mainly due to rising gasoline prices.

This situation was reflected in the tone of the accompanying statement. In particular, a fairly strong formulation appeared in the text stating that the Governing Council would not allow high energy prices to lead to sustained inflation. Commenting on this wording, Macklem noted that if businesses begin to widely pass their costs onto consumers, the Bank of Canada will "have to respond with tightening monetary policy parameters."

It is important to note that, according to the latest data on Canada's CPI growth, there are no clear signs of a massive transfer of the energy shock into core inflation as of yet. However, the central bank is already acknowledging the risk of such a scenario, taking a preemptively hawkish stance and signaling readiness to tighten policy if secondary inflation effects become more pronounced.

Following the June meeting, swap markets began pricing in the possibility of an interest rate hike this year. This is the first time (since last fall) that market expectations have turned upward, and the likelihood of a rate cut has dropped to nearly zero.

One could assume that if the Canadian economy were not in a technical recession, the central bank might have raised rates at yesterday's meeting. However, the central bank is forced to adopt a wait-and-see position, first due to said recession. Let me remind you that after revising the data on Canada's GDP growth for the fourth quarter of 2025, the statistical office reported a 1.0% contraction in the economy. In the first quarter of this year, the country's GDP also declined by 0.1%.

The second issue is trade uncertainty. Risks posed by new tariffs and the upcoming "revision" of trade agreements are exerting pressure on Canada's investment climate. This primarily pertains to the USMCA agreement. Under its terms, the parties are required to conduct a formal review of the agreement's operation every six years, with the first such review due by July 1 of this year. Canada has officially notified the US and Mexico that it seeks to extend the deal without any preconditions. However, the United States demands revisions to several important points of the agreement for Canada. In particular, the White House insists on changing the rules for duty-free importation of vehicles—Washington wants to enforce a requirement that at least 50% of vehicle components be produced on American soil (which is unacceptable to Canada's automotive industry).

Thus, the "June pause" is absolutely justified and well-reasoned. At the same time, unexpectedly firmer statements from the central bank have provided temporary support for the Canadian dollar.

However, after a short-term price pullback to the 38 level, the pair reversed higher and is now approaching the 40 level. This price dynamic is driven exclusively by the geopolitical agenda. Following Trump's announcement of "new powerful attacks on Iran," the safe-haven greenback has seen increased demand, including against the Canadian dollar.

The next direction of USD/CAD will depend entirely on developments in the Middle Eastern conflict. If the escalation intensifies (for example, if a second wave of announced airstrikes follows), the US dollar will see higher demand as a safe asset, further contributing to the rise of the pair toward resistance levels of 1.4050 (the upper Bollinger Bands line on W1) and 1.4100 (the Kijun-sen line on MN). If the parties indeed return to the negotiating table, the loonie is likely to return to the 1.3910–1.3970 range (the lower and upper Bollinger Band lines on the four-hour chart).

The EUR/CHF cross entered midweek with a confident rise, trading around 0.9220–0.9230 after bouncing off early-June lows of about 0.9130. The pair is exhibiting a stable upward trend amid a key divergence in the monetary policies of the European Central Bank (ECB) and the Swiss National Bank (SNB).

Unlike many other currency pairs dominated by the US dollar, the dynamics of EUR/CHF are shaped by two unique factors: on one hand, the ECB is raising rates for the first time since September 2023 amid an energy inflation shock; on the other hand, the Swiss National Bank continues to rely on currency interventions as the primary tool for containing inflation and maintaining the competitiveness of the Swiss economy.

Fundamental Background: Two Central Banks — Two Different Approaches

1. ECB: First Rate Hike in Nearly Three Years with a "Cautiously Hawkish" Signal

On June 11, the European Central Bank announced a 25-basis-point increase in key interest rates, as expected. Consequently, the rate for main refinancing operations, the marginal lending facility, and the deposit facility now stand at 2.4%, 2.65%, and 2.25%, respectively.

Key Takeaways from the ECB Statement

• Inflation forecasts raised: The ECB expects the overall inflation rate to average 3.0% in 2026, then decrease to 2.3% in 2027 and 2.0% in 2028. The core inflation forecast has been increased to 2.5% for 2026 and 2027.
• Growth forecasts lowered: The new growth forecast for the eurozone is only 0.8% for 2026 (with a subsequent acceleration to 1.2% in 2027 and 1.5% in 2028), reflecting the damage from the energy shock to the eurozone economy.
• Commitment to a "meeting-by-meeting" approach: The ECB emphasized that it does not commit to a specific rate trajectory and that all decisions will depend on incoming data.
• Recognition of risks: The bank stated that the outlook remains uncertain, with risks of rising inflation and declining economic growth.

Although the rate hike was widely anticipated by the markets, an important signal was that ECB President Christine Lagarde maintained a cautiously hawkish tone, acknowledging the risks of further inflationary pressure from rising energy prices. This allowed markets to maintain expectations of a possible second rate hike in the coming months.

2. Swiss National Bank: Betting on Interventions

In contrast to the ECB, the SNB is in a completely different situation. Inflation in Switzerland remains low, allowing the SNB to keep its key interest rate at 0.00% (and not consider raising it). Instead, the primary tool is currency interventions.

Since the last meeting, statements from SNB representatives have emphasized the bank's increased readiness to intervene in currency markets. Chairman Schlegel (on June 3) noted that "the war in Iran could increase pressure on the franc," and the SNB has "heightened its readiness for currency market interventions."

Why the SNB Is Not in a Hurry to Raise Rates

• Low inflation: While inflation in the eurozone stands at 3.2%, it is near the target level in Switzerland. The SNB is even concerned about deflationary risks if the franc strengthens excessively.
• Protection of exports: A stronger franc makes Swiss exports (watches, pharmaceuticals, equipment) more expensive. Given that the eurozone is Switzerland's key trading partner, a weak euro would be highly undesirable.
• Inflationary import: The SNB believes that the strengthening of the Swiss franc (which has occurred in recent months, despite a recent correction) will counteract any potential secondary inflationary effects from rising energy prices.
• Upcoming intervention data: On June 30, the SNB will release data on currency interventions for the first quarter. Economists expect these figures to show a notable increase in operations against the strengthening franc after several very calm years for the SNB in this area.

Interest Rate Differential: The Main Driver for EUR/CHF Growth

The current divergence in policies creates classic prerequisites for the euro to strengthen against the franc. All of the above should support EUR/CHF around 0.9200, with a possible move towards 0.9300 in light of the ECB meeting's outcomes.

What This Means

• Markets are pricing in three ECB rate hikes (including Thursday) over the next 10-12 months.
• Swiss rates, on the contrary, remain "tied to zero," with the risk of even negative rates in the event of a significant strengthening of the franc.
• This differential makes the euro more attractive for carry trades and investments, creating ongoing demand for the EUR/CHF pair.

Geopolitical Factor: The "Safe Haven" Status of the Franc Is Weakening

The Swiss franc is traditionally considered one of the major "safe-haven assets" alongside gold. However, the current conflict in the Middle East demonstrates a paradoxical dynamic.

Why the Franc Is Not Rising Amid Conflict

• Inflationary channel: The war in Iran and the closure of the Strait of Hormuz have led to a sharp spike in energy prices. For Switzerland, as for the eurozone, this creates inflationary risks, but for the SNB, these are secondary.
• SNB interventions: The SNB has already stated its "increased readiness for interventions," and analysts believe it may well sell francs to prevent excessive strengthening.
• Direct threats: Investment banks (e.g., J.P. Morgan) have previously warned that, in the event of a full-scale war, Switzerland could be drawn into the conflict due to its role in asset management and financial settlements, thereby weakening its status as a "safe haven."

Key Events

Conclusion

The EUR/CHF cross is at the epicenter of the divergence in monetary policies between the ECB and the SNB. On one hand, the ECB raised rates for the first time since September 2023 and is likely to maintain a cautiously hawkish tone, with markets pricing in three hikes over the next 10-12 months. On the other hand, the SNB remains at the zero rate (0.00%) and is betting on currency interventions rather than rate hikes to curb inflation and support export competitiveness.

The interest rate differential (200+ bps) is a key driver of the pair's growth. An additional factor supporting the euro is the ECB's "cautiously hawkish" signal, which allows markets to maintain expectations of further tightening.

The key zone of 0.9197 (EMA144 on the daily chart)–0.9240 (EMA50 on the weekly chart) will become the arena for a decisive battle in the coming days.

A technical breakout below this level could trigger a short-term correction to 0.9170-0.9130, but fundamental factors (interest rate differential, hawkish ECB) indicate that the likelihood of a rise above remains.

Traders should exercise caution and closely monitor further statements from representatives of both central banks, the SNB's upcoming intervention data (end of June), and geopolitical developments in the Middle East.

The ECB's rate hike was not only the first since 2023; it was also the first time it had responded to the oil crisis in the Middle East by tightening monetary policy. Christine Lagarde and her colleagues chose the lesser of two evils. They recalled the policy mistakes of 2008 and 2011, when monetary tightening proved premature, necessitating subsequent rate cuts.

In 2022-2023, the situation was quite different. The governing council delayed tightening monetary policy for too long, allowing consumer prices to soar above 10%. This time, the ECB decided not to take risks. It is better to do something than to do nothing.

ECB's Inflation and Economic Projections

The accompanying statement and updated forecasts did not impress EUR/USD enthusiasts. The ECB has made its future verdicts dependent on data. It presumably raised its inflation estimates while cutting growth forecasts for the eurozone. This paints a so-called stagflation scenario and provides grounds for a split within the ECB. "Doves" will fear recession, while "hawks" will warn of uncontrollable inflation. The lack of consensus renders the prospects for monetary tightening unclear.

Bloomberg's Expert Forecasts on ECB Rates

As a result, the futures market's and Bloomberg experts' views on the next steps toward monetary tightening in July or September are now in doubt. The euro loses support and falls. Will this be enough to renew the downward movement in the EUR/USD pair?

I don't think so. Despite Donald Trump's threats to resume bombardments on Iran, Reuters insider information indicates a revival of negotiations. Points of contention include the unfreezing of Western currency reserves of the Islamic Republic, its nuclear program, and the armed conflict between Israel and Hezbollah in Lebanon. Judging by the reluctance of oil prices to rise, the parties are gradually moving closer to each other.

A catalyst for a strengthening euro could be retail and institutional investors buying the dip in the S&P 500. The pullback in the broad stock index was driven by temporary factors—geopolitics, fears of stagflation, and cash reservations for the SpaceX IPO. There are hopes for positivity in all directions, which would encourage stock purchases.

Technical Analysis

Technically, on the daily chart, EUR/USD is testing the lower boundary of the fair value range of 1.1535-1.1680. A rebound with subsequent growth above 1.1560 and 1.1575 will provide a reason to buy. Conversely, a breakout will lead to a sell strategy.

The GBP/USD pair has a strong opportunity to continue its decline after reacting to bearish imbalance 19. Yesterday, I assumed that another bearish imbalance 20 could be invalidated, but instead of rising, the pair moved lower on Wednesday. Today, amid pressure from geopolitical developments in the Middle East, the market continues to buy the US dollar. Once again, this week is developing in favor of the US currency.

The geopolitical conflict between Iran and the United States has gone beyond preventive strikes. US forces have been carrying out attacks on Iran for the third consecutive day, while Iran has responded by targeting US military bases in the Persian Gulf. In addition, although traders largely ignored Wednesday's inflation report, it still showed that inflation accelerated to 4.2%. Today's Producer Price Index report also pointed to faster price growth. As a result, developments in the Middle East appear to be moving toward a renewed military conflict, while inflationary pressures worldwide are likely to continue rising unless central banks take action. The ECB has already begun tightening policy today, inflation in the UK is paradoxically declining, and attention now turns to the Federal Reserve.

The situation in the Middle East is heating up again, which could support the US dollar in the coming weeks. I do not expect a rally in the dollar comparable to the one seen between January and March, but it is difficult to deny that the US currency performs better during periods of geopolitical uncertainty than either the euro or the pound. Therefore, even if the dollar does not post substantial gains, significant appreciation of the euro and pound also appears unlikely.

In my view, the broader trend remains bullish despite the pair's sharp declines this year. At present, the ceasefire in the Middle East exists only formally. The Strait of Hormuz remains effectively blocked, the nuclear issue remains unresolved, and any signs of progress in negotiations are based largely on statements from Donald Trump. Iran presents a very different assessment of the situation. Conditions continue to shift between improvement and deterioration. At the moment, the market is leaning toward the possibility of renewed conflict.

The current chart structure is as follows. Bullish imbalance 18 generated a price reaction, but bearish imbalance 19 ultimately produced a sell signal. Following that signal, another bearish setup emerged within imbalance 20. Geopolitical developments support further downside in the pair, and technical analysis points in the same direction. Until at least one bearish pattern is invalidated or a bullish pattern emerges, I would not expect meaningful gains in the pound.

The economic calendar on Thursday was largely uneventful. At least, the market paid little attention to the US Producer Price Index report, while even EUR/USD traders largely ignored the ECB's interest rate hike.

The broader fundamental backdrop still leads me to expect US dollar weakness over the long term. Even the conflict between Iran and the United States changes little in that regard. Geopolitical tensions have temporarily reminded investors of the dollar's safe-haven status, but the overall environment for the US currency remains less than favorable. If the US economy gains momentum in 2026, the Federal Reserve resumes its monetary tightening cycle, and the conflict between the United States and Iran becomes a prolonged confrontation, then the dollar could indeed target the 1.3100–1.3000 level. However, in my opinion, the long-term outlook for the US dollar could not have changed because of a single positive Nonfarm Payrolls report, and the Federal Reserve has not yet signaled readiness to tighten policy further.

Economic Calendar for the United States and the United Kingdom:

• United States – University of Michigan Consumer Sentiment Index (14:00 UTC).

The economic calendar for June 12 contains only one event, which I do not consider particularly significant. Therefore, the impact of the economic backdrop on market sentiment on Friday is likely to be minimal.

GBP/USD Forecast and Trading Advice:

The long-term outlook for the pound remains bullish, but the most recent signals are bearish. Therefore, in the near term, provided geopolitical developments do not interfere, bears may continue pushing toward the March 31 low at 1.3158. Liquidity may be taken from recent swing points, after which bulls could regain control if geopolitical conditions become more favorable. At present, it is difficult to imagine a quick resolution to the conflict between Iran and the United States, which leaves the pound with limited upward potential.

The Dow Jones Industrial Average is trading around 50,232, pulling back after reaching its high near the strong resistance level of 51,836. The DJ has been under downward pressure for several consecutive sessions, so it may be entering a consolidation phase.

On the H4 chart, we can see that the Dow Jones has reached the 0/8 Murray line and the 200 EMA level, which has become strong support for this index.

As long as the price remains above the psychological level of 50,000 points, this could be seen as a buying opportunity, with targets at 50,637 and at the upper band of the downtrend channel around 50,700 points.

A sharp drop below the psychological level of 50,000 and a consolidation below the 200 EMA could continue the downward pressure and technical correction of the Dow Jones, potentially reaching the 7/8 Murray level around 48,437 in the coming days.

Given this, the Eagle indicator suggests we could buy the Dow Jones above 50,000, with targets at 50,650 and 700. A decisive break above the 21 SMA and above the downtrend channel could see it return to its highs around 51,836.

EUR/USD is trading around 1.1535, below the 21-period SMA and within a descending trend channel formed since the beginning of May.

Technically, the euro is under bearish pressure, and we could expect it to reach the 6/8 Murray level around 1.1474 in the coming days. If the bearish pressure persists, it could even reach the lower band of the descending trend channel around 1.1460.

Technically, we could be seeing a symmetrical triangle pattern forming on the H4 chart, which could signal a recovery for the EUR/USD pair if the price consolidates above 1.1550.

A bullish scenario for the euro would involve buying as long as the price remains above the 21-period SMA, with targets at the upper band of the descending trend channel around the 7/8 Murray level, located at 1.1596.

One possible scenario is that the EUR breaks below the symmetrical triangle pattern and the price consolidates below 1.1530; in that case, the outlook could turn negative, and we might expect the euro to fall to the 1.1474 level. This level could provide strong support for the euro, and we might expect it to consolidate in this area before taking long positions.

The Eagle indicator is showing a positive signal, although it is in an oversold zone; however, we should wait for confirmation of the euro's movement before deciding whether to buy or sell.

Bitcoin is trading around $62,856, rebounding after reaching the 61.8% Fibonacci retracement level drawn from its low of $59,000 to its high of $64,400.

Bitcoin consolidated for a few hours above the 61.8% Fibonacci level, which gave it the opportunity to resume its upward cycle. The cryptocurrency is now consolidating above the 0/8 Murray level and above the 21-period SMA, which suggests it could continue rising in the coming days to reach the upper band of the ascending trend channel formed since early June around the 1/8 Murray level, located at $65,600.

Given that Bitcoin is showing positive signs, and as long as the price remains above the 0/8 Murray level around $62,500, it will be seen as a positive buy signal. It is expected that in the short term, BTC will reach the 200 EMA around the psychological level of $70,000.

In the event of a technical correction, while the upward trend channel remains intact, we could expect Bitcoin to find strong support around $61,600. This level could coincide with the lower band of the upward trend channel and, in turn, give Bitcoin a new impetus to continue rising in the coming days.

Only a drop below the 61.8% Fibonacci retracement level around $61,000 could change the scenario for Bitcoin, and we could expect it to return to a low of $59,375. BTC could even continue falling and reach $54,500 around the -2/8 Murray level.

Our trading plan for the next few hours is to buy Bitcoin from the $62,500 level, with targets at $63,000, $64,500, and $65,600.

Gold is trading around $4,081, rebounding after reaching the lower band of the descending trend channel formed on May 1st.

Gold hit a low of $4,011 around the psychological level of $4,000 and is now consolidating above the 5/8 Murray level.

If gold consolidates above $4,062 in the coming hours, it could be considered a buying opportunity with targets at the 21-period SMA around $4,215.

Given that gold has found strong support around $4,062 or $4,011, both levels could be considered opportunities to take long positions with short-term targets around the 6/8 Murray level at $4,375.

Should gold consolidate below the 5/8 Murray level, we could expect a continuation of the downward movement. However, before that, we should wait for the price to consolidate below the psychological level of $4,000. This could accelerate the downward movement and reach the 4/8 Murray level around $3,750.

The Eagle indicator has reached extremely oversold levels and is giving a positive signal. Therefore, we expect a technical bounce around the 5/8 Murray level, and a move above this zone could be seen as an opportunity to take long positions.

Tehran has demanded an emergency revision of the negotiating track with Washington after another series of overnight clashes. In response, US President Donald Trump publicly said the US intends to return to full-scale operations and announced an imminent offensive with massive strikes on key civilian infrastructure, including bridges and power plants.

Separately, Trump said he was satisfied with the economy despite CPI rising to 4.2% and attributed a fall in oil prices to the alleged interception of 22 Iranian tankers — a claim Energy Secretary Chris Wright immediately denied, saying his department has no information supporting any forced seizure of Middle Eastern oil. Follow the link for more details.

New Fed Chair Kevin Warsh confronts surprising economic strength and rising inflation

New Fed Chair Kevin Warsh faces a paradox. Known as a hawk, Warsh was expected by some in the White House to help lower borrowing costs. Instead, macro data points the other way: GDP is growing about 3% (Atlanta Fed estimates), equity markets are hitting records amid fiscal stimulus, and unemployment remains at a comfortable 4.3%.

Warsh's earlier argument that digitalization and AI adoption would naturally restrain inflation is losing traction as massive investment flows add to price pressures. Analysts see little prospect for quick policy easing. Balance sheet reduction is judged unlikely to have a rapid effect. Follow the link for more details.

Goldman Sachs materially revises Fed rate forecasts

Goldman Sachs has removed interest rate cuts from this year's outlook and pushed the first rounds of easing to June and December 2027. The change follows a shockingly strong May labor report — 172k payrolls added versus a consensus 88k — which also kept the unemployment rate steady. Goldman cut its year-end unemployment forecast to 4.4% from 4.6%.

Strong macro releases sparked heavy selling of government bonds and a drop of more than 5% in the Nasdaq 100. Markets are now pricing in roughly 25bp of rate hikes by year-end. Investors expect the June 16–17 FOMC meeting under Warsh to feature a decidedly hawkish tone consistent with May CPI. Follow the link for more details.

USD: winning trade amid entrenched inflation?

BMO Capital Markets argues that buying the US dollar is the most attractive tactical call in an environment of entrenched inflation and tight financial conditions. Strong May employment data gave the greenback a sudden lift, and it is premature to assume the US–Iran standoff will end soon enough to push oil down and inflation off the table.

Fundamentals favor a persistently tight policy stance and dollar dominance. BMO is therefore holding aggressive long USD positions vs. the euro, pound, yen, AUD, and CAD. Bloomberg commentary supports this view. Follow the link for more details.

Bank of America warns of correction risk in tech

Analysts at Bank of America flagged worrying technical signals in the tech sector: the Nasdaq 100, though attempting to bounce from Friday's lows, remains in a precarious zone. The prolonged rally above the psychological 30,000 level looks overstretched. RSI has rolled down from overbought territory, and a weekly bearish engulfing pattern formed.

The run-up was driven largely by aggressive buying of semiconductor stocks. Quant models and the VanEck Semiconductor ETF profile point to critical overheating in the cohort, raising the risk of a sharp volatility spike. BofA advises large investors to protect portfolios as the current risk/reward disfavors buyers. Follow the link for more details.

Brent (North Sea) price dynamics

What actually happened is what should have happened: the period of fear passed. At the start of the Middle East conflict, there was a lot of talk about Brent hitting $200/bbl, since a closure of the Strait of Hormuz would have seemed catastrophic — roughly 20 million b/d transited it in peacetime. Even if Saudi Arabia managed to reroute 5 million b/d, the gap is still striking.

In practice, it wasn't as bad. After 100 days of confrontation in the Middle East, Brent is trading below $100/bbl. Flows are one thing, balance is another. Before the conflict, the oil market was in a record surplus of 3–4 million b/d, and that helped restrain the North Sea rally.

China's oil imports

China played an important role in preventing a recession tied to the biggest oil shock. Before the conflict, the country was supporting prices by importing about 11 million b/d. Now it is preventing prices from rising, cutting purchases to a ten-year low of 7.8 million b/d in May.

The crude market is cyclical: price increases lead to lower global demand and a fall in Brent. Similar dynamics are visible outside China. Bloomberg estimates refinery crude runs have fallen by 5 million b/d.

Don't forget alternatives: Gulf countries have been finding alternate routes, throughput in the Strait of Hormuz has recovered from March lows, US exports have risen to a record 5.6 million b/d from about 4 million b/d, and inventories are being actively drawn down. US stocks have declined for nine consecutive weeks.

It becomes clear the oil market has adapted, and news of renewed US–Iran talks serves as a catalyst for selling Brent. At least three Reuters sources in Tehran said the sticking point in the dialogue is the scale of Western unfreezing of Iranian assets.

Technically, on the daily chart, Brent has bounced off fair value at $95/bbl. That increases the risk of a continued corrective move into the uptrend, which could develop into a new trend. A break of pivot supports at $91.35 and $89.55/bbl would allow the formation of short positions in the North Sea grade.

US equity indices dynamics

According to Absolute Strategy Research, it took the S&P 500 15 years (2000–2015) to break even in real terms after the dot-com crash. Other long recovery periods include 1929–1956 and 1965–1991.

It would take many years to justify today's stretched earnings multiples if fundamentals revert to long-run averages. Taken together, these factors support concerns about a bubble and legitimate worry about a stagflationary outcome.

Price-to-earnings ratio dynamics

Fuel was added to the decline by expectations for a $75bn SpaceX IPO. Investors are raising cash, creating short-term liquidity pressure and triggering sell-offs in big tech.

The third bearish driver is geopolitics. The downing of a US helicopter triggered heavy US strikes on Iran. Trump publicly criticised Tehran for stalling negotiations. The escalation dented global risk appetite and contributed to the S&P 500 pullback. Market psychology flipped from FOMO — fear of missing out — to FOL (fear of losing), so a correction is sensible in this context.

However, the bear catalysts are not necessarily long-lasting. The SpaceX IPO is imminent. The US has halted strikes, and if Iran does not retaliate, negotiations could resume. Finally, the latest US inflation report was not as bad as headlines implied.

Annual figures broadly matched Bloomberg consensus, and month-on-month data showed a slowdown in May versus April. Those readings could mark a peak in consumer inflation, which is already easing in oil and gasoline prices. The likely result would be the Fed stepping back from further tightening in 2026 — a positive for US equity indices. Is it time to buy the dip?

Technically, the S&P 500 has formed an inside bar on the daily chart, signaling uncertainty. A return to the inside bar's upper boundary near 7,400 would be a reason to resume purchases. Aggressive traders can add long positions on a confirmed hold above the pivot at 7,300.

Due to low market volatility, prices did not reach the levels I had outlined.

Given the tense situation surrounding possible intervention by the Bank of Japan in the yen exchange rate, traders are tending to adopt a more cautious, wait-and-see stance. Going forward, special attention will be given to US Producer Price Index (PPI) data and the labor market.

A higher-than-expected PPI reading may increase concerns about accelerating inflation in the United States and, as a result, further support gains in the USD/JPY pair. Alongside the headline Producer Price Index, data for the PPI excluding food and energy will also be released. This sub-index is considered a more reliable measure of underlying inflation trends, as it removes volatile components. The dynamics of this indicator will also significantly influence expectations regarding future policy decisions by regulators. In addition, the market will receive weekly Initial Jobless Claims data. This indicator reflects the current state of the labor market and is an important gauge of its conditions. Weak data could lead to a minor correction in the pair.

Regarding the intraday strategy, I will primarily rely on scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy USD/JPY today at an entry point around 160.61 (green line on the chart), targeting a rise toward 160.95 (thicker green line on the chart). At 160.95, I will exit long positions and open short positions in the opposite direction (expecting a 30–35 point reversal from that level). Further upward potential in the pair today is possible in the case of strong US inflation data. Important: before buying, ensure that the MACD indicator is above the zero line and has just started rising from it.

Scenario #2: I will also consider buying USD/JPY if there are two consecutive tests of 160.47, while the MACD indicator is in oversold territory. This would limit downward potential and trigger an upward reversal. A move toward the opposite levels at 160.61 and 160.95 can be expected.

Sell Signal

Scenario #1: I plan to sell USD/JPY after a break below 160.47 (red line on the chart), which would lead to a sharp decline in the pair. The key target for sellers is 160.14, where I will exit short positions and immediately open long positions in the opposite direction (expecting a 20–25 point rebound). Downward pressure on the pair may return in the case of Bank of Japan intervention. Important: before selling, ensure that the MACD indicator is below the zero line and has just started moving downward.

Scenario #2: I will also consider selling USD/JPY if there are two consecutive tests of 160.61, while the MACD indicator is in overbought territory. This would limit upward potential and trigger a downward reversal. A decline toward the opposite levels at 160.47 and 160.14 can be expected.

What is on the chart:

• Thin green line – entry price for buying the trading instrument
• Thick green line – expected take-profit level or area for profit-taking, as further gains above this level are unlikely
• Thin red line – entry price for selling the trading instrument
• Thick red line – expected take-profit level or area for profit-taking, as further declines below this level are unlikely
• MACD indicator – overbought and oversold zones should guide entry decisions

Important: Beginner Forex traders should be very cautious when entering the market. Before major fundamental releases, it is best to stay out of the market to avoid sharp price fluctuations. If you choose to trade during news releases, always use stop-loss orders to minimize losses. Without stop-loss protection, you can lose your entire deposit very quickly, especially if proper money management is not applied and large volumes are traded.

Remember that successful trading requires a clear trading plan, similar to the one presented above. Spontaneous trading decisions based on current market conditions are, by definition, a losing intraday strategy.

A price test of 1.3371 occurred at the moment when the MACD indicator had just started moving downward from the zero line, which confirmed a valid entry point for a short pound trade. As a result, the pair declined by 15 points.

Today's economic calendar is expected to be busy with significant US events. In particular, special attention will be given to the Producer Price Index (PPI) data. This indicator is one of the key leading signals of inflationary pressure in the economy, reflecting price dynamics for goods and services at the wholesale level. Given the Federal Reserve's active fight against inflation, a higher-than-expected PPI reading may increase concerns about accelerating inflation and, as a result, push the Federal Reserve toward a more restrictive monetary policy, strengthening the US dollar against the pound. In addition, the market will receive weekly Initial Jobless Claims data. Together, these releases will provide a comprehensive picture of the current state of the US economy and are likely to trigger increased volatility in the currency market.

Regarding the intraday strategy, I will primarily rely on scenarios #1 and #2.

Buy Signal

Scenario #1: I plan to buy the pound today at an entry point around 1.3374 (green line on the chart), targeting a rise toward 1.3434 (thicker green line on the chart). At 1.3434, I will exit long positions and open short positions in the opposite direction (expecting a 30–35 point reversal from that level). Further pound strength today can only be expected after weak US data. Important: before buying, ensure that the MACD indicator is above the zero line and has just started rising from it.

Scenario #2: I will also consider buying the pound if there are two consecutive tests of 1.3350, while the MACD indicator is in oversold territory. This would limit downward potential and trigger an upward reversal. A move toward the opposite levels at 1.3374 and 1.3434 can be expected.

Sell Signal

Scenario #1: I plan to sell the pound after a break below 1.3350 (red line on the chart), which would lead to a quick decline in the pair. The key target for sellers is 1.3307, where I will exit short positions and immediately open long positions in the opposite direction (expecting a 20–25 point rebound). Downward pressure on the pound may return in the case of a sharp rise in US inflation. Important: before selling, ensure that the MACD indicator is below the zero line and has just started moving downward.

Scenario #2: I will also consider selling the pound if there are two consecutive tests of 1.3374, while the MACD indicator is in overbought territory. This would limit upward potential and trigger a downward reversal. A decline toward the opposite levels at 1.3350 and 1.3307 can be expected.

What is on the chart:

• Thin green line – entry price for buying the trading instrument
• Thick green line – expected take-profit level or area to lock in profits, as further upside above this level is unlikely
• Thin red line – entry price for selling the trading instrument
• Thick red line – expected take-profit level or area to lock in profits, as further downside below this level is unlikely
• MACD indicator – overbought and oversold zones should guide trade entries

Important: Beginner Forex traders should be very cautious when entering the market. Before major fundamental releases, it is best to stay out of the market to avoid sharp price swings. If you choose to trade during news releases, always place stop-loss orders to minimize losses. Without stop-loss protection, you can lose your entire deposit very quickly, especially if proper money management is not used and large volumes are traded.

Remember that successful trading requires a clear trading plan, similar to the one presented above. Spontaneous trading decisions based on current market conditions are, by default, a losing intraday strategy.

A price test of 1.1540 occurred at the moment when the MACD indicator had just begun moving downward from the zero line, which confirmed a valid entry point for a short euro trade. As a result, the pair declined by 15 points.

In addition to the ECB decision, one of the most important events will be the release of the US Producer Price Index (PPI). An increase in PPI may indicate rising costs for businesses, which in turn may lead to higher prices for end consumers and support the US dollar. In addition, weekly Initial Jobless Claims data will provide up-to-date information on the US labor market. An increase in jobless claims may signal a slowdown in hiring or even rising layoffs, while consistently low figures would indicate continued strength in the labor market.

It is also worth keeping in mind the Middle East situation, where new US strikes on Iran may put strong pressure on the euro and support buying in the US dollar.

Regarding the intraday strategy, I will primarily rely on scenarios #1 and #2.

Buy Signal

Scenario #1: Today, euro purchases can be considered if the price reaches the 1.1554 level (green line on the chart), targeting a rise toward 1.1620. At 1.1620, I plan to exit the market and also consider selling in the opposite direction, expecting a 30–35 point move from the entry point. Further euro growth will only be possible after weak US data. Important: before buying, ensure that the MACD indicator is above the zero line and has just started moving upward from it.

Scenario #2: I will also consider buying the euro if there are two consecutive tests of 1.1522, while the MACD indicator is in oversold territory. This would limit the downward potential of the pair and trigger a reversal to the upside. A move toward the opposite levels at 1.1554 and 1.1620 can be expected.

Sell Signal

Scenario #1: I plan to sell the euro after it reaches the 1.1522 level (red line on the chart). The target is 1.1455, where I plan to exit the market and immediately buy in the opposite direction (expecting a 20–25 point rebound from that level). Downward pressure may return today in the case of a sharp rise in inflation. Important: before selling, ensure that the MACD indicator is below the zero line and has just started moving downward.

Scenario #2: I will also consider selling the euro if there are two consecutive tests of 1.1554, while the MACD indicator is in overbought territory. This would limit the upward potential of the pair and trigger a downward reversal. A decline toward the opposite levels at 1.1522 and 1.1455 can be expected.

What is on the chart:

• Thin green line – entry price for buying the trading instrument
• Thick green line – expected take-profit level or area to manually lock in profits, as further upside above this level is unlikely
• Thin red line – entry price for selling the trading instrument
• Thick red line – expected take-profit level or area to manually lock in profits, as further downside below this level is unlikely
• MACD indicator – overbought and oversold conditions should be used as key signals when entering trades

Important: Beginner Forex traders should be very cautious when entering the market. Before major fundamental releases, it is best to stay out of the market to avoid sharp volatility. If you choose to trade during news releases, always use stop-loss orders to minimize losses. Without stop-loss protection, you can lose your entire deposit very quickly, especially if proper money management is not used and large volumes are traded.

Remember that successful trading requires a clear trading plan, similar to the one presented above. Spontaneous trading decisions based on current market conditions are, by default, a losing intraday strategy.

Attention from traders and analysts will now shift to the release of key macroeconomic indicators, which may significantly influence market sentiment and the further direction of the currency market.

One of the most anticipated events is the publication of the US Producer Price Index (PPI) for May this year. This indicator reflects the price dynamics of goods and services produced domestically and serves as an important leading signal of inflation trends in the consumer sector. An increase in PPI may indicate rising business costs, which in turn can be passed on to consumers in the form of higher prices.

Particular attention is also given to the Producer Price Index excluding food and energy prices. This measure provides a more stable view of underlying inflation in the production sector. Analysis of Core PPI will help assess the persistence of inflationary pressure and its potential impact on Federal Reserve monetary policy decisions.

Finally, the weekly Initial Jobless Claims data will provide fresh insight into the labor market. This indicator is sensitive to short-term fluctuations and can quickly reflect changes in the economic environment. An increase in jobless claims may signal a slowdown in hiring or even rising layoffs, while persistently low readings would indicate continued strength in the labor market, supporting the US dollar.

In the case of strong data, I will rely on the Momentum strategy. If the market shows no reaction to the data, I will continue using the Mean Reversion strategy.

Momentum Strategy (Breakout) for the Second Half of the Day

EUR/USD

• Buy breakout above 1.1550 may lead to gains toward 1.1580 and 1.1600
• Sell breakout below 1.1530 may lead to declines toward 1.1505 and 1.1480

GBP/USD

• Buy breakout above 1.3375 may lead to gains toward 1.3399 and 1.3420
• Sell breakout below 1.3350 may lead to declines toward 1.3330 and 1.3300

USD/JPY

• Buy breakout above 160.60 may lead to gains toward 160.90 and 161.17
• Sell breakout below 160.30 may lead to declines toward 160.02 and 159.80

Mean Reversion Strategy (Reversal) for the Second Half of the Day

EUR/USD

• I will look for sell opportunities after a failed breakout above 1.1561, followed by a return below this level
• I will look for buy opportunities after a failed breakout below 1.1515, followed by a return above this level

GBP/USD

• I will look for sell opportunities after a failed breakout above 1.3390, followed by a return below this level
• I will look for buy opportunities after a failed breakout below 1.3333, followed by a return above this level

AUD/USD

• I will look for sell opportunities after a failed breakout above 0.7015, followed by a return below this level
• I will look for buy opportunities after a failed breakout below 0.6988, followed by a return above this level

USD/CAD

• I will look for sell opportunities after a failed breakout above 1.4002, followed by a return below this level
• I will look for buy opportunities after a failed breakout below 1.3955, followed by a return above this level

EUR/USD 1H Chart

The EUR/USD pair showed no interesting movements in the first half of Thursday. During the night, the price rebounded from the 1.1527–1.1531 level and rose slightly, but traders were unable—or unwilling—to extend the upward movement. It should be noted that the official results of the ECB meeting will be released. Although the market has no doubts about monetary tightening, it is not rushing to buy the euro. However, we still believe that the euro may rise slightly after the announcement. The key question is that this growth is unlikely to have any meaningful impact on the technical outlook or market sentiment. The market continues to ignore fundamentals and macroeconomic data, focusing instead on major geopolitical events. Even further exchanges of attacks between Iran and the United States are no longer considered "important events." Therefore, strong trending moves are unlikely today. In the United States, the PPI report will be released, but after yesterday's inflation data it is of almost no significance.

EUR/USD 5M Chart

On the 5-minute timeframe, a buy signal was formed in the first half of Thursday around the 1.1527–1.1531 level. However, it appeared during the night, so beginner traders were unlikely to trade it. Before the opening of the US session, the price returned to the 1.1527–1.1531 level, so another signal may soon form.

How to Trade on Thursday:

On the hourly timeframe, the flat phase has ended and a downward trend has resumed after three weeks of consolidation. However, further gains in the US dollar will depend entirely on geopolitical developments. If full-scale conflict in the Middle East resumes, the dollar will continue to strengthen. If Tehran and Washington return to negotiations, risk currencies will be supported.

On Thursday, beginner traders may open short positions targeting 1.1455–1.1474 if the price breaks below the 1.1527–1.1531 level. Buy trades may be considered on a rebound from the 1.1527–1.1531 level, targeting 1.1584–1.1594.

On the 5-minute timeframe, the following levels should be monitored: 1.1354–1.1363, 1.1413, 1.1455–1.1474, 1.1527–1.1531, 1.1584–1.1594, 1.1655–1.1666, 1.1745–1.1754, 1.1830–1.1837, 1.1899–1.1908. Within minutes, the ECB meeting results and interest rate decision will be published. A press conference with Christine Lagarde will follow in half an hour. There is no certainty that the market will react strongly to this event, as the ECB's intention to raise rates has been known for over a week.

Main Rules of the Trading System:

1. Signal strength is determined by the time required for its formation (bounce or breakout). The shorter the time, the stronger the signal.
2. If two or more losing trades have been opened from the same level due to false signals, all further signals from that level should be ignored.
3. In a flat market, any pair may generate many false signals or none at all. Technical levels may be ignored.
4. On the hourly timeframe, MACD-based signals should be traded only when there is sufficient volatility and a confirmed trend (trendline or channel).
5. If two levels are very close to each other (5–20 points), they should be treated as a single support or resistance level.
6. After price moves 15 points in the expected direction, Stop Loss should be moved to breakeven.

What Is on the Charts:

• Support and resistance levels (zones) are used as targets for buy/sell trades or as signal sources.
• Red lines represent channels or trendlines showing the current trend and preferred trading direction.
• The MACD indicator (14, 22, 3) — histogram and signal line — is a supplementary indicator that can also be used as a signal source.

Important speeches and economic reports (in the news calendar) can strongly influence currency movements. Therefore, trading during such events should be done with extreme caution, or positions should be closed to avoid sharp reversals.

Beginner Forex traders should remember that not every trade will be profitable. A clear strategy and proper money management are key to long-term trading success.

Support for a rate hike is already gaining momentum among members of the Monetary Policy Board, and it now appears likely that the executive branch will also support an increase. Regarding the position of the Takaichi administration, which is likely the main obstacle to a final decision on a rate hike, Jiji Press reported that US Treasury Secretary Scott Bessent advised Prime Minister Takaichi during a meeting not to block a Bank of Japan rate increase. Therefore, it is reasonable to conclude that it is now more likely that the administration will accept—or has already accepted—a rate hike.

Key risks ahead of the meeting include events that could complicate a rate hike decision. These include severe supply chain disruptions caused by further escalation of tensions in the Middle East. However, such a deterioration in conditions appears unlikely in the coming days.

Analysts at Mizuho Bank forecast that the Bank of Japan will raise rates approximately once every six months. The policy rate is expected to reach 1.25% by December 2026 and 1.50% by June 2027 (terminal rate). In parallel with rate hikes, the Bank of Japan is also likely to slow the pace of quantitative tightening.

The net short position in the yen increased by 1.13 billion over the reporting week, reaching -10.13 billion. Short positions have exceeded the previous 2007 peak and reached a new record high. The fair value estimate is attempting to move below the long-term average.

USD/JPY has moved close to the April 30 high, after which a large-scale currency intervention followed. The current situation is similar; however, if the Bank of Japan proceeds with a rate hike, another intervention may not be necessary. Japanese authorities may also be considering a similar scenario and may retain the option of intervening later if the yen does not stabilize. Fundamentally, the yen remains weak, and a move toward 162 is still in play. However, confidence in a rate hike could support bearish USD/JPY positioning and allow the yen to retrace a few figures lower.

The Bank of Canada's decision came against the backdrop of first-quarter GDP data showing the onset of a technical recession. Clearly, this factor could not be ignored. In such conditions, a rate hike would be illogical; however, a rate cut is also not possible due to the persistent high risk of rising inflation.

Other Canadian economic indicators also did not require immediate policy action. The May labor market report was notably strong, with 88,000 new jobs created, significantly exceeding analysts' expectations of 10,000. The unemployment rate fell from 6.9% to 6.6%, as employment growth outpaced labor supply. Average hourly wages increased by 3.0% year-over-year in May, down from 4.5% in April, which can also be viewed positively from an inflation containment perspective.

This strong report allowed the Bank of Canada to reaffirm the validity of its current strategy of inaction. Preliminary GDP data for April showed growth of 0.4%, and the strong labor market figures suggest that economic activity may recover in the second quarter.

Canada's trade balance in April also showed positive dynamics, posting a surplus of CAD 2.7 billion compared to CAD 1.8 billion in the previous month. Rising oil prices contributed, but strong performance in other export categories should also be noted. The trade surplus with the United States also increased, indicating that concerns over trade conditions initiated last year by Trump-era tariff increases have not had a significant impact on the Canadian economy.

At present, it can be assumed that sustained economic recovery is necessary for meaningful strengthening of the Canadian dollar. However, there are still limited grounds for such momentum.

The net short position in CAD increased over the reporting week by 1.81 billion to -6.8 billion. The bearish bias is strengthening, with the fair value price above the long-term average and continuing to rise.

USD/CAD reached the resistance level of 1.3930–1.3965, which was identified in the previous review as the primary target. The trend remains bullish. From a technical perspective, after an attempt to break above 1.3965, a minor pullback is possible, which could be used for new long positions. However, a more likely scenario is a firm break above 1.3965 and a continuation toward the next target at 1.4139.

Gold plunged sharply amid a worsening US-Iran confrontation. The metal, traditionally seen as a "safe haven," is losing value, while oil is rising on fears of supply disruptions around the Strait of Hormuz. Spot gold fell 3.5%, dropping to $4,111.95 an ounce — a low not seen since March 23.

The selling continued after new US strikes on Iranian targets on Tuesday. The strikes were a response to the downing of a US Army Apache helicopter.

President Donald Trump warned that Iran has "dragged out talks for too long" and will pay the price. In response, Tehran carried out rocket and drone attacks on US bases in Jordan, Kuwait and Bahrain, heightening geopolitical tensions and supporting the rise in oil prices.

Nonetheless, the fall in gold reflects a reordering of market priorities — investors are increasingly focused on the risk of inflation, not only on geopolitical shocks.

Since the conflict began in late February, rising oil prices have revived expectations of possible monetary tightening. CME Group's FedWatch tool puts the probability of a US rate hike in December at 67% — a notable reversal from early-year expectations that had priced in easing.

"Markets desperately need positive news after the strong jobs report on Friday and this morning's threats from the president toward Tehran," independent metals trader Tai Wong told CNBC, commenting on the pressure on gold.

On Wednesday, the consumer price index offered the market some relief: core CPI rose 0.2% month-on-month in May, slowing from a 0.4% rise in April.

However, amid mounting energy-driven pressure, investors are turning their attention to the producer price index due Thursday. Some believe it could significantly influence expectations about the Fed's next steps and, accordingly, the outlook for both gold and oil.

Gold (XAU/USD) is struggling to build on its moderate recovery from the lows recorded earlier on Thursday, which marked the lowest levels since November 2025. The precious metal is currently holding near the $4,100 level.

From a technical perspective, the recent break below the key 200-day Simple Moving Average (SMA), along with the decline to a new February low, strengthens the bearish outlook for XAU/USD.

The MACD indicator remains deeply in negative territory, confirming the dominance of bearish sentiment. At the same time, the Relative Strength Index (RSI) signals oversold conditions, which may indicate a potential slowdown in downward momentum despite the persistent selling pressure.

The nearest resistance is located near the broken lower boundary of the downward channel, around $4,250. Further resistance levels include the 200-day EMA and SMA at $4,444, followed by the psychological level of $4,500 and then the 50-day SMA near $4,630.

As long as the price remains below these levels, sellers are likely to retain control of the market, and any upward moves will most likely be viewed as corrective rebounds rather than the beginning of a trend reversal.

Immediate support is located at $4,015. A break below this level could accelerate the decline toward the $3,900 level.

On the lower time frame, I can identify a classic five-wave bearish structure. Following the completion of this structure, the instrument may transition to an upward wave sequence, and at present, the structure appears complete. Therefore, a rise in the euro may be expected from the 1.1513 level, which corresponds to the 76.4% Fibonacci retracement level. However, without support from geopolitical developments, the euro is unlikely to receive strong market backing.

The EUR/USD pair was virtually unchanged on Wednesday, while traders continued to assess yesterday's inflation report. Opinions vary widely. Some economists believe that inflation data coming in line with forecasts allows the Federal Reserve to maintain its wait-and-see approach, as inflation did not show a significant acceleration in May. There is also a view that current inflation levels are acceptable to US President Donald Trump and that the pace of inflation growth has begun to slow. In my opinion, these interpretations are incorrect.

Inflation has been rising for three consecutive months and has nearly doubled over that period. If that is not a cause for concern, what is? Should policymakers wait until inflation approaches 6% before taking action? In my view, it is important to focus on the root of the problem. Inflation is rising, and there is no need to look for excuses, believe in a swift resolution of the Middle East conflict, or rely on unrealistic expectations. The current reality is harsh and uncompromising. Inflation continues to increase, and the slower pace of growth in May does not justify the conclusion that the upward inflation trend is reversing. Even if the Consumer Price Index eventually stops accelerating—which will happen sooner or later—that does not mean the Federal Reserve can relax and expect inflation to return to its 2% target on its own. The Federal Open Market Committee (FOMC) will eventually have to tighten monetary policy. The only question is when that process will begin.

Since yesterday, expectations in the futures market have become more hawkish. According to the CME FedWatch Tool, the probability of a Federal Reserve rate hike before the end of the year now exceeds 70%. The increase in hawkish expectations has been modest, but the next Federal Reserve meeting will take place as early as next week. At that point, market participants should be able to make more accurate forecasts for the remainder of 2026. In my opinion, most FOMC members—including Jerome Powell—will not be able to ignore rising inflation indefinitely, regardless of the views expressed by Stephen Miran and Kevin Warsh.

General Conclusions

Based on my EUR/USD analysis, I conclude that the pair remains within the broader upward trend segment (shown in the lower chart), while in the shorter term it remains within a downward trend segment that may already be complete. In my opinion, this may be a reasonable time to consider building long positions. The unsuccessful attempt to break below the 1.1513 level, corresponding to the 76.4% Fibonacci retracement level, combined with the completed appearance of the bearish wave structure, suggests that the pair may transition into a new upward wave sequence with targets near the 1.1700 level and above.

On the higher time frame, an upward trend segment remains visible, followed by the development of a corrective wave structure. In the near term, wave C is expected to form with targets near 1.1352, which corresponds to the 38.2% Fibonacci retracement level. Once the A-B-C corrective structure is complete, a new long-term bullish trend may begin.

Key Principles of My Analysis

1. Wave structures should be simple and easy to interpret. Complex structures are difficult to trade and often undergo revisions.
2. If there is no confidence in what is happening in the market, it is better to stay out of it.
3. There can never be complete certainty regarding market direction. Always use protective Stop Loss orders.
4. Wave analysis can be combined with other forms of analysis and trading strategies.