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Hello everyone, today XM Foreign Exchange will bring you "【XM Foreign Exchange】: Collection of positive and negative news that affects the foreign exchange market". Hope it will be helpful to you! The original content is as follows:
U.S. consumer inflation expectations fell across the board in May, 10-year U.S. Treasury yields fell, and market expectations for the Federal Reserve to cut interest rates have increased. The core CPI in April was only 1.8% year-on-year, hitting a new low since 2020, indicating that inflationary pressure continues to ease. This strengthens the expectation that the Fed may continue to cut interest rates in 2025. The US dollar index fell under pressure, and the offshore RMB once rose by more than 100 points and broke through 7.18.
Australia's GDP increased by only 0.2% month-on-month in the first quarter of 2025, a sharp slowdown from the previous value. The growth of household consumption and investment is weak, and extreme weather has an impact on the mining and tourism industries. Despite the recovery of the private sector, per capita GDP has fallen into negative growth again, and market expectations for further easing of the RBA have heated up, and the Australian dollar may fall below the 0.65 mark against the US dollar in the short term.
Canada's unemployment rate rose to 7.0% in May, the highest since September 2021. The manufacturing industry was significantly impacted by US tariffs, with a centrdom.info reduction of 12,200 jobs. Although the job market has increased by 8,800 people overall, high unemployment and trade uncertainty have exacerbated pressure on the depreciation of the Canadian dollar, and the dollar against the Canadian dollar may test the 1.38 resistance level.
The ECB announced a 25-point rate cut on June 9At a basis point, deposit rates fell to 2%, and suggest further easing is likely. Governor Lagarde pointed out that survey data showed weakening economic outlook, slowing services, appreciation of the euro and uncertainty in trade policies suppressed exports and investment. The euro may fall below the 1.08 support level in the short term, and if it falls below, it may open up downward space.
The Bank of England has cut interest rates by a total of 50 basis points in 2024, and is expected to continue to cut interest rates in 2025, but the amplitude is smaller than that of the European Central Bank. Although fiscal stimulus may boost the economy, inflation in the service industry remained stubbornly at around 5%, and the market has a big disagreement over the pace of interest rate cuts. The pound may fluctuate against the US dollar in the range of 1.25-1.27, so we need to pay attention to the inflation data in mid-June.
The Bank of Japan ended negative interest rates and raised interest rates twice in 2024, and is expected to raise interest rates twice in 2025 to 0.75%. Although GDP shrank by 0.2% in the first quarter, exports and manufacturing industries are resilient. Coupled with the Fed's expectation of interest rate cuts, the yen may test the 135 mark, and safe-haven demand may drive further appreciation.
The first meeting of the China-US economic and trade consultation mechanism was held in London on June 9, and market expectations for easing trade tensions increased. China's imports and exports increased by 2.5% year-on-year in the first five months, and exports to ASEAN and the EU increased by more than 13%, and the RMB cross-border settlement system was further expanded. If the negotiations make substantial progress, risky currencies such as the Australian dollar and New Zealand dollar are expected to strengthen and the US dollar is under pressure.
The risk of conflict between Israel and Iran escalates, Houthi forces frequently attack shipping in the Red Sea, and the US 82nd Airborne Division deployed to the Middle East. Geographic risks have boosted demand for safe-haven, and currencies such as the Japanese yen and Swiss franc have been supported. If transportation in the Strait of Hormuz is blocked, oil prices may soar, which will indirectly benefit the Canadian dollar (crude oil exporter).
Saudi Arabia announced on June 9 that it will not renew the US-Saudi Arabia security agreement and joins the RMB cross-border settlement system, weakening the status of the petrodollar. This move may trigger fluctuations in US dollar liquidity, the US dollar index may fall below the 102 mark in the short term, and the attractiveness of safe-haven assets such as gold has increased.
The US dollar index has fallen due to the cooling of inflation expectations and the impact of Sino-US negotiations. The daily-level RSI is oversold. If it falls below the 102 mark, it may fall below 101.5. Resistance level 103.5 and support level 102.0.
The euro/USD falls below 1.09 after the ECB cuts interest rates. If it falls below 1.08, it may fall below 1.075. Resistance level 1.095, it is recommended to reboundShort, stop loss of 1.100.
Australia dollar is dragged down by weak GDP. If it falls below 0.65, it may accelerate to decline to 0.645. The resistance is 0.660, and it is recommended to rebound to short around 0.660 and stop loss is 0.665.
The yen is boosted by the Bank of Japan's interest rate hike expectations. If it breaks through 135, it may test 134.5. The resistance level is 136.0. It is recommended to short when the high is high and stop loss is 136.5.
If the US CPI data on June 12 exceeds expectations, it may reverse the Federal Reserve's expectation of interest rate cuts and boost the US dollar.
The speech of European Central Bank President Lagarde on June 13 may send a signal of further easing to suppress the euro.
The escalation of the situation in the Middle East or the collapse of Sino-US negotiations may trigger a surge in risk aversion in the market.
If the Federal Reserve unexpectedly suspends interest rate cuts, the US dollar may rebound.
If the Bank of Japan postpone interest rate hikes, the yen may fall.
If major currency pairs break through key support/resistance levels, they may trigger trend markets and strictly stop losses are required.
Conclusion: The current foreign exchange market is affected by the interweaving of multiple factors. The US dollar is under pressure in the short term but is still supported by economic resilience in the medium term. Non-US currencies such as the euro and the Australian dollar are facing downward pressure, and safe-haven currencies such as the Japanese yen and the Swiss franc are boosted by geopolitical risks. Investors need to pay close attention to the progress of China-US consultations, the policy trends of the ECB and the situation in the Middle East, flexibly adjust their positions, and strictly control risks.
The above content is all about "【XM Forex】: Collection of positive and negative news that affects the foreign exchange market". It was carefully centrdom.infopiled and edited by the XM Forex editor. I hope it will be helpful to your trading! Thanks for the support!
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