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11th July 2025 | view in browser | ||
Dollar at a crossroads as policy shifts loom | ||
Following the One Big Beautiful bill’s passage, the administration is focused on boosting nominal GDP and resolving trade negotiations by August 1, though extensions are possible despite Trump’s firm deadline. | ||
Performance chart 30day v. USD (%) | ||
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Technical & fundamental highlights | ||
EURUSD: technical overview | ||
The Euro has broken out from a multi-month consolidation off a critical longer-term low. This latest push through the 2023 high lends further support to the case for a meaningful bottom, setting the stage for a bullish structural shift and the next major upside extension targeting the 2021 high at 1.2350. Setbacks should be exceptionally well supported below 1.1500. | ||
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R2 1.1900 - Figure - Medium R1 1.1830 - 1 July/2025 high - Medium S1 1.1662 - 10 July low - Medium S2 1.1654 - 26 June low - Medium | ||
EURUSD: fundamental overview | ||
One major bank’s economists note the ECB is cautiously approaching further interest rate cuts, despite a stronger euro potentially pushing inflation below the 2% target, as rate changes take time to impact the economy and the euro’s rise is less significant against a basket of currencies. Eurozone companies, facing profit pressures, are encouraged to use the stronger euro to rebuild margins rather than lower prices. Large-scale fiscal spending is expected to offset any negative effects of the euro’s strength, while market expectations of limited Fed rate cuts and potential U.S. trade developments support a bullish outlook for the euro against the dollar. | ||
USDJPY: technical overview | ||
There are signs of a meaningful top in place after the market put in a multi-year high in 2024. At this point, the door is now open for a deeper setback below the 2024 low at 139.58 over the coming weeks, exposing a retest of the 2023 low. Rallies should be well capped below 150.00. | ||
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R2 148.03 - 23 June high - Strong R1 147.19 - 9 July high - Medium S1 144.18 - 4 July low - Medium S2 142.68 - 1 July low - Strong | ||
USDJPY: fundamental overview | ||
Investors doubt a significant rebound in longer-dated Japanese Government Bonds due to expectations of increased government spending following Japan’s upper house election on July 20, 2025, as the ruling LDP’s low approval ratings may force PM Ishiba’s minority government to concede to opposition demands for more fiscal stimulus. The Bank of Japan is unlikely to raise interest rates soon, as rising long-term yields already tighten financial conditions, compounded by threats of U.S. tariffs and a record 19.4% drop in vehicle export prices, which could hurt automakers’ profitability and wage growth—a key BOJ goal. With negative real interest rates in Japan and widening U.S.-Japan yield differentials, the USDJPY exchange rate may test higher levels, with markets eyeing upcoming U.S. CPI data. | ||
AUDUSD: technical overview | ||
There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.5500 would give reason for rethink. A monthly close back above 0.7000 will take the big picture pressure off the downside and strengthen case for a bottom. | ||
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R2 0.6600 - Medium - Strong R1 0.6596 - 11 July/2025 high - Medium S1 0.6484 - 25 June low - Medium S1 0.6373 - 23 June low - Strong | ||
AUDUSD: fundamental overview | ||
The Australian dollar has held strong above its 50-day moving average after the Reserve Bank of Australia unexpectedly kept the Official Cash Rate at 3.85%, defying market expectations of a cut. Prime Minister Albanese’s upcoming visit to China from July 12-18 aims to improve trade and diplomatic ties, potentially boosting Australian exports and supporting the AUD. Additionally, China’s efforts to stabilize its economy, curb price wars, and achieve strong 5.4% GDP growth in Q1 2025 create a favorable environment for Australian exports, further strengthening the Australian Dollar. | ||
Suggested reading | ||
A Front-Row Seat To An All-New Industrial Revolution, L. Navellier, InvestorPlace(July 9, 2025) The Shadowy Past of the Secret Bank That Controls the World, J. Levy American Thinker (July 9, 2025) | ||