Fundamental Market Analysis for June 26, 2026 (EURUSD, GBPUSD, USDJPY)

EURUSD:

The ECB’s June decision has created both support and constraints for the euro. The central bank raised key interest rates by 25 basis points in response to renewed inflation pressure from energy prices. However, its updated forecasts point to 3.0% inflation in 2026 alongside economic growth of just 0.8%. The market sees that the fight against inflation will take place against a backdrop of weaker demand across the euro area.

US data continues to provide the US dollar with a firmer fundamental base. The personal consumption expenditures price index rose by 4.1% year-on-year in May, while consumer spending increased by 0.7%. Expectations of a Federal Reserve rate hike in July declined after the release, but inflation remains well above target and the labour market is still resilient. This continues to support demand for the US dollar.

For EUR/USD, the key issue is the difference in the quality of the economic backdrop. The ECB is responding to inflation pressure while lowering its growth outlook, whereas the United States continues to show resilient demand. Any pause in US dollar strength may limit intraday moves, but it does not change the broader imbalance in expectations. If this combination of factors persists, the downside scenario remains the priority.

Trading idea: SELL 1.1360, SL 1.1380, TP 1.1300

GBPUSD:

Sterling is ending the week in an environment where political uncertainty has once again become a currency-market factor. Following the resignation of Prime Minister Keir Starmer, investors are awaiting the formation of a new government and assessing whether confidence among UK government bond holders can be preserved. For the pound, the change of cabinet matters less than the clarity of fiscal policy, which remains limited for now.

The Bank of England kept its interest rate unchanged at 3.75% on June 17, although two Monetary Policy Committee members voted for an increase. The central bank noted that inflation had eased to 2.8% and that the labour market was gradually cooling, while energy prices remained volatile. This combination does not give the market confidence that policy will become more restrictive quickly and limits interest-rate support for sterling.

High inflation in the United States and resilient consumer spending continue to support expectations of a more restrictive Federal Reserve policy path, despite lower expectations of a July rate hike. The pound may receive short-term support when the US dollar weakens, but domestic fiscal concerns leave any recovery vulnerable. The baseline scenario allows for further weakness in GBP/USD until the market receives clearer signals on UK politics and the economy.

Trading idea: SELL 1.3185, SL 1.3210, TP 1.3110

USDJPY:

For USD/JPY, the interest-rate gap between the United States and Japan remains the main factor, but its influence is becoming less straightforward. The Bank of Japan raised its policy rate to 1%, while some board members have supported further policy normalisation. At the same time, the government’s policy programme emphasises support for demand through low borrowing costs, creating uncertainty around the Bank of Japan’s future course.

US inflation, measured by the PCE index, reached 4.1% in May, leaving the Federal Reserve cautious. At the same time, the data matched expectations and the market reduced the probability of a July rate hike. This does not eliminate the sizeable interest-rate advantage in favour of the US dollar, but it lowers the likelihood of a rapid widening in the gap. The advantage of the US currency no longer appears entirely one-sided.

The yen remains close to multi-decade lows, while Japanese authorities have strengthened verbal warnings and are preparing measures to manage reserves in case of foreign-exchange operations. The longer this situation persists, the greater the market’s sensitivity to official signals becomes. The interest-rate gap supports the US dollar, but it does not offset the risk of a sharp response from the authorities. If the current backdrop remains in place, the baseline scenario allows for a decline in USD/JPY.

Trading idea: SELL 161.80, SL 162.05, TP 161.05

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