Fundamental Market Analysis for June 29, 2026 (EURUSD, GBPUSD, USDJPY)

EURUSD:

The ECB’s 25-basis-point rate increase has not provided unequivocal support for the euro. At the same time, the central bank warned that the energy shock is increasing inflation risks and lowered its 2026 euro area growth forecast to 0.8%. This creates a difficult environment for the single currency: restrictive policy is needed to preserve price stability, but weak activity and falling real incomes limit demand for European assets.

The US dollar retains an advantage as markets expect the Federal Reserve to avoid easing policy too quickly. In June, the Committee kept the target range at 3.50%–3.75%, citing resilient economic activity and inflation above target. Markets are awaiting US labour market data and remarks at the ECB forum. A strong employment report could reinforce expectations that US interest rates will remain elevated for longer.

The ECB’s rate increase appears to be more of a response to inflation risks than a signal of accelerating growth in the euro area. As long as uncertainty around energy prices and growth persists, while the US dollar remains supported by Federal Reserve expectations, the baseline scenario for EUR/USD points to further downside. The selling idea is consistent with the divergence in economic resilience and the current demand for the US dollar.

Trading idea: SELL 1.1390, SL 1.1410, TP 1.1330

GBPUSD:

For sterling, the Bank of England’s cautious stance remains the key domestic factor. In June, the central bank kept its rate at 3.75%, although two Monetary Policy Committee members voted for an increase. Inflation has eased to 2.8%, the labour market is gradually cooling, and signs of weaker economic activity limit confidence that policy will become more restrictive. This reduces the interest-rate support available to the pound.

Political uncertainty is adding to the pressure following the change in the UK’s leadership. Markets are awaiting greater clarity on the future fiscal stance and the composition of the economic team, while recent surveys have pointed to weaker business activity. Even if fiscal rules remain in place, the transition period may make investors more cautious about UK assets and prevent sterling from benefiting fully from signs of persistent services inflation.

The external environment is also not supportive for GBP/USD. The US dollar continues to attract demand amid energy-related risks and ahead of US employment data. For the pair, the key issue is the relative ability of the UK and US economies to maintain growth under high borrowing costs. Until UK data and the political agenda provide a stronger case for sterling, the downside scenario remains the priority.

Trading idea: SELL 1.3205, SL 1.3225, TP 1.3145

USDJPY:

The Bank of Japan raised its short-term policy rate to around 1.0% in June but also noted a moderate economic recovery and some signs of weakness linked to higher oil prices. As a result, policy normalisation offers only partial support to the yen. The central bank must consider both the inflation effects of higher energy costs and the risk of weaker domestic demand. The interest-rate gap with the United States remains substantial.

The US dollar is supported by the Federal Reserve’s policy stance. The central bank kept the target range at 3.50%–3.75%, pointing to resilient economic activity and inflation above target, while markets await US labour market data. This continues to support the dollar against the yen and helps explain why USD/JPY remains close to multi-year highs despite the Bank of Japan’s rate increase.

However, the risk profile for this pair is asymmetric. Japanese authorities have repeatedly stated that they are ready to respond to excessive currency moves, and the proximity of the pair to 162 increases the likelihood of further official warnings or practical action. Such a response could provide rapid support to the yen even while the interest-rate differential favours the US dollar. Therefore, the cautious fundamental scenario points to a decline in USD/JPY.

Trading idea: SELL 161.75, SL 162.05, TP 160.85

You can find more analytical information on our website.