Fundamental Market Analysis for July 10, 2026 (EURUSD, GBPUSD, USDJPY)
EURUSD:
The minutes of the latest ECB meeting strengthened the case for the euro. Policymakers considered a scenario in which inflation remains above target next year even after nearly three expected interest rate increases. This suggests that further tightening may still be required. The gap between ECB and Federal Reserve interest rate expectations therefore no longer provides the US dollar with the same degree of support.
The US currency weakened as oil prices declined and markets reassessed the likelihood of a Federal Reserve rate increase in July. At the same time, steady jobless claims and persistent inflation risks mean that a more restrictive policy decision cannot be ruled out entirely. Further gains in EURUSD will therefore depend partly on whether investors continue to reduce expectations of an imminent Federal Reserve move.
The eurozone economy remains vulnerable to high energy costs, while ECB officials have highlighted the fragile growth outlook. However, the latest reassessment of the ECB’s rate path gives the euro stronger support than it had at the beginning of the week. If expectations of further ECB tightening remain in place and the US dollar receives no fresh positive catalyst, the base-case scenario supports further gains in EURUSD.
Trading idea: BUY 1.1455, SL 1.1425, TP 1.1545
GBPUSD:
The pound is ending the week near a one-month high. It is supported by positive real interest rates and expectations of at least one Bank of England rate increase before the end of the year. Lower oil prices are also important for the United Kingdom as a major energy importer. Reduced price pressure may improve the outlook for household and corporate spending.
The domestic backdrop remains mixed. Investors are assessing the growth outlook and the direction of future fiscal policy, while uncertainty over the composition of the new government has increased the pound’s sensitivity to political statements. However, concerns about excessive spending have eased somewhat, as markets expect fiscal discipline to remain in place. This provides the British currency with its own source of support.
The Federal Reserve remains concerned about inflation, but the probability of a July rate increase has declined, pushing the US dollar away from its recent highs. This combination allows GBPUSD to retain an advantage, although the resilient US labor market may limit the scale of the move. If Bank of England interest rate expectations remain firm and fiscal risks continue to be assessed calmly, the current fundamental backdrop supports the buying scenario.
Trading idea: BUY 1.3445, SL 1.3415, TP 1.3535
USDJPY:
The latest Japanese producer price data strengthened the case for the yen. The index rose by 7.1% year on year in June, compared with expectations of 6.8%. Import prices in yen terms also increased at their fastest pace since 2022. Rising cost pressures make it more likely that the Bank of Japan will return to the issue of further interest rate increases.
The central bank has already warned that companies are passing higher raw material and fuel costs on to consumers more quickly. Following the June rate increase to 1%, markets are considering the possibility of another move before the end of the year. This is gradually reducing the US dollar’s advantage in interest-rate-differential trades. US Treasury yields still support the American currency, but lower expectations of an imminent Federal Reserve decision are weakening this factor.
Yen weakness is also increasing import costs and keeping the foreign exchange market under close scrutiny from the Japanese authorities. The risk of official action does not determine the direction on its own. However, it is now accompanied by a fresh inflation signal and a stronger basis for further Bank of Japan action. Under these conditions, a decline in USDJPY appears to be the more sustainable scenario unless the US dollar receives renewed support from US economic data.
Trading idea: SELL 161.45, SL 161.75, TP 160.55
Get a 300% bonus on every deposit of $100 or more and increase your trading volume!
