Fundamental Market Analysis for July 22, 2026 (EURUSD, GBPUSD, USDJPY)
Event to watch today:
09:00 EET. GBP – Consumer Price Index
15:15 EET. EUR - ECB Main Interest Rate Decision
15:45 EET. EUR - ECB Press Conference
EURUSD:
The euro enters the European session near 1.1400 following another round of US dollar strength. Higher oil prices are increasing costs for the eurozone economy while also sustaining inflation risks, leaving the impact of the energy factor on the single currency mixed. Meanwhile, the approaching ECB meeting is limiting investors’ willingness to build positions before receiving new guidance on interest rates.
The US dollar is the main driver of the current session. The yield on ten-year US Treasury bonds remains close to multi-month highs, while continued tensions in the Middle East support demand for the American currency. The market also expects the Federal Reserve to keep its interest rate unchanged at the upcoming meeting, although the possibility of a rate increase later in the year has not disappeared. This strengthens the dollar’s advantage over the euro.
Local support for the euro from expectations of firmer ECB signals is currently insufficient to change the broader scenario. High energy costs may both restrain economic growth in the region and force the central bank to proceed cautiously. As long as US yields remain elevated and demand for the dollar persists, the base-case scenario allows for a further decline in EUR/USD.
Trading idea: SELL 1.1400, SL 1.1430, TP 1.1330
GBPUSD:
The pound enters the session near 1.3385 after several days of losses. Investors are assessing the first decisions of the new UK government and the possible methods of financing additional expenditure. Its commitment to maintaining existing fiscal rules has partly eased concerns, but the risk of higher borrowing and future tax increases continues to limit demand for the British currency.
Recent data showed that the labor market is stabilizing at weak levels. Wage growth and unemployment were largely unchanged, while payroll figures failed to indicate a convincing recovery. This backdrop does not provide the Bank of England with sufficient grounds to adopt a significantly tighter policy stance. It also puts the pound at a disadvantage against the dollar, which is supported by higher US Treasury yields and demand linked to geopolitical uncertainty.
The external dollar impulse remains stronger than the pound’s local support factors. Even the attractive yields offered by UK assets do not fully offset fiscal uncertainty and weak employment dynamics. If oil prices and US Treasury yields remain elevated, the downside scenario continues to take priority for GBP/USD.
Trading idea: SELL 1.3385, SL 1.3420, TP 1.3300
USDJPY:
The yen remains under pressure after weakening to its lowest levels in almost four decades. Higher imported oil costs are increasing the burden on the Japanese economy and worsening the trade balance, while the weaker currency is further raising the cost of overseas purchases. These conditions support expectations of cautious policy tightening by the Bank of Japan, but they have not yet materially reduced the interest rate differential in favor of the United States.
The yield on ten-year US Treasury bonds remains near 4.6%, while longer-dated securities are trading above 5%, increasing the appeal of dollar-denominated assets. At the same time, tensions in the Middle East and higher oil prices continue to support the US dollar. Against this backdrop, demand for interest rate differential strategies remains unfavorable for the yen, while USD/JPY retains further upside potential.
The main limiting factor is the risk of currency intervention by the Japanese authorities after the pair moved above 163.00. However, there has been no fresh confirmation of immediate action, while previous interventions failed to change the underlying interest rate differential for long. As long as US yields remain elevated, the USD/JPY buying scenario remains the base case, although the increased intervention risk calls for a more restrained target.
Trading idea: BUY 163.10, SL 162.75, TP 163.80
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