Important calendar events
The dollar crashed last week, as shifting Fed rate cut expectations and geopolitical undercurrents weighed on market sentiment. The dollar index ended the week at 97.25, its lowest level since January 2022. U.S. Treasury yields edged lower, with the US 10-year bond yield sliding from 4.38% to 4.35%.
The Fed held interest rates steady at 4.25–4.50% in June. The Fed updated its dot-plot, which summarizes policymakers’ projections of interest rates for the remainder of the year and into 2026. The Fed’s dot-plot maintained forecasts of two more rate cuts in 2025 despite upward inflation revisions.
Fed Chair Powell’s post-meeting press conference held hawkish undertones, hinting that policymakers remain cautious and are willing to wait before cutting interest rates again.
Last week, Fed Chair Powell’s Congressional Testimony took center stage. Powell’s testimony was delivered in two parts: on June 24 before the US House and in 25 before the Senate.
Fed Chair Powell’s Congressional testimony struck a cautious but slightly dovish tone, highlighting that tariff-driven inflation could still emerge and that rate cuts remain data-dependent. Powell reiterated that the central bank is not in a hurry to cut interest rates, revealing a dovish bias to the Fed’s outlook, which drove the dollar down.
The outlook for Fed rate cuts has shifted significantly in the past week—markets are now pricing in a much higher likelihood of policy easing before the end of the year. A rate cut in September is now fully priced in, while odds of a July cut rose to 25% compared to just 12% a week before. In addition, the probability of three rate cuts by the end of the year increased from 30.8% last week to 56.1% currently.
US President Trump publicly renewed his attacks on Fed Chair Powell last week, threatening to name a replacement by this fall. Powell maintained that rate cuts would be data-dependent and not driven by political pressure. US President Trump’s clash with Fed Chair Powell intensified market expectations of earlier Fed rate cuts in July and September.
Trump’s influence has opened a rift in the Fed. FOMC members Christopher Waller and Michelle Bowman, who have both been appointed by Trump, have advocated for a July rate cut, openly opposing Powell. Growing speculation that political pressure on the Fed may accelerate Fed easing put pressure on the dollar last week.
Meanwhile, the Iran-Israel ceasefire dampened safe-haven demand, further weakening the dollar.
On the data front, Core PCE Price Index, the Fed’s preferred inflation gauge, came in higher than expected on Friday. Core PCE rose by 0.2% in May, picking up from 0.1% in April, exceeding expectations of 0.1% growth. On an annual basis, core inflation ticked up to 2.7% from 2.6% in. The data indicated that price pressures remain sticky, reinforcing the Fed’s cautious stance. The progress of disinflation in the US is stalling, and policymakers will likely delay rate cuts until more headway has been made.
US Flash PMIs in June beat expectations, providing support for the dollar. Manufacturing PMI came in at 52.0 versus 51.1 expected, while Services PMI came in at 53.1 against 52.9 expected, which was softer, however, than last month’s reading of 53.7.
US CB Consumer Confidence plummeted to 93.0 in June, a significant decline from May’s 98.4 print, missing forecasts of 99.4.
Final US GDP for the first quarter of the year came in lower than expected, showing a 0.5% contraction, down from initial estimates of 0.2%. Concerns that the US economy may be entering recession put pressure on the dollar last week.
US headline inflation eased to 2.4% Year-on-Year in May, missing forecasts of 2.5%. Monthly CPI rose by just 0.1% against 0.2% expected. Core CPI, which excludes food and energy, held steady at 2.8% annually, missing estimates of 2.9%. Monthly core CPI rose by 0.1%, far softer than the 0.3% forecast.
Markets gear up ahead of a data-intensive week for the US. Key releases this coming week include the following:
EUR/USD surged from 1.148 to 1.175 last week, touching its highest level since August 2021. If the EUR/USD pair declines, it may find support at 1.120, while resistance may be encountered near 1.180.
The Euro traded lower last week, on disappointing Eurozone economic data and reduced ECB rate cut expectations.
The ECB delivered another rate cut at its June meeting, lowering its main refinancing rate for the eighth consecutive time. ECB policymakers reduced the benchmark interest rate by 25 basis points to 2.5%. ECB President Christine Lagarde emphasized a data-dependent approach moving forward. ECB policymakers have expressed a cautious approach regarding future rate cuts and are moving towards policy normalization.
Markets' odds of another rate cut in July are low, with consensus leaning toward a final 25 bp rate cut in September. ECB Vice-President Luis De President de Guindos stated last week that Euro Area inflation has dropped close to the central bank’s target but warned that future rate moves will depend on trade developments and especially on US tariff policy. ECB’s Klas Knot hinted that at least one more interest rate cut of 25 basis points is anticipated toward the end of 2025.
Eurozone PMI releases on Monday revealed weak business momentum. Eurozone Manufacturing PMI in June came in at 49.4 versus 49.6 expected. The EU manufacturing sector remained in contractionary territory, with a print below the threshold of 50.0 that denotes industry expansion. Services PMI rose to 50.0 in June from 49.7 previously, entering expansionary territory, which was in line with expectations. These underwhelming PMI readings reinforced expectations that the ECB will pause its easing cycle.
Positive German Ifo business climate data on Tuesday propped up the Euro. German Ifo business climate rose to 88.4 in June from 87.5 prior, beating expectations of 88.1. This marks the sixth consecutive monthly rise, reinforcing signs German economy may be stabilizing, supporting the euro.
Euro area inflation eased to 1.9% in May, dipping below the ECB’s 2% target and reinforcing expectations that the central bank is leaning toward a pause in rate cuts. Core CPI, which excludes food and energy, rose by 2.3% annually in May, down from a previous print of 2.7%. Cooling inflationary pressures are giving the ECB some leeway in its monetary policy decisions.
Eurozone GDP for the first quarter of 2025 was revised upward to reflect 0.6% expansion, up from 0.3% previously, beating the 0.4% consensus. The upward revision highlights resilience amid global trade headwinds.
GBP/USD rose to 1.376 last week for the first time since September 2021. If the GBP/USD rate goes up, it may encounter resistance at 1.363, while support may be found near 1.386.
Bank of England policymakers decided to hold rate cuts in a closely split vote in June. MPC members voted to keep interest rates steady at 4.25%, with the vote split 6–3 in favor of holding rate cuts.
BOE Governor Andrew Bailey’s post-meeting speech was slightly dovish, hinting at a gradual, data‑driven easing path, but cautioning that this isn’t a signal for an immediate rate cut. Bailey advocated for a slow and measured easing, highlighting labor market softness and rising energy risks tied to geopolitical instability. Markets are pricing in 2-3 rate cuts this year, with the first cut expected in August or September.
The Sterling remained firm overall last week, supported mainly by BOE Bailey’s cautious rhetoric. Bailey’s testimony on Tuesday before the House of Lords Economic Affairs Committee attracted considerable market attention. Bailey warned of UK labor‑market softening and uncertain economic growth. Bailey’s speech reinforced market speculation of late‑summer rate cuts, lending support to the Sterling.
Markets anticipate that the BOE will continue its easing cycle slowly and cautiously. In contrast, the Fed is seen as likely to cut rates more aggressively. The divergence in the policy outlook of the two central banks is weighing down the Sterling.
British headline inflation surged to 3.5% year-on-year in April, up from 2.6% in March and surpassing forecasts of 3.3%. The hotter-than-anticipated inflation data have dampened hopes for rate cuts shortly, with markets currently pricing in only one additional cut in 2025.
UK GDP contracted by 0.3% in April, sharply missing estimates of a 0.1% drop. The UK economic outlook is declining, marking the steepest economic contraction in 18 months. Quarterly GDP data, however, has been more upbeat. The British economy grew by 0.7% in Q1 2025, outperforming forecasts of 0.6% growth and marking the fastest growth among G7 nations.
USD/JPY dipped from 148.0 to 144.6 last week, driven mainly by the weakening dollar. If the USD/JPY pair declines, it may find support at 142.1. If the pair climbs, it may find resistance at 148.0.
Last week, the Yen weakened amid a risk-off sentiment triggered by the de-escalation of the crisis in the Middle East, which weighed down safe-haven demand.
The Bank of Japan held its policy rate at 0.5% in June and confirmed a slowdown in its bond-buying taper beyond the fiscal year 2026. BOJ policymakers unanimously chose to slow the tapering of government bond purchases, cutting the quarterly pace by half starting in April 2026. This effectively signals a more gradual exit from the stimulus.
BOJ Governor Kazuo Ueda’s commentary struck a cautious tone, yet with growing emphasis towards Japan’s inflation. Ueda stressed that escalating global risks—like trade tensions and Middle East volatility—warrant a cautious policy shift. Ueda emphasized that future rate moves would be data-dependent and hinted at a readiness to raise interest rates should inflation continue to go up.
The BOJ Summary of Opinions released on Wednesday showed a policy split between Japanese policymakers. Some members argued in favor of maintaining the 0.5% rate due to US tariffs, while others called for a decisive hike. The report revealed a cautious stance, weakening the Yen, but the effect was temporary.
National core CPI came in at 3.7% Year on Year in May, surpassing expectations of 3.6% and marking the highest pace since January 2023. On Friday, Tokyo’s core CPI came in at 3.1% year-on-year in June, decelerating from 3.6% in May and missing estimates of 3.3%.
Markets anticipate that the BOJ will raise interest rates at least one more time this year. The BOJ is expected to raise interest rates by approximately 75 basis points in the next two years, which will bring the central bank’s peak rate to 1.25%.
Japan's economy remained stagnant in the first quarter of 2025, exceeding the anticipated 0.2% decline. On an annualized basis, GDP shrank by 0.2%, compared to -0.7% in the previous reading. The BOJ may delay interest rate hikes further to support the country’s weakening economy, especially if trade tensions rise.
Gold prices remained bearish last week, dropping from $3,390 to $3,270 per ounce. If gold prices rise, they may encounter resistance at $3,450 per ounce, while if gold prices decline, support may be encountered near $3,244 per ounce.
Last week, gold declined for the second straight week, as easing geopolitical tensions reduced safe-haven demand, lowering gold's appeal.
The crisis in the Middle East showed signs of de-escalation last week after a ceasefire between Israel and Iran was announced.
Gold prices have typically been directed by the dollar’s movement, as the competing dollar typically loses appeal as an investment when the dollar rises. The dollar plummeted to multi-year lows last week, as Fed rate cut expectations went up, boosting gold prices. The dollar index ended the week at 97.25, its lowest level since January 2022. U.S. Treasury yields edged lower, with the US 10-year bond yield sliding from 4.38% to 4.35%.
Gold prices are supported by rising Fed rate cut expectations. The Fed held interest rates steady at 4.25–4.50% in June, as expected. The dollar rallied post-meeting as markets digested the Fed’s June decision and dot‑plot update.
The Fed also updated its dot-plot, which summarizes policymakers’ projections of interest rates for the remainder of the year and into 2026. The Fed’s dot-plot maintained forecasts of two more rate cuts in 2025 despite upward inflation revisions.
Fed Chair Powell’s post-meeting press conference held hawkish undertones, hinting that policymakers remain cautious and are willing to wait before cutting interest rates again. The outlook for Fed rate cuts has shifted significantly in the past week—markets are now pricing in a much higher likelihood of policy easing before the end of the year. A rate cut in September is now fully priced in, while odds of a July cut rose to 25% compared to just 12% a week before. In addition, the probability of three rate cuts by the end of the year increased from 30.8% last week to 56.1% currently.
Oil prices plummeted on easing geopolitical tensions last week, and WTI dropped from $77.7 to $66.1 per barrel. If oil prices retreat, they may encounter support near $60.0 per barrel, while resistance may be found near $80.0 per barrel.
Oil prices plummeted last week, and WTI marked its steepest weekly drop in over two years. The crisis in the Middle East showed signs of de-escalation last week after a ceasefire between Israel and Iran was announced.
The US Energy Information Administration announced a surprising 5.8M barrel draw for the week to Friday, June 20. This exceeded expectations of a 1.2M draw, raising supply concerns and providing support for oil prices.
Oil prices are kept in check by high central bank interest rates. The Fed held interest rates steady at 4.25–4.50% in June, as expected. The dollar rallied post-meeting as markets digested the Fed’s June decision and dot‑plot update.
The Fed also updated its dot-plot, which summarizes policymakers’ projections of interest rates for the remainder of the year and into 2026. The Fed’s dot-plot maintained forecasts of two more rate cuts in 2025 despite upward inflation revisions.
Fed Chair Powell’s post-meeting press conference held hawkish undertones, hinting that policymakers remain cautious and are willing to wait before cutting interest rates again. The outlook for Fed rate cuts has shifted significantly in the past week—markets are now pricing in a much higher likelihood of policy easing before the end of the year. A rate cut in September is now fully priced in, while odds of a July cut rose to 25% compared to just 12% a week before. In addition, the probability of three rate cuts by the end of the year increased from 30.8% last week to 56.1% currently.
Bitcoin price rose sharply from $100,700 to $107,000 early last week and touched the $108,000 mark over the weekend. If BTC price declines, support can be found at $98,000, while resistance may be encountered at $110,500.
Ethereum rose to $2,400 early in the week and hovered around $2,430 over the weekend. If the Ethereum price declines, it may encounter support near $2,100, while if it increases, it may encounter resistance near $2,875.
Bitcoin rallied strongly last week, as easing geopolitical tensions gave rise to a risk-on sentiment, and Bitcoin price surged to above $107,000. The announcement of a ceasefire between Iran and Israel improved market sentiment, raising the appeal of cryptocurrencies.
Cryptocurrency prices are affected by central banks’ interest rates. The Fed held interest rates steady at 4.25–4.50% in June, as expected. The dollar rallied post-meeting as markets digested the Fed’s June decision and dot‑plot update.
The Fed also updated its dot-plot, which summarizes policymakers’ projections of interest rates for the remainder of the year and into 2026. The Fed’s dot-plot maintained forecasts of two more rate cuts in 2025 despite upward inflation revisions.
Fed Chair Powell’s post-meeting press conference held hawkish undertones, hinting that policymakers remain cautious and are willing to wait before cutting interest rates again. The outlook for Fed rate cuts has shifted significantly in the past week—markets are now pricing in a much higher likelihood of policy easing before the end of the year. A rate cut in September is now fully priced in, while odds of a July cut rose to 25% compared to just 12% a week before. In addition, the probability of three rate cuts by the end of the year increased from 30.8% last week to 56.1% currently.
BTC/USD 1h Chart
ETH/USD 1h Chart
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Written by:
Myrsini Giannouli
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