Fed Rate Cut Speculation Weighs on Dollar (06.30.2025)

The US dollar weakened across the board as markets grew more confident in a potential Fed rate cut, following disappointing personal spending and income data.

The euro climbed to 1.1720, while the yen approached 144, supported by fiscal concerns and dovish Fed sentiment. GBP/USD edged higher ahead of UK GDP, aided by persistent inflation and political tensions. Gold fell toward a one-month low as easing geopolitical risks and a US-China trade deal dampened safe-haven demand. Meanwhile, silver rebounded above $36 with a softer dollar and lingering trade uncertainty.

Time	Cur.	Event	Forecast	Previous
06:00	GBP	GDP (YoY) (Q1)	1.30%(Act)	1.50%
12:00	EUR	German CPI (YoY) (Jun)	2.20%	2.10%
13:45	USD	Chicago PMI (Jun)	42.7	40.5
14:00	USD	FOMC Member Bostic Speaks
17:30	EUR	ECB President Lagarde Speaks

EUR/USD Climbs on Weak Spending Data

The EUR/USD pair rose to 1.1720 during early Asian trading this Monday, supported by an underperforming US dollar. The Greenback came under pressure as markets grew more confident that the Federal Reserve is most likely to begin cutting rates in September.

Friday’s data showed US personal spending unexpectedly declined in May while personal income marked the sharpest decline since September 2021, falling by 0.4%.

Focus in Europe turns to Germany’s upcoming retail sales and CPI data. ECB Governing Council member Klaas Knot stated Friday that the current interest rate is appropriate, but hinted at one more 25 basis point cut by the end of 2025. Markets still believe there will only be one ECB rate cut over the next year, with rates expected to bottom at 1.75%.

Resistance for the pair is at 1.1745, while support is at 1.1630.

R1: 1.1745	S1: 1.1630
R2: 1.1800	S2: 1.1550
R3: 1.1900	S3: 1.1450

Fed Dovishness Supports Yen Upside

The Japanese yen climbed toward the 144 level as the dollar weakened with a dovish outlook from the Federal Reserve, increasing concerns over the US fiscal position, and lingering trade uncertainties. This week’s US employment data might reveal signs of a cooling labor market.

In Japan, industrial production in May rose less than expected, with high US tariffs continuing to weigh on economic prospects. The ongoing 25% tariff on Japanese automobile exports remains a major concern in trade negotiations between the US and Japan, with little reported progress. Tuesday’s Bank of Japan Tankan survey will offer fresh perspectives on business sentiment and the overall economic outlook.

The key resistance is at $145.70, the major support is located at $143.55.

Investor Confidence Pressures Gold Prices

Gold continued to fall around $3,265 during Monday’s early Asian session. The drop brought the precious metal to nearly a one-month low, with the recent US-China trade agreement that encouraged investor confidence and overshadowed the precious metal’s appeal.

The agreement reached last week between the US and China to accelerate rare earth exports to the US was welcomed by the market, another factor that damaged gold’s appeal. The recent ceasefire between Iran and Israel also added pressure on gold prices.

Daniel Pavilonis, senior market strategist at RJO Futures, commented that the easing of geopolitical risks has prompted some investors to secure profits, as expectations of a sudden conflict with China or renewed unrest in the Middle East have decreased.

Resistance is at $3,300, while support holds at $3,250.

Strong UK Data Expectations Lift GBP/USD

GBP/USD edged higher to around 1.3720 before the UK’s Q1 GDP release. The pair was supported by a weaker US dollar.

On Friday, US data revealed that personal spending unexpectedly declined in May for the second time this year while personal income fell 0.4%. The US labor market data due this week, including the June payrolls report, could influence the Fed’s policy direction. Economists expect 110,000 new jobs, down from May’s 135,000, with unemployment forecast to rise slightly to 4.3%.

The British Pound also found support from the Bank of England’s cautious approach to rate cuts, as UK inflation, particularly core inflation, remains persistent. This has made policymakers hesitant to loosen monetary policy too quickly.

On the political front, tensions within the UK’s ruling Labour Party intensified after Prime Minister Keir Starmer scaled back welfare reform plans in response to opposition from over 100 MPs, who objected to proposed £5 billion annual cuts to welfare spending.

Resistance is seen at 1.3760, while support holds at 1.3620.

Silver Gains on Trump’s Tariff Pause Deadline

Silver traded around $36.20, recovering losses from the previous session as the US dollar weakened with growing expectations of a more dovish Federal Reserve, rising fiscal concerns. The softer dollar made silver more attractive to holders of other currencies.

Trump’s deadline next week for the 90-day pause on his reciprocal tariffs will shed light on the upcoming trade developments. In a related move, Canada announced that the country would withdraw its digital services tax targeting US tech firms after Trump threatened to halt all trade talks with Ottawa.

Resistance is seen at 36.85, while support holds at 35.40.