Markets Shift on Political Upheaval and Fed Cut Bets (10.07.2025)

The euro fell to around $1.1705 after French Prime Minister Sébastien Lecornu and his cabinet abruptly resigned, sparking renewed political uncertainty in Europe. 

Meanwhile, the yen weakened toward 150.5 per dollar as Japan’s new pro-stimulus leader Sanae Takaichi took office, reinforcing expectations of looser fiscal policy. Gold approached record highs near $3,970 on safe-haven demand amid global unrest and U.S. rate-cut expectations, while silver surged to its highest level since 2011 above $48.3 per ounce. The pound edged lower to $1.3470 as investors weighed persistent U.K. inflation and cautious BoE signals.

Euro Falls After French PM Resigns

In Tuesday’s Asian session, EUR/USD fell to around 1.1705 as the euro weakened against the US dollar after France’s newly appointed Prime Minister Sebastien Lecornu and his cabinet resigned only hours after presenting the new government lineup.

Technically, 1.1685 is the key support, while resistance is seen at 1.1755 and then 1.1810.

JPY Falls as Pro-Stimulus Leader Takes Office

The yen fell to around 150.5 per dollar on Tuesday, its lowest in over two months, after pro-stimulus candidate Sanae Takaichi won the LDP leadership race, paving the way for her to become Japan’s next prime minister. Her win raised expectations of major fiscal spending and continued loose policy. Meanwhile, BoJ Governor Ueda said rate hikes remain possible if growth and inflation stay on track but noted that U.S. tariffs are pressuring exporters, especially automakers, though the broader impact is limited.

The resistance is at 150.90, while the support holds at 149.10.

Gold Nears Record on Fed Cut Bets and Global Unrest

Gold climbed to around $3,970 per ounce on Tuesday, nearing record highs amid economic uncertainty and expectations of further U.S. rate cuts. Concerns over the U.S. government shutdown and political turmoil in France and Japan increased safe-haven demand. Markets now price in two more 25-basis-point Fed cuts, with 95% odds for October and 83% for December. Gold has surged over 50% this year, supported by Fed easing expectations, strong central bank buying, and rising ETF inflows.

From a technical perspective, support is around 3900, and resistance is at 3950.

GBP/USD Pulls Back, Supported by BoE’s Inflation Caution

GBP/USD fell to around 1.3470 on Tuesday, ending a two-day rise. The pair may find support as investors stay cautious about the BoE’s stance amid persistent inflation and a cooling labor market. The BoE expects inflation to peak near 4% in September, while officials warned that recent price shocks may not be temporary, signaling a cautious policy outlook.

Technically, support is at 1.3405, with a break lower exposing 1.3325. Resistance sits at 1.3495 and 1.3525.

Shutdown Uncertainty Lifts Silver

Silver climbed above $48.3 per ounce, its highest since April 2011, driven by safe-haven demand amid the U.S. government shutdown and expectations of more Fed rate cuts. Lawmakers failed to pass a funding deal, delaying key data like September’s jobs report. Markets now price in 25-bp cuts in both October and December, while investors await comments from Fed officials this week. Tight supply also supports prices, with the Silver Institute projecting a fifth straight global deficit in 2025.

From a technical perspective, resistance is observed at 48.75, while support is located at 47.95.