Risk Sentiment Improves; Dollar Down (06.25.2025)

The yen held firm near recent highs with BOJ caution and demand. Gold rebounded to $3,330 as ceasefire fragility and diverging Fed views stirred uncertainty, while GBP/USD neared 1.3650, its highest since February 2022. Silver continued to outperform gold, climbing toward $36, driven by solid industrial demand and a weaker dollar.

EUR/USD Nears 1.1620 Before Powell’s Testimony

EUR/USD edged up to 1.1615 in early European trading on Wednesday, supported by improved risk sentiment after Israel and Iran signaled an end to their air conflict. The truce, backed by pressure from President Trump, increased appetite for risk assets, favoring the euro over the dollar.

All eyes are now on Fed Chair Jerome Powell, who reiterated on Tuesday that monetary policy will remain data-driven. However, comments from Kansas City Fed President Schmid hinted at caution due to tariff-driven inflation. While markets expect a rate cut in September, July odds have edged slightly higher.

Resistance is at 1.1630, while support is at 1.1530.

Ceasefire Supports Yen’s Strength

The Japanese Yen stayed strong near a one-week high around 145.5 on Wednesday, supported by risk-off sentiment and dovish commentary from the Bank of Japan. Several BOJ members favored steady rates with concerns over U.S. tariffs and their impact on Japan’s economy.

May’s Services PPI remained above 3% yearly, strengthening speculation that the BOJ could still raise rates later this year. Meanwhile, lingering geopolitical uncertainty and expectations of Fed rate cuts continued to pressure the US Dollar.

The key resistance is at $146.20, and the major support is at $144.85.

Gold Rebounds on Ceasefire Fragility

Gold edged back up to around $3,330, recovering from a two-week low. While the Israel-Iran ceasefire brought temporary calm, a US intelligence report showed that Iran’s nuclear progress was only briefly disrupted, raising concerns about renewed tensions.

Fed Chair Powell adopted a cautious stance, saying rates would likely stay unchanged for now, though a July cut remains possible. Diverging views among Fed members on inflation and job data may limit gold’s upside in the near term.

Resistance is seen at $3,355, while support holds at $3,285.

Risk Sentiment Improves, GBP/USD Nears 1.3650

GBP/USD extended its rally for a third session, trading around 1.3620 and holding close to Tuesday’s high of 1.3648, its strongest level since February 2022. The pair continues to benefit from improved risk appetite as Middle East tensions ease following Trump’s announcement of a ceasefire between Iran and Israel.

Despite the initial increase, investors remain cautious as doubts persist over the ceasefire’s durability and potential nuclear negotiations with Iran. Focus is also on Iran’s enriched uranium stockpile, which continues to raise geopolitical concerns.

Meanwhile, Powell, in his congressional testimony, signaled that rate cuts are unlikely before Q4. He acknowledged that new tariffs could push inflation higher from June but maintained that the Fed is prepared to ease policy once conditions allow.

Resistance is seen at 1.3655, while support holds at 1.3540.

Silver Outperforms Gold, Eyes $36

Silver climbed back toward $36, bouncing from over two-week lows on falling Treasury yields and a softer dollar. While the Israel-Iran ceasefire remains shaky, Fed Chair Powell said “many paths are possible,” hinting at a flexible rate stance depending on job market data.

Strong industrial demand and tight supply continue to support silver, which is up nearly 9% in June, far outpacing gold’s modest gains.

Resistance is seen at 37.50, while support holds at 35.40.