Federal Reserve and the European Central Bank
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The first half of 2025 has officially come to a close and market participantsnow have the eyes on the remaining months of the year, with key points that ended June now rolling over. A few highlights to close the first half were the United States non-farm payrolls posting a gain of 147,000 jobs, while the Unemployment rate edged lower to 4.1 percent. This has lowered traders probability of the Federal Reserve cutting rates to barely 5 percent from 25 percent the week prior. Chair Powell reinforced that policy makers would take a “wait and learn more” approach.
Meanwhile, the European Central Bank will approach its upcoming July 24th meeting with its headline inflation at the 2 percent target and the Governing Counci currently debating a pause after eight rate cuts in nine meetings. As of this writing, PIMCO’s Konstatin Veit and Reuters poll of 72 economists put the odds of a July rate cut below 30 percent.
In Tokyo, the Bank of Japan has slowed its quantitative-tightening; however, the central bank faces internal dissent from board members like Hajime Takata, who argues that the economy is at a “true dawn,” advising resuming hikes later in the year. Looking at the same Reuters poll as earlier, economists polled push the next increase into 2026.
EUR/USD Technical Analysis
Weekly Forex Pairs developments of EUR/USD, Sigmanomics analysis
In the Euro-zone headline HICP re-accelerated to 2.0 percent through June from the year prior, with core HICP expecting to come in at 2.4 percent for 2025 by the ECB staff. Adding to the fundamental picture is Deutsche Bank recently releasing that they expect Euro-area GDP growth of approximately 0.8-0.9 percent next year. With recent released minutes showing an internal debate regarding inflation, market participants are pricing in one more quarter point cut to 3.5 percent by end of 2025.
The technical picture shows a dominant euro versus the greenback, but the pair has stalled at the end of June 2025. This price action stall comes in at the 78.6 percent Fibonacci extension on the 2021 high to 2025 low. With trend line resistance also not to far away, bulls should caution add ons at these elevated levels, but may look at pullbacks as a opportunity.
AUD/USD Forex Pairs Techical Analysis
Weekly Forex Pairs developments of AUD/USD, Sigmanomics analysis
Inflation in Australia has tumbeld to its lowest level since October 2024, with a recent printof 2.1 percent in May compared to the same time period one year earlier. Labor markets are tight but seem to be cooling. Looking ahead, economists are forecasting the cash rate to settle at 2.85 percent by mid-2026.
From a technical analysis perspective, the aussie compared to the greenback still remains confined by its descending weekly trendline that has developed since 2021. Key level to watch will be 0.68 as the zone marks trend line ceiling and psychological resistance. Not to overlook, forex.com marks “bullish breakout pending” if 0.6670 gives away; cloud support at 0.6450.
USD/JPY Technical Analysis
Weekly analysis of USD/JPY, Sigmanomics
Fundamentally, the Bank of Japan’s members have been debating whether “decisive” hikes will be needed despite external uncertainties. With core CPI at 3.7 percent in May 2025 compared to a year ago and the tankan survey showing big manufactures sentiment up 13 points, economists forecast the next hik in January 2026. Further, Reuters poll of 144 economists see no BoJ hike this year.
Technically, the head and shoulders formation of the pair still resumes intact with bears looking for confirmation of a neckline breakout. As price actions hovers over this zone, market participants should not rule out a spike lower as similar cases in the past have occurred at major inflection points.
