During the Asian session on Thursday, USDJPY plunged significantly, breaking below the 144.00 level, due to the widespread selling of the US dollar and the upward pressure on the asset from rising inflation in Japan.

Data from Japan's Ministry of Internal Affairs and Communications shows that rents in Japan's capital region rose by 1.3% year-on-year from April to May this year, the largest increase since 1994. Although this increase may seem modest compared to Tokyo's core inflation rate of 3.6% and the global surge in housing rents, it signifies that the inflationary cycle has finally penetrated Japan's rental market. The widespread increase in rents and prices provides the BoJ with grounds for further interest rate hikes.

Market observers note that the rise in rents confirms the so-called normalization shift by the central bank, which is indeed one of the signs of a rise in underlying prices and may drive the normalization process of monetary policy. Previously, in its semiannual financial system report, the BoJ had listed the real estate market as a key issue requiring close monitoring.

According to the summary of opinions from the BoJ's June meeting, the committee members discussed the issue of inflation rising faster than expected, while they continued to believe it was necessary to remain vigilant about the high uncertainty related to US tariffs.

One of the nine committee members stated, "Although prices are slightly higher than expected, given the downside risks to economic activity brought by US tariff policies and the situation in the Middle East, it is appropriate for the central bank to maintain its current stance on monetary policy implementation." Others also mentioned that the inflation rate was higher than expected.

Although the summary indicates that the urgency for interest rate hikes is not significant at present, the members' general view that inflation is higher than expected increases the likelihood of the BoJ raising the benchmark interest rate when the uncertainty of tariff impacts begins to dissipate.

Data released last Friday showed that Japan's main price index hit a two-year high, and the BoJ's inflation outlook suggests that the bank may raise its inflation forecast in the quarterly economic report at its July meeting.

USDJPY continued to be sold off on Thursday, but the intraday trend remained upward due to the oversold indicators. As long as the support level at 142.10 holds, USDJPY is expected to rise further, albeit modestly. On the upside, a break above 148.64 would restart the rally from 139.87.

However, given the relatively favorable fundamentals for the yen and the head-and-shoulders top pattern still in place on the daily chart, we anticipate that after a brief rebound, the bears will continue to dominate.

Trade Direction: Sell

Entry Price: 145.18

Target Price: 142.40

Stop Loss: 146.80

Valid Until: July 11, 2025 23:55:00

Support: 143.75/143.36/142.79

Resistance Levels: 144.51/144.90/145.46

The British Pound rallied sharply against the US Dollar on Thursday, breaking toward multi-month highs, as growing uncertainty around U.S. Federal Reserve leadership, coupled with mixed economic data, sent the greenback tumbling. At the heart of the move was a Wall Street Journal report stating that President Donald Trump may announce a replacement for Fed Chair Jerome Powell by as early as September or October — a headline that caught markets off guard and injected a fresh layer of political risk into the Fed’s already delicate forward guidance.

At the time of writing, the GBP/USD pair trades at 1.3746, marking a 0.61% daily gain and climbing to levels not seen since late 2021. Sterling’s strength has been aided by a combination of relative calm in UK macroeconomic news and renewed pressure on the Dollar as investors reassess the trajectory of U.S. monetary policy amid growing political noise.

According to the WSJ article, the Trump administration is actively considering candidates to replace Jerome Powell, whose term ends in early 2026. Potential contenders reportedly include former Fed Governor Kevin Warsh, National Economic Council Director Kevin Hassett, and Treasury Secretary Scott Bessent. While no formal decisions have been made, the prospect of a leadership shakeup has unsettled investors, as it raises questions over future Fed independence, policy continuity, and how a new chair might approach inflation and employment mandates in a politically charged election year.

The uncertainty surrounding Powell’s future has compounded pressure on the U.S. Dollar, which was already grappling with mixed data releases. Markets now face the confusing scenario of needing to monitor both Powell’s statements and possible early signals from a successor, should the nomination process move ahead sooner than expected.

Adding fuel to the fire, Powell testified before Congress this week, reiterating that the central bank is in wait-and-see mode, monitoring the lingering impact of U.S. tariff policies on inflation. He hinted that should inflation prove transitory and decline sustainably, rate reductions could be considered — a dovish tilt that markets are increasingly interpreting as the groundwork for easing later in the year.

Economic indicators released on Thursday painted a mixed picture of U.S. growth. While Durable Goods Orders surged by a stunning 16.4% in May — driven largely by a spike in commercial aircraft orders — the broader macro landscape looks less rosy. Revised data from the Bureau of Economic Analysis showed that Q1 2025 GDP contracted by -0.5% quarter-on-quarter, more than double the initial -0.2% print. This marks the weakest quarterly performance since early 2023 and raises concerns that the U.S. economy may be losing momentum faster than previously expected.

Meanwhile, Initial Jobless Claims dropped to 236,000 for the week ending June 21, beating expectations and the prior week’s 245,000 reading. However, two of the last three weekly reports came in higher than forecast, suggesting that the labor market may be cooling — albeit gradually. Together, the GDP miss and Powell’s remarks reinforced market expectations that the Fed could begin cutting rates later this year, pressuring Treasury yields and the U.S. Dollar.

On the UK front, the economic calendar was light, though Bank of England Governor Andrew Bailey delivered remarks that reaffirmed a slow and steady path toward easing. Bailey emphasized that while inflation is moving in the right direction, policy still needs to remain “restrictive for sufficiently long” to ensure inflation returns to the 2% target. He also underlined that rate cuts, when they come, would follow a “gradual and careful” trajectory.

Markets are currently pricing in a 76% probability of a rate cut at the BoE’s August meeting, according to OIS futures — a dovish shift that would typically weigh on the Pound. Yet, GBP/USD surged regardless, driven more by Dollar fragility than domestic optimism.

Some strategists warn that Sterling’s strength may be short-lived. Nick Rees, Head of Macro Research at Monex, told Bloomberg, “I think once things calm down and markets have a little bit more time to focus on the UK fiscal situation, I think big downside risk is building for the Pound that could start to play out in the weeks ahead.” Concerns over persistent deficits, soft productivity, and political uncertainty may eventually reassert downward pressure on Sterling.

From a technical standpoint, the GBP/USD pair continues to post higher highs, riding a strong uptrend bolstered by its position above the 50-day exponential moving average (EMA) and a rising bias line. Despite the RSI flashing overbought signals, bullish momentum appears intact, supported by positive divergence and growing investor appetite for risk assets amid Dollar weakness.

The pair has cleared multiple resistance levels and appears poised to challenge the 1.3800 zone, a psychological barrier last tested in early 2021. Should price action extend above this level, further gains could open toward the 1.3865 region, followed by the 1.4000 handle.

On the downside, initial support lies around the 1.3660 area — a prior breakout point and the location of the 9-day EMA. A break below this level could expose the pair to a corrective move toward the 1.3550 zone, which coincides with stronger structural support.

BUY GBPUSD

ENTRY PRICE: 1.3750

STOP LOSS: 1.3550

TAKE PROFIT : 1.4000

The U.S. Dollar came under heavy pressure on Thursday, reversing its modest recovery from the previous session as a complex blend of political tensions, macroeconomic risks, and monetary policy uncertainty sparked a sharp deterioration in investor sentiment. The catalyst for the renewed selloff was a fresh round of attacks from President Donald Trump targeting the independence of the Federal Reserve, a move that significantly undermined confidence in the credibility of U.S. monetary policy at a time when economic fragility is becoming more apparent.

According to reports from Washington insiders, Trump has recently escalated his rhetoric against Fed Chair Jerome Powell, allegedly using derogatory language and even entertaining the idea of replacing Powell before the end of his term. While the president has long been critical of the central bank's policy stance, the prospect of actively pursuing Powell’s dismissal represents a profound breach of the long-standing norms separating politics from monetary governance. Markets interpreted the remarks as an overt threat to institutional stability, prompting an immediate and sharp retreat in the dollar across the board.

This political drama unfolded just as Powell reiterated the Fed’s cautious tone regarding interest rates. In his latest public appearance, the Fed Chair suggested that the central bank remains in a strong position to manage inflation, even as the effects of U.S. tariffs continue to ripple through the economy. He offered no firm signal that a rate cut was imminent, instead emphasizing the Fed’s commitment to a data-driven approach.

Despite Powell's remarks, traders increasingly believe that policy easing is on the horizon. Expectations for a rate cut have surged in recent days. The CME FedWatch Tool shows that markets are now pricing in a 24% probability of a rate cut in July, up from just 14% a week ago. For September, the odds have soared to 90%, compared to 65% in the prior week. The spike in rate-cut bets is being driven not only by political pressure but also by fears that the administration’s escalating trade policy could push the U.S. economy into a period of stagflation—characterized by slowing growth and rising inflation.

Those fears were echoed by a recent report from JP Morgan, which warned that the imposition of unilateral tariffs could erode consumer and business confidence, slow investment, and feed into inflation through higher import costs. The bank raised its probability of a U.S. recession in the second half of 2025 to 40%, citing growing stagflationary pressures as the key risk factor.

Against this backdrop, the U.S. Dollar has lost favor even as global geopolitical tensions persist. The Dollar Index, which measures the greenback against a basket of major currencies, has broken below recent support levels. Demand has shifted toward currencies perceived to have more stable policy environments, despite broader market uncertainty.

One notable outperformer has been the Canadian Dollar. Despite a more than 16% collapse in crude oil prices—Canada’s primary export—the Loonie has gained nearly 0.5% against the U.S. Dollar this week. This divergence from traditional correlations suggests growing investor confidence in the relative strength of Canada’s macroeconomic fundamentals and its central bank’s policy discipline.

USD/CAD has been trading on the back foot, slipping toward critical support near the 1.3450 level. Technical signals point to further weakness ahead. The pair recently formed a head and shoulders reversal pattern, a classic bearish setup that signals an end to upward momentum. Additionally, the 50-day exponential moving average has moved above current price levels, a bearish crossover that indicates downside pressure is increasing.

Bearish engulfing candles have appeared on the daily chart, reinforcing the view that sentiment is turning against the greenback. Momentum indicators also show a shift in favor of sellers, and the price is now hovering near a potential break of market structure. A fair value gap has emerged just above the current level, suggesting that price may be seeking equilibrium at lower levels.

A descending trendline has consistently rejected upside attempts, further confirming that bulls have lost control. If the pair decisively breaks below 1.3450, technical momentum could drive it toward the 1.3380–1.3400 range. Conversely, any bounce is likely to face stiff resistance around 1.3560, the neckline of the head and shoulders pattern and a former support zone now acting as a ceiling.

SELL USDCAD

ENTRY PRICE: 1.3650

STOP LOSS: 1.3780

TAKE PROFIT: 1.3400

Gold prices attracted buying interest for a second consecutive day on Thursday, maintaining upward momentum during the European session. Sustained US Dollar selling momentum provided underlying support.

The divergence between falling safe-haven demand and sustained buying interest reflects a significant shift in market dynamics. Gold investors are increasingly positioning around monetary policy expectations rather than purely crisis-driven demand. This marks a broader trend toward more nuanced risk assessments and strategic asset allocations.

Federal Reserve Chair Jerome Powell, in his second day of testimony before Congress, defended the Fed’s cautious stance on interest rates, citing considerable uncertainty regarding the inflationary effects of tariffs. Powell acknowledged that tariff-driven price increases might prove transitory, but emphasized that the Fed must prepare for the possibility of more persistent inflation. “As the people who are supposed to keep stable prices, we need to manage that risk. That's all we're doing.” he said.

Powell stressed that the Fed is navigating largely uncharted territory, warning that the potential scale of new tariffs far exceeds those implemented during Trump’s first term — and that those earlier actions occurred in a low-inflation environment. “There is not a modern precedent.” he cautioned, advising against premature policy adjustments in the absence of clearer economic signals. On tariff-related inflation, Powell remarked: “If it comes in quickly and it is over and done then yes, very likely it is a one-time thing.” However, if the Fed misjudges the situation, “People will pay the cost for a long time.”

Investors appear to bet that political pressure, economic uncertainty, and Fed caution will ultimately favor looser policy. This suggests gold’s role as an inflation hedge and currency debasement protection remains attractive even with diminished traditional safe-haven demand.

Turning to price action: gold saw renewed buying interest on Thursday. However, a key bearish trendline is forming, with resistance near the $3360 level. A decisive break above this resistance could open further upside potential. The next major hurdle is around $3378, and beyond that, prices could revisit the $3400 handle.

Nonetheless, given gold’s historically poor performance in the month of June, upside momentum is likely to face significant headwinds. The path of least resistance remains to the downside.

Trade Direction: Sell

Entry Price: 3358

Target Price: 3259

Stop Loss: 3398

Valid Until: July 11, 2025 23:55:00

Support: 3329/3323/3295

Resistance Levels: 3350/3356/3360

The Swiss Franc extended its powerful rally on Thursday, breaching levels not seen in over two and a half years, as growing political turmoil in Washington accelerated the U.S. Dollar’s retreat across global markets. The USD/CHF currency pair tumbled sharply below the key psychological threshold of 0.8000, driven by investor angst over the Federal Reserve’s independence following a barrage of incendiary remarks from President Donald Trump.

Market participants scrambled into traditional safe-haven assets, with the Swiss Franc—often viewed as a shelter during times of geopolitical and institutional uncertainty—emerging as a top performer. The move marked a continuation of the “sell America” trade that has gained momentum in recent weeks as the U.S. Dollar’s credibility erodes under political interference and policy unpredictability.

Tensions between the White House and the Federal Reserve escalated dramatically on Wednesday after President Trump launched a blistering attack on Fed Chair Jerome Powell, labeling him “terrible” and “an average mentally person.” Trump went so far as to float the idea of publicly announcing Powell’s successor ahead of the scheduled end of his term in May next year—a suggestion that sent shockwaves through financial markets.

Such a move would be highly irregular and legally questionable, potentially creating a "shadow chair" that undermines the Fed's operational credibility. Investors viewed the remarks as a direct challenge to the independence of one of the world’s most powerful and respected central banks—an institution designed to be shielded from short-term political pressures in order to ensure long-term economic stability.

The market reaction was swift and brutal. Yields on U.S. Treasuries sank, risk sentiment deteriorated, and the U.S. Dollar came under intense selling pressure. The Swiss Franc, along with gold and the Japanese Yen, attracted heavy inflows as traders de-risked their portfolios.

Despite mounting political pressure, Fed Chair Jerome Powell has maintained a measured and deliberate tone. In his semiannual testimony to Congress earlier this week, Powell defended the central bank’s “wait-and-see” posture, emphasizing the importance of reacting to data rather than speculation.

Powell underscored that inflationary pressures—particularly those stemming from new and proposed trade tariffs—remain a real concern, and premature rate cuts could undermine the Fed’s credibility in anchoring inflation expectations. His stance came under fire from several Republican senators, who accused him of political bias, a charge Powell flatly denied.

Analysts suggest that while Powell’s commitment to central bank independence remains unwavering, the political noise surrounding the Fed is becoming a material risk in itself. The very notion of presidential interference in monetary policy—especially through the threat of an early replacement—risks institutional erosion and could diminish the Dollar’s long-held status as the global reserve currency.

Adding to the Dollar’s woes is the looming threat of unilateral tariffs. With a critical June 9 deadline fast approaching and no signs of resolution on key trade fronts, investors are bracing for another round of damaging import levies. These fears are magnified by recent soft U.S. economic data, which suggest that the post-pandemic growth cycle may already be losing steam.

In this environment, the combination of institutional instability, trade-related risks, and political volatility is accelerating the exodus from Dollar-denominated assets. The Swiss Franc, by contrast, is benefiting from Switzerland’s political neutrality, stable economic fundamentals, and historical role as a safe-haven currency.

From a technical standpoint, the breakdown in USD/CHF has opened the door to deeper losses. The pair decisively breached the key support level at 0.8055 during Thursday’s session, a level that had served as a floor for the past few weeks. The move confirmed the dominance of the prevailing bearish trend and was further supported by negative signals on the Relative Strength Index (RSI), which has turned lower after resetting from oversold conditions.

The Franc’s advance gained traction after rejecting off a key pivot level at 0.8070, now confirmed as near-term resistance. Price action suggests the pair is targeting the next support zone at 0.7962, with a break below that likely opening the path toward 0.7900 and potentially the October 2021 lows.

Should any signs of stabilization emerge, traders will watch the 0.8070–0.8100 zone closely for signs of a corrective bounce. However, as long as political instability dominates headlines and macroeconomic data supports a cautious Fed, the technical and fundamental bias for USD/CHF remains tilted to the downside.

SELL USDCHF

ENTRY PRICE: 0.8000

STOP LOSS: 0.8120

TAKE PROFIT: 0.7750

Starting June 23rd, the A-share market witnessed significant gains for three consecutive trading days. The Shanghai Composite Index climbed 2.86%, setting a new high for the year, the Shenzhen Component Index rose 3.88%, and the ChiNext Index surged 5.90%. This rally resulted from the convergence of multiple domestic and external factors:

Firstly, Iran-Israel Ceasefire:​​ An agreement between Iran and Israel significantly cooled geopolitical risks, despite minor subsequent friction. This prompted capital to flow back from safe-haven assets into equities. The ceasefire spurred a global rebound in risk assets, lifting major US indices, the Hang Seng Index, and Asia-Pacific markets. Foreign capital's appetite for Chinese assets strengthened. Data shows northbound capital recorded a net inflow exceeding CNY 12 billion on June 25th, hitting a nearly three-month high.

Secondly, the People's Bank of China (PBoC)'s Looser Policy Expectations Intensify:​​ On June 25th, the PBoC injected CNY 300 billion via its Medium-Term Lending Facility (MLF), resulting in a net liquidity injection of CNY 118 billion. Combined with CNY 200 billion in reverse repos, this brought the mid-June net liquidity injection to CNY 318 billion. The market anticipates a potential 0.5 percentage point reserve requirement ratio (RRR) cut and an interest rate cut by 30 basis points in H2 2025. These liquidity-easing expectations directly benefit financial heavyweights. Furthermore, six departments including the Financial Supervisory Administration jointly issued the "Guidance Opinions on Financial Support to Boost and Expand Consumption," explicitly promoting long-term capital inflows into the market and fostering stable capital market development. ​Regarding capital flows,​ margin financing balances have remained above CNY 1.8 trillion for 11 consecutive days. On June 25th, total trading volume on the Shanghai and Shenzhen exchanges surpassed RMB 1.6 trillion, expanding by over CNY 300 billion from the previous session. This indicates a synchronized recovery in leveraged capital and retail investor sentiment.

Notably, institutions like Goldman Sachs and UBS have upgraded their ratings on A-shares, forecasting the CSI 300 to reach a target level of 4,600 points, implying about 10% upside potential.

Based on the daily chart, the A50 index has rallied strongly following a deep correction starting in early April, testing the key 13,800 resistance level multiple times. This indicates robust short-term bullish momentum. Furthermore, after decisively breaking above multiple moving averages (MAs) in early May, subsequent pullbacks on June 2nd and June 23rd held firmly above the 60-day and 144-day MAs, reinforcing the bullish energy.

Regarding the moving average system, several MAs are showing signs of upward inflection, suggesting a gradually increasing probability of sustained near-term gains.

Currently, the A50 index faces near-term resistance at 13,800. As the price has touched this level several times, selling pressure has gradually been absorbed, increasing the likelihood of a breakout. A decisive break above 13,800 would open significant further upside potential, paving the way for a test of the previous high of 15,834.

Trading direction: Buy

Entry price: 13700

Target price: 14500

Stop loss: 13250

Valid Until: July 11, 2025, 23:00:00

Support: 13505/13264

Resistance: 13800/14566