EURUSD Declines After ECB Decision

Blue River

Forex

Technical Analysis

Economic

Summary:

The EURUSD rate corrected towards the 1.1730 area following the ECB's decision to keep interest rates unchanged. The market awaits the outcome of trade agreement negotiations between the US and the EU. Find out more in our analysis for 25 July 2025.

EURUSD forecast: key trading points

● Market focus: the ECB left the benchmark interest rate unchanged at 2.15%

● Current trend: correcting downwards

● EURUSD forecast for 25 July 2025: 1.1700 or 1.1830

Fundamental analysis

At yesterday’s meeting, the European Central Bank left key interest rates unchanged after eight cuts in the current cycle. The regulator noted that disinflation has progressed in line with expectations since the previous meeting in June.

ECB President Christine Lagarde stated that a more detailed assessment of the need for further rate cuts this year will require more economic data and clarity on the conditions of a potential trade agreement with the US.

Meanwhile, reports suggest that the US may agree to reduce tariffs on EU goods to 15% (the lower limit for duties on other countries) as part of an ongoing trade agreement actively being negotiated by EU diplomats.

EURUSD technical analysis

On the H4 chart, EURUSD is undergoing a downward correction, falling this morning to the 1.1730 area, with further decline towards the 1.1700 support level possible. The daily trend for the pair remains upward, so after the correction ends, the rally may continue.

The short-term EURUSD forecast suggests a further decline towards 1.1700 in the near term if bears keep the price below 1.1760. However, if bulls push the pair above 1.1760, growth may resume towards the 1.1830 resistance level.

EURUSD Declines After ECB Decision_1

Summary

The EURUSD pair corrected to the 1.1730 area following the ECB’s decision to leave rates unchanged. The market’s focus now turns to trade negotiations between the US and the EU.

Source: RoboForex

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Glendon

Economic

Forex

UK retail sales partially bounced back in June as Britons basked in heat wave conditions, adding to signs that the economy recovered from back-to-back monthly contractions during the spring.

The volume of goods sold online and in shops climbed 0.9% after plunging 2.8% in May, the Office for National Statistics said on Friday. The increase was slightly below the 1.2% gain expected by economists.

Stronger sales and an uptick in business surveys suggest the UK economy stabilized after GDP fell in both April and May amid the double blow of Labour’s tax rises and President Donald Trump’s US tariffs.

Last month was the second-hottest June on record for the UK as temperatures soared above 30 degrees Celsius in parts of England, prompting consumers to splash out on food and summer clothing.

While the boost will be welcomed by Chancellor of the Exchequer Rachel Reeves, it will do little to prevent a sharp economic slowdown in the second quarter from the bumper growth at the start of 2025. Retail sales rose just 0.2% over the quarter, contributing 0.01 percentage point to GDP, the statistics office said.

There were more ominous signs from GfK’s consumer confidence survey for July published earlier Friday. It showed that UK households are more inclined to save than at any point since the run-up to the financial crisis.

The highest unemployment rate in over four years and rising inflation may prompt already cautious consumers to slam the brakes on spending in the coming months. GfK also pointed to growing speculation that Reeves will need to raise taxes further to shore up the finances.

A cautious consumer has held back the UK economy in recent years with saving rates still well above pre-pandemic levels. Households have tightened their belts after a string of shocks to their finances, from the pandemic to double-digit inflation.

Source: Bloomberg Europe

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Thomas

Forex

Economic

ECB Policy Statement & Outlook

President Christine Lagarde struck a cautious tone, emphasizing a “wait-and-see” approachas policymakers assess risks from the ongoing U.S.–EU tariff negotiations.While inflation remains broadly aligned with the ECB’s 2% medium-term target, uncertaintysurrounding trade policy and the stronger euro continues to weigh on the outlook, this keptthe ECB to stay on a cautious sideline where cut is unlikely in upcoming meeting unlessinflation or growth data deteriorate significantly.Markets are now pricing in a lower probability of a rate cut in September.

Inflation and Trade Remains Key Consideration

June inflation rose to 2.0% y/y from 1.9% in May, with core pressures—particularly inservices and wages—remaining modest. Real income and spending data suggest theeurozone economy remains resilient for now.However, the ECB flagged elevated uncertainty over the U.S. administration’s proposed30% tariffs on European exports. Such measures, if enacted, could disrupt supply chains,dampen business confidence, and weigh on eurozone growth.Meaning to say, if the economic data and trade talks remain positive, we are unlikely to seethe ECB eases further in coming months, and even could be an end of easing cycle for now.

What’s Next for Euro?

The euro strengthened modestly following the ECB decision, with EURUSD testing 1.1750,supported in part by ongoing U.S. dollar weakness.However, it is obvious that the ECB decision does not pose major impact on the euro, therecent euro strengths largely driven by the weaker dollar.

ECB Holds Rates Steady, Signals Pause in Easing Cycle;What's Next on Euro?_1

EURUSD: Support on 1.1600,EURUSD – Daily Chart

From the technical perspective, EURUSD rebounded from the 1.1600 support zone earlierthis week and extended gains post-meeting.The short-term outlook remains constructive, but the pair faces potential resistance near1.1800 ahead of the August 1 U.S.–EU tariff deadline. Sentiment could shift quickly if tradetensions escalate.

ECB Holds Rates Steady, Signals Pause in Easing Cycle;What's Next on Euro?_2

EURJPY: Uptrend Intact, But Cautious on Momentum Loss,EURJPY – Daily Chart

Meanwhile, EURJPY remains on a strong upward trajectory, extending its winning streak tonine consecutive weeks.However, the latest weekly candlestick may shows early signs of exhaustion, potentiallyforming a Harami pattern—a classic indication of a possible momentum slowdown,especially as the pair tests a major resistance zone.

ECB Holds Rates Steady, Signals Pause in Easing Cycle;What's Next on Euro?_3

EURJPY – 4H Chart

Despite the hesitation on the higher timeframe, the short-term trend still shows no clearsigns of reversal. The pair is currently consolidating within a defined range between 171.20and 173.00. A sustained breakout above 173.00 could open the door for another leg higher.On the downside, a confirmed break below 171.20 support may signal the start of acorrective phase, with traders potentially shifting toward a more cautious stance.

Outlook on the Euro

The ECB has adopted a wait-and-see approach, opting to keep policy firmly data-dependentas it awaits greater clarity on the evolving trade landscape. With eurozone inflation anchoredaround target and economic activity showing resilience, the central bank appears in noimmediate rush to pursue further easing.However, external risks remain elevated—particularly the threat of renewed U.S.–EU tradetensions. Any escalation on this front could quickly revive market volatility and place freshpressure on policy outlooks.At this stage, euro strength is largely driven by U.S. dollar softness, as capital flows rotateaway from the greenback into the euro. Nonetheless, markets remain highly sensitive toshifts in trade headlines or inflation surprises, which could reshape the policy narrativeahead.

Source:AETOS

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Gerik

Economic

A Shift in Monetary Outlook Following Trade Progress

The recent U.S.–Japan trade deal, finalized just days ahead of the August 1 global tariff deadline, has significantly altered the monetary policy landscape in Japan. According to several officials familiar with internal discussions, the Bank of Japan now sees a clearer path toward a rate hike in 2025, likely as early as October, should economic conditions permit.

For months, the BOJ held back from further policy tightening, citing tariff-related uncertainty, tepid domestic demand, and cost-of-living pressures. The new trade deal, which avoids the harsher 25% tariffs Washington previously threatened and secures more predictable export terms, removes one of the most prominent risks that had warranted BOJ’s cautious stance.

Improved Sentiment, But Growth Fragility Persists

BOJ Deputy Governor Shinichi Uchida’s recent comments suggest a tonal shift in outlook. He noted that the agreement improves the odds of achieving the central bank’s 2% inflation target sustainably a key precondition for tightening. The BOJ’s next policy meeting on July 30–31 is now seen as a critical juncture for signaling this shift. Although rates are expected to remain on hold in July, investors and economists anticipate that the accompanying quarterly outlook report may revise inflation projections upward and soften warnings around tariff-induced downside risks.

The market appears to be pricing in this change. Two-year Japanese government bond yields reached a four-month high of 0.845%, reflecting growing expectations for a hike.

However, optimism remains tempered. While exports have held up so far, Japan’s Q1 GDP contracted amid sluggish consumption, and analysts project that the full impact of U.S. tariffs including those still targeting non-Japanese trade partners could still suppress demand. Former BOJ board member Takahide Kiuchi estimates that the tariffs could trim 0.55 percentage points off Japan’s annual GDP growth even with the deal in place.

Diverging Views Within the BOJ

There is no firm consensus within the BOJ's board. Hawkish members, such as Naoki Tamura, warn against moving too slowly in normalizing policy, particularly with real interest rates still deep in negative territory. Others remain skeptical, noting the fragility of domestic demand and cautioning that the manufacturing sector, while stable for now, could face delayed export shocks from broader global trade dynamics.

Thus, while the trade deal clears a major hurdle, BOJ officials are expected to wait for more concrete data before pulling the trigger. Key inputs include the upcoming tankan business sentiment survey and the October regional branch managers’ meeting, both of which will provide granular insight into corporate confidence and investment plans.

What to Watch Ahead

BOJ Governor Kazuo Ueda’s press conference on July 31 will be closely scrutinized for language hinting at a shift in policy tone. Meanwhile, the central bank’s quarterly economic report is expected to reflect a less pessimistic view on tariffs and may revise inflation and growth forecasts upward, paving the way for a potential rate hike in the October 29–30 meeting.

While Japan’s economic recovery is far from robust, the U.S.–Japan trade accord injects a degree of clarity into external conditions that may allow the BOJ to cautiously resume policy normalization. However, lingering risks from domestic consumption weakness to global trade fragmentation mean the bank is likely to proceed incrementally, prioritizing data over rhetoric in its next moves.

Source: Reuters

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Damon

Political

Economic

Thailand, Cambodia Clashes: UN To Hold Emergency Meeting_1

Cambodia and Thailand blame each other for triggering the latest clashes

The United Nations Security Council is due to hold an emergency meeting on Friday to discuss the ongoing border clashes between Thailand and Cambodia.A long-running border dispute erupted into intense fighting on Thursday, with violence flaring near two temples on the border between Thailand's Surin province and Cambodia's Oddar Meanchey.Both countries blame the other for triggering the latest clashes.While Cambodia fired rockets and shells into Thailand, the Thai military scrambled F-16 jets to hit military targets across the border.

Clashes continue for a second day

The fighting continued for a second day early on Friday, Thai authorities said.They also claimed that Cambodia was using heavy weapons, including artillery and rockets."Cambodian forces have conducted sustained bombardment utilizing heavy weapons, field artillery, and BM-21 rocket systems," the Thai military said in a statement. "Thai forces have responded with appropriate supporting fire in accordance with the tactical situation."The Thai Interior Ministry said the death toll on their side had risen to 14. It added that over 100,000 people from four border provinces had been moved to nearly 300 temporary shelters.

The exact number of casualties in Cambodia remains unclear.

A Cambodian provincial official said on Friday that at least one Cambodian civilian was killed and five others injured.Around 1,500 Cambodian families from Banteay Ampil district in the Oddar Meanchey province near the conflict zone have been evacuated to safety, Meth Meas Pheakdey, a spokesperson for the provincial administration, said on Facebook.

What is the conflict about?

The two nations are locked in disagreement over the Emerald Triangle — an area where the borders of both countries and Laos meet, and home to several ancient temples.Thailand and Cambodia, which share an 800-kilometer (500-mile) frontier, have been arguing over where the border should be drawn for years.Dozens of kilometers in several areas are contested.Fighting broke out between 2008 and 2011, but a UN court ruling in 2013 settled the matter for over a decade.

The international community has urged both sides to exercise restraint and halt the fightingImage: STR/AFP

The current crisis erupted in May after both countries' militaries briefly fired at each other in a relatively small, contested border area that each nation claims as its own.Both sides said they acted in self-defense. One Cambodian soldier was killed.While Bangkok and Phnom Penh said afterwards they agreed to de-escalate the situation, tensions have remained high as Cambodian and Thai authorities continued to implement or threaten measures short of armed force.

How did the international community react?

China's Foreign Ministry said it was deeply concerned about the ongoing clashes and would play a constructive role in promoting de-escalation.The United States and France, Cambodia's former colonial ruler, urged an immediate end to the conflict.The EU said it was deeply concerned about the clashes and called for dialogue to end the fighting.

Edited by: Sean Sinico

Source: DW

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Gerik

Economic

Market Rotation Favours Small-Caps Amid Tariff Risk and Euro Strength

In the wake of U.S. President Donald Trump's global tariff regime most notably the looming August 1 deadline for a potential deal with the EU European investors are repositioning. Smaller companies, with their more domestic revenue base and lower sensitivity to currency swings, are emerging as safer investment alternatives to large multinationals facing higher exposure to global trade frictions.

The STOXX Europe small- and mid-cap indexes have respectively gained 9% and 11% this year, outpacing the large-cap index's 7% rise. Analysts attribute this to the local focus of smaller firms: they generate 60% of their revenues within Europe, according to Goldman Sachs, compared to just 35% for large-cap peers. This geographic insulation minimizes the impact of both U.S. tariffs and a rising euro.

Euro Rally Shifts the Narrative

In an unexpected turn, the euro has appreciated over 12% in 2025, reaching around $1.17 and possibly heading toward $1.20. This rise contradicts earlier predictions of parity with the U.S. dollar, driven by capital outflows from U.S. markets post-April 2 "Liberation Day" tariffs. While this presents a challenge for large exporters, smaller firms benefit from their euro-centric operations, further enhancing their appeal.

This environment has shifted investor preference away from traditional plays like luxury firms with U.S. and Asian exposure. As Artemis Investment Management’s Harry Eastwood puts it, “Liberation Day slightly disrupted the global order of trade... small- and mid-caps have become much more interesting.”

Discounts Narrow as Confidence in Small-Caps Rebounds

Valuation dynamics are also turning. In March, small-caps traded at a record 11% discount to large-caps, due to inflation fears and aggressive rate hikes from the European Central Bank. Now, with the ECB having already cut rates by 200 basis points since mid-2024 and pausing further cuts this week, optimism is rising. Small-caps currently trade at 13.4x forward earnings compared to 14.3x for large-caps, narrowing the discount to 6.5%.

Fund flows affirm the trend: European small- and mid-cap funds have seen ten consecutive weeks of net inflows, the longest streak since 2021. This shift is driven not only by macro conditions but also by improving sentiment around earnings stability for smaller firms.

Germany’s Fiscal Push and Sectoral Tailwinds

Germany’s aggressive post-election fiscal stimulus and a supportive ECB environment are helping revive growth expectations. The SDAX, Germany's small-cap index, has surged nearly 20% since February more than double the blue-chip DAX’s 8.4% increase over the same period.

These developments suggest small- and mid-sized firms are well positioned for a “re-rating” as investors recalibrate expectations. As Van Lanschot Kempen’s Ingmar Schaefer notes, "When we look at the next 12 months, we think there can definitely be a re-rating of small caps vis-à-vis large caps."

With geopolitical trade tensions and currency strength rewriting global investment narratives, European small- and mid-cap companies have become strategic assets. Their domestic orientation, improving earnings outlook, and favorable macroeconomic policy backdrop create a compelling case for sustained investor interest, even as broader market uncertainties persist.

Source: Reuters

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James Whitman

Economic

Japan's government said on Friday that profits from a $550 billion investment package agreed in this week's tariff deal with the U.S. would be split between Japan and the U.S. according to the degree of contributions by each side.

The comment from a Japanese government official suggests the investment scheme would involve substantial contributions not just from Japan but also from the U.S. government or companies, though the structure of the scheme remains largely unclear.

The White House said earlier this week the U.S. would retain 90% of the profits from the $550 billion U.S.-bound investment and loans that Japan would make in exchange for lower tariffs on auto and other exports to the U.S.

The official told a briefing that resulting returns will be split 10% for Japan and 90% for the U.S. "based on the respective levels of contribution and risk borne by each side."

Japan has said the U.S. investment package includes loans and guarantees from state-owned Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI), to enable Japanese firms to build resilient supply chains in key sectors such as pharmaceuticals and semiconductors.

A law revision in 2023 has expanded the scope of JBIC, making foreign companies key to Japan's supply chains eligible for loans from the bank.