The EURUSD is racing to new highs as markets react to US policy, and perhaps some recognition that the ECB has done its easing while the US Fed may be pushed to ease sooner. US CPI came in less than expectations yesterday. The US PPI and Initial jobless claims data will be released today at 8:30 AM ET, with the PPI estimated at 0.2% for the headline and 0.3% ex food and energy (YoY est 2.6% and 3.1% respectively). The US initial jobless claims are expected at 240K down from 247K but if it remains above 240K or goes higher, it may be showing some deterioration of the employment picture.

In the video above, I take a look at the technicals for the EURUSD, USDJPY and GBPUSD. The EURUSD is the biggest mover. The GBPUSD had a run lower off weaker data (GDP, Industrial production) but snapped back higher. The USDJPY has moved below the cluster of MAs tilting the bias lower.

In other influences, geopolitical risks are elevated with Iran the focus. Yesterday, there was a report that non-military personel should leave Bahrain and Kuwait

Later, the Washington Post said US intelligence officials are increasingly worried that Israel might carry out a strike on Iran without prior approval from Washington. A regional diplomat expressed deep concern, warning the situation is more dangerous now than ever.

Meanwhile, the IAEA Board of Governors passed a resolution declaring Iran non-compliant with nuclear safeguards. The resolution cites Iran's failure to allow enhanced access to nuclear sites and coincides with the upcoming sixth round of US-Iran talks on June 15. Although Iran’s foreign minister signaled optimism about reaching a nuclear agreement, US officials have expressed growing doubts including Pres. Trump.

ECB's Schnabel signaled that the monetary policy tightening cycle is nearing its end, with inflation stabilizing and financing conditions no longer restrictive. Despite ongoing trade tensions, the growth outlook remains broadly stable. She expects headline inflation to ease in early 2026 due to base effects, while core inflation, though still high, is on a declining path. The ECB sees limited impact from trade diversion with China and emphasizes that inflation expectations remain anchored. The strong euro is seen as confidence-driven rather than rate differential-based, and overall, monetary policy is considered well-positioned.

In contrast ECBs Patsalides were a little more dovish. Patsalides emphasized the ECB's flexibility and agility in managing interest rates, while Simkus noted that further rate cuts may be needed as inflation risks skew lower and projections suggest price growth could fall short. He added that the ECB is now at a neutral policy rate level.

ECBs Miller said that inflation is likely to stay around 2% in the near future.

US stocks are lower in pre-market trading with the Nasdaq down -114 points. The S&P futures are implying a decline of -30 points and the Dow is down -264 points.

US yields are lower as well supporting the USD decline:

  • 2 year 3.911%, -3.3 basis points
  • 5-year yield 3.971%, -4.0 basis points
  • 10 year yield 4.367%, -4.7 basis points
  • 30 year 4.857%, -5.2 basis points

Two cuts are expected by the Fed by the end of the year with the first cut nearly priced in for September.

Source: Forex Live