The shortened last week brought central bank heads to Europe, where the European Central Bank hosted its annual forum in Sintra, Portugal. Discussing the topic of macroeconomic shifts and policy responses, Bank of Japan's Governor Kazuo Ueda noted that the underlying inflation was slightly below the central bank's 2% target.
Discussing the situation, Ueda pointed to three components that define inflation dynamics – demand-driven price rises, cyclical components such as U.S. tariffs, and domestic supply shocks.
Ueda, whose five-year term ends in 2028, said that the much-anticipated additional rate hikes will depend on "the relative strength of the three dynamics."
Meanwhile, his US counterpart, Jerome Powell, drew criticism for a $2.5 billion bill for renovating the central bank's Washington headquarters. The work began in 2021, with an estimated cost of $1.9 billion, before costs soared by more than 30%. Multiple parties, including House Judiciary Committee Chair Jim Jordan, have stated that the matter will be investigated. President Donald Trump, who has openly clashed with Powell over the interest rate policy, has called for his resignation. If that were to occur, the impact on the market would be considerable.
While the week ahead is light on news, it also brings Trump's Tariff deadline of July 9. Thus, market volatility could be considerable.
Key News
- Tuesday: AUD – RBA Interest Rate Decision
- Wednesday: NZD – RBNZ Interest Rate Decision, USD – FOMC Meeting Minutes
- Thursday: USD – Unemployment Claims
- Friday: GBP – GDP m/m, CAD – Unemployment Rate
Pairs In Focus
1. AUD CAD
After a two-week surge failed to reach a key weekly level of 0.90100, this pair is reverting toward the lower key level of 0.88750.
AUD/CAD daily chart, Source: TradingView
The forex chart above shows that a clean break and close on the daily chart would signal a potential run at new lows, with a first stop at support at 0.87850. A rate cut from the Reserve Bank of Australia on Tuesday could be the catalyst for this trade.
2. NZD CHF
The Swiss franc has been one of the best-performing currencies in 2025, owing to its stability and long-standing association with gold. Its advance against the New Zealand dollar has been a multi-month trend, with a prolonged ranging period in May and early June, which has eventually broken to the downside.
NZD/CHF 4-hour chart, Source: TradingView
Zooming into the H4 chart, any sudden pullbacks above 0.48130, to 0.48300 could be sold with a good price action. The first stop to the downside is around 0.47715, while yearly lows are around 0.46380.
Notes:
- AUD NZD: Ranging around the key level of 1.08180. There is no clear trend, although the bias is slightly bearish.
- AUD CHF: Remains in a bearish trend. The pullback has finished in early June, and only a fundamental catalyst could reverse the trend.
- AUD JPY: Price hit a key level at 95.250, but it failed to clearly close above it. As long as that resistance remains in place, the ranging price action can continue.
- AUD SGD: Slightly rallied, but failed to make a decisive bullish move. Remains in a range.
- CHF JPY: Reached and exceeded the long-standing 180 target and made a new all-time high—no signs of a pullback.
- CAD JPY: Indecisive price action continues. A rally brought it to a 107.05 key level but failed to clear it. A deeper pullback is possible, particularly given the risks associated with tariffs.
- EUR AUD: Remains in a bullish trend, and further weakness could propel it towards highs from early April.
- EUR/JPY: Pushed to yet another high. A bullish trend could use a breather, but the long-term target, a high from a year ago, is around 175.
- EUR NZD: Remains in a strong bullish trend, eyeing the high from early April around 1.99500.
- GBP AUD: Overall bullish, but short-term price action is ranging around a key level of 2.08430.
- GBP JPY: A pullback has established a potential higher low, meaning that the uptrend might still be in play. The key level above is at 199.700.
- GBP NZD: Failed to break higher and surpass a high from May. A key level to observe is 2.25100.
Note: Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. Singapore Forex Club is not responsible for any financial decisions based on this article's contents. Readers may use this data for information and educational purposes only.
