EUROPEAN FX UPDATE: DXY benefits from US attack on Iran whilst JPY lags

DXY: +0.2%, 99.09

• DXY is on a firmer footing this morning, with the Greenback receiving haven inflows following the latest surprise US attack on Iran. On that, the US launched “Operation Midnight Hammer,” striking Iran’s nuclear facilities at Fordow, Natanz, and Isfahan. Following the attack, US President Trump called the impact an “obliteration”, adding that the strike would be a one-time action, with Washington still seeking diplomacy. Iran’s Parliament has endorsed closing the Strait of Hormuz, but still awaits approval – the latest commentary via shipping giants Maersk and Hapag-Lloyd seems to suggest that they continue to sail through the chokepoint.


• DXY currently trades in a 98.87-99.16 range; today’s session trough coincides with its 21 DMA. Further upside may see a potential test of its 50DMA at 99.49.


• The docket ahead includes US Flash PMIs which are due later, where the metrics are expected to fall slightly. Elsewhere, US existing home sales for May are seen slipping to 3.95mln from 4.0mln. On the speakers' slate, remarks are due today from Fed's Goolsbee (2025 voter); Fed's Kugler (voter) and Williams (voter) will speak at a 'Fed Listens event'; Fed's Bowman (voter) will speak at a banking conference.

EUR: -0.3%, 1.1492

• EUR is modestly lower vs the Dollar today, and currently trades in a 1.1454-1.1521 range; the low for today is in close proximity to its 21 DMA at 1.1442.


• It is worth noting that whilst the losses in the European morning are fairly modest in nature, the Single-Currency was one of the worst performers as markets reopened. This is likely in part due to the bloc’s heavy reliance on oil through the Strait of Hormuz, and therefore the potential inflationary impacts.


• Geopolitics aside, the EUR has had a number of EZ PMI figures to digest. French figures were weaker-than-expected; German metrics were stronger-than-expected, with the Composite component surprisingly climbing into expansionary territory; EZ was mixed. The accompanying EZ Release suggested that the “The eurozone economy is struggling to gain momentum", but highlighted that "the ECB can remain relatively calm, as the strong euro and the deflationary effect of US tariffs argue against a short-term rise in inflation”. Overall, the Single Currency was little moved.

USD/JPY: +0.9%, 147.51

• JPY benefited from the geopolitical risk premium at the reopen, but this soon reversed thanks to the stronger Dollar and amid the latest geopolitical implications on higher oil prices. As it stands, the JPY is the clear G10 underperformer. The currency was little moved by the region’s PMI report, which showed an improvement across all components, with the Manufacturing climbing into expansionary territory.


• USD/JPY has surged past its 100 DMA (146.80) to currently trade towards its session high at 147.62. The pair is now trading at the levels not seen since mid-May, whereby there may be some resistance at 147.67, which marks the high from 14 May 2025. It is worth highlighting that GBP/JPY is looking for a test of the round 200.00 mark, current peak at 198.19. Do note that the 200.00 mark has not been breached since 24 July 2024.

GBP: -0.1%, 1.3434

• GBP is faring better vs peers but still lower vs the Dollar. Currently trades in a 1.3390-1.34499 range; the trough for today resides a little below its 50 DMA at 1.3402. UK PMIs only notable release for the day; Services printed in-line whilst the Manufacturing metric topped the most optimistic of analyst expectations. There was some modest two-way action in Cable, but it ultimately resided within the day’s range.

Antipodeans: AUD -0.5%, NZD -0.7%

• Antipodeans were swept away by the broader risk-off sentiment, following the surprise US attack on Iranian nuclear facilities. More recently, despite sentiment improving across the equities complex, no real follow-through to the Aussie or Kiwi, which still reside towards the foot of the G10 pile.


• Aussie little moved to the overall improvement in the region’s Flash PMIs; AUD/USD currently trades in a 0.6399-0.6448 range. The Kiwi also in the red and trades within a 0.5916-0.5966 confine.

23 Jun 2025 - 10:05- ForexEU Research- Source: Newsquawk