EUROPEAN FX UPDATE: DXY hammered amid reports Trump is to name a Powell successor early

DXY: -0.5%, 97.01

• DXY is on the back foot for the fourth consecutive day, and currently trades towards the lower end of a 96.93-97.60 range – the index now trades at levels not seen since March 2022. Further downside may see the potential test of the low from 1st March 2022 at 96.62.


• The past of couple of days have seen a tinderbox of catalysts for the Dollar, these include both external and domestic factors; 1) geopolitical premium unwinding thanks to Iran-Israel ceasefire, 2) lower yields, 3) Fed Chair Powell leaving all options open for the July meeting.


• Most recently, overnight reporting suggested that US President Trump may accelerate the announcement of a successor to Fed Chair Powell, possibly as early as this summer, or in September or October, according to WSJ sources. Some potential candidates include; Former Fed Governor Kevin Warsh, National Economic Council Director Kevin Hassett, Treasury Secretary Scott Bessent, Former World Bank President David Malpass, and Fed Governor Waller. This may see some investors shift their focus away from Powell, and in-turn shape expectations of the policy path before the Chair’s term ends.


• Focus for the remainder of the day shifts to a slew of US data; final US GDP stats for Q1 are expected to see the headline unrevised at -0.2%, deflator unrevised at 3.7%, core PCE prices unrevised at 3.4% (NOTE: May PCE data is due on Friday). Weekly initial jobless claims are seen little changed at 245k, while continuing claims (which coincide with the BLS survey window for the May jobs data) are seen rising a touch to 1.95mln from 1.945mln. The US advanced goods trade deficit is expected to widen slightly to USD 88.5bln (prev. 87bln). Some Fed speakers are also scheduled.

EUR: +0.7%, 1.1740

• EUR/USD continues to benefit from the broader Dollar weakness and currently trades above 1.17; session peak at 1.1744. ING writes that there is some heavy resistance in and around these levels, but a comfortable clearing of 1.17 could see the Single-Currency set its sights on 1.20 – analysts suggest that a deterioration in US-specific factors would be needed. EUR/USD is currently trading at levels not seen since mid-2021; the high from 24 Sept at 1.1747 may be in focus.


• EZ-specific docket has been exceptionally light today; German GfK Consumer Sentiment printed a touch below expectations, no reaction on this. Focus ahead turns to some ECB speak from de Guindos, Schnabel and Lagarde – but trade today is more likely to be at the whim of US data in the afternoon.

USD/JPY: -1%, 143.90

• JPY is the G10 outperformer today, largely thanks to the pullback in US yields overnight and broader Dollar weakness. USD/JPY has fallen below both its 21 DMA (144.50) and 50 DMA (144.27) to currently trade below the 144.00 mark to 143.76 at worst – next downside level is 16 June low at 144.65.


• Overnight, upside in the JPY was briefly capped on reports that Japanese Economy Minister Akazawa said Japan will continue tariff talks with the US ahead of reciprocal tariffs due on July 9th, but cannot accept the 25% auto tariff - do note that he flagged earlier in the week that he would visit Washington as soon as today.

GBP: +0.7%, 1.3760

• GBP also benefits from the Dollar weakness and trades at multi-year highs, and marginally topped its 2022 high at 1.3749. Beyond that, there is a little bit of clear air up until the 1.3800 mark, whereby the high from Oct 29 2021, at 1.3804 may be in focus.


• UK-specific newsflow has been very light so far, with BoE speak over the past week not offering too much insight for traders. Nonetheless, focus will be on BoE speak from Governor Bailey later today.

Antipodeans: AUD +0.5%, NZD +0.5%

• Antipodeans are modestly benefitting from the Dollar weakness, but also amid some positive commentary out of China overnight – remarks which helped to boost base metals also. Firstly, the Chinese State Planner said with policy implementation and introduction, "we are confident and capable of minimising the adverse impacts from external shock", according to Reuters. Secondly, Premier Li said authorities will take forceful steps to boost consumption. Lastly, Citi raised its China 2025 GDP growth outlook to 5.0% (prev. 4.7%).


• The Aussie now looks to test its current YTD high at 0.6551; Kiwi looking to test its YTD high at 0.6087.

26 Jun 2025 - 10:15- ForexData- Source: Newsquawk