EUROPEAN FX UPDATE: FX in stasis after geopolitical updates, JPY mildly boosted by Y/Y Core CPI beat

DXY: U/C, 98.65

• DXY is flat and trading in a very tight 98.53-98.70 range, after falling a touch overnight on geopolitical updates, which has seen the Dollar lose its risk premium a little.


• In the prior session, the Dollar slipped after US President Trump offered Iran a two-week window to monitor negotiations before deciding on military action. This sparked a risk-on mood, as it helped to ease some nerves of an imminent attack on Iran and hence an escalation in the Middle East. The White House also noted the prospects for negotiations with Iran, while a Middle East Eye correspondent Friday reported that US Secretary of State Rubio told his French counterpart that the US is ready for direct contact with the Iranians at any time.


• Traders will be looking to today's meeting between Iran's Foreign Minister and officials from the EU, UK, France and Germany in Geneva, where the Europeans aim for a diplomatic solution amid the escalating Israel-Iran conflict; separately, US President Trump will attend a national security meeting today (11:00EST/16:00BST).


• Price action this morning has been muted and ultimately awaits the readout of the Iran-E3 meeting in Geneva (which will focus on nuclear talks); President Trump is also scheduled to attend a national security meeting today (11:00EST/16:00BST). Data docket today includes; US Philly Fed Business Index and Leading Index Change.

EUR: +0.2%, 1.1517

• EUR is at the top of the G10 leaderboard, but ultimately just a little stronger vs the Dollar. No specific European-driver for the strength today, so likely on the geopolitical updates from Trump on Thursday (see above) – in brief, should the US choose not to attack Iran, this would be net-negative on crude prices and as such has lifted the Single-Currency today; gains are of course capped given the continued uncertainty.


• EUR/USD currently trading around the mid-point of a 1.1491-1.1532 range in what has been a relatively rangebound session so far. Docket ahead is fairly light, with only EU Consumer Confidence in the afternoon scheduled.

USD/JPY: +0.1%, 145.32

• JPY is essentially flat/modestly firmer today but did catch a slight bid following the region’s inflation report. Headline Y/Y printed in-line with expectations whilst the Core metric was a touch above expectations, and in-fact printed the fastest Y/Y pace since January 2023. ING suggests that this isn’t quite enough to push the BoJ to hike, but a material trade deal in Q3 may allow the Bank to resume with its hiking cycle.


• BoJ Governor Ueda also spoke overnight – his remarks were not too pertinent, and overall just highlighted that the Japanese economy is recovering and that “underlying inflation to gradually heighten after a pause”.


• Following the release of the Japanese CPI report, USD/JPY fell from 145.29 to a session trough of 145.16. Since then, USD/JPY moved off those lows and has since traded within the midpoint of a 145.13-56 range; upside could see a potential test of yesterday’s high at 145.77.

GBP: +0.2%, 1.3487

• GBP is incrementally firmer vs the USD but posts modest losses vs the EUR. Cable was mildly pressured on the release of a very weak Retail Sales report, whereby the M/M metrics fell beneath the most pessimistic of analysts' forecasts; printing at -2.7% (exp. -0.5%). Analysts at Pantheon Macro write that a strong report in the prior month is usually followed by a slump in the next – so expect a rebound soon; they also offer that cooler temperatures may be to blame for the slump. Elsewhere, GfK Consumer Confidence improved a little from the prior, but only marginally so; a GfK expert suggested the ongoing Middle East conflict may subdue sentiment ahead.


• GBP/USD fell around 0.2% to make a fresh trough at 1.34470 in the hour after the Retail Sales report. Thereafter, the Pound has been trading relatively steady for most of the morning. Upside levels include its 21 DMA at 1.3518.

Antipodeans: AUD +0.1%, NZD +0.1%

• Antipodeans are incrementally firmer/flat vs the Dollar in what has been a lacklustre session so far. Specifics for the Aussie and Kiwi have been on the lighter side overnight and were little moved by the PBoC fixing, which was the strongest since March 17th.


• AUD currently trades in a 0.6463-0.6495 range, and oscillates its 21-DMA. As for the Kiwi, high for the day coincides with its 21-DMA at 0.60122 – downside could see a test of its 50 DMA at 0.59664.

20 Jun 2025 - 10:10- ForexGeopolitical- Source: Newsquawk