Currency pair of the week

With a jam-packed calendar this week, including, ISM Manufacturing and Services PMIs, the closely watched JOLTS Job Openings report, and the monthly Non-Farm Payrolls report to come, traders are bracing for volatility. These data points are expected to influence the USD/JPY forecast, especially with both the Fed and BoJ policy decisions looming in December.

The slight cooling of the so-called "Trump Trade," characterised by a strong dollar (and a Bitcoin rally), may not last very long. For now, though, traders are adjusting their expectations somewhat and scaling back hopes for aggressive tax cuts and tariff hikes. It is far too early for us to drop out bearish EUR/USD forecast.

This week, there is not much in the way of US data, but global PMIs on should cause some volatility. The EUR/USD forecast remains bearish, and we continue to expect an eventual breakdown below the $1.05 handle.

This week, inflation data from the US and GDP data from UK will be crucial. With last month’s US CPI outpacing expectations at 2.4% year-over-year, markets remain attentive to signs of persistent inflation.

The GBP/USD is among the major forex pairs to watch this week. After a blowout US jobs report, the market has dropped its calls for another 50 basis point rate increase from the Fed. While key inflation figures this week could provide some short-term volatility, the Fed’s focus has moved on from inflation. Therefore, beyond some short-term volatility, this should not really change the picture for US interest rates pricing and the dollar.

While the broader US dollar trend remains bearish, the GBP/USD outlook is not so certain. With much of the dollar weakness already factored in, a pullback in the cable could be on the horizon as we approach this week’s US employment data.

Unless the RBA is surprisingly more dovish than expected at its meeting on Tuesday, Aussie CPI comes in well below expectations on Wednesday, or we see a sharp reversal in risk appetite, the path of least resistance will remain to the upside, in line with our continued bullish AUD/USD forecast.

This week brings key data releases from around the world, including the latest US inflation report and along with a rate decision from the European Central Bank. After last week’s jobs data, we continue to hold a bearish outlook on the dollar ahead of the upcoming CPI release.

The upcoming release of US inflation data is likely to alter the odds of a September rate cut in the direction of the surprise, putting the GBP/USD forecast into focus. Thus, a clearer trend for the US dollar could emerge this week, after the greenback fell across the board last week.

One big risk event is taking place next Sunday, on June 30. This will mark the first round of the French parliamentary election. But it is likely that the extent of Marine Le Pen party's progress will only be known after the run-offs on July 7.

The GBP/USD forecast is in focus, with the upcoming Bank of England rate decision, UK CPI, retail sales from both sides of the pond and global PMI data all on tap this week. Plus, there is the added uncertainty from the upcoming UK general election.

The markets have reacted negatively with both the CAC and euro falling following European elections turmoil and France's decision to call a snap election. Markets generally don't like uncertainty and not when far-right parties are making gains across Europe, especially in Austria, Italy and Germany.

It will be a busy week for the greenback with lots of top-tier data releases to come, starting with the ISM manufacturing PMI on Monday. Among major currency pairs, the likes of the USD/CAD will be quite volatile with the Bank of Canada also expected to make a rate announcement in mid-week.

EUR/USD outlook could be impacted by key inflation data from Eurozone and US this week, as euro makes positive start to new week and dollar falls. EUR/USD technical analysis points higher after breaking from its bullish flag pattern. However, with key data on tap, the upside could be limited.

Our GBP/USD outlook remains bullish, mainly due to our bearish US dollar forecast. On the GBP side of the equation, the Bank of England is getting closer to cutting interest rates, although the market seems to be looking past this. Domestically, the focus this week is on UK inflation data, which is expected to cool, potentially cementing expectations that the central bank will cut rates in June.

GBP/USD has been supported by stronger UK GDP ahead of wages data on Tuesday. Meanwhile, the US dollar has been hit by signs of cooling labour markets ahead of key inflation data on Wednesday. GBP/USD technical analysis points higher after breaking a bearish trend.

GBP/USD forecast: All eyes on BoE policy decision, before attention turns to UoM consumer sentiment and inflation expectations data on Friday, before CPI data next week.