Forex Week Ahead: Dollar Stumbles, Risk Assets Eye Data – June 30, 2025

The Forex Week Ahead begins under a shadow of U.S. dollar weakness as the DXY breaks below key multi-year support, signaling a deeper shift in global FX sentiment. With risk appetite buoyed by falling Treasury yields, expectations of Fed rate cuts in Q3 are gaining traction. This week’s key macroeconomic events—U.S. ISM data, NFP, Eurozone inflation, and Australian retail sales—will shape directional conviction for major pairs.

Key Insights

  • U.S. Dollar Index (DXY) hits multi-year low, breaking below 103.43 Fibonacci support
  • Markets price in higher odds of Fed rate cuts by September
  • U.S. Treasury yields fall, fueling risk-on sentiment
  • Strong labor market still anchors Fed caution
  • Euro gains support from improving inflation dynamics
  • Australian data may pressure AUD amid weak consumption signals
  • GBP shows resilience despite internal inflation slowdown

Market Overview and Market Drivers

The currency markets enter the first week of July on a pivotal footing. The weakening of the U.S. dollar, driven by dovish Fed expectations and softening yields, sets the tone. Market participants are pricing in increased odds of a rate cut by the Federal Reserve as early as September, even as policymakers remain cautious.

Risk assets have outperformed as Treasury yields retreat, particularly with the 2-year yield slipping under 4.60%. This drop suggests growing conviction that tighter policy is nearing its end. Meanwhile, inflation across the Eurozone shows tentative signs of bottoming, while the U.K. and Australia face diverging pressures that will influence GBP and AUD, respectively.

The dollar’s breakdown below long-term Fibonacci support signals a psychological shift. This week’s macro drivers, especially U.S. ISM indices and Friday’s NFP report, will be decisive for dollar direction. For traders, the Forex Week Ahead is packed with catalysts that could trigger volatility across G10 currencies.

Currencies Outlook

🇺🇸 U.S. Dollar (USD)

The US Dollar is currently experiencing a “dovish drift,” primarily due to signs of a slowing US economy. Recent data suggest a weaker first half of the year for US growth, casting doubt on the resilience of consumer spending. Tariff-induced pressures are contributing to a “stagflationary” environment, where growth slows before inflation fully manifests. Fed Chair Powell’s “wait-and-see” approach further contributes to the dollar’s subdued performance, as the central bank resists hasty policy actions amidst mixed signals and internal disagreements. The dollar index has notably hit multi-year lows and broken long-term Fibonacci levels, signaling a significant bearish trend.

🇪🇺 Euro (EUR)

The Eurozone shows tentative signs of recovery, with June PMI figures suggesting a fragile but ongoing improvement. While the recovery is not robust, it indicates a move away from the economic stagnation seen earlier. The European Central Bank‘s (ECB) stance on monetary policy will be closely watched, especially with upcoming CPI data that could influence their dovish or hawkish leanings. A continued, albeit slow, recovery could provide some support for the Euro against a weakening dollar.

🇬🇧 British (GBP)

Similar to the Eurozone, the UK’s June PMI figures indicate a fragile but persistent recovery. The Bank of England‘s (BoE) future policy decisions will be critical for the Pound’s trajectory. Inflation data and economic growth indicators will be key determinants of the BoE‘s next steps. A sustained recovery, even if modest, could offer resilience to the Pound.

🇦🇺 Australian Dollar (AUD)

Australia surprised markets with lower-than-expected inflation figures. This development could influence the Reserve Bank of Australia‘s (RBA) monetary policy, potentially leaning towards a more dovish stance if inflation remains subdued. The RBA‘s reaction to these figures will be a key driver for the Australian Dollar.

🇨🇦 Canadian Dollar (CAD)

Canada has reported broadly steady inflation, suggesting a more stable economic environment compared to some other major economies. The Bank of Canada‘s (BoC) monetary policy will be influenced by these inflation trends and other domestic economic data. Stable inflation could allow the BoC more flexibility, potentially supporting the Canadian Dollar.

🇯🇵 Japanese Yen (JPY)

Japan’s Tankan Survey is a key indicator of business sentiment and economic conditions. A positive survey could suggest an improving economic outlook, potentially offering some support to the Yen. However, the Yen’s overall trajectory will also be influenced by the Bank of Japan‘s (BoJ) ultra-loose monetary policy and global risk sentiment.

🇨🇳 China (CNY)

Upcoming China PMI figures will be crucial for assessing the health of the world’s second-largest economy. Stronger-than-expected PMIs could signal a rebound in manufacturing and services, potentially boosting global trade sentiment and impacting the Yuan, while weaker data could exacerbate global growth concerns.

Upcoming Economic Calendar

The upcoming economic calendar is dense with high-impact events that could drive weekly volatility. The most anticipated data will be the U.S. ISM Manufacturing (Monday) and Non-Farm Payrolls (Friday), both essential for validating or challenging the market’s Fed expectations. Eurozone flash inflation data and Australian retail sales will provide insights into regional economic resilience.

Important Events List:

  • U.S. ISM Manufacturing PMI – Monday, July 1
  • Eurozone Flash CPI – Tuesday, July 2
  • Australian Retail Sales – Wednesday, July 3
  • U.S. ISM Services PMI – Wednesday, July 3
  • U.S. Non-Farm Payrolls (NFP) – Friday, July 5

📅 Ziwox Terminal, Economic calendar

Pairs of the Week

EUR/USD – Euro Eyes Upside Amid DXY Breakdown

Fundamental Analysis

EUR/USD is breaking higher as the DXY collapses below long-term support. With markets aggressively repricing Fed expectations, the euro has room to extend gains, especially if Eurozone inflation shows signs of bottoming. Meanwhile, U.S. data this week—particularly NFP—will either validate or reverse current trends. The euro may also benefit from repatriation flows and relative macro stability compared to other regions.

Conclusion

The Forex Week Ahead promises directional clarity as major currencies test key levels. With the dollar breaking down, euro gaining strength, and risk sentiment improving, traders must watch data closely. U.S. ISM and NFP will shape macro expectations and determine if current FX trends accelerate or reverse.

📊Forex live data analysis: Ziwox terminal

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Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Trading Forex involves risk, and you should consult with a qualified financial advisor before making any investment decisions.