Daily Forex Highlights – Jul 02 – ADP misses at 98K; Warsh says inflation risks have eased; NFP awaited

📌 What Moves Markets Today

US ADP employment came in at 98,000 for June, below the 118,000 forecast and the lowest since March. Fed Chair Warsh struck a dovish tone, saying inflation risks have declined and near-term inflation expectations have fallen over the past four weeks. Markets are now awaiting Friday's nonfarm payrolls report. USD/JPY saw a sharp dip to 161.15 amid suspected intervention, but quickly recovered.

🟡 Neutral for USD ahead of NFP.

🔴 Bearish for JPY on intervention uncertainty.

🔥 Quick Takes

Dollar

- US markets closed tomorrow for the holiday; NFP data due today → A light trading session ahead. All eyes are on the jobs report.

- Fed Chair Warsh: Inflation risks have declined; inflation expectations have fallen over the past four weeks → A dovish signal. The Fed is less worried about prices.

- US June ADP employment: +98,000 vs +118,000 expected, lowest since March → A miss. Private sector hiring is slowing.

- Sources: Warsh has appointed a Bessent aide as a Fed adviser → A personnel move. No policy signal.

Euro

- France June PMI beat the preliminary reading, returning to expansion territory → A positive surprise. The French economy is picking up.

- German manufacturing improved in June; new orders returned to growth → A rare bright spot. The worst may be over for German industry.

- Eurozone manufacturing ended the first half on a strong note; cost pressures eased → A solid end to H1. The ECB has less urgency to hike.

- ECB's Nagel: June's move was never a "pre-emptive" hike. All options remain open for July and September. → A balanced stance. The ECB is keeping its options open.

Pound

- BOE Governor Bailey: Not considering rate cuts at this time. The economy is slowing, and the labor market is softening. → A dovish tilt. No cuts anytime soon.

- Markets have reduced BOE hike bets; now pricing about 20 basis points of hikes by year-end → Expectations are cooling. Sterling may have less support.

Yen

- NHK: Japan's tax revenue for the last fiscal year is expected to reach about 84 trillion yen, a record high for the sixth straight year → Strong fiscal revenues. A positive signal.

- Sources: Japan is moving away from pre-announcing intervention risks, focusing instead on targeting speculators. Intervention timing is based on preventing excessive yen weakness, not a specific level. → A shift in strategy. Surprise intervention is more likely.

- Foreign investors sold Japanese bonds in June at the highest level in three years → A large outflow. The yen remains under pressure.

Other

- Vietnam central bank deputy governor: The dong is under pressure from a stronger dollar; the central bank will stabilize the FX market and is determined to control inflation → Verbal intervention. The dong is being defended.

- Bank of Canada Governor Macklem: We are at the lower end of neutral rates, roughly at a level that can restrain inflation → A dovish signal. No urgency to move.

- Korea inflation remains elevated, supporting the BOK's hawkish stance → Inflation is sticky. The BOK will stay tight.

- Australia unexpectedly posted a trade deficit in May, the largest since 2015 → A shock. The Aussie may come under pressure.

💡 Technical Analysis

Source: Investing.com – Prices as of Jul 02, 2026

EUR/USD – 1.1400

The pair is grinding higher toward 1.1400 but lacks conviction ahead of NFP. On the 4-hour chart, price remains below the 200-period EMA (1.1522), keeping the near-term bias bearish. RSI near 42.5 suggests fading bullish momentum. A bearish flag pattern is forming. Support is at 1.1366 and 1.1335. Resistance is at 1.1451 and 1.1522 (200-period EMA).

GBP/USD – 1.3300

The pair is holding near 1.3300, supported by Burnham's fiscal discipline pledge. Price remains below the 200-period SMA (1.3366), keeping the broader bias bearish. RSI near 54 suggests modest momentum. Support is at 1.3200 and 1.3140. Resistance is at 1.3300 and 1.3366 (200-period SMA).

USD/JPY – 161.80

The pair recovered quickly after a sharp dip to 161.15 amid suspected intervention. The bullish trend remains intact above the 20-day EMA (160.85). RSI at 71.6 is in overbought territory, suggesting strong momentum but vulnerability to a pullback. Support is at 160.85 (20-day EMA). Resistance is at 162.00 and 163.00.

🔮 What to Watch This Week

- 🇺🇸 US nonfarm payrolls (today) – key for Fed policy

- 🇯🇵 Japan intervention – surprise tactics?

- 🇪🇺 Eurozone data – ECB expectations

- 🇬🇧 UK politics – Burnham's fiscal plans

- 🇦🇺 Australia trade deficit – further weakness?