Daily Forex Highlights – Jul 01 – Fed rate hike odds hit 80%; Warsh speaks at ECB forum today

📌 What Moves Markets Today

Fed funds futures now price an 80% probability of a September rate hike. Fed Chair Warsh takes the stage at the ECB's Sintra forum later today, with markets on high alert for policy signals. The euro is under pressure as the ECB signals less urgency to hike. USD/JPY is holding near 40-year highs just below 163.00, with intervention fears capping further gains.

🔴 Bearish for EUR as ECB pushes back on rate hike urgency.

🟢 Bullish for USD as rate hike expectations firm.

🔥 Quick Takes

Dollar

- Fed funds futures: September rate hike probability now around 80% → Markets are pricing in a move. The Fed is expected to act.

- Fed Chair Warsh speaks at the ECB forum at 9 PM today → A key event. Markets will parse every word for policy signals.

Euro

- ECB: Oil futures show prices staying elevated for years, raising economic costs. One more rate hike may be needed, but the case is weaker than before. Quick action does not necessarily mean a July move. → The ECB is pushing back on July hike expectations. September is the new baseline.

- French inflation falls to lowest since March on lower oil prices → A dovish data point. Pressure on the ECB to hike is easing.

- France finance minister: 2026 GDP growth forecast at 0.9%, with downside risks. May adjust the forecast in coming weeks. → A cautious outlook. The euro zone's second-largest economy is slowing.

- Sources: ECB plans to double the minimum reserve requirement to 2% to reduce interest costs → A technical move. Could tighten liquidity modestly.

Pound

- UK house prices stall despite lower mortgage costs → Housing market remains sluggish. No sign of recovery.

Yen

- Japan manufacturer sentiment hits highest since 2018. Manufacturing posted its strongest quarterly performance in over 12 years in June. → A bright spot for the Japanese economy. The BOJ may have more room to move.

- Japanese firms expect USD/JPY to average 152.57 and EUR/JPY 175.62 for fiscal 2026/27 → Corporate forecasts are far below current levels. A sign that firms expect the yen to strengthen.

- Japan's top FX official: The intervention two months ago was successful and had US support → A rare acknowledgment. Japan is signaling it has room to act again.

Other

- Switzerland KOF leading indicator: 101.2 vs 99.1 expected → A beat. The Swiss economy is holding up.

- Korea Q1 FX intervention: net sales of $13.628 billion, down from $22.467 billion in Q4 2025 → Intervention pressure is easing. The won may be stabilizing.

- Korea June exports: largest year-on-year gain since October 1978; trade surplus hits record high → A massive export boom. Strong demand for Korean goods.

- Thailand central bank: Economic growth expected to slow → A dovish signal. No rate hikes ahead.

- Russia Sberbank CEO: Key rates need to be lowered → A dovish call from a major bank. Pressure on the central bank to cut.

- Thailand business group: Expects 2026 export growth at 8%-10%; GDP growth to hold at 1.6%-2.0% → A mixed outlook. Exports strong, but overall growth remains modest.

💡 Technical Analysis

Source: Investing.com – Prices as of Jul 01, 2026

EUR/USD – 1.1400

The pair is under pressure near 1.1400 as the ECB pushes back on aggressive tightening bets. Price remains below the 200-period EMA (1.1538) and the 1.1500 psychological level, keeping the broader bias bearish. RSI near 49.1 suggests a neutral bias after recovering from oversold conditions. MACD is marginally positive. Support is at 1.1380 and 1.1335. Resistance is at 1.1500 and 1.1538. A break above 1.1500 would be needed to shift the outlook.

GBP/USD – 1.3235

The pair is trading near 1.3235, failing to break through the 23.6% Fibonacci retracement level. Price remains below the 1.3300 mark and the 200-period SMA (1.3366), keeping the broader bias bearish. RSI near 54 suggests steady momentum but not a bullish shift. MACD remains modestly positive. Support is at 1.3200 and 1.3140. Resistance is at 1.3300 and 1.3366 (200-period SMA).

USD/JPY – 162.00

The pair is holding just below 163.00, near 40-year highs. The wide interest-rate differential continues to weigh on the yen. Verbal intervention is capping further upside, but no action has been taken. RSI at 71.6 is in overbought territory, suggesting strong momentum but increasing vulnerability to a pullback. Support is at 160.85 (20-day EMA). Resistance is at 163.00.

🔮 What to Watch This Week

- 🇺🇸 Fed Chair Warsh speech at ECB forum – key policy signals

- 🇪🇺 Eurozone CPI – rate hike expectations

- 🇺🇸 US manufacturing PMI – economic strength

- 🇯🇵 Japan intervention – words or action?

- 🇰🇷 Korea trade data – export momentum