OPEC+ Supply Surge Pushes Oil Lower, Dollar Higher

A fifth straight OPEC+ output hike weighs on crude and firms the dollar broadly. Sterling holds near 1.3350, caught between Burnham's fiscal pledge and last week's weak services PMI data. The euro consolidates above 1.1430 as the ECB stays tight-lipped on July. ISM Services and FOMC minutes land later this week.

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GBP: Sterling Waits for Fresh Direction

GBPUSD 1.3348 | EURGBP 0.8560

The pound opened the week on steady footing against the dollar. GBP/USD hovered around the mid-1.3300s as traders balanced geopolitical risks against shifting interest rate expectations.

Support for the dollar came from renewed tensions around the Strait of Hormuz. Reports that Iran could introduce new transit charges for vessels passing through the strategic waterway lifted demand for traditional safe-haven assets. That capped gains in the GBP/USD pair and kept price action contained.

Lower oil prices, however, softened inflation expectations. That reduced pressure on the Federal Reserve (Fed) to keep interest rates higher for longer and limited broader support for the dollar.

The pound drew support from the UK's commitment to fiscal discipline, although recent economic data painted a more cautious picture. Last week's PMI releases showed slower activity across the services sector, raising fresh questions about the strength of domestic growth.

Attention now turns to the latest UK Construction PMI. A stronger reading could reinforce confidence in the UK economy after softer business surveys. Later in the session, the US ISM Services PMI will provide another test of dollar sentiment and expectations for Fed policy.

Sterling continues to trade between competing forces. Fiscal credibility offers one source of support. Softer economic data limits upside momentum. At the same time, geopolitical developments continue to shape demand for the dollar during periods of heightened uncertainty.

For now, traders appear reluctant to commit to a stronger directional view. Incoming economic data and central bank communication are likely to determine whether sterling can build on recent gains or continue to trade within its current range.

Key Technical levels for the GBP/USD pair: Resistance sits at 1.3430 and Support sits at 1.3290

Key Technical levels for the EUR/GBP pair: Resistance sits at 0.8600 and Support sits at 0.8510

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EUR: ECB Holds Its Cards; Euro Consolidates

EURUSD 1.1427

EUR/USD held close to the mid-1.1400 area, consolidating after recent shifts in central bank rhetoric. Investors assessed the outlook for both the European Central Bank (ECB) and the Federal Reserve (Fed).

Safe-haven demand for the dollar following renewed Middle East tensions prevented the pair from extending higher, although softer US inflation expectations also limited broader dollar strength.

Lower energy prices have eased inflation pressures across both Europe and the United States. That has encouraged investors to reassess the pace of future policy decisions on both sides of the Atlantic.

Comments from ECB officials offered little fresh guidance. ECB Governing Council member Moulin spoke over the weekend and confirmed that the central bank is in a "good position" following the June rate rise. He declined to offer any forward guidance on July. "We are not doing forward guidance," he said flatly. That deliberate ambiguity reflects the ECB's current posture, as policymakers continue to stress a data-dependent approach rather than signalling the next interest rate move. That leaves incoming economic releases carrying greater weight for the euro.

Meanwhile, ECB President Christine Lagarde speaks in Paris later today, and Fed Governor Christopher Waller addresses an ECB conference alongside her. Two central bank voices in one session are a live catalyst. Any deviation from the current consensus framing on rates could move the cross.

Today's focus shifts to German factory orders, Eurozone retail sales, producer prices and Sentix investor confidence data. None of these are headline-movers in isolation, but together they sketch the health of the Eurozone economy heading into the second half of 2026. Later, the US ISM Services PMI and remarks from Fed officials could provide the next catalyst for EUR/USD.

The broader picture has changed little. The euro continues to find support from improving inflation dynamics, while uncertainty over future ECB policy limits stronger upside momentum. At the same time, expectations for US interest rates continue to shape the direction of the pair.

Investors now await clearer signals from both central banks before pricing a more decisive move.

Key Technical levels for the EUR/USD pair: Resistance sits at 1.1530 and Support sits at 1.1325

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USD: The Dollar Finds Support as Rate Expectations Shift

DXY 101.00

The dollar index holds near 101.00 after slipping in the wake of last Friday's softer-than-expected June payrolls report. The move lower in the Greenback was contained, and the dollar found its footing again through Asian trade.

Geopolitical tensions and cautious risk sentiment kept demand for safe-haven assets intact, even as expectations for Fed policy softened.

Fed Chair Kevin Warsh reaffirmed the central bank's commitment to its 2% price stability target last week and acknowledged that inflation risks and expectations have begun to moderate. That, combined with the payroll miss, has shifted futures pricing: the CME FedWatch tool now puts the probability of a hold at the 29 July meeting at 78%. The probability of a year-end rate hike still sits at 77.3%, but the conviction behind near-term tightening has clearly softened.

Crude oil prices have dropped sharply in recent weeks, and that easing in energy costs reduces the inflationary pressure the Fed was watching most closely. Two rate hike bets for 2026 have partially unwound back toward one or none. That shift removes a pillar of dollar support without collapsing it. The geopolitical Hormuz premium keeps a floor under the Greenback for now.

The Fed's June FOMC meeting minutes will be published on Wednesday. Those minutes precede the oil slide, so the tone is likely more hawkish than current conditions warrant. Today's US ISM Services PMI offers another measure of economic momentum. A forecast of 54.0 for June, a slight pullback from prior readings, is the near-term catalyst to watch. The services sector has carried much of the US economy through higher borrowing costs. Any sign of slowing demand could reinforce expectations that policymakers will stay patient over the coming months.

US President Donald Trump attends a NATO meeting in Turkey this week and is scheduled to meet Ukrainian President Volodymyr Zelenskyy. A renewed push toward a Ukraine ceasefire is on the table. Any meaningful diplomatic development on that front would carry geopolitical implications for energy prices, risk sentiment, and the dollar simultaneously.

The dollar also continues to draw support from geopolitical uncertainty. Developments around the Strait of Hormuz have lifted demand for defensive assets, although easing energy prices have prevented broader gains across the currency.

This leaves the Greenback caught between two competing themes. Safe-haven demand supports the currency. Softer inflation expectations limit expectations of tighter monetary policy. Until one narrative takes control, the dollar may continue to trade within familiar ranges.

Investors will also monitor comments from Fed officials this week. Any shift in tone could reshape expectations for the second half of the year and influence the next move across the major currency pairs.

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Asia-Pacific Currencies Track Global Risk Sentiment

AUDUSD 0.6929 | NZDUSD 0.5683| USDJPY 162.08 | GBPJPY 216.15

Currency trading across the Asia-Pacific region reflected the same cautious tone seen elsewhere. Investors balanced geopolitical developments, central bank expectations and domestic economic data ahead of a busy week.

The Japanese yen weakened against the dollar as the wide interest rate gap between Japan and the United States continued to favour the dollar. Officials in Tokyo reiterated their willingness to respond to excessive currency moves, keeping intervention risks in focus and limiting sharper yen losses.

The Australian dollar traded within a narrow range as investors weighed improving global risk sentiment against uncertainty over the US interest rate outlook. Attention now turns to upcoming domestic data for signs that the Reserve Bank of Australia can maintain its current policy stance.

The New Zealand dollar also traded cautiously ahead of this week's Reserve Bank of New Zealand meeting. Expectations for the central bank's next decision have become a key driver for the kiwi after recent inflation data pointed to persistent price pressures.

China's yuan edged lower against the dollar as investors awaited fresh economic data from Beijing. Authorities continue to guide the currency through daily reference rates, helping to limit sharper swings despite uncertainty surrounding China's recovery.

The Canadian dollar found support from energy prices but struggled to build momentum against the US dollar. While oil continues to influence the loonie, expectations for Federal Reserve policy remain the dominant driver of USD/CAD.

Across emerging Asia, the Indonesian rupiah weakened as higher US yields continued to support the dollar. Investors also watched the country's latest foreign exchange reserves report, as reserves had declined over recent months.

The broader picture across the region follows a familiar pattern. Local economic data continues to shape individual currencies, but shifts in Federal Reserve expectations and global risk sentiment remain the primary drivers of price action.

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Current Rate Table:

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Market Lookahead

Mon, Jul 6

• Eurozone PPI (May) , Retail Sales (May), Investor Sentiment Confidence (July)
• US ISM Services PMI

Tues, July 7

• Germany’s Industrial Production (May)

Wed, July 8

• RBNZ Interest Rate Decision
• FOMC Minutes

Thurs, July 9

• Germany’s Trade Balance

Fri, July 10

• Germany’s HICP (Jun) inflation

Speeches from BoE, ECB and Fed members through the week

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