Forex Market Forecast for July 2023

Nick Ranga

Forex Market Forecast for July 2023

The second half of June has seen economic worries creep back into markets, with equities moving lower and risk-off-associated currencies making some gains. However, those worries have once again quickly dissipated, with US and European inflation continuing to edge lower. The US also held rates steady in June. Looking to July, we have an RBA rate decision, FOMC minutes, and US non-farm payrolls in the first week. While macroeconomic concerns still linger, we see a more risk-off focus heading into July, which bodes well for currencies such as the GBP and AUD. Here are some recent talking points:

  • At an ECB panel discussion in Sintra, Fed chair Jay Powell warned several more rate hikes could be expected in the coming months.
  • Spanish inflation is now under the 2% ECB target and at a 2-year low. However, this reportedly won’t deter an ECB interest rate hike in July. Eurozone inflation data is due Friday, June 30.
  • The Bank of England said the most recent rise in interest rates reflected a resilient economy and unexpectedly persistent inflation, hinting at further rate rises ahead.
  • In Australia, inflation retreated in May, easing fears of further rate hikes.

US Dollar

The US dollar was a weaker performer in June, although it showed some signs of strength as macroeconomic uncertainty popped up once again. Its biggest loss in June (at the time of writing, June 29) was against the South African rand. Looking ahead to July, if US inflation continues to ease, we see the currency weakening further against its risk-off counterparts.

Key Levels

  • EURUSD: Higher – 1.1090, Lower – 1.0880
  • GBPUSD: Higher -1.2700, Lower – 1.2600
  • USDJPY: Higher – 145.90, Lower – 140.95


The euro performed well in June, hitting a high of 1.1012 against the US dollar. However, depending on the inflation reading tomorrow, we could see traders begin to price in a pause in rate hikes. However, this will be hinged on how positive or negative the eurozone inflation data is. From a technical perspective, the EURUSD chart looks bullish, and the pair could begin to approach the 1.11 mark once again.

Key Levels

  • EURUSD: Higher – 1.1090, Lower – 1.0880
  • EURGBP: Higher – 0.8727, Lower – 0.8520

British Pound

Like the euro, the GBP had a positive month against the US dollar, hitting a high of 1.2848. However, the price has pulled back to around 1.2646 since then. Regardless, with inflation in the UK remaining sticky, the BoE, as expected, has hinted at further rate rises, suggesting a potentially stronger GBP in July. The chart also looks bullish, adhering well to the trendline drawn on the daily chart.

Key Levels

  • EURGBP: Higher – 0.8727, Lower – 0.8520
  • GBPUSD: Higher -1.2700, Lower – 1.2600

Japanese Yen

The talk surrounding a BoJ policy shift continues, although nothing has happened yet. The latest report from Bloomberg states that Bank of Japan Governor Kazuo Ueda suggested the possibility of normalising monetary policy could occur if the BOJ becomes confident inflation will pick up next year. As a result of the lack of BoJ movement, the yen declined significantly in June, and we see the same trend continuing. Looking at the USDJPY chart, the pair is heading back towards its October 2022 high, and unless risk increases over the next few weeks, we could see it hit the level above 150.00 in the next few months.

Key Levels

  • USDJPY: Higher – 145.90, Lower – 140.95
  • EURJPY: Higher – 158.00, Lower – 155.28

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