Psychology for major markets July 1st

EUR/USD – EUR/USD firmer after the right wing RN party won the first round of elections by a slightly smaller margin than expected, but upside looks limited without some increase in expectations of Fed easing, so 1.07-1.08 range looks likely near term.

USD/JPY – USD/JPY prints above 161 and uptrend continues helped by JPY losses on the crosses with still no sign of intervention. Downward revision in Japanese Q1 GDP helps maintain negative JPY sentiment, but IMM short JPY positioning rises to highest since intervention in late April.

EUR/GBP – EUR bounce after French election turns sentiment more positive and stabilisation likely near 0.85 ahead of the UK July 4 election.

AUD/USD – Tome remains mildly positive with RBA one of the more hawkish central banks, but easier Fed expectations still look necessary to break above 0.67.

EUR/CHF – Retaining its more positive tone of the last week after a positive reaction to the French election result, but 0.97 likely to be the middle of a new range so more limited scope for further gains from here.

Equities – Valuations getting stretched in the US but Europe more positive after first round of French election