Psychology for major markets Jul 04

EUR/USD – EUR/USD edging off 4 year highs above 1.18. Underlying sentiment remains USD negative tariffs and the US budget bill also in focus, and EUR seen as the alternative reserve currency.

USD/JPY – JPY still soft on the crosses and USD/JPY correcting higher as equities remain firm and Trump indicates no trade deal is likely with Japan.

EUR/GBP – Holding above 0.86 after spike higher on talk of Chancellor Reeves being sacked and failure of government to pass spending cuts. Reeves will likely stay after support from PM Starmer but underlying sentiment remains GBP negative.

AUD/USD – Found good support below 0.64 and retains scope for gains above 0.66 although rising expectations of RBA easing are limiting upside

Equities – S&P futures still making new all time highs and sentiment remains positive helped by easing Mid-East tensions and rising hopes of Fed easing, but valuation remains expensive and market looks vulnerable to bad news