The ECB's 25bps hike and cautious forward guidance, coupled with SpaceX's IPO and US-Iran deal developments, shape market sentiment ahead of key US data.
European Central Bank Signals July Pause Amid Rate Hike
The European Central Bank (ECB) delivered a widely anticipated 25-basis-point interest rate increase on Thursday, maintaining its data-dependent stance. Policy makers indicated a potential pause in July if oil prices remain stable, aligning with market expectations for two additional hikes this year. Final inflation readings from France and Spain, both scheduled for the European session, are unlikely to shift the ECB's trajectory significantly.
Market Reaction: EURUSD Holds Steady
Traders are pricing in a cautious ECB approach, with EURUSD consolidating near multi-week highs. The euro's momentum faces headwinds from mixed signals on inflation and growth, though the currency remains supported by relative yield differentials against the US dollar.
American Session: SpaceX Debut and US-Iran Deal Watch
SpaceX's Nasdaq debut under the ticker $SPCX adds a tech-driven narrative to the session, with optimism around Trump-era dealmaking potentially fueling risk appetite. However, skepticism persists as Iranian state media reported Supreme Leader Ayatollah Khamenei has not yet approved a nuclear agreement, keeping geopolitical risks on the radar.
Key Data to Watch: Michigan Consumer Sentiment
The University of Michigan's consumer sentiment index will provide insights into US economic confidence amid sticky inflation pressures. A stronger-than-expected reading could bolster USD bullish bets, while soft data may revive dovish Fed expectations.
Risk Sentiment and Technical Outlook
Global risk sentiment remains fragile, with equity markets eyeing SpaceX's IPO performance and bond yields reacting to central bank signals. EURUSD traders will monitor oil price stability and upcoming US data for directional cues, with resistance at 1.0850 and support near 1.0700.
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