The below key drivers are likely to impact investor risk sentiment and FX markets in June
- The US continues to drive global currency swings with tariffs, debt concerns and speculation over Federal Reserve direction.
- Central banks are sending mixed signals, as traders react to possible pauses or future rate cuts across Europe, the UK, and the Pacific.
- Conflicting economic signals like strong retail and inflation data alongside weak growth and jobs are keeping currency markets on edge.
Read on for insights into factors affecting the key currencies, or download as a PDF.
EUR Euro
The euro fluctuated in May, driven by a mix of weak EU data, a softer USD and hopes the ECB might pause future rate cuts. Global vs domestic impacts will likely continue driving volatility.
In the second half of May, the euro experienced significant volatility against the US dollar, driven by economic data, central bank policy expectations, and geopolitical developments. The EURUSD pair initially declined for four consecutive weeks, reaching a low of 1.1064 in mid-May, amid stronger USD performance and concerns over Eurozone growth.
Mixed EU data, fuelled speculation of further European Central Bank (ECB) rate cuts. ECB officials consistently hinted at a 25-basis point cut in June, citing disinflation and sluggish economic activity.
Despite weak fundamentals, the euro rebounded in late May, closing at 1.1363, up 1.78% for the week. This was largely due to USD weakness following President Trump’s announcement of 50% tariffs on EU imports and a controversial fiscal bill. However, the euro’s gains were capped by disappointing PMI data, indicating contraction in business activity.
The ECB cut its deposit rate again on June 5th, bringing its main borrowing rate to 2%. However, it was the rhetoric around a possible future pause which sent markets scrambling to buy the euro and sending the EURUSD rate towards April’s highs . Inflation remained near target, but weak retail sales and trade tensions continued to weigh on sentiment.
Overall, the euro’s performance reflected a tug-of-war between external USD-driven factors and internal Eurozone economic fragility.
Expected ranges:
- EURUSD 1.1290–1.1510
- EURGBP 0.8280–0.8650
GBP Sterling
The pound held up well despite rate cuts and mixed UK data, boosted by a weaker US dollar and trade deals—but rising unemployment and policy concerns could keep it under pressure.
Between early May and early June 2025, the British pound (GBP) showed resilience against the US dollar (USD), rising 1.36% over the month despite weekly fluctuations. Initially, the pound fell due to strong US inflation data and optimism over US-Asia trade deals, closing at 1.3272 on May 2. A surprise rise in UK retail sales failed to lift the currency, as weak manufacturing data and cautious sentiment prevailed.
On May 12, the Bank of England (BoE) cut interest rates by 25 basis points to 4.25%, causing a brief dip in GBPUSD.
UK GDP growth beat expectations at 0.7% but rising unemployment and slowing wage growth tempered optimism. Strong UK retail sales, a weaker USD and renewed trade tensions saw the pound surge to a 3-year high of 1.3543 on May 26. Inflation pressures remained, with CPI at 3.5% and core CPI at 3.8%. BoE Governor Bailey emphasised a cautious approach to future rate cuts amid persistent inflation and economic uncertainty.
Markets speculate there could be a rate hold at the June 19 BoE interest rate meeting. This could provide further support for the pound during the month, however, with rising unemployment and slowing wage growth in the UK, the BoE might be pressured to cut again later in the year.
Expected ranges:
- GBPUSD 1.3280–1.3660
- GBPEUR 1.1630–1.2080
AUD Australian dollar
The Aussie dollar stayed quiet in May, weighed down by uncertainty, soft local data, and global nerves—despite signs the US dollar might be losing steam. Eyes are now on US policy shifts.
Despite a broad-based shift in US dollar fortunes, the AUD bounced between US$0.64 and US$0.65 unable to take advantage of a de-escalation in US/China trade tensions and building USD negatives.
The Australian dollar has been among the worst performing majors throughout 2025, impacted by uncertainty. The on-again/off-again approach of Trump’s tariffs has forced investors to the sidelines, driving demand for haven assets and dampening demand for the AUD.
A softening in domestic macroeconomic markers has elevated calls for the Reserve Bank of Australia (RBA) to lower rates. While the RBA board elected to cut rates at its May policy meeting, markets have called for further cuts as Q1 growth data was lower than expected.
While steady against the USD, the AUD has underperformed when measured against other key crosses, falling below 0.57 against the euro, 0.48 against the pound and 1.08 against the NZD.
Looking ahead, the AUD is well-supported, approaching US$0.64. Markets are now placing a premium on US assets as policy uncertainty prompts investors to seek alternative risk havens, reducing demand for the USD. Our focus remains attached to US policy changes, tariff headlines and key macroeconomic markers. Having tested 2025 highs near US$0.6530 through the first week of June, we are keenly watching for any break above this level as a technical signal potentially prompting a break into a higher range.
Expected ranges:
- AUDUSD 0.6300–0.66
- AUDGBP 0.4700–0.50
- AUDNZD 1.0700–1.0950
- AUDEUR 0.5400–0.5800
NZD New Zealand dollar
The NZD stayed stuck in May, held back by weak local data and global uncertainty—though a surprise shift in tone from the RBNZ gave it a slight boost.
The NZD underperformed compared with other majors throughout 2025, hamstrung by uncertainty and domestic economic softness. President Trump’s tariff agenda has only elevated doubt surrounding the global economic outlook.
The on-again/off-again approach of Trump’s tariffs has forced investors to the sidelines, driving demand for haven assets and dampening demand for the NZD. Furthermore, a softening in domestic macroeconomic markers amplified calls for the Reserve Bank of New Zealand (RBNZ) to extend its easing cycle were amplified by a softening in domestic macroeconomic markers. As anticipated, the RBNZ lowered rates in May but surprised markets with the accompanying statement. Policymakers suggested future easing would be dependent on their evolving assessment of the economy and global economic environment, noting risks to inflation driven by US trade policy.
Looking ahead, the NZD is well-supported on moves approaching US$0.5950. Markets are now placing a premium on US assets as policy uncertainty prompts investors to seek alternative risk havens, reducing demand for the USD. Our focus remains attached to US policy changes, tariff headlines and key macroeconomic markers. Having reached 2025 highs near US$0.6080 through the first week of June, we are keenly watching for any consolidated break above US$0.6050 as a technical signal potentially prompting a break into a higher range.
Expected ranges:
- NZDUSD 0.5900–0.6200
- NZDGBP 0.4200–0.4500
- NZDAUD 0.91–0.9350
- NZDEUR 0.5150–0.5350
USD United States dollar
The US dollar had a rollercoaster May, boosted by strong data. However, trade tensions and debt worries added headwinds. With USD still in flux, inflation and Fed moves are in sharp focus.
The second half of May saw the US dollar fluctuate, driven by shifting economic data, trade tensions, and central bank expectations. Initially, the USD strengthened on the back of positive Q1 inflation data and optimism over US-Asia trade deals. However, this momentum was interrupted in mid-May when US CPI data showed signs of moderation, leading to speculation about potential Federal Reserve (Fed) interest rate cuts.
Later in the month, the USD weakened further due to renewed trade tensions, particularly after President Trump announced tariffs on EU imports and introduced a controversial fiscal bill, raising concerns about the US debt outlook. Despite this, the USD regained some ground in early June as safe-haven demand returned amid global uncertainty and persistent inflation in key sectors.
Overall, the US dollar’s performance has been a tug-of-war between Fed expectations and geopolitical risks, with the US Dollar Index (DXY) remaining below its recent peak of 100.50.
Looking ahead, the USD remains sensitive to upcoming inflation data, Fed policy signals, and global trade developments. Markets are forecasting the Fed to keep rates on hold till Q3 of this year. With other major central banks expected to continue a path of cutting rates, diverging pathways could support the USD, but longer term fiscal concerns which could negate any positive US Dollar sentiment. Rising US debt and controversial spending bills (eg, the “One Big Beautiful Bill Act”), are leaving investors concerned for the medium-term health of the US economy.
Expected range:
- DXY 98.351–99.66
JPY Japanese yen
The yen dipped in May but bounced back as rising inflation raised hopes of tighter policy from Japan’s central bank. All eyes now on the BoJ’s next move.
The Japanese yen faced steady pressure in the second half of May, dropping from a high of 148.65 on May 13 to a low of 142.12 on May 27, before slightly recovering to close at 144.02, against the US dollar. This 4% drop was mainly driven by domestic events, with the turning point on May 23, when Japan’s April inflation report showed core inflation at 3.5% year-over-year—higher than expected—suggesting rising inflationary pressure.
This surprised the market and increased expectations that the Bank of Japan (BoJ) might start tightening policy. Following this, 10-year Japanese government bond yields rose above 1%, breaking levels not seen in over a decade, which attracted foreign investors back to Japanese assets. BoJ Governor Ueda’s comments about rising food prices and the need to stay alert further pushed USDJPY down.
In response, traders reduced their exposure to the US dollar and started closing out yen-funded carry trades, reflecting a more cautious outlook. While US data and Federal Reserve comments were mostly neutral, the dollar found some support at month-end, helping USDJPY bounce back above 144, likely due to month-end trading flows rather than strong fundamentals.
Looking ahead, the June BoJ meeting will be key to see if policymakers hint at a July rate hike or more bond tapering. With Japanese yields rising and market positioning clearer, the risk for USDJPY remains to the downside—especially if the Fed holds rates steady and the BoJ signals tighter policy.
Expected ranges:
- USDJPY 140–150
CAD Canadian dollar
The Canadian dollar bounced back in May as US uncertainty and soft data hurt the greenback. With rates steady and investor confidence firming, CAD could stay on solid ground.
The Canadian dollar was well-supported through May, bouncing strongly off lows near US$0.7150 and extending through US$0.7330 amid growing USD uncertainty.
US policy ambiguities and a series of misses across key US macro data sets have elevated market concerns surrounding the US debt burden and fiscal deficit. Analysts and investors have applied a premium on US assets, reducing the US dollar’s attractiveness as a safe haven asset and driving markets to seek alternate haven plays.
With the Bank of Canada electing to leave rates on hold amid near-term concerns for the impact of tariffs on inflation expectations helped lift short term domestic rates as US yields face mounting pressures. Having edged above 4.55% US 10-year yields slid back below 4.40 through the last 2 weeks correlating in extended USD softness.
Looking ahead, the CAD remains well-supported on moves below US$0.72. Our focus remains attached to US policy changes, tariff headlines and key macroeconomic markers. Having made 2025 highs near US$0.7340 through the first week of June we are keenly watching for any consolidated break above US$0.7350 as a technical signal potentially prompting a break into a higher range.
Expected ranges:
- CADUSD 0.7100–0.7400
- CADGBP 0.5300–0.5500
- CADEUR 0.6300–0.6500
SGD Singapore dollar
The Singapore dollar hit a near-decade high in May, boosted by safe-haven demand and a weaker US dollar. But with soft growth ahead, big moves from here may be limited.
USDSGD extended its decline in May 2025, falling from around 1.30 to a low near 1.28, the strongest level for the Singapore dollar in nearly a decade. The move reflected broad USD weakness amid escalating US trade tensions, including newly announced tariffs on imports such as steel and aluminium, which raised concerns about global growth and inflation. Meanwhile, the SGD benefitted from its safe-haven status within Asia, and improving regional sentiment.
Singapore’s economic data in May was mixed. Q1 GDP expanded 3.9% y/y but contracted 0.6% q/q, prompting the Ministry of Trade and Industry to downgrade its full-year growth forecast to 0.0–2.0%. Core inflation edged up slightly to 0.7% in April, while headline inflation held steady at 0.9%. With price pressures subdued, MAS maintained a neutral policy stance after easing in April and reiterated that inflation risks remain tilted to the downside.
Looking ahead, USDSGD is likely to consolidate between 1.28 and 1.32 over the next month. While the SGD’s strength may persist in the near-term, further appreciation could be limited as the pair approaches key technical support and the upper bound of MAS’s estimated policy band. With growth outlooks still soft and inflation well-contained, MAS may consider easing again if exports weaken further. On the US side, although Fed rate cuts are expected later this year, near-term policy remains on hold, leaving room for USD support if risk sentiment deteriorates. Overall, a range-bound outlook is favoured unless a clear macro catalyst shifts the balance.
Expected range:
- USDSGD 1.28–1.32
HKD Hong Kong dollar
The Hong Kong dollar swung sharply in May, as capital flows and HKMA action stirred markets. Despite the volatility, the currency peg remains solid, and policy support stays strong.
The Hong Kong dollar saw sharp swings in May 2025, with USDHKD initially falling to the strong-side limit of 7.75 before rebounding toward 7.84 by early June.
Early gains were driven by capital inflows linked to IPO activity, equity gains, and dividend demand. This prompted Hong Kong Monetary Authority (HKMA) intervention to defend the peg, with over HK$129 billion injected to cap HKD strength. As a result, interbank liquidity surged and short-term HKD rates collapsed, encouraging short-HKD carry trades. This dynamic reversed HKD gains, and the pair rebounded to the weaker half of its 7.75–7.85 band, reflecting broader outflow pressure and a widening US/HK interest rate gap.
On the macro front, Q1 GDP rose 3.1% y/y, driven by strong exports and tourism, while headline inflation climbed to 2.0%. Unemployment edged up to 3.4%, though officials expect labour conditions to stabilise with easing trade tensions and ongoing stimulus.
In a May 20 article, HKMA Chief, Eddie Yue reiterated the credibility of the Linked Exchange Rate System (LERS), emphasising that recent FX movements were “textbook” under the peg and reaffirming that there is no need to alter the current regime.
Looking ahead, USDHKD is likely to drift toward the 7.80–7.85 range in the coming month. Seasonal HKD demand from upcoming dividends may tighten liquidity briefly, but the broader bias leans toward modest HKD weakness. Overall, USDHKD is expected to stay within the band, with HKMA operations ensuring stability and anchoring confidence in the currency board regime.
Expected range:
- USDHKD 7.78– 7.85
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