For July, our monthly tactical outlook highlights EUR/GBP, EUR/JPY, and EUR/CAD. The Euro is the strongest performer due to a less dovish ECB, signaling potential bullish breakouts and uptrends for these cross pairs.
In our June monthly tactical outlook, we highlighted a potential US dollar sell-off and positioned it for its medium-term weakness by focusing on EUR/USD, GBP/USD, and AUD/USD currency pairs. The EUR/USD has rallied by 3.6% in June to hit a four-year high of 1.1760, the GBP/USD has advanced by 1.9% to record a three-year high of 1.3710, and the AUD/USD staged a bullish breakout from an eight-week range configuration since early May, jumping by 2.2% to reclaim its seven-month high of 0.6570.
For July, we will highlight three FX cross pairs – EUR/GBP, EUR/JPY, and EUR/CAD, to take note of the medium-term horizon (multi-week), according to the latest developments in macro (fundamentals) and momentum factors (technical analysis).
The euro is the strongest performer, supported by a less dovish ECB
Fig 1: 1-month rolling performance of Euro Currency Index & other major currencies indexes as of 30 June 2025 (Source: TradingView)
The European Central Bank (ECB) has cut its policy deposit facility rate by 25 basis points for the eighth time to 2% at its recent June meeting. During the post-meeting press conference, ECB President Lagarde highlighted that the ECB is now approaching the end of a monetary easing cycle, suggesting a pause may be on the horizon.
Money markets have trimmed wagers on additional interest cuts in the Eurozone, with another 25-bps reduction no longer seen as a certainty. Hence, the yield spread discount between Eurozone and other developed nations’ sovereign bonds may narrow further, in turn, supporting a further advancement of the EUR, where the Euro Currency Index is the top performer among other major currencies with a one-month rolling return of 3.80% (see Fig. 1).
EUR/GBP bullish breakout from major descending trendline resistance
Fig 2: EUR/GBP major & medium-term trends as of 1 July 2025 (Source: TradingView)
The EUR/GBP exited a major downtrend phase on 1 April 2025 as it broke above a major descending trendline resistance in place since the 3 February 2023 high and staged a retest and bullish reversal on its 200-day moving average on 29 May 2025 (see Fig. 2).
These observations suggest the EUR/GBP may be in the middle of undergoing a medium-term uptrend phase supported by the bullish momentum condition flashed out by the daily RSI momentum indicator.
Watch the 0.8450 key medium-term pivotal support with the next medium-term resistances coming in at 0.8740 and 0.8850/8875 (also the upper boundary of the medium-term ascending channel and Fibonacci extension).
However, a break below 0.8450 negates the bullish tone for a possible slide to retest 0.8380 (also the 200-day moving average), and a breach below may trigger a deeper corrective decline to expose the next medium-term support at 0.8230.
Early stage of a major uptrend phase for EUR/JPY
Fig 3: EUR/JPY major & medium-term trends as of 1 July 2025 (Source: TradingView)
The EUR/JPY has staged a bullish breakout on 6 June 2025 from a 10-month basing configuration previously in place since the 5 August 2024 low of 154.41.
In addition, the daily MACD trend indicator has trended upwards steadily above its centreline since 6 June 2025.
These observations suggest the potential start of a medium-term to major uptrend phases for the EUR/JPY. Key medium-term pivotal support rests at 164.80, with the next medium-term resistances coming in at 175.40, 179.35, and 182.80 (see Fig. 3).
On the other hand, failure to hold above 164.80 invalidates the bullish breakout scenario to reinstate a choppy corrective decline sequence to expose the next medium-term supports at 162.25 and 158.20.
Potential bullish breakout above long-term secular range resistance for EUR/CAD
Fig 4: EUR/CAD major & medium-term trends as of 1 July 2025 (Source: TradingView)
The recent two-month advance of 3.9% seen on the EUR/CAD from its 12 May 2025 low is now fast approaching a long-term secular range resistance of 1.6105 (January 2016 to July 2020).
The daily MACD indicator has continued to trend upwards steadily after it exited from a bullish basing configuration at its centerline from 26 May 2025 to 12 June 2025, which suggests that the current medium-term uptrend condition from the 10 February 2025 low remains intact (see Fig. 4).
A clearance above 1.6105 may trigger a bullish breakout and acceleration to expose the next medium-term resistances at 1.6330/6380 and 1.6585 (also the upper boundary of the major ascending channel and Fibonacci extension).
On the flip side, a break below the 1.5710 key medium-term pivotal support invalidates the bullish scenario to kick-start a corrective decline sequence to expose the next medium-term supports at 1.5330 and 1.5080.
