Daily Report Horacle - July 7, 2026

Calendar

Macro Sentiment

Important Information:

US Dollar

US markets are back after a long weekend, and FX markets are showing a typical summer lull. Volatility on the G7 is hovering near all-time lows, which is enough to revive the appetite for carry trades in the coming weeks. One-week dollar deposit rates remain among the most attractive in the G10, a reminder that holding a short position on the greenback requires a compelling scenario—which is not really present right now.

Last week’s US employment figures certainly disappointed, but without seriously impacting short-term rates, which retained most of their April gains. The market now prices in 31 basis points of tightening for the year, compared to 43 in May. Wednesday’s FOMC minutes will be the first test under Kevin Warsh’s leadership: a hawkish message is expected, although the document could be toned down. The dollar has also held up well against the lack of Japanese intervention, with USD/JPY already back above 162. Tokyo seems willing to save its reserves, with a potential intervention window around July 16-17. Today, the ISM services index should confirm growth at 2%, with an expected pullback in the prices paid component.

Euro

EUR/USD is holding above 1.1400, awaiting a clearer signal on monetary policy. The probability of an ECB rate hike in September has fallen below 50%, but rhetoric from officials this week—notably Schnabel and Lane—should serve as a reminder that the fight against inflation is not won, with a risk of underlying inflation rebounding.

Resistance at 1.1475 should cap the euro’s bullish inclinations, in a context where the dollar still enjoys a favorable interest rate differential. The pair could trade in a 1.13/1.14 range as long as the outlook for Fed hikes remains unclarified—probably not before the end of the quarter.

British Pound

Last week’s bearish breakdown in EUR/GBP deserves to be taken seriously, driven by the unwinding of short positions on the pound and low summer volatility that makes the carry on a short British currency position unattractive.

Politics, however, will resurface in late July, with the likely arrival of Andy Burnham as Prime Minister on July 20. The favorite for the Chancellor position, Ed Miliband, is perceived as being further to the left, but fiscal maneuvering room remains very tight without tax hikes. Combined with our scenario of a Bank of England that would not raise its rates this year, this could weigh on the pound in the coming weeks.

Takeaway: the dollar retains the upper hand, the euro awaits a signal, the pound suffers from political uncertainty. Today’s Japanese data (wages up 3.2%, household spending down) have not changed the landscape.

These elements are provided for informational purposes and do not constitute an investment recommendation.