Predictions

USD/CNH is expected to trade in a narrow range of 6.80-6.8260 in the next 30 days, as the PBOC deliberately holds resistance, preventing a collapse but not hindering weakening to support exports. The market will test the level of 6.8260, but regulatory control and fixing will not allow the rate to break the ceiling without a sharp deterioration in data. The main risk is an unexpected easing of fixing or aggressive Fed tightening, which would shift the range upward.

Pressure on EUR/USD downward to 1.06 is expected amid deepening industrial recession in Eurozone and weakness of German economy. ECB cannot ease policy due to inflation, creating risk of further pair decline. Main risk — unexpected ECB statement on readiness for rate cut dialogue, which could crash euro to 1.05.

The Fed's hawkish pivot and abandonment of clear forward guidance create structural demand for the dollar as a high-yield 'safe haven'. The widening yield spread of 10-year Treasuries (4.0-4.5%) and maintaining the rate at 3.5-3.75% until year-end will ensure a 2-4% strengthening of DXY in the coming month. The main risk is an unexpected slowdown in the labor market, which could force the Fed to soften its rhetoric.

The ECB June bulletin signals a further widening of the spread between Italian BTPs and German Bunds due to stagflation, rate hikes, and debt servicing risks. Markets are pricing in continued tight policy, which will increase pressure on peripheral eurozone bonds in the next 30 days. The main risk is an unexpected easing of ECB rhetoric or de-escalation of the Middle East conflict.

Schnabel's statement on the need for further rate hikes regardless of oil prices creates a strong upward momentum for the euro. EUR/USD is expected to strengthen by 1-3% within a month as markets reassess the ECB's hawkish stance amid persistent inflationary pressure. The main risk is an unexpected slowdown in inflation or deterioration of eurozone economic data, which could limit the rise.

The ECB rate hike of 25 bps turned out to be a 'dovish hawk' and is not accompanied by a clear signal of further tightening, which will disappoint markets. Against the backdrop of an expected Fed pause and continued high rates in the US, the dollar may strengthen against the euro. The main risk is the unblocking of the Strait of Hormuz, which would support the euro by lowering energy prices.