Tariff Threat Keeps the Dollar Under Pressure
• Despite a better-than-expected June US jobs report, the dollar remains soft
• US yields jumped 10 to 12 basis points, but FX markets ignored the usual correlation
• Elevated FX option volatility shows market nerves ahead of potential new tariffs next week
• From July 9th, tariffs could return to higher levels for countries without US trade deals
• Markets are bracing for trade-related noise, keeping the dollar heavy

Strong Euro Catches ECB’s Attention
• ECB officials are showing concern about the strength of the euro, especially if it breaks above 1.20
• A 10 percent rise in euro-dollar historically reduces inflation and weakens economic growth
• The ECB is unlikely to directly intervene but may hint at deeper rate cuts if the euro strengthens further
• For now, euro-dollar is expected to trade between 1.1720 and 1.1810, with risks tilted to the upside

Swiss Franc Remains a Safe Haven
• The Swiss franc remains strong as investors seek safety amid trade tensions
• The Swiss National Bank faces a tough choice between further rate cuts and currency intervention
• More trade-related volatility could push dollar-franc and euro-franc lower
• The SNB may step in to defend the 0.9200 to 0.9250 area in euro-franc if the franc gets too strong

Market Outlook
• The dollar index is likely to stay between 96.35 and 97.45 today due to the US holiday
• Overall, FX sentiment is cautious ahead of next week’s tariff deadline and trade developments

What Next?
• Although FX markets are quiet today due to the US Independence Day holiday, the coming days could bring significant volatility. If President Trump follows through with new tariffs, we can expect sharp moves in major currency pairs, particularly the dollar, euro and Swiss franc. The euro remains firm, but a break above 1.20 could force the ECB to react. Traders should stay alert, as next week’s headlines could reshape the FX landscape in the short term.