Monthly Tactical Views (June)—“Sell America” moment may trigger further US dollar weakness

For June, we will highlight three relevant instruments—EUR/USD, GBP/USD, and AUD/USD—to note the medium-term horizon (multi-week), according to the latest developments in macro (fundamentals) and momentum factors (technical analysis).

In recent weeks, bond vigilantes have reemerged, challenging the U.S. government's ability to finance its growing budget deficits. Their concerns have driven long-term sovereign bond yields back toward pre-COVID pandemic levels.

In the US, the 30-year Treasury bond yield skyrocketed by 5.1% to print a high of 5.15%, fast approaching levels last seen in 2007, as US President Donald Trump’s “One Big Beautiful Bill” of significant tax cuts is poised to swell the US budget deficit by trillions.

According to the Congressional Budget Office, Trump’s massive tax bill will likely add US$2.4 trillion to the US national debt over the next decade.

In addition, the US White House Administration’s erratic approach to implementing its global trade tariffs policy reinforces stagflation risk being boomeranged back into the US economy, in turn providing another catalyst to push up the term premiums of longer-term US Treasury notes and bonds.

The herding effect of the recent rapid up move seen in the 30-year US Treasury bond yield (sell-off in Treasury bonds) has led credit rating agencies to question the long-held safe-haven status of US sovereign fixed-income instruments.

On 16 May, the US government lost its last triple-A credit score from a major ratings firm after a downgrade by Moody’s Investors Service, which revived the “Sell America” theme play that witnessed a significant sell-off in the US dollar against major currencies in the prior two months.

The US Dollar Index plummeted by -7.5% in March and April and ended May with a loss of -0.20%, which saw four consecutive months of losses since February 2025, its worst performing streak since the period of October 2022 to January 2023 (see Fig. 1).

The recent corrective decline of -4.4% seen in the EUR/USD from its 21 April high to 12 May low has managed to stall on the 50-day moving average and staged a bullish reversal of 3.3% to print a current intraday high of 1.1436 on Monday, 2 June at the time of the writing before a rebound took place on Thursday, 29 May after a retest on its 20-day moving average.

In addition, the daily MACD trend indicator flashed out a bullish crossover condition on 26 May and continued to inch higher above its centreline.

These observations suggest that the corrective decline from 21 April to 12 May may have ended, and the price actions of EUR/USD look set to resume its impulsive up move sequence of its medium-term uptrend phase (see Fig. 2).

Watch the 1.1050 key medium-term pivotal support, and a clearance above the 21 April swing high of 1.1570 sees the next medium-term resistance coming in at 1.1715/1.1755 (also the upper boundary of the major ascending channel from the 28 September 2022 low).

However, failure to hold at 1.1050 key support invalidates the bullish scenario for another round of corrective decline to expose the next medium-term supports at 1.0830 and 1.0730.

The recent corrective pull-back of -2.3% seen in the GBP/USD from 28 April to 12 May has ended as price actions have staged a bullish breakout from its former 26 September 2024 swing high of 1.3415 on 23 May and managed to trade above its rising 20-day and 50-day moving averages since 19 May.

In addition, the daily RSI momentum indicator has continued to display a bullish momentum condition since 12 May, which supports the start of a potential impulsive up move sequence for the GBP/USD within its ongoing medium-term uptrend phase since the 13 January 2025 low of 1.2100 (see Fig. 3).

Key medium-term pivotal support rests at 1.3210, with the next medium-term resistances coming in at 1.3750, 1.3910, and 1.4070 (also the upper boundary of the major ascending channel from the 26 September 2022 low).

On the other hand, a break below 1.3210 invalidates the bullish scenario for another corrective decline to expose the next medium-term support at 1.2890 (also the 200-day moving average).

The daily RSI momentum indicator of the AUD/USD has started to flash out a bullish momentum condition (a series of “higher lows”) right above its 50 level and has not reached its overbought region of 70 level.

These observations suggest the 4-week tight range consolidation of 190 pips since 24 April may soon stage a bullish breakout (see Fig. 4).

A clearance above the 0.6530 intermediate resistance sees the 0.6700 medium-term resistance (also the long-term secular descending trendline from the 25 February 2021 high).

On the flipside, a break below 0.6350 key medium-term pivotal support invalidates the bullish scenario to expose the next medium-term supports at 0.6130 and 0.5930/0.5870.