US Dollar Index

The US dollar index struggled near a three-and-a-half-year low on Wednesday, with the market focused on the latest remarks from Federal Reserve Chairman Powell and the massive tax and spending bills pushed by the Trump administration. This intertwined drama of finance and politics not only affects the fate of the US dollar, but also casts a heavy cloud of uncertainty on global foreign exchange markets. The US dollar index remained around 96.80 on Wednesday as dovish expectations from the Federal Reserve and concerns about President Trump's fiscal policy put pressure on the currency. Federal Reserve Chairman Powell reiterated on Tuesday that he remains patient on further rate cuts, but did not rule out the possibility of a rate cut at this month's meeting, emphasizing that future moves will depend on upcoming data. Investors are now waiting for Thursday's much-anticipated June employment report to further understand the strength of the labor market and the potential direction of monetary policy.

The US dollar index continues to trade under persistent bearish pressure, recently breaking below the lower line of the descending wedge pattern that has guided price action since mid-May, with a low of 96.38. The index is currently hovering around 96.80 and is retesting the lower line of the wedge after rebounding from the intra-week low of 96.38, although it is still well below the 9-day simple moving average, which is currently at 97.50. This continued rejection of the simple moving average highlights the strength of the current downtrend. The breakout of the wedge suggests that the bearish pressure may accelerate, with no immediate signs of a reversal. Momentum indicators further confirm the negative outlook. The 14-day relative strength index (RSI) has dropped below 30, entering the oversold zone, which may indicate the potential for a short-term rebound, although this may also reflect the strength of the current selling pressure. Meanwhile, the moving average convergence/divergence (MACD) histogram remains in negative territory, reinforcing the bearish trend. Unless the US dollar index can recapture and hold the 98.00–97.50 range, the path of least resistance remains to the downside, with the next key support currently in focus at the 96.00 round number mark, and the low of 95.13 on February 4, 2022. Nearby.

Consider shorting the US dollar index near 96.90 today, stop loss: 97.00, target: 96.40, 96.30

WTI spot crude oil

WTI crude oil rose about 3% on Wednesday to close at $67.50 a barrel as Iran suspended cooperation with the UN nuclear watchdog, sparking geopolitical tensions, while US crude oil inventories unexpectedly increased. Iran's move added a certain risk premium to prices, although analysts pointed out that supply disruptions have not actually occurred yet. At the same time, US crude oil inventories unexpectedly increased by 3.8 million barrels, and gasoline demand fell to 8.6 million barrels per day, far below the 9 million barrels considered healthy in the summer. In addition, OPEC+ plans to gradually increase production, but these measures have been largely reflected by the market, especially Saudi Arabia significantly increased exports in June. Traders are now waiting for the US employment report, which may affect the Fed's expectations of rate cuts, thereby affecting the outlook for oil demand.

From a technical perspective, the daily chart of WTI crude oil shows a "convergence pattern", and the long and short forces are in a stalemate around $64-67/barrel. Hidden under the stable price is the traders' breathless waiting for the OPEC+ resolution and the "silent period" before the technical change. The daily chart of US crude oil (WTI) shows that the current oil price is under pressure at the $67.15 {21-day simple moving average} level. The 9-day and 21-day moving averages show a "death cross" bearish pattern. At the same time, the 14-day relative strength index RSI is near 50, and the momentum indicator is weak, indicating limited buying power. If oil prices fall below the 9-day simple moving average of $65.93 and the support below the $65.00 mark, there may be a risk of further decline to $63.72 {last week's low}; on the contrary, if it can regain the 9-day simple moving average of $65.93 and $65.91 {June 26 high}, it is expected to restore the rebound momentum to $67.15 {21-day simple moving average} and the $68.00 mark.

Today, you can consider going long on WTI crude oil near 66.40, stop loss: 66.20, target: 67.50, 68.00

Spot gold

Beijing time on July 2, Trump's tax cut bill ignited a wave of risk aversion, and the Fed's interest rate cut expectations heated up again. The gold market ushered in a new round of rising craze in early July 2025. The spot gold price soared on Wednesday, hitting the highest level since June 24 near $3356.00/ounce, rising for two consecutive trading days. Currently, spot gold is trading around $3355/ounce. Gold prices rose more than 1% on Tuesday. Investors have sought safe-haven assets after US President Trump's "Big and Beautiful Bill" was passed in the Senate and the July 9 deadline for suspending trade tariffs is getting closer; the newly passed budget bill provides support for gold prices because it seems to increase the deficit by $3 trillion over the next 10 years. This will stimulate inflation to a certain extent. More importantly, it will increase the debt burden, and debts must be repaid through more financing and more borrowing. All of these are more beneficial to the gold market.

From the daily chart, gold is currently running above the Bollinger Channel, and the Bollinger central axis is at $3,344, indicating that long and short trading has not yet broken the equilibrium state. The upper and lower tracks of the Bollinger Channel are located at $3,420 and $3,268 respectively, forming obvious upper and lower track limits. Recently, the price has been supported near $3,250 many times, while the upper side is blocked near $3,400, and repeated tests have failed to effectively break through. In the short term, the trend of gold is still in a sideways trend, and key catalysts are yet to trigger a breakthrough. The technical indicator MACD shows that the fast and slow lines are in a short position. Although the bar chart shows signs of shortening, there is no obvious bottom divergence signal, indicating that the market repair has not yet been completed. The RSI index remained stable near 51, indicating that the price still has room to go up. If the price effectively falls below the support of $3,300, there is a risk of accelerated correction to $3,250; on the contrary, if it can stand firm at the central axis of $3,344 and break through $3,400 with large volume, it is expected to open up space and challenge the resistance of $3,420.

Today, you can consider going long on gold near 3,353, stop loss: 3,350 target: 3,375, 3,380

AUD/USD

The Australian dollar was flat at around $0.6580 on Wednesday. Data from the Australian Bureau of Statistics showed that retail sales grew 0.2% in May, higher than the revised flat level in April, but lower than the market's expectation of 0.4% growth. In addition, the growth of building permits was also lower than expected, exacerbating concerns about the weak economic outlook. The data reinforced market expectations that the RBA will cut interest rates by 25 basis points to 3.60%, with markets increasingly leaning toward further easing in the second half of the year, potentially lowering the cash rate to 3.10% or even 2.85% - levels seen as stimulative. Meanwhile, the Australian dollar found some support as the dollar lingered at multi-year lows, coupled with a weaker US dollar and an increased likelihood of a rate cut by the Federal Reserve and uncertainty over President Trump's proposed spending bill.

AUD/USD was trading around 0.6580 on Wednesday. Daily technical analysis shows a persistent bullish bias as the pair remains within an ascending channel pattern. The 14-day relative strength index (RSI) remains above 50, reinforcing bullish sentiment. Moreover, the pair is trading above its 21-day simple moving average of 0.6512, suggesting strong short-term price momentum. On the upside, AUD/USD could rebound to a new eight-month high of 0.6590 set on July 1. A successful break above this level could support the pair to test the upper line of the ascending channel, around 0.6650. On the other hand, the 21-day SMA of 0.6512 appears to be a major support level. A break below this level will weaken short-term price momentum and test the rising 50-day SMA near 0.6466.

Consider going long on AUD near 0.6566 today, stop loss: 0.6553, target: 0.6620 , 0.6630

GBP/USD

GBP/USD fell more than 1% at one point, breaking below $1.36 to a near one-week low of 1.3560, affected by political turmoil and growing uncertainty over the UK's fiscal leadership. Speculation surged after Chancellor of the Exchequer Rachel Reeves appeared emotional during Prime Minister's Questions, while Prime Minister Keir Starmer did not clearly support her, following the government's 180-degree turn on a controversial welfare bill. Although Downing Street denied any signs of resignation and the Treasury attributed Reeves' reaction to personal reasons, the market is increasingly uneasy. The situation has heightened concerns about fiscal credibility, especially given the recent budget withdrawal and limited fiscal room. Investors are worried that the instability around Reeves' position could derail the UK's economic plans, triggering a sell-off in the market. Meanwhile, Bank of England policymaker Alan Taylor called for a faster pace of rate cuts, warning of rising risks of a hard landing.

From the daily chart, GBP/USD climbed to a 45-month high this week on a bull wave, testing above 1.3780 for the first time since October 2021. The pair also closed in the rising range for the fifth consecutive month as the US dollar weakened across the board. GBP buyers have gained an advantage recently as GBP/USD price quickly surpassed the rising trend line and moved well above the 20-day simple moving average, close to 1.3585. The 14-day relative strength index RSI, a technical indicator, is at 67, close to the overbought zone, warning of a possible pullback. The first support level is at the 1.3600 round number mark, and a break below it will see the 1.3560 {Wednesday low} level. As for the upside, the 1.3700 mark is the first resistance level, followed by this week's high of 1.3789, and will continue to look towards 1.3800 {market psychological mark}.

Today, you can consider going long on the pound around 1.3650, stop loss: 1.3640, target: 1.3700, 1.3710

USD/JPY

The yen weakened against the dollar to around 143.65 yen per dollar on Wednesday, retreating from a three-week high after US President Donald Trump threatened to impose a 35% tariff on Japanese imports to force Tokyo to make trade concessions. Trump called the negotiations with Japan "very difficult" and once again criticized the country for its unwillingness to accept American cars and rice. Meanwhile, domestic data released earlier this week showed that business confidence among large manufacturers unexpectedly rose in the second quarter, highlighting the resilience of the economy despite growing external risks. On the external front, the Japanese yen was supported by growing dovish expectations for Fed policy and concerns over the inflationary impact of President Trump’s tax and spending bill, which have weighed on the greenback.

From a technical perspective, the negative oscillator on the daily chart suggests that any subsequent rise towards the 144.00 level could be seen as a selling opportunity. This in turn should limit USD/JPY to the 21-day simple moving average, which is currently around the 144.55 area. Follow-through buying that results in a breakout above the 144.55 level would allow the spot price to recapture the psychological 145.00 mark. On the other hand, the 143.40-143.35 area could offer some support ahead of the 143.00 round number mark and overnight lows in the 142.70-142.65 area. Failure to hold the aforementioned support would reaffirm the short-term negative bias and put USD/JPY at risk of accelerating its decline towards the May month lows in the 142.15-142.10 area. The downtrend may extend further and test levels below 141.00.

Consider shorting USD around 143.85 today, Stop Loss: 144.00, Target: 142.90, 142.70

EUR/USD

EUR/USD traded slightly below 1.1800 during the Wednesday session, ending its winning streak since June 18. The pair fell slightly after hitting a high of 1.1830 on Tuesday, the highest level since September 2021, which can be attributed to the slight rise in the US dollar. The dollar strengthened as the latest showed that US manufacturing economic activity improved in June. The US ISM Manufacturing Purchasing Managers Index rose to 49.0 from 48.5 in May. In addition, the US JOLTS job vacancies rose to 7.76 million in May, while the job vacancies reported in April were 7.395 million. The data was higher than the market expectation of 7.30 million. Preliminary data showed that the eurozone inflation rate was 2% as expected, remaining within the European Central Bank's target range. Meanwhile, ECB Chief Economist Philip Lane pointed out that the central bank's recent tightening cycle has ended.

The daily chart shows that the uptrend remains intact after the winning streak since June 18, but the EUR/USD pair seems ready for a potential correction. The "cross star" formed after a rise of more than 3.29% suggests that consolidation may occur. But the 14-day relative strength index (RSI) of the technical indicator shows that bullish momentum remains. If EUR/USD breaks through 1.1800, the next resistance will be the yearly high of 1.1829, followed by 1.1886 {September 2021 high}, and 1.1900 {round mark}. In case of further weakness, if the pair falls below 1.1750, it is expected to slide to the key support level of 1.1700 {round mark}.

Today, you can consider going long on the Euro around 1.1780, stop loss: 1.1766, target: 1.1850, 1.1860

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