US Dollar Index

The US Dollar continued its intraday uptrend this week following the release of the June Consumer Price Index (CPI) report, prompting traders to reassess expectations of the Federal Reserve easing monetary policy. As the market lowers its anticipation for imminent policy loosening, the dollar is strengthening, with the Fed now expected to maintain a wait-and-see approach until inflation shows clearer progress toward its 2% target.

The Dollar Index remains steady around 98.50, its highest level since June 23, with bullish momentum building. Part of the recent strength is attributed to technical factors, seen as a corrective rebound from a roughly 9% decline year-to-date. The index is approaching key technical targets, including the 50-day moving average and the psychological 100 level. Beyond inflation and tariffs, markets are also closely watching the US fiscal and debt outlook, along with political pressure from the Trump administration as Fed Chair Powell maintains current rates.

Over the past two weeks, the Dollar Index has steadily rebounded, finding support at the 9-day Simple Moving Average of 97.80. After a period of consolidation, the index has now broken decisively above the upper boundary of a descending wedge pattern, clearing the key 98.00 resistance level and advancing to 98.55 during US trading hours. This breakout confirms a short-term bullish continuation, opening the door for a potential move toward the 98.80–99.00 zone in the coming days, followed by 99.28, the 75-day Simple Moving Average.

Momentum indicators are turning more positive. The 14-day Relative Strength Index (RSI) has climbed to 57.23, suggesting growing buying interest as breakout momentum increases. However, the Average Directional Index (ADX) remains relatively weak at 12.44, indicating the trend is still in its early stages and may require further confirmation.

Immediate support lies at the 98.00 level, followed by the 9-day Exponential Moving Average at 97.80.

WTI Crude Oil 

WTI crude oil traded around $65.60 on Wednesday. Prices dipped slightly after U.S. President Donald Trump set a 50-day deadline for Russia to end the war in Ukraine, easing market concerns over potential supply disruptions. On Monday night, Trump announced new weapons support for Ukraine and threatened sanctions on buyers of Russian exports unless Moscow agrees to a peace deal within 50 days. This raised hopes of avoiding sanctions, contributing to the downward pressure on oil prices.

Additionally, a surprise increase in U.S. crude inventories last week signaled weaker demand, further weighing on prices. On the flip side, stronger-than-expected GDP data from China— the world’s second-largest oil consumer—could provide some support for WTI.

On the daily chart, WTI is trading near $65.60, just above the key support at the 40-day Simple Moving Average of $65.68. A sustained break below $64.88 (the 50-day SMA) would expose the June 24 low at $63.73. Momentum indicators show signs of deterioration, with the Relative Strength Index (RSI) falling to 46.50—indicating weakening bullish momentum, though it remains above oversold territory.

On the upside, resistance remains firm at $66.75, which aligns with recent highs from July 10–12 where WTI peaked and reversed. Further resistance is seen at $67.06, the 200-day SMA, capping any  short-term rebound attempts.

Spot Gold

Gold prices climbed to $3,345 per ounce on Wednesday, rebounding after two consecutive days of losses, as investors weighed rising U.S. inflation and ongoing trade developments. The June CPI posted its fastest increase in five months, suggesting that tariffs may be starting to contribute to inflationary pressures. With June’s CPI marking the largest monthly gain since January, the U.S. dollar index hit a near three-week high, and Treasury yields rose to a six-week peak—both factors putting pressure on gold earlier in the week.

Gold declined on Tuesday as market participants awaited further updates on tariffs, even as inflation data came in broadly in line with expectations. While short-term price action has turned slightly bearish, overall market sentiment has not shifted fully to the downside. Despite gold remaining within a consolidation range since mid-May, uncertainty around tariff policy continues to offer underlying support. Long-term sentiment remains optimistic, with many expecting renewed upward momentum as trade tensions evolve.

The current gold market presents both challenges and opportunities. In the short term, prices are likely to continue ranging between $3,300 and $3,400. However, in the longer term, factors like geopolitical risk, inflation expectations, and a broader easing trend in monetary policy may provide tailwinds for gold. The uptrend remains intact, but continued weakness could pose a risk to bullish momentum. The 14-day Relative Strength Index (RSI) has turned mildly bearish but remains neutral overall, suggesting no clear dominance by bulls or bears.

On the downside, if gold breaks below the key psychological level of $3,300, the next support lies at $3,257.30 (the 89-day moving average). On the upside, a break above $3,350 would target $3,400 (a round-number resistance), followed by $3,445.70—the high from June 16.

AUD/USD

The Australian dollar strengthened to around 0.6530 on Wednesday, snapping a three-day losing streak as investor focus shifts to Thursday’s labor market data, which could provide fresh insights into the Reserve Bank of Australia's (RBA) policy outlook. The RBA has recently adopted a cautious, data-dependent stance, citing a more balanced inflation outlook and continued labor market resilience. A strong jobs report could cast doubt on the market’s current 80% probability of a rate cut at next month’s meeting.

Markets currently expect a 20,000 increase in employment for June, with the unemployment rate holding steady at 4.1%. Meanwhile, hotter-than-expected U.S. inflation data has dashed hopes for a Fed rate cut in September, renewing concerns over higher import tariffs and limiting gains in the risk-sensitive Australian dollar. On the trade front, former President Trump cut tariffs on Indonesian goods to 19% in exchange for major purchase commitments, while warning of over 10% tariffs on smaller countries.

AUD/USD traded near 0.6530 on Wednesday. From a technical perspective, the pair remains under moderate bullish bias. The 14-day Relative Strength Index (RSI) is hovering around the neutral 50 level, indicating a balanced market. However, the pair has slipped below the 9-day Simple Moving Average (SMA) at 0.6540, suggesting weakening short-term momentum.

On the upside, AUD/USD may attempt to retest the 9-day SMA at 0.6540. A clear break above this level could revive bullish momentum and support a move toward the July 11 high at 0.6595—an eight-month peak. Continued strength may push the pair toward the November 2024 high at 0.6687.

On the downside, the pair is testing support at the lower boundary of its ascending channel near 0.6510 and the psychological 0.6500 level. A break below this support zone would weaken short-term momentum and expose the pair to further downside toward the 70-day SMA near 0.6460.

GBP/USD

GBP/USD rebounded above 1.34 on Tuesday after briefly dipping to 1.3365, ending an eight-day losing streak. The move followed a surge in U.S. consumer inflation for June, which reignited safe-haven demand for the dollar and renewed concerns that the Federal Reserve may delay its anticipated rate cuts. U.S. CPI rose quietly into the end of Q2, with the annual rate climbing to 2.7%—well above the Fed's 2% target. Despite data generally meeting or exceeding expectations, rising prices are putting pressure on market sentiment.

As inflation remains sticky, hopes for an early Fed rate cut have diminished. According to CME's FedWatch tool, traders now fully expect the Fed to keep rates unchanged at the July meeting. The probability of a September cut has dropped to 44%, though markets remain optimistic about rate reductions in 2025, with an 80% chance of a 25 basis point cut in October and expectations for further easing in December.

From a technical perspective, GBP/USD has been under steady pressure since early July, falling to a three-week low at 1.3365. The pair pulled back from a multi-year high reached earlier this month and, for the first time in nearly three months, traded below the 55-day Simple Moving Average (1.3482). The 14-day Relative Strength Index (RSI) has dipped below the 50 neutral line, signaling potential for further downside.

If the pair fails to hold above the psychological 1.3400 level, the next support lies at 1.3397 (lower Bollinger Band), with further downside risk toward 1.3324 (89-day SMA). On the upside, reclaiming the 55-day SMA at 1.3482 is essential to resume bullish momentum. A break above this level would  open the door to 1.3500 (round-number resistance) and potentially 1.3571 (30-day SMA).

USD/JPY 

On Wednesday, the Japanese yen attempted to recover some recent losses against the U.S. dollar amid swirling but subsiding speculation that President Donald Trump may consider firing Federal Reserve Chair Jerome Powell. After three straight days of gains, USD/JPY climbed to an intraday high of 149.19 before retreating sharply toward the 147.00 level. Despite a strong start for the dollar, risk sentiment shifted during U.S. trading hours as uncertainty surrounding Trump’s comments triggered a broad pullback in the pair.

Trump’s ambiguous remarks have added a layer of political uncertainty to a market already navigating shifting interest rate expectations and ongoing geopolitical trade risks. Tuesday’s U.S. CPI report indicated stronger consumer inflation, reducing the likelihood of near-term Fed rate cuts. However, Wednesday’s PPI data showed no change in producer-level inflation for June, providing a more mixed inflation outlook.

Technical Analysis:
The break above the June high of 148.03 and the subsequent move past the May swing high around 148.65 acted as a fresh bullish trigger for USD/JPY. However, with the 14-day Relative Strength Index (RSI) nearing 70 on the daily chart, the pair appears slightly overbought, suggesting a short-term consolidation or mild pullback may be due.

If the pair falls back below the 148.03 level and the psychological 148.00 threshold, it could drift toward 147.00 and further to 146.97, which aligns with the 9-day Simple Moving Average. On the upside, if USD/JPY regains strength above the 149.00 level and confirms the breakout, it could move toward the 200-day SMA near 149.70.  A further rally may push the pair to the psychological 150.00 level and potentially test the April 2 high at 150.50.

EUR/USD

As we enter mid-July, EUR/USD has entered a notable correction phase following several months of upward momentum, pulling back from its recent high of 1.1830. On Tuesday, the pair traded near a recent low at 1.1592, with both technical and fundamental signals suggesting increasing market divergence over the next directional move.

The U.S. dollar remains firm, supported by persistent expectations that the Federal Reserve will keep interest rates elevated. Although Trump’s announcement of a 35% tariff on Canadian exports starting August 1 sparked some concern, it hasn’t significantly dented the dollar’s resilience. On the euro side, weak signs of economic recovery in the eurozone and the European Central Bank’s cautious stance on monetary policy continue to weigh on sentiment, capping the euro’s upside. The pair’s previous strength has largely stemmed from internal dollar positioning and rebalancing rather than genuine eurozone economic improvement. Notably, the euro remains one of the most crowded trades among G10 currencies, suggesting possible near-term profit-taking pressure.

On the daily chart, EUR/USD shows a neutral-to-slightly-bullish bias. To regain upward traction, the pair needs to post a daily close above the 20-day Simple Moving Average (SMA) at 1.1682. A successful close would open the path toward 1.1700, followed by the July 20 high at 1.1749, then 1.1800 and the record peak at 1.1829.

On the downside, a break below the 1.1600 psychological level would bring attention to last Wednesday’s low at 1.1562. A move below that would expose the 50-day SMA at 1.1487, followed by the 1.1400 round-number support.

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