USD

The US Dollar Index moderately surged after the stronger-than-expected Q2 GDP report, offsetting previous losses and stabilizing at 104.30. Nonetheless, the likelihood of a Fed rate cut in September remains high, which seems to limit the dollar's upside potential. As signs of deflation steadily appear, market participants are increasingly confident about a potential rate cut in September, but Fed officials continue to adopt a cautious approach, remaining data-dependent. Therefore, attention has shifted to the upcoming key data, specifically the Core Personal Consumption Expenditures (PCE) data on Friday. The US private sector continues to expand healthily, with the S&P Global Composite PMI rising to 55 in July from 54.8 in June. In contrast, the S&P Global Manufacturing PMI fell to 49.5 from 51.6 in June, while the Services PMI edged up to 56 from 55.3. The CME FedWatch Tool continues to support the possibility of a rate cut in September, although the upcoming PCE data will largely determine the Dollar Index dynamics for the rest of the week.

From the daily chart, the Dollar Index shows a neutral to bearish outlook, with major technical indicators remaining in negative territory, including the 14-day Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD). Meanwhile, the bearish signal of the 20-day (104.72) and 100-day (104.82) simple moving averages crossing in the 104.80 area remains, and the index has fallen below the 200-day (104.35) simple moving average, confirming the negative outlook. Support levels are at 104.00 (psychological level); the July low of 103.65 (July 17) from 106.13 to 103.65; and 103.50 (midline of the descending channel). On the upside, resistance levels are at 104.59 (38.2% Fibonacci retracement level) and 104.89 (50.0% Fibonacci retracement level).

Today, consider shorting the Dollar Index around 104.48, with a stop loss at 104.60, and targets at 104.15 and 104.10.

WTI Spot Crude Oil

Due to the decline in weekly crude oil inventories last week, WTI prices have halted their fall. The EIA crude inventory change report is expected to show an increase of 700,000 barrels for the week ending July 19. Israeli Prime Minister Benjamin Netanyahu will address the US Congress, seeking to shift American attention to the Middle East. The selling of oil seems to continue. WTI crude oil reached $77.25 per barrel this week, its lowest level since early June, and the lowest in nearly a month and a half. Earlier this week, it broke through the 50-day and 200-day moving averages, and there has been almost no support in the market since then. Weak demand from China has exacerbated market concerns. However, the market is approaching oversold territory, and market participants still believe that fundamental factors support prices rising from current levels for the remainder of the third quarter in a deficit environment.

From a technical perspective, the rebound in oil prices this week has also received some support. Although WTI crude oil fell by 7% over the previous three trading days, the mid-week rebound indicates that market confidence in oil prices is gradually recovering. The decline in oil prices may have been excessive, and the market is looking for opportunities to rebound. The MACD indicator has just crossed below the signal line, suggesting that there may still be downward pressure on oil prices. The support levels are expected to be $77.27 (61.8% Fibonacci retracement level from $72.67 to $84.73), $77.25 (Wednesday's low), and $76.40, with a major support level at $75.51 (76.4% Fibonacci retracement level), followed by the psychological level of $75.00. Resistance levels are seen at the 200-day moving average of $78.74 and the psychological level of $80.00, with the next level at $81.88 (23.6% Fibonacci retracement level).

Today, consider going long on crude oil around $78.70, with a stop loss at $78.55, and targets at $79.80 and $79.00.

XAUUSD

On Thursday, gold continues to face selling pressure, trading near a multi-week low of $2,353. In a market with subdued sentiment, the bright metal has retreated during the first half of the day. Leading the decline are stock markets, influenced by weak earnings reports and a significant drop in the tech sector. Gold prices extend their previous day's sharp pullback from the weekly high, facing heavy selling pressure for the second consecutive day. Despite the lack of clear fundamental catalysts, gold continues its downward trend, dropping over 1.0% in the Asian session to a two-week low near $2,366. However, various factors should help prevent further declines in the precious metal. The risk-averse sentiment indicated by the overnight plunge in US stocks and overall weakness in Asian markets may provide some support for safe-haven assets like gold. Traders need to be cautious about aggressive bearish bets on gold prices as they await the US PCE price index later this week, which will significantly influence the Fed's policy path and provide directional momentum for gold, a zero-yield asset.

From a recent technical perspective, a break below the psychological level of $2,400 and the support at $2,385.20 (50.0% Fibonacci retracement level from $2,286.80 to $2,483.70) might act as a new trigger for bearish traders. Additionally, the daily oscillators have just started to gain bearish momentum, indicating minimal downward resistance for gold prices. Therefore, the prudent approach is to wait for some follow-through selling, pushing gold prices below the 61.8% Fibonacci level at $2,362 and the 50-day moving average near $2,361. At that point, gold prices might further drop below the July 5 pivot near $2,348.60. On the other hand, if gold attempts to rebound, it may face resistance at the psychological level of $2,400. If prices continue to strengthen and break above this level, a rally towards the resistance at $2,408.50 (38.2% Fibonacci level) and further up to the $2,423 - $2,425 area could be expected.

Today, consider going long on gold before $2,360.00, with a stop loss at $2,355.00, and targets at $2,375.00 and $2,380.00.

AUDUSD

AUD/USD extended its significant nine-day pullback, dropping below the 0.6600 level on Wednesday and hovering below the critical 200-day moving average at 0.6585 during the Asian session on Thursday. So far, AUD/USD has completely reversed its monthly gains, driven by China's poor economic outlook, falling commodity prices, occasional USD strength, and the recent rate cut by the People's Bank of China (PBoC). Regarding the latter, the PBoC's unexpected decision to lower both short-term and long-term US Treasury yields earlier this week negatively impacted the yuan and, consequently, the Aussie, as Australia's economy relies heavily on the Chinese market, and the Aussie serves as a liquid proxy for the yuan. China's sluggish growth momentum is likely to hinder a sustained recovery for the Aussie, as China continues to face post-pandemic challenges, deflation, and insufficient economic recovery stimulus.

The first support level for further AUD/USD declines might be 0.6531 (61.8% Fibonacci retracement level from 0.6362 to 0.6798). A break below this would target the psychological level of 0.6500, followed by the May low of 0.6465 and the 2024 low of 0.6362 (April 19). On the other hand, any occasional bullish moves should encounter initial resistance at 0.6600 (psychological barrier) and 0.6635 (38.2% Fibonacci retracement level), followed by 0.6699 (23.6% Fibonacci retracement level) and the 0.6700 (round number) area.

Today, consider going long on the Aussie before 0.6520, with a stop loss at 0.6505, and targets at 0.6570 and 0.6580.

GBPUSD

On Thursday, GBP/USD maintained a bearish bias, breaking below 1.2900 during the US trading session. The dollar benefited from a risk-averse market atmosphere and stronger-than-expected US GDP data, leading to a decline in the pair. During the Asian session on Thursday, GBP/USD traded lower, reaching 1.2890. The increased probability of a rate cut by the Bank of England (BoE) in August weakened the pound. With no significant UK economic data releases, GBP/USD is influenced by the dollar. The BoE is expected to lower the bank rate to 5% at its August meeting next week, although the likelihood of a rate cut is much smaller than it was a few weeks ago. The case for a rate cut is still unclear. For the dollar, market participants expect the Fed to keep rates unchanged at next week's July meeting but predict the Fed will start easing monetary policy in September. Investors will gain more new momentum from this week's key US economic data. The preliminary July S&P Global PMI for the US, released on Wednesday, may confirm the rate outlook. Later this week, the US PCE price index will be released.

This week, GBP/USD has remained subdued for four consecutive days, around 1.2850. Despite stronger-than-expected UK PMI data, the pair failed to gain traction. Instead, sellers pushed GBP/USD below 1.2900 but failed to achieve a daily close below this level, which could pave the way for a deeper correction. According to the momentum angle of the technical indicator 14-day Relative Strength Index (RSI), buyers have the advantage, but in the short term, with the RSI slope pointing downward, sellers have entered the market. Therefore, GBP/USD may extend its decline. They will face the key level of 1.2900, and below 1.29, the next level will be the high of June 12 at 1.2860. Once these levels are removed, the next demand area will be 1.2800 (psychological level), and a break below will see the low of July 10 at 1.2779. Conversely, if buyers push the rate above 1.2942 (23.6% Fibonacci retracement level from 1.2612 to 1.2945) and 1.2945 (last week's high), the next resistance will be 1.3000 (psychological barrier).

Today, consider going long on GBP before 1.2840, with a stop loss at 1.2825, and targets at 1.2905 and 1.2910.

USDJPY

On Thursday, the yen reached a 12-week high of 151.93. Traders are unwinding carry trades ahead of next week's Bank of Japan (BoJ) policy meeting. With recent US PMI data allowing the Federal Reserve to maintain its restrictive policy, the dollar might appreciate. In the early Asian session on Thursday, USD/JPY faced some selling pressure, hitting a three-month low near 152.65. Bets on a BoJ rate cut next week are heating up, providing some temporary support for the yen. The BoJ is expected to debate whether to raise rates again and announce a plan to roughly halve its bond purchases over the next few years, possibly because more analysts believe a rate hike might occur now rather than in September. The BoJ's stance on bond purchases and the potential gradual reduction of such purchases will also be key topics to watch. Additionally, potential foreign exchange intervention measures by Japanese authorities might limit USD/JPY's upside.

This week, USD/JPY has continued its steep decline, dropping about 3%, as it broke below the critical support levels of the 134-day simple moving average at 153.78 and the May 16 low at 153.60. This paved the way for further declines, with the current price reaching a three-month low of 151.93. In the short term, USD/JPY has turned bearish after a clear break below these levels, opening the door to testing lower prices. The 14-day Relative Strength Index (RSI) is currently at an extremely oversold level of 29.50, but short-term momentum still favors the sellers. If USD/JPY continues to decline towards the next support area, it may turn even more oversold. The first support level for USD/JPY is the May 3 low at 151.85. Once this level is broken, it could point towards the psychological support level at 150.00. On the upside, for the bulls to regain control, they must reclaim the 153.60 - 153.78 area, which could then extend the rise towards 155.77 (61.8% Fibonacci retracement level from 151.85 to 161.95).

Today, consider shorting USD before 154.20, with a stop loss at 154.50, and targets at 153.10 and 152.90.

EURUSD

EUR/USD regained some balance after two consecutive days of declines, with the dollar's price action hesitant ahead of the critical Personal Consumption Expenditures (PCE) data release on Friday, rising to 1.0870. During the Asian session on Thursday, EUR/USD fell for the third consecutive day, currently trading near 1.0840. The Eurozone's economic outlook remains bleak, with expectations of further rate cuts by the European Central Bank (ECB) in September, leading to the continued downward trend of EUR/USD from the previous trading day. Earlier this week, ECB Vice President Luis de Guindos hinted at a possible rate cut in September as the central bank would have more information to reassess the monetary policy situation. ECB President Christine Lagarde indicated last week, after keeping policy rates unchanged, that the probability of a rate cut in September is "high" given the easing inflation pressures. Expectations of further rate cuts by the ECB might weigh on the euro in the short term. In the US, market participants expect the Federal Reserve to start cutting rates in September.

From a recent technical perspective, the next downside target level for EUR/USD is the important area comprising the 200-day moving average at 1.0816, the 50.0% Fibonacci retracement level from 1.0666 to 1.0948 at 1.0807, and the psychological level at 1.0800. Further support is at 1.0773 (61.8% Fibonacci retracement level). A break below these levels could open the door to the round number of 1.0700. On the upside, initial resistance is at the July high of 1.0948 (July 17), followed by the March high of 1.0981 (March 8), and the psychologically significant level of 1.1000.

Today, consider going long on USD before 1.0830, with a stop loss at 1.0820, and targets at 1.0870 and 1.0880.

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