The U.S.-Japan deal includes 15% reciprocal tariffs and expanded market access for U.S. exports, ranging from autos and agricultural goods to rice. “The announcement defused immediate trade tensions and improved the global risk tone,” analysts at ING wrote, adding that precious metals came under pressure as capital rotated into equities and riskier assets.
At the same time, the U.S. dollar staged a mild recovery, bouncing from a two-week low. Although the rebound in the greenback was modest, it was enough to trigger profit-taking in gold, which had surged over 4% in the past five trading days. Technical traders noted the move as a corrective pullback rather than a trend reversal, citing persistent uncertainty in the Fed’s rate path.
Fed Signals and Political Pressure Keep Floor Under Gold
While the Trump-Japan deal improved sentiment, uncertainty over Federal Reserve policy continues to cloud the macro outlook. President Trump has renewed calls for lower rates and publicly questioned Fed Chair Jerome Powell’s leadership. Meanwhile, Treasury Secretary Scott Bessent has requested a review of central bank operations, sparking concerns about institutional independence.
“Political interference in monetary policy is unsettling for markets,” said Michael Saunders, a senior FX strategist. “That ambiguity around future rate decisions is preventing a full dollar recovery, thereby cushioning the downside in gold.”
Lower interest rate expectations tend to support gold, which offers no yield but benefits from a weaker dollar environment.
Flash PMIs and Housing Data to Set the Tone
Later today, traders will scrutinize the U.S. Existing Home Sales report, followed by global flash PMI releases, which could influence economic sentiment and precious metals direction.
Copper price witnessed a strong rise in its last intraday trading, to breach the key resistance at $5.73, amid the dominance of the main bullish trend on the short-term basis and its trading alongside a minor bias line, with the continuation of the dynamic support that is represented by its trading above EMA50, reinforcing the stability of this bullish track, especially with the emergence of the positive signals on the (RSI), despite reaching overbought areas.
Therefore, our expectations suggest a rise in (copper) price in its upcoming intraday trading, if it settles above $5.73, to target the critical resistance level at $5.89.
The expected trading range for today is between $5.65 and $5.89
Trend forecast: Bullish
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The average price of oil per barrel in 2025 is projected at $68.6, while the price of 1,000 cubic meters of gas is forecasted at $399, the Governor of the Central Bank of Azerbaijan, Taleh Kazimov, said during a press conference on the parameters of the interest rate corridor, APA reports.
He noted that by the end of this year, the current account surplus is expected to form around $3.6–4 billion.
The Pound to Dollar exchange rate (GBP/USD) was unable to regain 1.3500 on Tuesday and consolidated around 1.3480 after Monday’s significant recovery.
UoB commented; “The outlook for GBP has shifted from negative to neutral; GBP is likely to trade in a range between 1.3415 and 1.3535.”
According to Scotiabank; “we see a near-term range bound between 1.3450 support and 1.3520 resistance.”
The latest UK government borrowing data dented Pound sentiment, although the overall impact has been limited at this stage.
Longer-term, Credit Agricole has a year-end GBP/USD forecast of 1.37 from 1.40 previously.
The June UK budget deficit increased sharply to £20.7bn for June from £14.1bn the previous year, above consensus forecasts of £17.4bn and the second-highest June deficit on record.
One major contributory component was debt interest payments which more than doubled to £16.4bn from £8.0bn the previous year.
Monex commented on the headline data; “These overshot expectations yet again, a fact that should refocus minds on UK fiscal sustainability risks.”
It added; “As we have noted previously, this is not a sterling positive dynamic, leaving risks to the pound tilted to the downside ahead of Thursday’s PMI release.”
Saxo UK investor strategist Neil Wilson expects Autumn tax hikes and is focussing on the bond market reaction.
The 10-year yield has retreated to near 4.61% from earlier highs around 4.65% with the 30-year yield around 5.44%
According to Wilson; “we’re not yet back to yesterday’s highs so nothing to get jumpy about. But I do worry that we could see bond vigilantes hit gilts this autumn.”
Overall financial conditions will be a key element for both the dollar and Pound.
Scotiabank detects some warnings from US equity-market conditions; “it is clear that NYSE market breadth remains pretty poor—fewer stocks are driving broader index gains—which is not a great sign of health and we are right on the cusp of that time of the year when US equities typically hit a bit of an air pocket.”
The relationship between equities and the dollar fluctuates and is complex.
According to Scotiabank; “FX correlations with risk have normalized after an extended period in the spring when the USD tended to weaken with softer USD-denominated assets. But volatility might still be a test for the USD.”
The FTSE 100 index is testing record high, underpinning the Pound for now, but any slide in global equities would pose a threat to the Pound.
US trade developments will continue to be watched closely ahead of the August 1st tariff deadline with a high degree of uncertainty whether the Administration will look to extend deadlines.
Macquarie Group global FX and rates strategist Thierry Wizman commented; “Nothing that happens on August 1 is necessarily permanent, so long as the U.S. administration remains willing to talk, as was indicated in Trump’s letters from two weeks ago.”
Jonas Goltermann, deputy chief markets economist at Capital Economics looked at the interest rate implications; “Our base case remains that solid U.S. data and a tariff- driven rebound in inflation will keep the FOMC on hold into 2026, and that the resulting shift in interest rate differentials will drive a continued rebound in the dollar in the next few months”
He added; “But that view is clearly at the mercy of the White House’s whims.”
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Copper price witnessed a strong rise in its last intraday trading, to breach the key resistance at $5.73, amid the dominance of the main bullish trend on the short-term basis and its trading alongside a minor bias line, with the continuation of the dynamic support that is represented by its trading above EMA50, reinforcing the stability of this bullish track, especially with the emergence of the positive signals on the (RSI), despite reaching overbought areas.
Therefore, our expectations suggest a rise in (copper) price in its upcoming intraday trading, if it settles above $5.73, to target the critical resistance level at $5.89.
The expected trading range for today is between $5.65 and $5.89
Trend forecast: Bullish
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According to Japan’s Ministry of Finance, the value of exports for US-bound motor vehicles plunged 26.7% YoY in June despite actual exports rising 3.4%. Economists attributed the sharp fall in exports to carmakers slashing prices to offset the existing 25% auto tariff.
Notably, transport equipment (including cars) accounted for 22.7% of Japan’s total exports in June, underscoring the significance of the sector for the economy.
Falling export prices impact corporate profit margins, potentially impacting Japan’s labor market. Given the auto sector accounts for around 8% of Japan’s total workforce, sector-wide job losses could weigh on consumer sentiment and spending, further affecting the economy.
A deteriorating macroeconomic backdrop would likely close the door on a 2025 BoJ rate hike. A less hawkish BoJ policy stance could weigh on appetite for the Yen. On the other hand, a favorable trade deal may revive bets on a BoJ rate hike.
BoJ Chatter and Rate Hike Rhetoric in Focus
While trade talks take center stage, traders should monitor BoJ commentary for clues on the effects of tariffs on the rate path. BoJ Deputy Governor Shinichi Uchida is slated to speak on Wednesday, July 23. Views on recent inflation numbers, the effect of US tariffs on trade terms, and the timeline for further policy tightening would move the dial.
USD/JPY Daily Outlook: Housing Sector and the US Dollar
Later in the session on Wednesday, US housing sector data will give traders a snapshot of the US economy. Economists forecast monthly existing home sales to fall 0.7% in June after rising 0.8% in May.
The GBPJPY pair rose in its last intraday levels, affected by its lean on the support of minor bullish trend line on the short-term basis, gaining positive momentum, accompanied by the emergence of the negative signals on the (RSI), after reaching oversold levels, attempting to surpass the negative pressure on the EMA50, announcing its full recovery.
Therefore, our expectations suggest a rise of (GBPJPY) in its upcoming intraday trading, if the support settles at 198.70, to target the critical resistance level at 199.80.
The expected trading range for today is between 198.75 and 199.80
Trend forecast: Bullish
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The Pound US Dollar (GBP/USD) exchange rate initially slipped on Tuesday before bouncing back following the latest UK borrowing figures.
At the time of writing, GBP/USD was trading at $1.3493, having rebounded quickly from its initial dip.
The Pound (GBP) wobbled on Tuesday after UK public sector borrowing for June came in at £20.7bn – well above forecasts of £15.6bn and the highest since April 2021. Weaker tax revenues and elevated debt servicing costs drove the shortfall, fuelling concerns over potential tax hikes in the autumn.
Sterling initially slipped as investors digested the figures, but GBP/USD later rebounded after the Office for Budget Responsibility (OBR) offered reassurance. The OBR noted that borrowing for the April–June quarter is ‘exactly in line’ with its March forecast, at £57.8bn, with receipts and spending tracking expectations.
The fiscal outlook for the rest of the year also appears brighter, with the OBR anticipating lower borrowing in H2, driven by higher capital gains tax receipts, reduced debt interest, and normalised social benefit spending.
The US Dollar (USD) clawed back losses on Tuesday, stabilising after a shaky start to the week as traders turned their focus to an upcoming speech from Federal Reserve Chair Jerome Powell.
The ‘Greenback’ had come under pressure after former President Donald Trump renewed his attacks on Powell, urging the Fed to slash interest rates despite persistent inflationary concerns and the risk of tariff-fuelled price rises.
However, expectations that Powell will defend the Fed’s cautious stance and resist political pressure helped lift the Dollar. Investors anticipate that the Fed Chair will signal a steady-handed approach, reaffirming the central bank’s commitment to data-driven policy over short-term political demands.
With little on the economic calendar midweek, the Pound Dollar exchange rate may trade sideways in the short term. In the absence of fresh drivers, broader market sentiment and shifts in risk appetite are likely to steer movement.
The tempo picks up on Thursday, starting with the UK’s flash PMI figures. Analysts anticipate a strong showing from the services sector, with forecasts pointing to a rise to 53, its highest reading since August 2024. A solid print could give Sterling some upward momentum.
Across the Atlantic, the US S&P Global PMIs are also due. While not as closely watched as the ISM releases, a positive surprise could lend support to the Dollar. Meanwhile, weekly jobless claims will be closely monitored. Any uptick in filings may weigh on USD sentiment.
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Gold price retreats from over one-month highs above $3,400 on Tuesday.
The US Dollar consolidates the downside amid tariff uncertainty and Fed concerns.
Gold price settles Monday above the key Fibo resistance; any downside appears limited.
Gold price is reversing from over one-month highs of $3,403 reached in early Asia on Tuesday as buyers take a breather, awaiting clarity on potential US trade deals before the August 1 deadline.
Gold price is down but not out
The latest retracement in Gold price could be attributed to a bout of profit-taking after Monday’s nearly 1.5% rally and ahead of key earnings results from America’s tech giant – Alphabet Inc, this Wednesday.
A pause in the US Dollar (USD) and US Treasury bond yields sell-off also weighs on the Greenback-priced bright metal.
The fate of Gold price hinges on the USD’s performance, in the face of US President Donald Trump’s tariff talks.
Mounting uncertainty over US trade deals with Japan and the European Union (EU) weighed heavily on the Greenback at the start of the week on Monday, as it revived US economic growth concerns.
Citing some sources. the Wall Street Journal (WSJ) reported on Monday that “US officials have informed the EU’s trade chief that President Trump is likely to demand further concessions in ongoing trade talks, including a higher baseline tariff of 15% or more on most European goods, a significant increase from the previously discussed 10%.”
EU diplomats noted that the bloc is exploring a broader set of possible countermeasures against the US as doubts over a likely deal rise.
Meanwhile, Japanese political instability cast clouds on a likely US-Japan trade deal before the August 1 deadline.
Additionally, the US currency also felt the heat of the falling US Treasury bond yields amid persistent worries over the Federal Reserve’s (Fed) independence amid Trump’s repeated calls for Fed Chair Jerome Powell’s resignation.
The record rally on Wall Street indices also diminished the safe-haven appeal of the USD and the attractiveness of the yields, helping Gold price extend Friday’s gains.
Gold price technical analysis: Daily chart
As observed on the daily chart, Gold price closed Monday above the 23.6% Fibonacci Retracement (Fibo) level of the April record rally at $3,377.
Meanwhile, the yellow metal holds its position well above all major Simple Moving Averages (SMA) as the 14-day Relative Strength Index (RSI) stays comfortably above the midline, despite the latest downtick.
The technical setup, therefore, appears in favor of Gold buyers, with acceptance above the $3,400 mark needed to take on the static resistance at around $3,440.
Conversely, if the correction extends, Gold price could test the previous resistance-turned-support at $3,377, below which the $3,330 area could lend some support. That zone is the confluence of the 21-day SMA and the 50-day SMA.
Sellers must find a strong foothold below that demand area to test the 38.2% Fibo level of the same rally at $3,297 before targeting the July low of $3,283.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
The Euro-to-Pound exchange rate (EUR/GBP) was trapped in a narrow range on Tuesday despite a souring market mood.
At the time of writing, the GBP/EUR was trading at around €1.1528, virtually unchanged from Tuesday’s opening levels.
The Euro (EUR) found modest support on Tuesday, strengthening against several of its peers despite the absence of any notable Eurozone data releases.
Although muted against the Pound (GBP), a broadly cautious market tone helped lift demand for the safe-haven common currency, allowing it to edge higher against its risk-sensitive rivals.
However, the Euro’s gains were limited, as persistent concerns over US–EU trade relations acted as a headwind, tempering investor enthusiasm and keeping EUR performance relatively contained.
The Pound saw uneven trading on Tuesday, with its performance driven mainly by shifting risk appetite amid a quiet UK economic calendar.
Sterling managed to edge higher against its risk-sensitive rivals despite its own growing correlation with risk appetite, as an anxious trading environment dented demand for those currencies.
However, the Pound struggled to build momentum elsewhere, holding steady against safe-haven currencies such as the Euro, as the prevailing risk-off sentiment kept GBP gains in check.
Looking ahead to Wednesday’s European session, the Pound Euro (GBP/EUR) exchange rate is likely to remain subdued, with both currencies lacking clear direction in the absence of any high-impact domestic data.
With no notable UK or Eurozone releases scheduled, investors are likely to look ahead to more influential events later in the week.
The primary focus will be Thursday’s European Central Bank (ECB) interest rate decision.
While the ECB is widely expected to hold interest rates steady at its July meeting, the tone of the accompanying statement and press conference will be crucial in determining the central banks next move.
Any hints that further rate cuts remain on the table, especially in light of lingering concerns about weak growth across the bloc, could weigh heavily on EUR exchange rates.
Equally, if policymakers strike a more hawkish tone or express confidence in the Eurozone’s economic outlook, the single currency could find renewed support and push higher in the latter half of the week.
At the same time, the Pound may find fresh impetus from the UK’s upcoming flash PMI figures, also set for release on Thursday.
Markets are expecting the UK’s services PMI reading, the dominant sector of the UK economy, to remain in expansion territory, which could underpin GBP exchange rates.
Until then, however, the GBP/EUR exchange rate is likely to remain rangebound, as traders await Thursday’s key events.
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