The US dollar initially pulled back a bit during the trading session, but we have that FOMC meeting the next day on Wednesday. So, I don’t know if we will break out to the upside. It’s possible that maybe we do, but I certainly don’t want to throw a bunch of money into the market ahead of a significant announcement that’s going to move everything.
So, with that, I think you have to look at this as a market that, quite frankly, will more likely than not find itself in a more of a buy on the dip type of scenario. Now, the FOMC and the Federal Reserve could do or say something to upset the apple cart as it were, but any pullback from here, as long as we can stay above the 146 yen level, I look at it as value.
AUD/USD Technical Analysis
The Australian dollar continues to plunge and it is getting interesting, but we need to get below the 200 day EMA for me to start shorting. Otherwise, we could just bounce right back into this channel that we’ve been stuck in for what seems like a lifetime.
This is a pair that has been very difficult to trade, in the sense that it’s been such a grind and not much of a trend, although it definitely ended up trend, but it’s been a fight the whole way. With this, I’m waiting to see if we bounce from this area here to start buying. Otherwise, I’m looking forward to break down below the 200-day EMA and offering a nice shorting opportunity.
For a look at all of today’s economic events, check out our economic calendar.
Copper price is under negative pressures, which forces it to provide bearish correctional trading, but its stability above the support at $5.3200 forms the main factor to confirm the continuation of the positivity in the near and medium period trading, therefore, we will keep waiting for gathering the positive momentum to motivate it to target $5.7100, then wait to reach the next main target near $5.9700.
Note that the price decline below the mentioned support and holding below it, so that will confirm delaying the bullish scenario, to begin providing strong bearish correctional trading, to expect reaching $5.0650, then reach the next support base at $4.7200 level.
The expected trading range for today is between $5.4000 and $5.7100
Copper price is under negative pressures, which forces it to provide bearish correctional trading, but its stability above the support at $5.3200 forms the main factor to confirm the continuation of the positivity in the near and medium period trading, therefore, we will keep waiting for gathering the positive momentum to motivate it to target $5.7100, then wait to reach the next main target near $5.9700.
Note that the price decline below the mentioned support and holding below it, so that will confirm delaying the bullish scenario, to begin providing strong bearish correctional trading, to expect reaching $5.0650, then reach the next support base at $4.7200 level.
The expected trading range for today is between $5.4000 and $5.7100
The Pound to Dollar exchange rate (GBP/USD) has struggled to hold gains above 1.3450 as a firmer USD, boosted by the latest US-EU trade deal and upcoming Fed policy signals, weighs on near-term sentiment, though long-term forecasts, including from Wells Fargo, still point to a move towards 1.37 by end-2025.
The Pound-to-Dollar rate briefly hit 1.3450 in Asia on Monday before a retreat to test 1.3400 as the US currency gained net support following the US-EU trade deal.
Pound Sterling settled around 1.3430 as it attempted to resist a firm dollar and Sterling did have a firm tone on the crosses with net gains across most major pairs, notably the Euro.
ING sees the risk of further losses for the pair amid a firm US currency; “GBP/USD looks more vulnerable. Here, we favour a retest of decent support at 1.3370, below which losses can accelerate – perhaps all the way to 1.3150 if the US data/FOMC event risk this week is dollar positive enough.
According to UoB; “From here, we expect GBP to trade with a downward bias, but it is too early to determine if GBP can reach the major support at 1.3365.”
Wells Fargo sees scope for GBP/USD gains to 1.37 by the end of 2025 before a relapse to 1.30 by the end of 2026.
Overall risk appetite held firm with overall volatility grinding lower which helped underpin the Pound in global markets.
MUFG commented; “The biggest risk of market volatility that could undermine the positive FX carry momentum will come at the end of the week – with the release of the non-farm payrolls report.”
According to ING; “there is a huge amount of macro data and central bank action this week, which we think can provide some support to the dollar.
The Federal Reserve will announce its interest rate decision on Wednesday with strong expectations that rates will be held at 4.50%.
ING expects a mixture of solid data and residual inflation concerns will influence the decision.
It added; “This should leave the majority of the Federal Reserve comfortable in their patient position on interest rates (FOMC meeting on Wednesday) and see a further pricing out of the prospects of a September Fed rate cut.”
Markets remain very confident that the Fed will leave rates at 4.50%. There is the possibility of dissenting votes from Waller or Bowman and the guidance from Chair Powell will be watched very closely, especially given political pressure from the Administration.
According to Scotiabank; “For the statement, we note the risk of dovish dissents from both members of the board of governors as well as the regional Fed presidents.”
Rabobank commented; “US data release will be overshadowed by an FOMC decision. Has Trump’s visit to the Federal Reserve changed Powell’s mind? Have the recent trade deals – which bring lower tariffs than perhaps feared? And if not, will Powell’s reluctance to back a rate cut change Trump’s mind about letting the Fed Chair sit out his term?
It added; “Our US strategist expects the FOMC to stay on hold a little while longer, as they try to gauge the impact of tariffs on the US economy.”
According to MUFG; “Recent trade deals will be welcomed by the Fed as they help to dampen downside risks to growth and upside risks to inflation. We expect Chair Powell to continue to signal that they want to assess economic data over the summer to better determine the best path for policy going forward while sticking to plans to resume rate cuts later this year if inflation doesn’t surprise to the upside.”
ING also considers that the US Dollar is not an attractive funding currency, limiting potential selling pressure.
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Quick overview
USD/JPY closed the week at 147.67, supported by rising US yields and a dovish stance from the Bank of Japan.
Cooling inflation in Japan allows the BoJ to maintain negative rates, contrasting with the Fed’s hawkish approach.
Technically, USD/JPY is testing resistance at 147.72, with potential targets of 149.06 and 150.27 if it breaks above.
The upcoming central bank meetings could lead to significant volatility in the USD/JPY pair.
USD/JPY closed the week at 147.67. The yen is still on the back foot as global risk appetite and rising US yields continue to favor the US dollar. Traders are now focused on next week’s central bank decisions with both the Federal Reserve and Bank of Japan meetings on the calendar—keeping policy divergence front and center.
Rising Yield Gap and Cooling Inflation Boosts USD/JPY
The greenback is getting support from the Fed’s higher for longer rate strategy which is in contrast to the BoJ’s super dovish stance. Japan’s July Tokyo CPI dropped to 2.9% from 3.1% so inflation may be cooling. The slower inflation gives the BoJ more room to delay any shift away from negative rates.
In contrast the Fed is expected to re-affirm its hawkish tone with resilient US data and sticky core inflation. This widening interest rate differential is keeping the yen under pressure and fueling further upside in USD/JPY.
USD/JPY Technical Outlook: Momentum Builds But Resistance Looms
From a technical standpoint USD/JPY is at 147.65 testing the 50-SMA at 147.72 on the 4-hour chart. Price is still in a rising wedge so bullish but also looks exhausted.
Support zones: 147.00, 145.84 (trendline support), 144.25
Price bounced off the wedge lower trendline so buyers are still in control. But RSI has turned down from 56.81 so momentum is waning. Above 147.72 could unlock 149.06 and then 150.27, below 147.00 could expose 145.84.With both the Fed and BoJ announcing next week USD/JPY is set for big moves. The Fed is expected to hold rates steady and signal caution while the BoJ may downplay inflation risks.
As long as the interest rate gap is wide and Japanese inflation is soft the bias is for the dollar. But watch out for any surprises from the BoJ which could get the pair out of the range.
In summary:
USD/JPY is bullish above 147.00
Above 147.72 targets 149.06 and 150.27
Near term risk is below 147.00 for 145.84
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The US dollar has rallied a bit during the early hours on Monday, breaking above the 200 day EMA, and now it looks like we’re trying to get to the 149 level. This is an area that I think we could be looking at as a major barrier and if we can break the 149 yen level, then 151 yen would be your next target. Short-term pullbacks are probably buying opportunities, but we do have a Bank of Japan meeting here in the next few days, so I’d be very cautious with this pair right now, although I still like the idea of buying.
AUD/USD Technical Analysis
The Australian dollar has fallen pretty significantly against the US dollar, but at this point in time, we are looking at the 50 day EMA sitting just below as well as the bottom of this channel. So, I think you’ve got a situation where the buyers may come back sooner or later, not necessarily right away, but if the pattern holds, we’re just simply going to test the lower part of the channel and see yet another bounce. I don’t really like shorting this pair until we get below the 200 day EMA, but truthfully buying it is a bit torturous as well. It’s just grinding ever so slowly higher.
For a look at all of today’s economic events, check out our economic calendar.
Platinum price ended the correctional trading by testing the extra support at $1381.00, forming a confirmation key for the continuation of the positive continuation, attacking the barrier at $1420.000 level, to find an exit for resuming the bullish attempts.
Stochastic begins to provide positive momentum by its repeated stability above 20 level, which makes us wait for breaching the current barrier and holding above it, to ease the mission of targeting $1458.00 level, and surpassing it will provide a chance for achieving new gains that might extend to $1480.00 and $1507.00.
The expected trading range for today is between $1390.00 and $1458.00
The Pound to Euro exchange rate recovered to retake the 1.15 as the single currency weakened across global markets and risk appetite improved, helping lift Pound Sterling from earlier lows.
Barclays sees scope for GBP/EUR to recover towards 1.1765.
Foreign exchange analysts at Danske Bank, however, expect that the Pound to Euro exchange rate (GBP/EUR) will slide to 1.1240 over the next six to twelve months.
During the week, Pound Sterling posted sustained losses and dipped to test 3-month lows just above 1.1440 amid Euro gains and negative Pound sentiment.
In the short term, EU-US trade developments ahead of the August 1st deadline could be pivotal in determining whether GBP/EUR breaks below 1.1440.
Any deal could lead to further near-term Euro demand.
Credit Agricole sees scope for a limited Pound recovery; “Barring any massive data surprise, the GBP could still try to reverse its slight near-term undervaluation, especially as the UK-US trade deal could shelter the GBP at a time when the 1 August deadline looms large for the EU.”
According to Barclays, the Pound is now undervalued; “we think conditions are in place for EURGBP to converge towards lower levels more consistent with rate differentials and the VIX (c.0.85). (1.1765 for GBP/EUR)
Danske, however, expects that the weak UK fundamentals will lead to further Pound losses.
The latest UK business confidence data was mixed with a slight improvement in manufacturing offset by weaker growth in services.
There was further upward pressure on costs and a key element was evidence of weak demand, together with persistent inflation pressure which increased fears of stagflation within the economy.
According to ING; “Higher payroll taxes and a chunky rise in the National Living Wage back in April are exerting more significant downward pressure on staffing numbers, according to the latest PMI.”
It added; “But the PMI also suggests these policy changes are keeping upward pressure on prices. We’ve seen hints of this in the CPI data, principally in food, where inflation rates have picked up over and above what we’ve seen in the eurozone.”
Danske Bank commented; “the pressure on GBP has mounted as the UK economy has showed more pronounced signs of weakness. We increasingly see domestic factors and the relative growth outlook between the UK and the euro area as becoming GBP negatives.”
It added; “Additionally, we think a global investment environment characterised by elevated uncertainty, widening credit spreads and a positive correlation to a USD negative environment, in our view, favours a weaker GBP.”
There are very strong expectations of an August Bank of England rate cut.
JP Morgan expects quarterly cuts, but added; “if the MPC is increasing its focus on slack, then there is still a risk that more members on the MPC could shift their support for a faster pace of cuts in 2H25.”
The ECB held interest rates at 2.00% and there were hints of no further cuts.
According to Rabobank; “It was also very unlikely that Lagarde would give any new guidance for September. She didn’t. But, reading between the lines, her slightly more upbeat comments hinted at lower odds that the ECB will cut again.”
Danske Bank commented; “Our forecast anticipates a final 25 basis point reduction to 1.75% at the September meeting, though the risks lean towards leaving the policy rate unchanged.”
ING noted the possibility that talk could move towards rate hike; “if the trade tensions are resolved quickly and a lifting of uncertainty increased resilience of the eurozone economy, the debate at the ECB could quickly shift. From whether or not more rate cuts are needed to when to hike rates in order to tackle inflationary pressures stemming from fiscal stimulus.”
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The Pound US Dollar (GBP/USD) exchange rate slipped to a one-week low on Monday as markets digested the EU-US trade deal announced over the weekend.
At the time of writing, GBP/USD was trading at $1.3417, having touched a one-week low of $1.3407 earlier in the session.
The US Dollar (USD) advanced at the start of the week, lifted by relief among investors following a breakthrough trade agreement between the United States and the European Union.
The pact averts a potentially damaging trade conflict, with both sides stepping back from the brink after the US threatened to impose 30% tariffs on EU imports. In response, the EU had prepared to counter with so-called ‘anti-coercion’ measures.
Analysts suggest the deal strongly benefits the US, with one describing it as a ‘big win’ for President Donald Trump. Under the terms, the EU has committed to purchasing $750bn in energy and semiconductor products from the US over the next three years, alongside plans to invest $600bn in the American economy over the same timeframe.
The Pound (GBP) was on the back foot on Monday, slipping against the strengthening US Dollar as worries over the UK’s fiscal outlook dampened investor appetite.
Concerns about rising debt levels and the sustainability of public finances weighed on Sterling, particularly after high-profile hedge fund manager Ray Dalio warned that the UK is trapped in a ‘doom loop’ of mounting debt, elevated taxes, and weak growth.
His comments followed disappointing public borrowing figures and speculation that Chancellor Rachel Reeves may be forced to announce tax hikes in the autumn, having failed to deliver welfare reform.
Nevertheless, GBP/USD avoided steeper losses thanks to a broadly risk-on tone across European markets, which helped support the increasingly risk-sensitive Pound against other major currencies.
Looking ahead, Tuesday kicks off a packed schedule of US economic data, starting with the latest job openings report. Markets are bracing for a decline in vacancies during June – a result that could spark fresh concerns about labour market softness and weigh on the Dollar.
At the same time, the release of the US consumer confidence index may offset some of that pressure. Sentiment is forecast to have improved in July, which could help buoy the ‘Greenback’ if the data comes in strong.
In contrast, the UK calendar remains light, leaving the Pound likely to take its cues from broader market sentiment. If investors remain upbeat, risk appetite could lend Sterling some support while also potentially tempering demand for the safe-haven Dollar.
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The US dollar has been positive again during the Friday trading session as we are touching the 200 Day EMA, and perhaps more importantly for me, the ¥148 level.
This is an area that we have seen resistance previously, and the fact that the 200 Day EMA is sitting there as well makes quite a bit of sense.
All things being equal, this is a situation where I do think that you favor the upside due to the interest rate differential, and of course the fact that the Bank of Japan has to worry about a bond market that is quite frankly, pathetic.
Technical Analysis
The technical analysis for this pair is somewhat neutral in the short term, negative over the longer term, but in the intermediate term, it does appear that we are doing everything we can to turn things around and rally. I like buying small positions in this market in just simply collecting the swap at the end of every day, suggesting that I could be into this trade to the upside for months. If we can break above the recent swing high near the ¥149 level, that opens up the possibility of a move to much higher levels, perhaps even kicking off a longer-term “buy-and-hold” situation. I do think that eventually this is a being the case, because the US dollar is oversold, and unlike many other pairs, the US dollar is actually the currency that people buy when they are feeling more “risk on.”
If we were to turn around and fall from here, the ¥146 level is an area that I’m watching, as it is the 50 Day EMA sitting right there as well, and of course previously it has offered both support and resistance so I think a certain amount of “market memory” can be found there as well. That being said, the market is likely to continue to see a lot of interest in that area. At this point, I have no interest whatsoever in shorting this pair.
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
