U.S. Dollar Index

The U.S. Dollar Index initially fell but later rebounded to trade above 98.50, as the CPI report had limited impact on market expectations for the Federal Reserve’s next policy move. Headline inflation rose in line with monthly and annual forecasts, while core inflation came in lower than expected, suggesting that overall price pressures—particularly from recently imposed tariffs—remain contained for now. Following the data release, traders modestly increased their expectations for rate cuts, though the market still anticipates two cuts by year-end, with the first likely in September. Fed Chair Jerome Powell cautioned that inflation may pick up over the summer due to tariff effects, signaling that rate cuts could be delayed. Looking ahead, upcoming PPI and retail sales data later this week will offer more insight into the state of the U.S. economy. The dollar mostly gained against the yen and the euro.

After rebounding slightly from a multi-year low of 96.38, the Dollar Index is now trading just above 98.50. A previous false breakout occurred within a downward wedge pattern. The index is currently hovering above the 21-day moving average (97.73) and testing key resistance at 98.83 (50-day moving average)—a former support zone that has now turned into resistance. Momentum indicators are showing early signs of recovery, though overall sentiment remains cautious. The 14-day Relative Strength Index (RSI) has climbed to the neutral 50 level, indicating a hesitant but improving trend. A daily close above both the wedge’s upper boundary and the psychological 98.00 level could signal a potential breakout from the recent downtrend, strengthening the bullish case for further upside. Such a move may pave the way for a rally toward the 98.83–99.00 range. On the downside, immediate support now lies at 97.76 (Monday’s low); a break below this level could attract selling pressure and expose the 14-day moving average target at 97.36.

WTI Spot Crude Oil

WTI crude oil edged slightly lower on Tuesday to $65.65, following a nearly 3% drop on Monday as investors weighed U.S. President Trump’s new threat of sanctions against buyers of Russian oil—a move that could impact global oil supply. At the same time, concerns persist over Trump’s tariff policies. Trump announced new weapons support for Ukraine and warned that unless Moscow agrees to a peace deal within 50 days, new sanctions will be imposed on those purchasing Russian oil. Traders are assessing whether the U.S. will impose steep tariffs on countries that continue trading with Russia. Markets viewed the development as mildly negative, interpreting the 50-day window as leaving room for negotiation and delaying the likelihood of immediate sanctions. Meanwhile, EU envoys are reportedly nearing consensus on the 18th round of sanctions against Russia, which includes proposals to lower the oil price cap.

For now, oil prices remain in a period of choppy consolidation amid multiple uncertainties. In the short term, Trump’s 50-day ultimatum eases immediate sanction concerns, though the risk of broader tariffs still threatens global economic stability. Looking to the medium term, if sanctions are implemented or Russia cuts output in response—coupled with falling inventories—oil prices could regain upward momentum. On the daily chart, WTI remains within a short-term downward channel, currently trading just below the 20-day moving average at $67.09. Prices have closed lower for three consecutive sessions, indicating short-term bearish pressure. The MACD indicator shows a widening bearish crossover, with weakening momentum bars suggesting that downside momentum has yet to fully play out.

Key support lies at $64.71 (50-day moving average). A break below this level would open the door for further downside toward the June 24 low at $63.72. On the flip side, if prices hold above the 50-day moving average and show signs of a bullish reversal, a rebound could retest the $67.09 (20-day MA) and $68.00 (200-day MA) resistance zones.

Spot Gold

Gold prices fell sharply on Tuesday, dropping more than 0.55% as the latest U.S. inflation report pushed the U.S. dollar higher, placing pressure on precious metals. Despite risk-off sentiment and comments from President Trump, gold failed to find support and instead declined, currently trading around $3,325, after reaching an intraday high of $3,366. Market sentiment remains mixed as U.S. equities fluctuated following the release of the June Consumer Price Index (CPI). Both headline and core inflation rose year-over-year, indicating that tariffs are beginning to drive up prices. As a result, traders now seem to believe that the Federal Reserve will hold rates steady and wait for more data ahead of the Jackson Hole Symposium and the September FOMC meeting. This week, market focus will shift to producer price inflation, retail sales, labor data, and the University of Michigan consumer sentiment report.

In summary, gold is currently at a critical juncture, caught between opposing market forces. On one hand, trade tensions and geopolitical risks offer support for gold; on the other hand, a stronger U.S. dollar and rising Treasury yields continue to weigh on the metal.

From a technical perspective, gold faces strong resistance around $3,375. A decisive break above this level could open the door for further gains toward $3,400 (a key psychological level), followed by the June 16 high at $3,445.70. On the downside, support lies in the $3,324–$3,310 range (50-day to 70-day moving averages). A break below this zone could trigger a deeper pullback. Additional support can also be found around the $3,300 psychological level and $3,252.80 (89-day moving average).

AUD/USD

The Australian dollar weakened against the U.S. dollar on Tuesday, slipping to around 0.6515 following the release of key economic data from China. Australia's largest trading partner reported Q2 GDP growth of 5.2% year-on-year, slightly below Q1’s 5.4% but above the 5.1% forecast. On a quarterly basis, China's GDP rose 1.1%, exceeding market expectations of 0.9%. However, June retail sales disappointed, rising only 4.8% year-on-year compared to expectations of 5.6% and a prior reading of 6.4%. In contrast, industrial production came in strong at 6.8%, beating the 5.6% forecast. Geopolitical tensions have resurfaced, and with the U.S. dollar showing signs of strength, AUD/USD may face renewed headwinds. Meanwhile, Westpac’s Consumer Sentiment Index for Australia rose 0.6% in July, following a 0.5% increase in June.

As of Tuesday, AUD/USD was trading around 0.6515. Technical analysis on the daily chart shows that the pair remains in an upward channel, suggesting persistent bullish sentiment. The 14-day Relative Strength Index (RSI) is slightly above 50, reinforcing the bullish bias. However, the pair is hovering near the 14-day moving average (0.6516), indicating neutral short-term momentum.

On the upside, the pair could soon retest the 8-month high of 0.6595, reached on July 11. A breakout above this level would likely strengthen the bullish case, potentially setting the stage for a move toward the November 2024 high of 0.6687. On the downside, initial support is seen at the 0.6500 psychological level. A break below this would weaken sentiment and may expose the pair to further  downside toward the lower Bollinger Band near 0.6442.

GBP/USD

GBP/USD fell by another 0.67% on Tuesday, marking its eighth consecutive daily decline. The drop came as U.S. CPI inflation rose in June, boosting demand for the U.S. dollar as a safe haven and reigniting concerns that the Fed may delay rate cuts until later in the year. Inflation in the U.S. quietly picked up at the end of Q2. While most figures met or exceeded expectations, investors are feeling the pressure of rising prices. The annualized CPI rate for June rose to 2.7%, pulling further away from the Fed's 2% target. As inflation remains persistent, hopes for near-term rate cuts have diminished. According to the CME FedWatch tool, traders now fully expect the Fed to hold rates steady at its July meeting. Following the CPI release, the probability of a September rate cut has also decreased, with a 44% chance of no change. However, the market remains optimistic about rate cuts in 2025, with an 80% chance of a 25bps cut in October, and expectations for further easing in December.

On the daily chart, buying momentum for the pound has weakened since last week, pushing GBP/USD to a three-week low of 1.3378. The pair has pulled back from multi-year highs set in early July and is now testing below the 55-day moving average (1.3482) for the first time in nearly three months. The 14-day Relative Strength Index (RSI) has fallen below the 50 neutral level, opening up more room to the downside.

If the pair continues to drop below the key psychological level of 1.3400, the lower Bollinger Band at 1.3397 may act as the next support, followed by the 89-day moving average at 1.3324. On the upside, a break back above the 55-day MA at 1.3482 is critical to reigniting a recovery. The next resistance is the psychological 1.3500 level, and a successful break above that would likely lead to a test of the 30-day  MA at 1.3571.

USD/JPY

USD/JPY surged over 0.86% during the North American session, reaching 148.95 and approaching the 149.00 mark for the first time since April 2025. A slightly hotter-than-expected U.S. CPI report sent U.S. Treasury yields soaring, as traders ruled out the likelihood of near-term Fed rate cuts.

According to the Bureau of Labor Statistics (BLS), June’s CPI rose 2.7% year-over-year, still well above the Fed’s 2% target. Core inflation also ticked higher, nearing the 3% threshold, as President Donald Trump once again criticized the Federal Reserve, saying it should cut rates by 3%. Money market pricing suggests the Fed will hold rates steady between 4.25% and 4.50% in June. The U.S. 10-year Treasury yield, which is closely linked to USD/JPY, rose 4.5 basis points to 4.483%, providing firm support for the dollar.

The recent break above the 100-day Simple Moving Average (145.79) and the subsequent strong move through the 147.00 level have acted as major bullish triggers for USD/JPY. Moreover, a bullish golden cross has formed, with the 9-day MA (146.39) crossing above the 100-day MA (145.79). Oscillators on the daily chart are also gaining positive momentum, yet remain well short of overbought territory. This suggests that the path of least resistance remains to the upside, supporting the continuation of the two-week rally.

Looking ahead, the next key resistance is the 200-day SMA around 149.71. A break above this could open the door toward the psychological 150.00 level, followed by the April 2 high at 150.50.

On the downside, any meaningful pullback is likely to be viewed as a buying opportunity around the  148.00 area, with the next key support at 147.56 (130-day SMA).

EUR/USD

EUR/USD declined more than 0.8% on Tuesday, retreating to its lowest levels in nearly three weeks, as U.S. Consumer Price Index (CPI) data showed inflation rising in June—reversing the recent disinflation trend. This prompted investors to reassess their bets on a possible Fed rate cut in September.

Inflation in the U.S. picked up gradually at the end of Q2. Although the data largely met or exceeded expectations, investors are still feeling the weight of rising prices. According to the CME FedWatch tool, markets now fully expect the Fed to keep rates unchanged at its July meeting. After the CPI release, the probability of a September rate cut dropped, with 44% odds for no change. Still, markets remain optimistic about two rate cuts in 2025, with an 80% chance of a 25-basis-point cut in October, followed by another cut in December.

From a technical perspective, EUR/USD is showing a neutral-to-bearish short-term trend, having fallen below the 14-day Simple Moving Average at 1.1730. If the daily close remains below this level, sellers will aim to clear the next support zones at 1.1592 (Tuesday's low) and 1.1582 (34-day SMA). Further support lies at the 45-day SMA near 1.1507, followed by the key psychological level at 1.1500.

From a momentum standpoint, the 14-day Relative Strength Index (RSI) is hovering near the neutral 50 level. A clear break below 50 could accelerate downside pressure.

To resume a bullish outlook, buyers would need to push the pair back above 1.1700, followed by a breakout of the July 10 high at 1.1750, then on to 1.1800, and potentially the 2024 high at 1.1830.

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