US Dollar Index

The US Dollar Index rose on Monday to 98.65, the highest level in nearly a week, supported by easing trade tensions following the newly announced US-EU trade agreement. Under the deal, a 15% tariff will be imposed on EU exports to the US—lower than the 30% rate initially threatened by President Trump. In addition, US and Chinese officials are scheduled to meet today to discuss ongoing trade issues. It is widely expected that the current trade truce, which expires on August 12, will be extended.

Market attention is also shifting to the Federal Reserve’s monetary policy decision later this week. No changes are expected to the federal funds rate, but several key economic indicators will be released in the coming days to provide more insight into the state of the US economy. These include GDP growth, non-farm payrolls, personal consumption expenditure inflation data, and the ISM Manufacturing PMI. For now, concerns about the economic impact of tariffs appear to have eased slightly.

Last week, the US Dollar Index posted a modest gain, rebounding from the support level at 97.10, which is now viewed as a potential higher low. Although the rebound has technical characteristics, it contrasts with the broader trend of dollar weakness expected this week, as traders turn their focus to upcoming central bank meetings in the US and Japan.

Is this rebound a technical correction or the start of a reversal? While the index remains in a long-term downtrend, a breakout above the 34-day moving average at 97.83 signals a shift in short-term momentum. Technically oriented buyers are eyeing the July 17 high of 98.93 and the psychological resistance at 99.00 as the next potential targets. Some initial selling pressure is expected at those levels, but a decisive break could open the way for further gains toward 98.93.

However, traders remain cautious. A move back below the 50-day moving average at 98.30 would invalidate the bullish setup, with support then shifting back toward the 97.50 area.

WTI Spot Crude Oil

WTI crude oil surged more than 2% on Monday, reaching $66.70 per barrel, driven by renewed geopolitical concerns following US President Donald Trump's ultimatum to Russia regarding a ceasefire in Ukraine. Trump warned that Russia has 10 to 12 days to comply or face a 100% “secondary tariff,” raising fears of potential supply disruptions.

Prior to this, the European Union had introduced new sanctions, including a lower price cap on Russian oil and a ban on refined products from third countries. These measures are set to take effect in January. If fully implemented, they could tighten global oil supply—especially considering the limited spare capacity within OPEC.

Prices were also supported by Trump’s announcement of a $750 billion EU agreement to purchase US energy. However, the risk of oversupply persists, with expectations that OPEC+ may raise quotas again in September. Meanwhile, the extension of the US-China trade truce could slightly ease concerns about demand.

WTI is currently trading near $66.50, easing some of the recent bearish pressure as fundamentals and technicals align. A break below the 50-day simple moving average at $65.50 would expose the 100-day average at $64.59 and the round-number support at $64.00. This confluence zone is critical. Failure to hold above it could open the way to the June low of $63.73. A clean break would then target the major psychological level at $63.00.

On the upside, resistance remains at the 50.0% Fibonacci retracement level of the January–April decline at $67.08, followed by $68.36—the high from July 14.

Spot Gold

On Monday, July 28, international gold prices declined for the second consecutive session, pressured by a stronger US dollar, improving risk sentiment, and the recently announced US-EU tariff agreement. During the day, spot gold fell to its lowest level in nearly three weeks as traders remained cautious ahead of the upcoming Federal Reserve interest rate meeting. Spot gold settled at $3,314.30 per ounce, down 0.69%, with an intraday low not seen since July 9. COMEX August gold futures closed 0.56% lower at $3,316.90, marking a fourth straight day of losses.

The US dollar gained further positive momentum, becoming a key factor suppressing gold. In addition, renewed optimism around global trade boosted market sentiment, further reducing demand for safe-haven assets like precious metals. However, dollar bulls appear reluctant to take aggressive positions ahead of more clarity on the Fed's rate-cut path. As a result, investor attention is now focused on the outcome of the two-day Federal Open Market Committee (FOMC) meeting starting Wednesday, which is expected to shape the next move for both the dollar and non-yielding gold. Key US macroeconomic data releases this week will also help determine the direction of the gold/USD pair.

Technically, after two failed attempts to break above and a false breakout from the descending trendline (connecting the all-time high near $3,500 and the lower peak of $3,452 on June 16), bears have regained control. A bearish engulfing pattern has formed on the daily chart, indicating renewed downside pressure. Strong bearish momentum has pushed gold down over 2.5% in the past three days, erasing more than half of the gains from the $3,246 to $3,438 rally. The 50% Fibonacci retracement level at $3,342, which aligns with the 20-day moving average, has been broken, bringing the key psychological support at $3,300 into view.

A clean break below $3,300 could trigger significant long liquidation, exposing downside targets at $3,285.30 (89-day moving average) and $3,284.50 (lower Bollinger Band). However, $3,311 (Monday’s low) and $3,312 (80-day moving average) remain important short-term support levels and could limit further downside. On the upside, initial resistance lies at the Bollinger mid-band around $3,345.90, followed by the $3,400 level.

AUD/USD

The Australian dollar weakened against the US dollar on Monday, marking a third consecutive day of losses and touching a near one-week low of 0.6515. Traders are awaiting developments from the scheduled meeting between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, taking place Monday in Stockholm. According to sources cited by the South China Morning Post on Sunday, both sides are expected to extend the current tariff truce by another three months. The Financial Times also reported that the US has temporarily frozen export restrictions on key technologies to China in an effort to keep trade relations stable. Given the close trade relationship between China and Australia, any shift in China’s economic outlook tends to influence the Australian dollar.

Markets will be closely watching Australia’s Q2 CPI data due Wednesday, which will play a critical role in shaping the Reserve Bank of Australia's next rate decision. RBA Governor Michele Bullock reaffirmed last week the central bank’s commitment to keeping inflation low and stable while acknowledging the ongoing uncertainty in the global economy.

Technically, the recent pullback in AUD/USD may be partly driven by profit-taking after a sharp rally. On the daily chart, price action remains contained within a rising wedge pattern. Last Thursday, the pair reached 0.6625—an eight-month high—testing the upper resistance of the wedge. A decisive breakout above this level could invite further buying interest, targeting the November high at 0.6687, and potentially extending to the round number resistance at 0.6700 if sustained.

However, Thursday’s long upper wick candle signaled weakening bullish momentum. The current session has formed a full-bodied bearish candle, reinforcing the reversal signal and suggesting potential further downside. The recent low at 0.6515, along with the psychological level at 0.6500, forms a key support zone. A break below this zone would expose the lower Bollinger Band at 0.6483 and the 89-day moving average at 0.6435.

GBP/USD

The British pound slipped below 1.3400 against the US dollar at the start of the week, pressured by renewed dollar strength following the announcement of a new US-EU trade framework. Spot prices fell toward a near two-month low around 1.3350, with the rebound lacking bullish conviction as traders appear hesitant ahead of a week filled with key central bank events and high-impact economic data.

Upcoming releases—including the US Q2 GDP advance estimate, the PCE price index, and the closely watched non-farm payrolls report—are likely to drive the US dollar and set the tone for GBP/USD in the days ahead. While the risk-on sentiment sparked by the US-EU trade deal has somewhat weighed on safe-haven demand for the dollar, providing limited support to GBP/USD, expectations that the Bank of England could cut rates in August are tempering bullish bets on the pound.

From a technical perspective, although GBP/USD has previously broken above the 50-day simple moving average at 1.3533 and the psychological level at 1.3500, the pair has since pulled back but still retains a slight upward bias. On the daily chart, the 14-day Relative Strength Index (RSI) has turned bearish over the past two weeks, now hovering around 40—suggesting sellers currently have the upper hand.

In the near term, GBP/USD may test the key psychological level at 1.3300. A break below this would expose further support at the 100-day simple moving average near 1.3329, followed by 1.3274—the low from May 20. On the upside, a recovery above 1.3400 could bring 1.3450 and the 1.3500 resistance area back into focus.

USD/JPY

The Japanese yen continued to weaken against a broadly stronger US dollar, pushing USD/JPY to a one-week high near 148.55 during Monday’s European session. Optimism surrounding the new US-EU trade agreement supported positive market sentiment, reducing demand for safe-haven assets like the yen.

In addition, easing inflation in Japan and growing political uncertainty have led to a decline in market expectations for an immediate rate hike by the Bank of Japan. This further pressured the yen. While the Japan-US trade agreement has helped reduce economic uncertainty and could pave the way for policy normalization by the BoJ, such expectations have offered limited support to yen bulls so far.

On the other hand, the US dollar has gained from growing market acceptance that the Federal Reserve is likely to maintain higher interest rates, given ongoing concerns about inflation and a still-strong labor market. This backdrop has supported a third straight day of gains for USD/JPY ahead of this week’s key central bank events and economic data from the US.

On the daily chart, USD/JPY rebounded last week from the 38.2% Fibonacci retracement level of the January–April move at 147.14. The 14-day Relative Strength Index (RSI) has climbed to 58, indicating more room to the upside before entering overbought territory. Buyers are now eyeing resistance near the 50% retracement level at 149.38, which could reinforce bullish momentum.

A break above the 149.00–149.38 zone could open the way toward the recent high at 149.63, which aligns with the 200-day simple moving average. Beyond that, the next key psychological target is 150.00. On the downside, initial support lies at 148.03 (June 23 high), followed by the 20-day simple moving average at 147.58.

EUR/USD

On Monday, the euro initially climbed to $1.1770 but quickly reversed all gains, falling 1.28% to $1.1585—its lowest level in two weeks—under pressure from broad US dollar strength. The move followed market reactions to the newly announced US-EU trade agreement. The deal includes a 15% tariff on European exports, half of the 30% initially threatened by the US. Certain products, such as aircraft parts and specific chemicals, are exempt, while auto tariffs will be capped at 15%. The agreement also includes EU commitments to purchase US energy and increase investment in the US.

While many investors welcomed the deal as a step toward easing trade tensions and restoring stability, much of the agreement was already priced in. Moreover, some in Europe view the agreement as punitive and unfavorable to the EU. Meanwhile, market attention is now turning to the upcoming Federal Reserve policy decision later this week.

EUR/USD consolidated last week after reaching a high of 1.1788, just shy of the key 1.1800 psychological barrier, before pulling back toward the 1.1600 level. Although the 14-day Relative Strength Index (RSI) remains in bullish territory, momentum is fading as the indicator approaches neutral levels.

Currently, the pair has broken below the 20-day simple moving average at 1.1705, opening the way for a retest of the 1.1600 support area. A further decline would expose support at the 55-day simple moving average near 1.1530, with the next psychological level at 1.1500.

On the upside, holding above the 1.1600 level would bring the 9-day simple moving average at 1.1685 into focus, followed by resistance at the 1.1800 mark.

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