USD

Due to heightened risk aversion on Tuesday, the U.S. dollar is likely to rise. An increase in U.S. Treasury yields may help support the dollar. Vice President Kamala Harris has garnered support for the main candidate nominated by the President. The dollar index, which measures the value of the dollar against six other major currencies, has recovered its daily losses and is trading around 104.30 during the early European session on Tuesday. As investors assess the political situation in the U.S. and remain cautious ahead of key data releases later this week, the currency market generally maintains range-bound trading. The recent uptrend of the dollar index has converged, hovering again near the 200-day moving average around 104.39. Rising U.S. Treasury yields provide support for the dollar, with 2-year and 10-year U.S. Treasury yields at 4.52% and 4.25%, respectively. As expectations for a Fed rate cut in September increase, the dollar faces pressure. Last week, Fed Chairman Jerome Powell noted that this year's three inflation readings have "somewhat increased market confidence" that inflation is likely to sustainably meet the Fed's target, suggesting that rate cuts may be imminent.

Technically, the dollar index may rise slightly this week, but the bearish outlook remains unchanged, mainly because the index faces challenging times to rise above the 220-day simple moving average at 104.52, and the recent resistance area above the level of 104.59 (38.2% Fibonacci retracement of 106.13 to 103.65). Technical indicators such as the 14-day Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), which are still in negative territory, further support the bearish stance, indicating continued downward momentum. On the downside, attention can be given to below the psychological barrier of 140.00, followed by the July low of 103.65 (on July 17), and 103.50 (the middle line of the downward channel). Conversely, if the index breaks above the 200-day moving average of 104.38 with significant trading volume, it could further test the levels of 104.59 and 104.89 (50.0% Fibonacci retracement).

Today, consider shorting the dollar index near 104.50, with a stop loss at 104.65 and targets at 104.15 and 104.10.

WTI Spot Crude Oil

 The trading price of U.S. WTI crude oil on Tuesday was approximately $78.50. Due to concerns about oil demand and increasing inventories, WTI prices slightly declined to a more than one-month low of $77.25. Against the backdrop of oil demand concerns and inventory increases, WTI prices fluctuated downward, nearing the lowest level in over a month. The U.S. second quarter Gross Domestic Product (GDP) and the June Personal Consumption Expenditures Price Index (PCE) will be released on Thursday and Friday, respectively. Federal Reserve policy inclinations may favor risk-sensitive assets like oil. On the other hand, demand concerns continue to weaken WTI prices. On Monday, the People's Bank of China unexpectedly cut both the one-year and five-year Loan Prime Rates (LPR), but it was not enough to boost the overall sentiment in the oil market. Meanwhile, with oversupply from OPEC+ and non-OPEC+ oil-producing countries, oil prices are expected to fall to around $70 next year.

Technically, the MACD indicator has just broken below the signal line, and the 14-day Relative Strength Index (RSI) is near the negative zone at 38.20, indicating minimal downward resistance for the commodity. There may still be pressure for adjustment in oil prices. Downside support is anticipated at 77.27 (61.8% Fibonacci retracement of $72.67 to $84.73). Stronger support will directly target $75.51 (76.4% Fibonacci retracement). As for resistance levels, they revisit $80.00 (a psychological market threshold), and $80.12 (38.2% Fibonacci retracement of $72.67 to $84.73), with the next level pointing to $81.88 (23.6% Fibonacci retracement), and further touching the upper channel line level at $82.90.

Today, consider going long on crude oil near $78.00, with a stop loss at $77.80 and targets at $79.50 and $79.60.

XAUUSD

After closing in the negative territory for the fourth consecutive trading day on Monday, gold rebounded on Tuesday, with prices exceeding $2400. Despite the resilience of the dollar, a pullback in U.S. Treasury yields helped gold maintain a moderate daily gain. Gold prices seem to benefit from the typical market caution and renewed concerns about the Chinese economy ahead of key U.S. earnings reports. Although risk-averse capital returned, the dollar turned defensive, following U.S. Treasury yields down from a two-week high. Concerns about a slowdown in the Chinese economy are growing. In this context, investors are rushing to buy traditional safe-haven assets like gold. However, as the world's largest consumer of gold, China's economic slowdown has sparked concerns about the physical demand for gold in the country. Despite recent price spikes, China's gold demand is currently experiencing cyclical weakness, but central banks in emerging markets, including China, may continue to buy gold frequently, whether or not it is made public. Traders are also eagerly waiting for Thursday's U.S. second-quarter Gross Domestic Product (GDP) report and Friday's June Personal Consumption Expenditures (PCE) inflation data before making any directional bets on gold prices.

From the daily chart, technical indicators such as the 14-day Relative Strength Index (RSI) support gold prices when they remain above the 50 level, currently at around 55.50. The 21-day and 50-day simple moving averages forming a "golden cross" bullish pattern are also still in effect, demonstrating a constructive outlook for gold prices. If the gold price rally intensifies, it will test $2408, the 38.2% Fibonacci retracement of the July rally. The next upward resistance is at the static level of $2425. A breakthrough targets the previous cycle's high of $2450, and above this, buyers will aim for the historical new high of $2483.80 set last week. On the other hand, if sellers return, gold prices may test $2385 (the 50% Fibonacci retracement) and $2381.30 (the 20-day simple moving average), paving the way for a further drop to the 50-day moving average support at $2360.50. The last line of defense for gold bulls is the psychological level of $2350.

Today, consider going long on gold before $2405.00, with a stop loss at $2402.00 and targets at $2420.00 and $2423.00.

AUDUSD

On Tuesday, the downward trend of the AUD/USD continued into another trading day, dragging the spot rate to a five-week low, nearing the key level around 0.6600. At the beginning of this week, the AUD/USD's decline was exceptionally strong due to the market's perception of a lack of positive news from China, coupled with further weakening in commodity prices and the People's Bank of China's interest rate cuts. Despite this, the AUD/USD fell for the sixth consecutive trading day on Monday, breaking the 0.6700 support level, and the decline was quite strong, opening the door for further significant short-term corrections. Additionally, as the Australian dollar remains dependent on the Chinese market, the People's Bank of China's unexpected rate cuts for both short and long terms also pushed down the yuan, impacting the AUD. As the Australian dollar is also seen as a proxy for the yuan, further selling pressure emerged. Moreover, the absence of significant stimulus measures and the ongoing weak economic outlook in China led to declines in copper and iron ore prices, further pressing the AUD. On the other hand, the Federal Reserve might ease policies in the medium term, while the Reserve Bank of Australia might maintain a restrictive stance in the long term, which could support the AUD/USD in the coming months.

The daily chart shows that the technical indicator, the 14-day Relative Strength Index (RSI), is now below 37, indicating a bearish trend. Immediate support for further declines in the AUD/USD is expected around 0.6600 (a psychological market threshold) and the 100-day moving average of 0.6607. If the AUD/USD breaks below this area, it may fall towards the June low of 0.6574 (on June 10), with the 200-day moving average at 0.6583 providing support before this point. Subsequently, the AUD/USD could target the May 6 low of 0.6558. If the bulls regain momentum, the near-term target is 0.6695 (23.6% Fibonacci retracement), followed by 0.6730 (the midline of the channel) and 0.6724 (the 14-day moving average).

Today, consider going long on the AUD at just before 0.6600, with a stop loss at 0.6585 and targets at 0.6650 and 0.6660.

 GBPUSD

The GBP/USD remains on the defensive, hovering near 1.2900 and struggling to find stable footing on Tuesday. The dollar remained steady after retreating on Monday, and a negative shift in risk sentiment prevented the currency pair from regaining its appeal. Early in the week, the GBP/USD consolidated above 1.2900, catching its breath after a surge in the dollar over the weekend, showing signs of stabilization near 1.29. As the market prepares for a new round of key data starting on Wednesday in both Europe and the U.S., GBP/USD is consolidating near the crucial level of 1.2925. GBP/USD traders will focus on Wednesday’s twin Purchasing Managers' Index (PMI) reports. The UK’s July manufacturing and services PMIs are expected to show slight increases, with the services PMI anticipated to rise to 52.5 from the previous 52.1. Friday’s U.S. PCE Price Index will round off the week's trading. Ahead of these data releases, there is help in calming the market’s ambiguous bets on a potential rate cut by the Bank of England in its August 1 policy decision.

Early in the week, GBP/USD on the daily chart edged higher to 1.2880 (midline of the upward channel) and above the psychological market threshold of 1.2900. Although the gains are modest, GBP/USD remains above 1.2900 despite a pullback from the 12-month high above 1.3000. Bulls still maintain dominance. This might be enough to suggest that the recent weakness in the pound has halted (or might even reverse). A 'pregnant candle' signal appears on the daily chart, and if confirmed at the close, this would indicate more solid support at 1.2900/1.2880. Near resistance is at 1.2948 (last week’s high) and 1.3000 (psychological market threshold), with a breakout targeting 1.3080 (upper line of the rising wedge on the daily chart), and potentially challenging 1.3100 or higher levels. Additionally, if there is a sustained break below the 18-day moving average near the 1.2850 area, it would challenge the bullish commitment near key resistance at 1.2820 (21-day moving average) and 1.2800 (psychological barrier).

Today, it is suggested to go long on GBP just before 1.2900, with a stop loss at 1.2885, and targets at 1.2940 and 1.2950.

USDJPY

Due to surging bets on an interest rate cut by the Bank of Japan, the USD/JPY fell to 156.00. With inflation still above 2%, it is anticipated that the Bank of Japan will further raise interest rates by 10 basis points. Investors are awaiting U.S. data for new guidance on interest rates. On Tuesday, the yen extended gains for the second consecutive trading day, likely attributed to heightened risk aversion. Traders have been evaluating the Bank of Japan's interest rate decision next week, where the central bank may raise rates to bolster the yen. According to market reports, senior ruling party official Toshimitsu Motegi urged the Bank of Japan to communicate more clearly its plans for normalizing monetary policy through gradual rate hikes, emphasizing the adverse impact of the excessive depreciation of the yen on the economy. Japanese Prime Minister Fumio Kishida added that the normalization of central bank monetary policy would support Japan's transition to a growth-driven economy. Market bets on a September rate cut by the Federal Reserve are rising, challenging the trajectory of the dollar, and USD/JPY faces challenges. Federal Reserve Chair Jerome Powell noted growing optimism about progress in tackling inflation over the past few months. At the same time, Federal Reserve Governor Christopher Waller stated that the time for lowering policy rates is getting closer.

The daily chart shows that USD/JPY was trading around 155.50 at the start of the week. The USD/JPY is currently below 158.13 (38.2% Fibonacci retracement from 151.85 to 161.95) and the psychological market threshold of 158.00, maintaining short-term downward momentum. Additionally, the 14-day Relative Strength Index at 34.39 reinforces the bearish outlook. USD/JPY may find significant support near the lows of June 4 at 154.52, and the June low of 154.55. Breaking below this level could lead to further declines toward the low of May 16 at 153.62. On the upside, near resistance is at the 14-day exponential moving average of 156.89. If this level is breached, USD/JPY could rise to 158.13 (38.2% Fibonacci retracement) and face resistance near the psychological level of 160.00.

Today, it is suggested to go short on USD just before 155.80, with a stop loss at 156.00, and targets at 154.80 and 154.70.

EURUSD

The EUR/USD has retreated to multi-day lows and has touched the 1.0840 area again amid renewed buying interest in the dollar ahead of key data releases later this week. Yesterday, the EUR/USD's modest rise was enough to partially offset the significant declines from the previous two trading days, although a convincing breakthrough of the 1.0900 barrier remains challenging. During the early Asian session on Monday, the EUR/USD briefly rose to just above 1.09. The dollar's decline provided some support for the currency pair. Rising bets on a Federal Reserve rate cut in September and vulnerabilities in the U.S. labor market exerted some selling pressure on the dollar. John Williams, President of the New York Fed, stated on Friday that rate cuts might be needed in the coming months, but not at the July policy meeting. On the euro side, the European Central Bank decided to keep rates unchanged, in line with market expectations. ECB President Christine Lagarde did not commit to a predetermined path for rate cuts, and the ECB still needs to maintain high interest rates. The ECB’s data-dependent approach may support the euro in the short term.

From a short-term perspective, the EUR/USD briefly fell below 1.0900 and is now testing support formed by the 38.2% retracement of the rally from the oscillation low of 1.0666 to the high of 1.0948 at 1.0840, and the 17-day moving average at 1.0839. The 14-day Relative Strength Index (RSI) is around 53.50, indicating that while buyers still hold control, the currency pair might encounter resistance near 1.0948 (last week's high). The next resistance level is at 1.10 (psychological market threshold). A clear break below 1.0840 - 1.0839 could open the door for further declines, potentially testing the 1.0800 (psychological market threshold) in the coming days.

Today, it is suggested to go long on the EUR/USD just before 1.0835, with a stop loss at 1.0820, and targets at 1.0885 and 1.0890.

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