Important calendar events
The dollar gained strength last week, and the dollar index rose from 98.0 to 98.5. U.S. Treasury yields also gained strength, providing support for the dollar, with the U.S. 10-year bond yield rising from 4.35% to 4.42%.
U.S. inflation came in above expectations, delaying market bets on early Fed easing, boosting the dollar. US Headline inflation jumped to 2.7% year-on-year in June from 2.4% in May, against expectations of a 2.6% reading. Monthly Consumer Price Index (CPI) came in at 0.3%, which was in line with expectations but exceeded May’s 0.1% print. Core CPI rose by 0.2% in June, up from 0.1% in May, but fell below expectations of 0.3%.
US Producer Price Index (PPI) on Thursday, however, was cooler-than-expected. PPI for June came in at 0.0% MoM, missing the 0.2% forecast and down from May’s 0.3%. On an annual basis, PPI rose by 2.3%, slower than May’s 2.7% and the expected 2.5%. Core PPI, which excludes food and energy, was also flat in June, easing from 0.4% in May, and landed at 2.5% annually.
The Fed held interest rates steady at 4.25–4.50% in June. Fed Chair Powell’s post-meeting press conference held hawkish undertones, hinting that policymakers remain cautious and are willing to wait before cutting interest rates again.
Last week’s hot inflation print showed that US inflation is moving away from the Fed’s 2% target, reinforcing the Fed’s decision to pause rate cuts. Currently, odds of a Fed rate cut in July are practically zero, while rate cut expectations in September dropped to 54% after the release of the US inflation report.
Fed Chair Jerome Powell has repeatedly warned that high US tariffs are pushing inflation up. President Trump, however, once more urged the Fed to bring interest rates down, threatening to replace Powell. Political pressure for lowering interest rates did not significantly affect the Fed rate cut expectations, however, as markets do not anticipate that Trump’s threats will affect monetary policy.
Fed commentary stayed cautious last week. While some policymakers hinted at room for cuts later this year, the tone remained data-dependent. Fed’s Daly stated that it is reasonable to expect two rate cuts by year-end, but mostly from September onward.
The dollar firmed late last week following the release of a series of upbeat US data. US Retail Sales for June surprised on the upside, rising by 0.6% MoM against 0.1% anticipated and following a contraction by 0.9% in May. The data signaled resilient consumer spending, despite the recent market volatility.
Jobless claims also fell to a three-month low of 221K for the week ending July 12 against expectations of 233K. The data pointed to a robust labor market, reinforcing the Fed’s cautious stance, and markets scaled back expectations of imminent Fed easing.
Final US GDP for the first quarter of the year came in lower than expected, showing a 0.5% contraction, down from initial estimates of 0.2%. Concerns that the US economy may be entering recession put pressure on the dollar last week.
This coming week, Fed Chair Jerome Powell is due to speak at a regulatory conference on Tuesday. A dovish stance could weaken the dollar, while a focus on inflation risks could keep it supported.
Key data releases this week that may affect the dollar include the following:
EUR/USD traded sideways last week, oscillating around the 1.163 level. If the EUR/USD pair declines, it may find support at 1.144, while resistance may be encountered near 1.183.
The Euro found some support against the rallying dollar last week ahead of this week’s ECB policy meeting on July 24.
Euro area final CPI came in at 2.0% year-on-year in June as anticipated, aligning with the ECB’s target and reducing immediate pressure for further easing. Core inflation, which excludes food and energy, remained steady at 2.3% annually in June as forecasted.
The ECB delivered another rate cut at its June meeting, lowering its main refinancing rate for the eighth consecutive time. ECB policymakers reduced the benchmark interest rate by 25 basis points to 2.5%. ECB President Christine Lagarde emphasized a data-dependent approach moving forward.
The ECB is widely expected to hold rates steady at its monetary policy meeting this week, with consensus leaning toward a final 25 bp rate cut later this year.
Several ECB policymakers have signaled a more cautious stance ahead of this week’s meeting, hinting that July may be too soon for another cut. This week, market participants will focus mostly on the ECB’s projections and Lagarde’s forward guidance. Any hint that cuts could be postponed beyond July would bolster the Euro, while renewed talk of easing may put pressure on the currency.
German ZEW economic sentiment rose to 52.7 in July from 47.5 in Jun,e against 50.8 anticipated, raising optimism about the Eurozone’s leading economy.
Eurozone GDP for the first quarter of 2025 was revised upward to reflect 0.6% expansion, up from 0.3% previously, beating the 0.4% consensus. The upward revision highlights resilience amid global trade headwinds.
GBP/USD edged lower last week, dropping from 1.350 to 1.340. If the GBP/USD rate goes up, it may encounter resistance at 1.378, while support may be found near 1.336.
Disappointing UK labor data put pressure on the Sterling last week. UK payrolls showed a decline of 41,000 jobs in June, marking the fifth consecutive monthly decline and registering a total annual drop of 178,000, its lowest since 2021. Meanwhile, the UK unemployment rate rose to 4.7% for the first time since 2021. Average annual wage growth dropped to 5.0% in June from 5.4% in May.
The data pointed to a softening labor market, raising expectations that the BOE could cut interest rates as early as August. In contrast, the Fed is seen as holding off rate cuts at least until September, putting pressure on the Sterling.
At the same time, Headline CPI rose to 3.6% year-on-year in June, up from 3.4% in May and beating expectations of 3.4%. Every month, CPI increased by 0.3% in June, up from May’s 0.2%, and in line with forecasts. Core CPI, which excludes food and energy, climbed to 3.7% YoY, above May’s 3.5% and above expectations around 3.5%.
Bank of England policymakers decided to hold rate cuts in a closely split vote in June. MPC members voted to keep interest rates steady at 4.25%, with the vote split 6–3 in favor of holding rate cuts.
BOE Governor Andrew Bailey’s post-meeting speech was slightly dovish, hinting at a gradual, data‑driven easing path, but cautioning that this isn’t a signal for an immediate rate cut. Bailey advocated for a slow and measured easing, highlighting labor market softness and rising energy risks tied to geopolitical instability.
GDP data showed that the British economy contracted by 0.1% in May, following a 0.3% decline in April, against expectations of 0.1% growth. This marked the second consecutive month of economic contraction, raising concerns about the UK's economic resilience.
This coming week, UK Flash manufacturing and services PMI data for July are due on the 24th. The growth of these two key sectors will provide indications of the British economic health and may affect the Sterling. On Friday, UK Retail Sales figures for June are expected to show improvement over May’s contraction.
USD/JPY surged to a three-month high of 149.2 last week but pared some gains towards the end of the week, dropping to 148.4. If the USD/JPY pair declines, it may find support at 142.5. If the pair climbs, it may find resistance at 149.2.
US tariff concerns were a key driver of the Yen last week, with US President Donald Trump threatening to impose higher reciprocal tariffs on imports from Japan starting on August 1.
The Yen also came under pressure last week as National inflation eased more than expected in June. Headline inflation dipped to 3.3% year-on-year from 3.5%. Core CPI, which excludes food and energy, cooled to 3.3% from 3.7% in May. Tokyo core CPI recently came in at 3.1% year-on-year in June, decelerating from 3.6% in May and missing estimates of 3.3%. Softening inflation reduced speculation around imminent BOJ rate hikes, weakening the Yen and pressuring bond yields.
Meanwhile, political uncertainty in Japan is putting pressure on the Yen after the country’s national elections on July 20. Sunday’s upper-house election saw the ruling coalition lose its majority, introducing uncertainty over Japan’s future fiscal policy and taxation.
The Bank of Japan held its policy rate at 0.5% in June and confirmed a slowdown in its bond-buying taper beyond the fiscal year 2026. BOJ policymakers unanimously chose to slow the tapering of government bond purchases, cutting the quarterly pace by half starting in April 2026. This effectively signals a more gradual exit from the stimulus.
BOJ Governor Kazuo Ueda’s commentary struck a cautious tone, yet with growing emphasis towards Japan’s inflation. Ueda emphasized that future rate moves would be data-dependent and hinted at a readiness to raise interest rates should inflation continue to go up.
Japan's economy remained stagnant in the first quarter of 2025, exceeding the anticipated 0.2% decline. On an annualized basis, GDP shrank by 0.2%, compared to -0.7% in the previous reading. The BOJ may delay interest rate hikes further to support the country’s weakening economy, especially if trade tensions rise.
Gold prices remained steady last week, trading near the $3,350 per ounce mark. If gold prices rise, they may encounter resistance at $3,450 per ounce, while if gold prices decline, support may be encountered near $3,244 per ounce.
Gold prices remained steady last week, amid softer US inflation, lower Fed rate cut bets, and US political turmoil.
Gold rose early in the week as new US tariff threats raised concerns about trade tensions. The possibility of higher tariffs on goods from Europe and Asia pushed investors toward safe-haven assets like gold.
Gold prices have typically been directed by the dollar’s movement, as the competing dollar typically loses appeal as an investment when the dollar rises. The dollar gained strength last week, and the dollar index rose from 98.0 to 98.5. U.S. Treasury yields also gained strength, providing support for the dollar, with the US 10-year bond yield rising from 4.35% to 4.42%.
Trump has renewed his attack on Fed Chair Jerome Powell, demanding immediate rate cuts. Both the Fed and markets, however, have largely ignored Trump’s threats, and rate cut expectations did not rise.
Gold prices are supported by rising Fed rate cut expectations. The Fed held interest rates steady at 4.25–4.50% in June, as expected. Fed Chair Powell’s post-meeting press conference held hawkish undertones, hinting that policymakers remain cautious and are willing to wait before cutting interest rates again.
Strong economic and inflationary US data last week boosted the dollar and US yields, dampening gold’s appeal. Last week’s hot inflation report showed that US inflation is moving away from the Fed’s 2% target, reinforcing the Fed’s decision to pause rate cuts. Currently, odds of a Fed rate cut this week are practically zero, while rate cut expectations in September dropped to 54% after the release of the US inflation report.
Fed Chair Jerome Powell has repeatedly warned that high US tariffs are pushing inflation up. President Trump, however, once more urged the Fed to bring interest rates down, threatening to replace Powell.
Oil prices remained relatively steady last week, and WTI price dipped below $66.0 per barrel mid-week but pared losses towards the end of the week, rising to $67.3 per barrel. If oil prices retreat, they may encounter support near $65.2 per barrel, while resistance may be found near $78.4 per barrel.
Last week, oil prices moved mainly due to a mix of geopolitical tensions and economic signals, with WTI falling below $66.0 per barrel. Early in the week, US President Trump’s 50-day deadline for Russia to end the Ukraine conflict eased supply concerns, pushing oil prices lower. US President Donald Trump announced on Monday that the US would impose 100% secondary tariffs on countries that continue to purchase Russian oil if Moscow does not reach a ceasefire agreement with Ukraine within 50 days.
However, ongoing drone attacks on oil fields in Iraqi Kurdistan mid-week raised concerns about the stability of the region, providing support for oil prices.
Rising Saudi exports and plans for higher OPEC+ output also weighed on oil prices. At the same time, global demand showed signs of slowing — China, Japan, and South Korea reported weaker consumption.
The US Energy Information Administration announced on Wednesday a surprise crude stockpile draw of 3.9M barrels for the week ending July 11. This was above the 1.8M expected draw, indicating reduced stocks, which boosted oil prices.
OPEC+ has raised its oil production for August by 548,000 bpd, well above the prior 411,000 bpd. This supply boost signals the cartel’s intent to allow oil prices to ease amid growing concerns over weakening global demand and trade uncertainties.
Oil prices are kept in check by high central bank interest rates. The Fed held interest rates steady at 4.25–4.50% in June, as expected.
Last week’s hot inflation report showed that US inflation is moving away from the Fed’s 2% target, reinforcing the Fed’s decision to pause rate cuts. Currently, odds of a Fed rate cut this week are practically zero, while rate cut expectations in September dropped to 54% after the release of the US inflation report.
Fed Chair Jerome Powell has repeatedly warned that high US tariffs are pushing inflation up. President Trump, however, once more urged the Fed to bring interest rates down, threatening to replace Powell.
Bitcoin hit an all-time high of $123.150 on Monday but deflated later in the week on profit taking, dipping below the $117,000 mark over the weekend. If BTC price declines, support can be found at $104,800, while resistance may be encountered at the all-time high of $123,150.
Ethereum shot up to $3,800 last week for the first time since December. If the Ethereum price declines, it may encounter support near $2,360, while if it increases, it may encounter resistance near $4,000.
Bitcoin surged early last week at the start of “Crypto Week”. Cryptocurrency regulations were discussed in the US House to make the US the “crypto capital of the world,” as President Trump has promised.
The US House passed major bill,s including the CLARITY Act, and the GENIUS Act on July 17 to regulate stablecoins. Pro-crypto regulatory developments drove institutional flows, pushing total crypto market capitalization past the $4 trillion mark.
Bitcoin price reached an all-time high above $123K on Monday but pared gains later in the week on profit-taking. ETF inflows remained strong last week, signaling persistent institutional demand, with spot Bitcoin ETFs accumulating approximately $15 billion in net inflows since May.
Bitcoin rose to historical highs due to strong institutional buying and optimism around regulatory clarity, which boosted investor confidence. After Bitcoin’s strong rally, many investors rushed to take their gains, leading to a dip in Bitcoin's price.
Cryptocurrency prices are affected by central banks’ interest rates. The Fed held interest rates steady at 4.25–4.50% in June, as expected.
Last week’s hot inflation report showed that US inflation is moving away from the Fed’s 2% target, reinforcing the Fed’s decision to pause rate cuts. Currently, odds of a Fed rate cut this week are practically zero, while rate cut expectations in September dropped to 54% after the release of the US inflation report.
BTC/USD 1h Chart
ETH/USD 1h Chart
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