Important calendar events
The dollar dipped last week, and the dollar index dropped from 98.6 to 97.3. U.S. Treasury yields remained steady, providing support for the dollar, with the 10-year U.S. Treasury bond yielding approximately 4.42%.
The dollar was under pressure last week due to concerns that the White House may be trying to undermine the Fed’s independence. U.S. President Donald Trump is putting pressure on the Fed to cut interest rates immediately. Fed Chair Jerome Powell has repeatedly warned that high U.S. tariffs are pushing inflation up, delaying rate cuts.
The clash between Trump and Fed Chair Jerome Powell continued with renewed vigor last week. A member of Trump’s administration has accused Fed Chair Jerome Powell of perjury, and Trump has once again threatened to fire Powell.
Fed rate cut expectations were not affected by the allegations, but the U.S. dollar and yields sank. In addition, Trump criticized Powell for the cost of the Fed’s renovation project during his visit to the central bank’s headquarters on Thursday. Trump’s open criticism of Powell is sparking concerns that the US government is attempting to influence the Fed’s monetary policy.
The Fed held interest rates steady at its previous policy meeting, 4.25–4.50% in June. The Fed is expected to leave rates unchanged again at its meeting this Wednesday, July 30. Powell’s speech after the meeting will attract considerable market attention, and his stance is likely to affect the dollar’s direction.
Fed Chair Jerome Powell emphasized a robust yet balanced capital framework in his opening address at the Integrated Review of the Capital Framework for Large Banks Conference. Powell emphasized the Fed’s commitment to making decisions based squarely on data and pushed back explicitly against political pressure to cut rates prematurely. Powell stressed the need to support financial stability and economic growth, trimming rate cut expectations.
Markets are pricing in a 60–65% probability of a first 25 bps cut in September, and a total of around 1.7 cuts by year-end. Policymakers have emphasized their commitment to a patient, data-dependent approach and are concerned about tariff-driven inflation.
On the data front, Jobless Claims dropped to 217K from 221K the week before, indicating that the U.S. labor market remains robust. Durable goods orders for June tumbled 9.3% but came in a bit better than the expected 10.4% decline. Core goods orders rose by 0.2%, against a 0.1% gain forecast.
Flash Services PMI rose to 55.2 in July from 52.9 in June. Flash Manufacturing PMI dropped to 49.5 in July from 52.9 in June, indicating that the U.S. manufacturing sector is beginning to contract.
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%.
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 week is data-heavy for the dollar, and increased volatility is expected. The most highly anticipated event of the week is the Fed rate announcement on July 30. Other key macroeconomic data coming up this week include:
EUR/USD was bullish last week, rising from 1.162 to 1.174. If the EUR/USD pair declines, it may find support at 1.155, while resistance may be encountered near 1.183.
The Euro edged higher last week, driven by the dollar’s weakness and rising optimism of a U.S.-EU trade deal.
The European Central Bank (ECB) held interest rates steady at 2% on Thursday after cutting rates eight consecutive times. The Euro gained strength after the ECB policy meeting, countering the dollar’s rally. The ECB held rates steady, as expected, but struck a cautious tone, acknowledging progress on inflation but warning of the possible effects of trade tariffs.
ECB President Christine Lagarde stated that the central bank monitors rates rather than targeting them, and that policymakers intend to work with the data that comes in moving forward.
Commenting on the EU-U.S. trade tensions, Lagarde stated that if the situation is resolved soon, it will clear the current climate of uncertainty. US-EU trade talks continue ahead of the August 1 deadline for new tariffs.
On Sunday, however, an unexpected trade deal helped ease tensions and is likely to cause volatility in the EUR/USD this coming week. U.S. President Trump and European Commission President Ursula von der Leyen announced a framework deal in Scotland imposing a 15% U.S. tariff on most EU exports, down from the threatened 30%. The package includes €600 billion in EU investments into the U.S. and a commitment to purchase around €750 billion in U.S. energy, while maintaining larger tariffs on steel and aluminum and granting exemptions for aircraft parts, semiconductors, certain chemicals, and agri-products.
Eurozone data was disappointing last week, with weak PMIs and business climate. EU Manufacturing PMI remained in contraction at 49.8 in July, up from 49.5 in June. Services PMI climbed to 51.2 in July versus 50.5 prior and against market estimates of 50.7.
German ifo business climate released on Friday edged up to 88.6 in July from 88.4 in June, marking the highest level in over a year, though it fell just short of the 89.0 anticipated, suggesting sentiment is improving but is still fragile.
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.
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 seesawed last week, rising from 1.340 to 1.359 mid-week, then paring gains and dropping to 1.343 at the end of the week. If the GBP/USD rate goes up, it may encounter resistance at 1.378, while support may be found near 1.336.
The Sterling slipped over the week, pressured by soft UK data and shifting Bank of England policy outlook.
UK retail sales for June, released on Friday, rose by just 0.9%, falling short of the 1.2% forecast. At the same time, May’s print was revised lower to reflect the 2.8% contraction, indicating weak consumer demand.
UK Flash Services PMI data for July came in at 51.2, below the 52.8 anticipated, indicating that the services sector’s growth is slowing down. At the same time, the UK manufacturing sector showed weak improvement in July, but remained in contractionary territory, with a print of 48.2, below the threshold of 50.0 that denotes industry expansion.
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.
Market odds of a BOE rate cut in August have gone up to 80%, while a total of two more rate cuts are expected by year-end. Sluggish economic growth and sticky inflation may force the BOE to cut interest rates more aggressively, putting pressure on the Sterling.
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.
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%.
USD/JPY plummeted from 148.4 to 145.8 at the beginning of the week, then rallied, rising to 147.6 at the end of the week. If the USD/JPY pair declines, it may find support at 142.6. If the pair climbs, it may find resistance at 149.2.
The Yen was volatile after the Japanese national elections as markets digested the election result. Last Sunday’s election resulted in the ruling LDP-Komeito coalition, led by PM Shigeru Ishiba, losing its majority in the upper house, following a loss of lower house control in October 2024. Ishiba has vowed to stay on for the time being, offering markets some reassurance, boosting the Yen.
Rumors of snap elections in Japan are putting pressure on the Yen, despite Ishiba’s reassurance that he will remain in office. Political instability in Japan, stemming from Ishiba’s weakened position, raises concerns about potential fiscal expansion and a weaker Yen in the long term.
Political instability in Japan, stemming from PM Ishiba’s weakened position after his defeat in Sunday’s national elections, raises concerns about potential fiscal expansion and a weaker Yen in the long term.
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. The Bank of Japan is expected to keep its policy settings unchanged this week on July 31, maintaining ultra-low rates as economic growth remains fragile. Markets will follow closely BOJ Governor Kazuo Ueda’s speech for forward guidance in these times of political turbulence in Japan.
Political uncertainty following the recent elections is complicating the BOJ’s policy outlook. PM Ishiba’s weakened political position may influence fiscal policies, such as proposed tax cuts and increased spending, which could affect inflation dynamics.
U.S. President Donald Trump announced a trade deal with Japan last week, setting a 15% tariff on Japanese imports, including automobiles, lower than the expected 25%, boosting market confidence. Elevated volatility in USD/JPY is anticipated as markets assess the trade deal and Japan’s shifting political landscape.
Ishiba commented on the trade deal, stating, "This agreement marks a balanced step toward strengthening U.S.-Japan economic ties while protecting our industries, and we will continue to negotiate for Japan's interests."
On the data front, Manufacturing PMI dropped to 48.8 in July from June’s 50.1, missing expectations of 50.2, signalling sector contraction. Meanwhile, Services PMI rose to 53.5 in July from 51.7 in June.
Cooling inflation in Japan has reduced BOJ rate hike expectations, weakening the Yen and pressuring bond yields. Tokyo core CPI came in at 2.9% year-on-year in July from 3.1% year-on-year in June, suggesting cooling price pressures. Headline inflation dipped to 3.3% year-on-year in June from 3.5% in May. Core CPI, which excludes food and energy, cooled to 3.3% from 3.7% in May.
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 were volatile last week, rising from $3,340 to $3,440 per ounce mid-week, then paring gains and dropping back to $3,340 per ounce. If gold prices rise, they may encounter resistance at $3,440 per ounce, while if gold prices decline, support may be encountered near $3,244 per ounce.
Gold prices moved in a tight range last week, driven by a mix of cautious risk sentiment and shifting expectations on Fed monetary policy. Gold prices gained strength early in the week, supported by a softer dollar and renewed speculation that the Federal Reserve could cut rates sooner than expected.
Cooling trade tensions lowered demand for safe-haven assets later in the week, however, capping gold’s gains. The announcement of a U.S.-Japan trade deal improved risk sentiment. In addition, a U.S.–EU trade deal was announced over the weekend and is expected to cause volatility in gold prices at the start of this week as markets assess rising trade optimism ahead of the August 1 deadline.
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 dipped last week, and the dollar index dropped from 98.6 to 97.3. U.S. Treasury yields remained steady, providing support for the dollar, with the US 10-year bond yielding approximately 4.42%.
US President Donald Trump is putting pressure on the Fed to cut interest rates immediately. Fed Chair Jerome Powell has repeatedly warned that high US tariffs are pushing inflation up, delaying rate cuts. The clash between Trump and Fed Chair Jerome Powell continued with renewed vigor last week. A member of Trump’s administration has accused Fed Chair Jerome Powell of perjury. Fed rate cut expectations were not affected by the allegations, but the US dollar and yields sank, boosting gold prices.
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. The Fed is expected to leave rates unchanged again at its meeting this Wednesday, July 30. Powell’s speech after the meeting will attract considerable market attention, and his stance is likely to affect the dollar’s direction.
Markets are pricing in a 60–65% probability of a first 25 bps cut in September, and a total of around 1.7 cuts by year-end. Policymakers have emphasized their commitment to a patient, data-dependent approach and are concerned about tariff-driven inflation.
Oil prices remained relatively steady last week, and WTI price traded close to $67.0 per barrel during the week but dipped to $66.0 per barrel at the end of the week. If oil prices retreat, they may encounter support near $65.2 per barrel, while resistance may be found near $70.0 per barrel.
Last week, oil prices edged lower, settling at three-week lows as demand concerns outweighed reduced supply. U.S. manufacturing data showed a surprising slowdown, with the ISM Manufacturing PMI falling below forecasts, fuelling concerns about weaker fuel consumption in the U.S. China’s recent industrial output and retail sales also missed expectations, intensifying fears of a global demand slowdown.
On the supply front, the US Energy Information Administration announced on Wednesday a surprise crude stockpile draw of 3.2M barrels for the week ending July 18. This was above the 1.4M expected draw, indicating reduced stocks, which boosted oil prices.
Oil prices came under additional pressure on Friday, after reports surfaced that the U.S. is preparing to allow Chevron to resume limited oil operations in Venezuela. The move raised the prospect of increased global supply in the coming months, adding to bearish sentiment already driven by weak demand signals.
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. The Fed is expected to leave rates unchanged again at its meeting this Wednesday, July 30. Powell’s speech after the meeting will attract considerable market attention, a nd his stance is likely to affect the dollar’s direction.
Markets are pricing in a 60–65% probability of a first 25 bps cut in September, and a total of around 1.7 cuts by year-end. Policymakers have emphasized their commitment to a patient, data-dependent approach and are concerned about tariff-driven inflation.
Bitcoin hit an all-time high of $123.150 last week but dropped below $115,000 this week as a risk aversion sentiment prevailed. Bitcoin price rallied towards the end of the week, climbing above $119,000 over the weekend. If BTC price declines, support can be found at $107,000, while resistance may be encountered at the all-time high of $123,150.
Ethereum remained steady last week, trading close to the $3,820 level. If the Ethereum price declines, it may encounter support near $2,430, while if it increases, it may encounter resistance near $4,000.
Bitcoin price reached an all-time high above $123K earlier in July but immediately deflated on profit-taking. Bitcoin lost ground last week, slipping nearly 3% as institutional demand faded and a risk-aversion sentiment prevailed. Spot ETF inflows slowed mid-week for the first time after two weeks of strong inflows, indicating reduced institutional demand.
Cryptocurrency prices are affected by central banks’ interest rates. The Fed held interest rates steady at 4.25–4.50% in June, as expected. The Fed is expected to leave rates unchanged again at its meeting this Wednesday, July 30. Powell’s speech after the meeting will attract considerable market attention, and his stance is likely to affect the dollar’s direction.
Fed Chair Jerome Powell emphasized a robust yet balanced capital framework in his opening address at the Integrated Review of the Capital Framework for Large Banks Conference. Powell emphasized the Fed’s commitment to making decisions based squarely on data and pushed back explicitly against political pressure to cut rates prematurely. Powell stressed the need to support financial stability and economic growth, trimming rate cut expectations.
Markets are pricing in a 60–65% probability of a first 25 bps cut in September, and a total of around 1.7 cuts by year-end. Policymakers have emphasized their commitment to a patient, data-dependent approach and are concerned about tariff-driven inflation.
BTC/USD 1h Chart
ETH/USD 1h Chart
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Written by:
Myrsini Giannouli
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