Tuesday’s decline in US stocks was precipitated by deteriorating economic conditions, worries of a recession, and sky-high inflation. The dismal outlook of the world’s largest retailer, Walmart Inc., illustrates the effects of inflationary pressures on consumer spending. Concerns over a faltering global economy prompted investors to anticipate another 75-basis-point increase before to a widely anticipated Federal Reserve interest rate hike, with the total 150-bps interest rate spike in June and July reaching the highest level since the early 1980s.

Alphabet Inc., the parent company of Google, and Texas Instruments Inc. rose after earnings, but Microsoft fell due to its slowest revenue growth since 2020. In addition, the sales of McDonald’s Corp. and Coca-Cola Co. exceed expectations, and Coinbase Global Inc. is under investigation in the United States for allegedly allowing Americans to trade digital assets that should have been registered as securities, according to three individuals familiar with the situation.

The S&P 500 and Dow Jones Industrial Average both dipped on Tuesday as a result of the Fed’s threat to raise interest rates on Wednesday, recession fears, and disappointing earnings reports. The S&P 500 plummeted 1.19% daily, while the Dow Jones Industrial Average declined 0.7%. Eight of eleven sectors remained in the red, with Consumer Discretion and Communication Services having the worst performance of all categories, falling 3.38% and 2.20%, respectively. In the meantime, the Nasdaq 100 sank 2% on Tuesday, while the MSCI world index declined 0.9%.

Main Pairs Movement

As yesterday’s financial markets were dominated by aversion to risk, the US dollar rose on Tuesday, surrounded by bullish momentum, and approached the 107.30 level. During the first part of the trading day, the DXY index fluctuated in a range between 106.2 and 106.5. It then began to experience considerable purchasing pressure and reached a day high of over 107.2 during the US trading session. Escalating fears of economic slowdown in the Eurozone and the Russia-related energy crisis continued to boost demand for the safe-haven dollar, as the Russian gas giant Gazprom is supplying roughly 20% of its normal natural gas supply. The market’s attention will now move to the Fed’s monetary policy statements.

The GBP/USD exchange rate declined by 0.12% on Tuesday as the US dollar strengthened across the board. Investors continue to be anxious about the possibility of a worldwide recession, which has eclipsed the likelihood of a 50 basis point (bps) rate hike by the Bank of England in August. In the late European session, the GBP/USD pair plummeted to a daily low below the 1.197 level before regaining upward momentum to recover the majority of its daily losses. In the meantime, EUR/USD sustained significant losses yesterday and retested its daily low near 1.010 throughout the US trading session. EU nations also agreed to limit gas consumption during the upcoming winter. The pair fell over 1% for the day.

As investors await additional direction from the Federal Reserve’s monetary policy meeting, gold was little changed with a 0.10% loss for the day after moving sideways in a narrow range below $1719 in the late US trading session. The White House stated on Tuesday that it would sell 20 million barrels from the Strategic Petroleum Reserve, causing WTI oil prices to drop to around $95 per barrel.

Technical Analysis

XAUUSD(4-Hour Chart)

Gold does a little technical progress, consolidating around 1722.66 on Tuesday. From the technical perspective, the four-hour outlook is neutral-to-bearish. Gold has fallen below the midline of the Bollinger Band and the 20 Simple Moving Average, suggesting that bears are in the driver’s seat. Failure to maintain above the resistance level of 1722.66 would bring the pair toward the next support of 1680.99. On the flip side, if gold can move upward above the midline, then the bullish momentum might be able to gain traction on the four-hour chart. The RSI indicator still trades around the midline, reflecting the absence of directional strength. Further price action eyes on the FOMC meeting.

Resistance: 1722, 1748, 1769

Support: 1680.99

USDJPY (4-Hour Chart)

USDJPY surpasses 136.00 as the US dollar regains positive traction on Tuesday ahead of the FOMC meeting. Technically speaking, USDJPY performs a meaningful rebound after hitting the lower band of the ascending channel. USDJPY has breached the psychological resistance of 136.00, suggesting that USDJPY resumes its bid mood. USDJPY attracts some buyers near 136.00, thus the RSI indicator has a skewed upside. The pair is expected to move further north as the RSI has way far from overbought, implying that there are rooms for the pair to ascend. On the flip side, if the pair falls below the bullish channel, then it will lose some positive momentum in the near- term

Resistance: 136.62, 137.06, 137.61

Support: 136.84, 134.75

EURUSD (4-Hour Chart)

EURUSD tumbles towards 1.0100 amid the European gas crisis and fears of a global recession. From the technical perspective, EURUSD is trading at its lowest in a week near the support level of 1.0109. The outlook of the currency pair turns downside as the bearish double-top trading pattern has been formed. In the meantime, the four-hour chart favours a downside extension as EURUSD has breached below the 20 Simple Moving Average. Failure to maintain above 1.0109 would confirm another downside momentum. Moreover, technical indicators, both the RSI and the MACD gain downward traction, trading within the negative regions.

Resistance: 1.0205, 1.0284, 1.0362

Support: 1.0109, 0.9952

Economic Data

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Amidst the lowest intraday volatility and volume of the year and ahead of this week’s crucial Fed meeting, US stocks inched up on Monday amid a turbulent session. Large technology firms remained under bearish pressure as investors anticipate negative earnings report news. Despite recession fears, investors are awaiting the conclusion of Wednesday’s critical FOMC monetary policy meeting, which is likely to raise interest rates by 75 basis points. However, investors’ scepticism that the Federal Reserve can control inflation without triggering a recession could continue to dampen market sentiment. In the Eurozone, the German Ifo Business Climate Index sank to a two-year low of 88.6 in July, which was worse than expected and reflected the concern of a gas crisis among German businesses.

Monday was a positive day for the S&P 500 and Dow Jones Industrial Average as investors awaited earnings announcements from technology giants amid warnings from a hawkish Federal Reserve. The S&P 500 increased by 0.1% daily, while the Dow Jones Industrial Average increased by 0.3%. The Energy and Utilities sectors performed the best among all categories, advancing 3.71 % and 1.26%, respectively. Eight of eleven sectors remained in positive territory. The Nasdaq 100 fell the most on Monday with a loss of 0.5%, while the MSCI World index remained relatively unchanged.

Main Pairs Movement

On Monday, the US dollar fell below the 106.30 level, since it is largely anticipated that the Federal Reserve will hike interest rates by 75 basis points following its meeting on Wednesday. The DXY index fell the most on Monday, reaching a daily low of 106.2, before rebounding to surpass 106.6 during the US session. In addition to rate hikes, structural characteristics of the U.S. economy, particularly improved energy resilience, have propelled the dollar to multi-year highs.

GBP/USD increased by 0.37% on Monday, despite the US dollar’s weakness and the unpredictability of UK politics. At the start of the week, the cable pairs plummeted to a daily low of roughly 1.196, before gaining bullish momentum to surpass 1.208 during the late Asia session. Similarly, EUR/USD fell to a level of 1.018 at the start of yesterday and then rallied to a day high at 1.026. The pairings remain flat for the day as traders anticipate fresh hints, the US CB consumer confidence report for July and the FOMC meeting on Wednesday.

Gold began the week with a 0.46% loss, falling under intense selling pressure in late Asia and at the start of the US trading session when XAUUSD hit a daily low below the $1715 level. Awaiting the Fed’s interest rate policy decision, the price trend has now shifted to neutral. On Monday, WTI oil prices increased by 2.11% and reached almost $96.

Technical Analysis

XAUUSD(4-Hour Chart)

Gold initially attempted to rally early Monday, but turned around to show signs of weakness. Gold hovers around the $1,715 region during the American trading session. From the technical perspective, the intraday decline brings gold below the resistance of $1,722; the four-hour outlook turns downside following the trading pattern of the double-bottom formation. The RSI indicator has turned southward, suggesting that buyers are on the sideline and sellers are back in the market. If gold breaks below the midline of the Bollinger band, gold is likely to see further downward pressure and an acceleration of the downside. In order to regain positive traction, gold needs to climb above $1,722.

Resistance: 1722, 1748, 1769

Support: 1680.99

USDJPY (4-Hour Chart)

USDJPY turns upside as the US dollar rallied a bit during the trading session. From the technical aspect, the overall outlook of USDJPY is back to bullish after the pair trades within the ascending channel. The recovery frankly suggests that the corrective phase comes to an end. The acceptance above 136.52 would confirm the bullish stance of the pair. The upside is also supported by the RSI indicator, which turns upward, attracting some follow-through buyers back into the market. On the contrary, failure to stand above 136.52 and trade within the ascending channel would make the currency pair back in a bearish mood.

Resistance: 136.52, 137.06, 137.61

Support: 136.84, 134.75

EURUSD (4-Hour Chart)

EURUSD has gone back and forth during the course of sessions on Monday as markets continue to carefully monitor ahead of the FOMC meeting. Technically speaking, EURUSD shows that it keeps struggling to overcome the 20 SMA. The near-term outlook of EURUSD is neutral-to-bullish as the RSI slightly skews to the north while the MACD indicator tends to be bullish. The upside momentum remains limited if the pair cannot overcome the resistance of 1.0284, breaching the consolidation. On the flip side, if the EURUSD declines below the current support of 1.0205, then the outlook would turn bearish on the four-hour chart. Further price movement eyes on the FOMC meeting later this week.

Resistance: 1.0284, 1.0362

Support: 1.0284, 1.0109, 0.9952

Economic Data

All eyes will be on the US Federal Open Market Committee (FOMC) meeting this week for insights into upcoming interest rates hikes after annual inflation hit a 4-decade high of 9.1% in June.

US policymakers are anticipating continued price surges and are backing a 50-75 basis points hike. Officials say the economic outlook warrants moving to a restrictive policy stance, and warned that tighter measures will be imposed if inflation pressures persist.

Advance Gross Domestic Product (GDP) releasing Thursday is expected to edge up 0.8-0.9% in the second quarter. This positive outlook follows a fall of 1.6% in Q1, the first contraction since the pandemic-induced recession in 2020, weighed down by record trade deficits, supply constraints, worker shortages, and high inflation.

US Core Personal Consumption Expenditure (PCE) for June will also be announced this week, predicted at a 0.9% rise.

Australia is expecting yet another bump in its quarterly Consumer Price Index (CPI) figures on the backs of soaring fuel prices and surging building costs. Annual inflation rate saw a 5.1% spike in the first quarter, marking its highest reading since the introduction of the Goods and Services Tax in the early 2000s.

Market Analysis

Due to dismal results from social-media companies and weak economic data, US stocks dropped on Friday, failing to maintain the upward momentum and ending a three-day rise. Snap Inc.’s disappointing performance and Twitter Inc.’s weaker-than-anticipated sales figure have heightened concerns about online ad spending, which is also one of the mounting indications that technology businesses are preparing for a recession.

The Fed meeting this week will be the primary focus for investors, as market sentiment remains fragile in the face of higher inflation, rapidly rising interest rates, and fears of a recession, despite market participants’ expectations that the Fed will take a more measured approach to tighten monetary policy. In the Eurozone, economic activity in Germany’s private sector decreased in early July, according to statistics released on Friday, while the eurozone’s manufacturing PMI went below 50 for the first time in more than two years. The economy of the eurozone is likely to fall in the third quarter, as corporate activity has begun to decline.

Both the S&P 500 and Dow Jones Industrial Average sank on Friday, with the S&P 500 falling for the first time in four days due to recession fears and disappointing tech company reports. The S&P 500 decreased by 0.9% on a daily basis, while the Dow Jones Industrial Average decreased by 0.4%. Eight of eleven sectors remained in negative territory, with the Communication Services and Information Technology sectors losing 4.34 % and 1.38 %, respectively, as the poorest performers. The Nasdaq 100 dropped the most on Friday, falling 1.8%, while the MSCI World index dropped 0.5%.

Main Pairs Movement

The US dollar was little changed on Friday, as it faced additional selling pressure and failed to rise above the 107.3 mark in response to data indicating a decline in early July private sector business activity. After the release of the German Manufacturing PMI, the DXY index inched upward and reached a daily high, but then began to experience fresh selling to extend its daily losses below the 106.2 mark. In July, the US S&P Services PMI fell to 47, which was well below the market’s forecast of 52.6 and indicated a worrying downturn in the economy.

The GBP/USD currency rate increased by 0.16 % on Friday after renewed dollar weakness. In terms of economic data, UK Retail Sales decreased by 5.8 % year-over-year in June, but better-than-expected UK PMIs have relieved some pressure on the Bank of England (BoE). At the start of the European session, the GBP/USD pair plummeted to a daily low below the 1.193 level before regaining upward momentum to recoup all of its daily losses. During the initial half of the day, EUR/USD was surrounded by bearish momentum and weighed down by dismal German PMI data. The pair declined by over 0.15 % for the day.

Gold climbed 0.55 % on the day after reaching a daily high above $1738 in the early US trading session, as the precious metal attracted new buyers in response to a strong decline in US government yields. Meanwhile, WTI oil maintained its downward momentum and fell to around $95 per barrel on Friday, as the reopening of the Nord Stream 1 gas pipeline weighed on oil prices.

Technical Analysis

XAUUSD(4-Hour Chart)

Gold surpasses $1,725 at the time of this Friday’s writing. As a result of the poor PMI data, the benchmark 10-year US Treasury bond yield falls by more than 4% every day, reducing the demand for the US dollar. After reaching the crucial support level of $1,680, gold performs a good technical recovery. Due to the fact that the RSI has not yet reached overbought territory and the MACD is continuing to provide support, gold may be able to overcome the $1,732 resistance level. The acceptance of the midpoint of the Bollinger band would protect the bulls of gold.

Resistance: 1732.58, 1756.40, 1779.70

Support: 1680.99

USDJPY (4-Hour Chart)

Following the release of US economic statistics, USDJPY was able to fall below 136,000 during the American session. The USDJPY reached its lowest level in two weeks. The intraday bias is now bearish from a technical standpoint, as the pair has breached the bullish channel. The pair is about to produce a four-hour closing price below the channel and the 136.28 resistance level. Immediate support is located at 135.67, followed by the zone at 134.52. To erase the negative tone, the U.S. dollar must climb back above 136.28.

Resistance: 136.28, 136.95, 137.53

Support: 135.67, 134.52

EURUSD (4-Hour Chart)

After US statistics, the EURUSD has extended its rebound during the American trading day. From a technical standpoint, EURUSD recovers after reaching the lower Bollinger Band band and the 20 Simple Moving Average. The bulls had pushed EURUSD over 1.0205 resistance at the time of writing, indicating a positive change on the four-hour chart. If EURUSD is able to sustain its upward momentum into the next barrier around 1.0284, the probable double-bottom formation will indicate a bullish bias for the pair. Currently, the RSI indicator is trading within the positive region, which supports the upside. Contrariwise, an intraday closing below 1.0205 could pave the way for a decline towards parity. Next week’s FOMC meeting will likely influence future price movements.

Resistance: 1.0284, 1.0362, 1.0459

Support: 1.0205, 1.0109

Economic Data

The European Central Bank agreed to increase interest rates by 50 basis points, the first increase in almost a decade, in response to increasing inflation and the ongoing conflict with Russia. In addition, Gazprom restored gas shipments to the EU via the Nord Stream 1 pipeline, giving extra support for EUR purchasers.

In the US, the business sector’s performance has bolstered market sentiment, contributing to Thursday’s rise in US stocks, which was the greatest three-day rally since May 2022. Apple Inc. and Amazon.com Inc. moved higher ahead of the release of their quarterly earnings reports next week, while Tesla Inc. soared 10% for the day after its quarterly results above expectations. Even if recent earnings optimism and anticipation that the Fed will take a more gradual approach to tighten monetary policy functioned as tailwinds for the equity markets, investor sentiment remains fragile due to worries about increasing inflation and the possibility of a recession.

The S&P 500 and Dow Jones Industrial Average both rose on Thursday, as the US currency dropped versus its peers and investors grew more bullish about the upcoming earnings season. The S&P 500 increased by 1% daily, while the Dow Jones Industrial Average increased by 0.5%. The Consumer Discretionary and Health Care sectors performed the best among all categories, advancing 2.25% and 1.51%, respectively. Nine of eleven sectors remained in positive territory. The Nasdaq 100 surged the highest on Thursday, increasing by 1.4%, while the MSCI World index jumped by 0.8%.

Main Pairs Movement

The US dollar dropped on Thursday, maintaining its bearish trend and failing to rise above the 107.3 level as the upward advance in the equities markets and poor US economic data imposed bearish pressure on the currency. After the ECB’s monetary decision, the DXY index inched higher and reached a daily high before fresh selling began to erase all of its intraday gains. The US Weekly Initial Jobless Claims increased to 251K in the week ending July 16, exceeding the market’s expectation of 240K by a significant margin. In July, the Philadelphia Fed Manufacturing Index fell to -12.3, which weighed on the U.S. dollar.

The GBP/USD exchange rate increased by 0.16% on Thursday as the US dollar weakened across the board. However, investor sentiment deteriorated due to reasons such as the ECB’s unexpected decision to increase interest rates by 50 basis points. At the opening of the US trading session, the GBP/USD pair plummeted to a daily low below the 1.190 level before regaining upward momentum to recover its daily losses. After the release of the ECB’s monetary policy decision, EUR/USD had considerable buying pressure and reached a daily high above the 1.027 mark. The pair increased over 0.50% on the day.

The decision by the European Central Bank (ECB) to raise interest rates by 50 basis points functioned as a tailwind for gold, which climbed 1.30% on the day after reaching a daily high above $1720 in the late US trading session. The restoration of gas flows from Russia’s Nord Stream 1 pipeline exerted significant downward pressure on WTI oil prices, which fell to the $96 level during the US trading session.

Technical Analysis:

XAUUSD(4-Hour Chart)

At the time of writing, gold is trading above $1,710 after recovering from a new 2022 bottom of $1,680.82. Following the announcement of the ECB’s monetary policy decision, the US dollar weakens, hence strengthening gold.

Technically speaking, gold indicates at a bullish correction as it has officially breached the bearish channel and the middle line of the Bollinger Band, indicating that bulls are initiating the upward momentum. Currently, the RSI indicator leans into positive territory on the four-hour chart, indicating that buyers have re-entered the market and sellers have exited. Gold is anticipated to rise towards the immediate resistance level of $1,727.58. If, on the other hand, gold is unable to keep its momentum above the negative channel, gains will be restricted and further selling pressure will ensue.

Resistance: 1727.58, 1756.40, 1779.70

Support: 1680.99

AUDUSD (4-Hour Chart)

After breaking the downward trend line in mid-July, the AUDUSD four-hour chart flips upside down. The four-hour chart reveals that AUDUSD closes above the 20 SMA but below the longer SMA, indicating that AUDUSD has not yet fully turned bullish over the longer term. The breach of the current resistance will propel AUD to the next level at 0.6982. Failure to overcome the current resistance level would result in a short-term AUD low of 0.6824.

Resistance: 0.6911, 0.6982, 0.7053

Support: 0.6824, 0.6682

EURUSD (4-Hour Chart)

Following a larger-than-anticipated increase in interest rates by the ECB, the EURUSD gains ground.

From a technical standpoint, the four-hour picture turns positive; the EURUSD continues to climb after hitting a low in mid-July. The pair advances alongside the upward trend line and the 20 Simple Moving Average. However, bulls of the EURUSD face rejection after hitting the upper Bollinger Band band and the overbought zone of the RSI indicator; sellers of the EURUSD look to take action, leaping in significantly to keep the dominating bearish in place. At the time of writing, EURUSD is clinging to the ascending trend line; bulls will continue to gain if EURUSD can hold above the level, then proceed to the next immediate resistance level at 1.0304. Alternatively, if EURUSD goes below the trend line, it will turn bearish in the short term, inviting additional follow-through selling.

Resistance: 1.0266, 1.0363, 1.046

Support: 1.0146, 0.9952

Economic Data

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US stock advanced on Wednesday, which is the first back-to-back gain in almost two weeks. Risk sentiment remains fragile, any upbeat surprises may lead to dramatic gains for markets amid investors’ expectations for potential disappointments. Tesla briefly jumped in extended trading after its earnings beat estimates. Besides the war in Ukraine, a slowdown in China and the prospect of the US recession, are all adding to investors’ skittishness. The European Union is preparing for a situation where Russia halts gas export to retaliate against sanctions over its invasion of Ukraine. It is worth noting that the rate decision made by the Bank of Japan and Bank of England this week. Overall, the market is still in fear of uncertainty, investors tend to wait for more information to plan their next moves.

The benchmarks, S&P 500 and Dow Jones Industrial Average both advanced for a second straight training session, as the US dollar remained under selling pressure. The S&P 500 increased 0.59% daily and Dow Jones Industrial Average was up 0.15% for the day, seven of eleven sectors get in positive territory as the Consumer Discretionary and Information Technology sectors performed the best among all groups, rising 1.77% and 1.56% respectively. Meanwhile, the Nasdaq 100 also rose 1.6% on Wednesday.

Main Pairs Movement

The US dollar advanced on Wednesday, ending its previous slide and rebounded toward the 107 area amid recession fears and a cautious market mood ahead of the European Central Bank monetary policy announcement. The DXY index was surrounded by bullish momentum during the first half of the day, then preserved its upside traction to touch a daily high above 107.2 level in the US session. The US dollar has benefitted from its haven status as investors are awaiting the outcome of the ECB meeting on Thursday, which is expected to hike the rate by 25 bps in July or even a potential 50 bps move.

GBP/USD declined with a 0.27% loss on Wednesday amid the stronger US dollar across the board. The worse-than-anticipated UK inflation data exerted bearish pressure on the cable as the UK Consumer Price Index (CPI) jumped to 9.4% yearly in June. The GBP/USD climbed to a daily high above the 1.203 mark in the Asian session, but then witnessed heavy selling to surrender all of its daily gains. Meanwhile, EUR/USD remained under downside momentum and dropped to a daily low below 1.016 level during the US trading session. The pair was down almost 0.50% for the day.

Gold tumbled with a 0.85% loss for the day after dropping to a daily low below the $1694 mark in the late US trading session, as the rising US bond yields and stronger greenback yesterday both weighed on the precious metal. Meanwhile, WTI oil failed to preserve its upside traction and dropped to the $99 area during the US session, as the recession fears escalated amid central banks’ rate hikes.

Technical Analysis

XAUUSD(4-Hour Chart)

Gold seems to consolidate along the descending channel on Wednesday. The outlook of the metal, gold, stays bearish as long as it trades within the bearish channel. On the upside, To regain upside traction, gold needs to at least climb above the descending channel onto the downside, the RSI indicator stays within the negative territory, suggesting that gold buyers are still on the sidelines. The breakout of the immediate support of 1697.66 would confirm another decline.

Resistance: 1,740.31, 1,766.70, 1,788.03

Support: 1,697.66

USDJPY (4-Hour Chart)

USDJPY rebounds after hitting the support level of 137.43. The intraday bias remains upside as it continues to trade within the strong bullish channel. At the time of writing, USDJPY is clinging to the upper bound of the bullish channel; a break of 138.18 will resume a larger up trend to its next resistance of 139.38. The break would be significantly important for USDJPY’s bulls as it is where the upper band of the channel and the 20 Simple Moving Average intersect. On the flip side, USDJPY’s bears need to decline below 136.22 to claim the downside momentum. Further price action eyes on the BOJ Press Conference and the FOMC meeting next week.

Resistance: 138.18, 139.38

Support: 137.43, 136.82, 136.22

EURUSD (4-Hour Chart)

EURUSD edges lower but steadily stays above 1.0200 after US data, Existing Home Sales fell sharply in June. Investors stay on the sidelines, waiting for the ECB meeting.

From the technical perspective, bulls of the EURUSD face rejections after hitting the resistance of 1.0266; however, the short-term outlook remains upside as the EURUSD still trades above the 20 SMA and within the upper band of the Bollinger band. The upside momentum holds as long as the RSI indicator does not fall towards the negative levels and the MACD does not become bearish. On the flip side, the decline will likely pick up the pace on a break below the support level of 1.0146.

Resistance: 1.0266, 1.0363, 1.046

Support: 1.0146, 0.9952

Economic Data

US stock rebounded on Tuesday, regained upside momentum and closed near session highs in its biggest one-day gain since June 24th as investors assessed the outlook for earnings. Any upside surprises may lead to impressive gains for equity markets amid investors’ expectations for potential disappointments ahead of the earnings report season. But the market focus remained on whether the aggressive monetary tightening by major central banks to fight high inflation will lead to a recession or not. In the Eurozone, the European Central Bank may consider a 50 bps rate hike during its meeting this week to deal with the worsening inflation, which lifted the Euro higher to its highest level in two weeks. On top of that, recession concerns have cooled a little bit as Russian gas giant Gazprom would resume its gas provision to the EU as planned on July 21.

The benchmarks, S&P 500 and Dow Jones Industrial Average both advanced on Tuesday as the US dollar remained under selling pressure and investors speculated that markets may have come close to their bottom. The S&P 500 was up 2.7% daily and the Dow Jones Industrial Average also advanced with a 2.4% gain for the day. All eleven sectors stayed in positive territory as the Communication Services and the Industrial sectors are the best performing among all groups, rising 3.63% and 3.58%, respectively. The Nasdaq 100 meanwhile climbed the most with a 3.1% gain on Tuesday and the MSCI World index rose 2% for the day.

Main Pairs Movement

The US dollar declined for the third session on Tuesday, as European Central Bank policymakers are considering raising interest rates by 50 basis points, which is higher than expected at their meeting on Thursday to calm record-high inflation. The DXY index bounced back to a psychological resistance of 107.500 in the first half of Tuesday, then lost upbeat momentum and dropped to a level below 106.500 during the Asia Session. The dollar lost 0.63% for the day and is still under selling pressure as the improvement in risk sentiment.

As the market got a positive mood, GBP/USD advanced by 0.35% on Tuesday. The declining inflation expectations in the US may hurt greenbacks further. The cable slipped to a daily low below 1.194 level, then regained upside traction and surged to a daily high above 1.202 level. Meanwhile, ECB President Christine Lagarde may elevate interest rates by 25 or 50 bps, which will trim the Fed-ECB policy divergence. EUR/USD witnessed heavy buying and reached a daily high above 1.024 during the mid-Asia session. The pair went up 0.83% for the day.

Gold advanced by 0.14% for the day, getting to a daily high above the $1713 mark in the mid-Asia session. A pullback in the US dollar continues to support the gold price as investors move to the sidelines ahead of key central bank meetings. Meanwhile, WTI oil preserved its upside traction and reached a daily high above the $100 level during the US session.

Technical Analysis:

XAUUSD(4-Hour Chart)

Gold advances slightly on Tuesday amid the broad-based selling pressure on the US dollar.

From the technical aspect, the outlook of the bullion remains bearish as gold continues to trade within the negative territory since early July. However, gold might be primed for a rebound if gold can breach the upper bound of the descending channel. The breakout of the level would give the metal a boost towards the next resistance of $1,740. On the flip side, if gold fails to overcome the bearish channel, the downside would resume towards the trough of $1,697.

Resistance: 1,740.31, 1,766.70, 1,788.03

Support: 1,697.66

USDJPY (4-Hour Chart)

USDJPY edges lower for the third- consecutive day on Tuesday amid subdued greenback demand. A diminishing odd for a more aggressive US Fed interest rate hike in late July continues to weigh on the greenback. From the technical perspective, the four-hour outlook of USDJPY remains bullish but bearish in the near term. Bulls are supported as USDJPY continues to trade within the ascending channel while USDJPY has dropped below the 20 Simple Moving Average, suggesting a downside momentum in the short- term. As of now, the relevant support near 137.43 would be the first defendant for bulls. A convincing break below the level might prompt aggressive selling and bring the pair to test 136.82. On the four-hour chart, as long as USDJPY holds above 136.22, the overall outlook remains upside.

Resistance: 138.18, 139.38

Support: 137.43, 136.82, 136.22

EURUSD (4-Hour Chart)

EURUSD continues to advance toward 1.0250 as the US dollar struggles to find demand. The euro-dollar gains positive traction amid the speculation about the ECB meeting this week. Technical speaking, in the near- term, the outlook of EURUSD turns upside as it trades well above the 20 Simple Moving Average. The break of the previous resistance has given the euro dollar a boost toward the next immediate resistance of 1.0266. Despite the RSI indicator has reached an extreme level, the bullish MACD looks to attract more follow-through buyers of the euro dollar. At the time of writing, bulls might give it another attempt if the pair can successfully break above the aforementioned resistance level of 1.0266. Further price action eyes on the ECB meeting.

Resistance: 1.0266, 1.0363, 1.046

Support: 1.0146, 0.9952

Economic Data

US stock declined on Monday, failing to preserve its bullish momentum after Apple Inc.’s plans to slow hiring added to the market’s concerns that the Federal Reserve’s aggressively monetary tightening against higher inflation will result in a recession. Wall Street was unable to retain its early gains and turned red despite the US encouraging data last Friday temporarily cooled recession-related concerns, as big companies like Apple Inc. and Alphabet Inc. both decided to slow hiring and spending growth next year in some divisions to respond to the potential recession. In the Eurozone, the energy crisis in Europe amid gas supply from Russia continued to weigh on investors’ moods as the Nord Stream 1 pipeline is scheduled to reopen on Thursday following its maintenance. The Russian company Gazprom has also declared to several European natural-gas buyers that it could not guarantee gas supplies to Europe because of extraordinary circumstances.

The benchmarks, S&P 500 and Dow Jones Industrial Average both dropped on Monday as Apple Inc. slid more than 2% on its worst day in almost three weeks amid a worsening mood. The S&P 500 was down 0.8% on a daily basis and the Dow Jones Industrial Average also declined with a 0.7% loss for the day. Eight out of eleven sectors stayed in negative territory as the health care and the utility sectors are the worst performing among all groups, rising 2.15% and 1.40%, respectively. The Nasdaq 100 meanwhile dropped the most with a 0.9% loss on Monday and the MSCI World index was little changed.

Main Pairs Movement

The US dollar kept declining to a weekly low at the beginning of the week, continuing to ease since the US encouraging data announced last Friday temporary cooled the recession-related concern. The DXY index still is in the mood bearish, and spent most of the first day of the week diving, to a weekly low of 106.9 during the late Asia session, but bounced back to 107.4 in the US afternoon.

GBP/USD advanced by 0.83% on Monday, as the improvement in risk sentiment. The cable moved up to a weekly high of 1.2020 during the late Asia session, then lost upbeat momentum and went back to around 1.1947. At the same time, EUR/USD also got a 0.63% growth on the first day of the week, to a weekly high of 1.0201, then fell back a little to around 1.0140 during the US afternoon. Not only the impact of the weak US dollar, but the high possibility of the ECB deciding to step up interest rates for the first time in 11 years make EUR/USD possibly regain bullish energy.

The Gold price remains almost unchanged on Monday. In the first half of Monday, the gold goes up to $1721, then lost momentum and fell to $1708 at the end of the day. Fed’s speak has pushed back against a 100bp hike from some notable hawks, raising the risk of a near-term short-squeeze on the Gold Price prior to the meeting. However, this could create the perfect storm for a downside continuation in gold on a hawkish outcome from the meeting.

Technical Analysis

GBPUSD(4-Hour Chart)

GBPUSD extends to a daily gain near 1.2000 in the American trading session as the US dollar confronts some selling pressure caused by the expectation of the Fed.

From the technical perspective, recently upside momentum has brought GBPUSD out of the negative territory where the bearish channel is; It suggests that the outlook of GBPUSD turns bullish on the four-hour chart in the near- term. At the moment, GBPUSD is clinging to the resistance level of 1.1958; the RSI indicator on the four-hour chart stays below 70, meaning that the pair has more room on the upside. If GBPUSD can stand sustainably above 1.1958, then the next resistance of 1.2081 would be the next target.

Resistance: 1.1958, 1.2081, 1.2180

Support: 1.176

XAUUSD (4-Hour Chart)

Gold trades slightly positive for the day despite a better market mood.

Technical speaking, the outlook of gold skews to the downside; gold’s bulls seem to be unable to overcome the midline of the Bollinger band, staying within the lower bounce. The RSI indicator remains in the negative territory, suggesting that buyers are still on the sideline. To the upside, in order to claim an upside momentum, gold needs to first climb above the midline of the Bollinger band, and then continue to climb toward the resistance level of $1,740.31. On the flip side, failure to stay above the support level of $1,697.66 would resume gold’s decline further south.

Resistance: 1740.31, 1766.70, 1788.03

Support: 1697.66

EURUSD (4-Hour Chart)

EURUSD advances as high as 1.0200 as the US dollar faces a selloff. The selloff of the US dollar comes after the Fed will hike interest rates by 75 bps, rather than the more aggressive option of 100 bps.

From the technical perspective, EURUSD shows an ongoing recovery from 0.9952 to 0.0174 on the four-hour chart at the time of writing. The double-bottom trading pattern has given the euro dollar a boost. The pair remains above the 20 Simple Moving Average and the upper band of the Bollinger Band, suggesting a bullish move in the near- term. At the moment, the resistance level of 1.0146 would be an obstacle for the pair to overcome as the RSI indicator has reached the overbought territory, suggesting a pullback. If the pair can successfully break the level, the recovery can extend towards 1.0266(38.2% of the Fib. Retracement.)

Resistance: 1.0146, 1.0266, 1.0363

Support: 1.0000, 0.9952

Economic Data