Geopolitical Tensions Have Eased, Shifting the Focus to Powell's Semiannual Testimony

Commodity

Central Bank

Summary:

If Federal Reserve Chairman Powell signals further rate cuts during his testimony before Congress later today, the U.S. dollar may experience further depreciation, potentially bolstering gold prices following their recent significant decline.

SELL XAUUSD

Close Time

CLOSED

3348.00

Entry Price

3259.00

3398.00

4208.91 +11.00 +0.26%

890.0

Pips

Profit

3259.00

3258.66

Exit Price

3348.00

Entry Price

3398.00

Fundamentals

Gold prices initially sustained a robust bearish sentiment during Tuesday's early European session, subsequently moderating, yet still hovering near a two-week low. The news of a ceasefire between Iran and Israel bolstered investor confidence, triggering a fresh wave of global risk-on trading, which is perceived as a primary factor contributing to the outflow of funds from the safe-haven asset.

Tensions escalated yesterday following Iran's missile strikes on U.S. airbases in Qatar and Iraq. However, the situation de-escalated as Trump welcomed the pre-warned attacks, characterizing them as a "very weak response," with no reported casualties.

Brent crude experienced one of its largest single-day declines in five years, decreasing by over US$7 per barrel since yesterday, as the immediate threats in the Strait of Hormuz subsided. Gold prices also retreated significantly due to the easing geopolitical tensions.

With the geopolitical situation stabilizing, the focus will shift to Federal Reserve Chairman Powell's testimony before the House Financial Services Committee later today, which may offer insights into the future path of interest rate cuts.

Following support for a rate cut as early as July from Federal Reserve Governors Waller, Goolsbee, and Bowman, Powell's stance suggests an increased risk of a rate cut. The market may interpret any shift in Powell's cautious approach to rate cuts as a sign that pressure from Trump to lower rates has breached the "firewall of the Fed's independence." This could lead to a further decline in the dollar and provide additional trading opportunities for gold in the short term.

Geopolitical Tensions Have Eased, Shifting the Focus to Powell's Semiannual Testimony_1

Technical Analysis

The recent pullback in gold prices, driven by the exhaustion of bullish momentum, aligns with expectations. While prices briefly found support during Tuesday's European session, consolidation is anticipated to dominate trading in the coming sessions. However, the current market structure suggests that the path of least resistance post-consolidation remains downward.

Given the price breakdown, it is recommended to go short at the highs within the US$3,349-US$3,352 range (the second point of origin for medium-term short positions, following the initial sell-off at US$3,378). The target range is US$3,271-US$3,259. A decisive break below this range would likely attract additional short positions, potentially driving prices lower towards the US$3,245-US$3,200 threshold.

Trading Recommendations

Trading Direction: Sell

Entry Price: 3348

Target Price: 3259

Stop Loss: 3398

Valid Until: July 9, 2025 23:55:00

Support: 3316, 3302, 3293

Resistance: 3348, 3352, 3357

Risk Warnings and Disclaimers

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Alan

Forex

Summary:

Expectations of only two Fed rate cuts this year provide some support for the US dollar, while fading expectations of the Bank of Japan (BoJ) rate hikes may pressure the yen lower.

BUY USDJPY

Close Time

CLOSED

145.092

Entry Price

150.900

142.500

155.115 -0.230 -0.15%

10.2

Pips

Profit

142.500

145.194

Exit Price

145.092

Entry Price

150.900

Fundamentals

On June 18th, the Fed held rates steady in its June meeting, but its dot plot revealed that 7 out of 19 officials favored no cuts this year. Projections for just two cuts before 2025 reinforced the US dollar's yield spread advantage. Despite weak data like May's -0.9% MoM U.S. retail sales, the Fed's concerns about sticky inflation suppressed bets for easing, offering the dollar some support. Moreover, June U.S. manufacturing PMI (52) and services PMI (53.1) exceeded expectations, while existing home sales signaled consumer resilience, providing the fundamental underpinning for the US dollar.

In Japan, the BoJ's dovish stance amplified yen depreciation pressures. Although May core CPI rose 3.7% YoY, the BoJ explicitly delayed rate hikes until Q1 2026 and slowed its bond purchase tapering pace, further cooling expectations for earlier tightening. This policy lag exacerbates the yen's yield disadvantage. Coupled with risks of fiscal expansion ahead of the upper house election (LDP approval rating fell to 32.5%), the yen faces dual depreciation pressures.

Geopolitically, Trump's claim that Israel and Iran agreed to a "complete and total ceasefire" sent oil prices lower, weakening demand for the yen as a safe haven currency.

Technical Analysis

145 Level Becomes Fierce Battle Between Bulls and Bears – Can Technical Breakthrough Open Upside Potential? _1

The 4-hour chart shows USDJPY breaking through the key resistance at 145.00, opening upside potential with significantly strengthened bullish momentum. Yesterday, the pair retreated after facing pressure below 148.50 and has now pulled back near the 145.00 support level. Currently, USDJPY is hovering above the MA60, multiple support factors converge here. If upcoming hourly candles show signs of stabilization near 145.00, the likelihood of short-term continuation upward increases. Simultaneously, the MA system shows a bullish alignment, further boosting the probability of extended gains.

Therefore, buying at lows is suggested.

Trading Recommendations

Trading direction: Buy

Entry price: 145.10

Target price: 150.90

Stop loss: 142.50

Valid Until: July 08, 2025, 23:00:00

Support: 144.32/142.79

Resistance: 148.01/148.64

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

This level has acted as a strong support area in recent sessions, and the inability to form a new local low may suggest that bearish pressure is fading.

BUY EURUSD

Close Time

CLOSED

1.16004

Entry Price

1.17250

1.15000

1.16537 +0.00111 +0.10%

46.6

Pips

Profit

1.15000

1.16470

Exit Price

1.16004

Entry Price

1.17250

As the last trading week of June begins, geopolitical tensions are dominating global attention. Over the weekend, the U.S. carried out synchronized airstrikes on three key Iranian nuclear sites after diplomatic efforts by the White House to resolve tensions with Tehran collapsed.

In response, Iran launched missile strikes on a U.S. military base in Qatar. At the same time, Iraq’s Ain al-Assad base went on high alert for a possible attack, though no missiles were fired. Adding to the escalation, Iran’s parliament voted to halt cooperation with the International Atomic Energy Agency (IAEA), marking a significant setback for diplomatic ties.

However, market sentiment shifted after President Donald Trump announced on Monday that a “complete and total” ceasefire between Israel and Iran would soon come into effect. According to Reuters, the ceasefire was expected to begin within approximately six hours, once both sides completed their final military operations.

“It has been fully agreed between Israel and Iran that there will be a COMPLETE AND TOTAL CEASEFIRE (in about 6 hours from now, once Israel and Iran wrap up their ongoing final missions!), for 12 hours, after which the war will be considered OVER,” Trump posted on social media.

A senior Iranian official confirmed to Reuters that Tehran had accepted the ceasefire proposal mediated by Qatar and presented by the United States in coordination with Israel, providing some relief to risk sentiment across markets.

Looking ahead, traders are turning their focus to key macroeconomic events in the U.S., including Fed Chair Jerome Powell’s semiannual testimony and the release of the Conference Board’s Consumer Confidence Index, both scheduled for Tuesday.

On the monetary policy front, Federal Reserve Vice Chair for Supervision Michelle Bowman stated on Monday that the time to cut interest rates may be approaching, citing potential risks to the labor market. She noted that inflation appears to be on a sustained path back toward the 2% target and expressed reduced concern over tariffs triggering renewed inflationary pressures.

In Europe, fresh economic data highlighted the fragile nature of the eurozone’s recovery. The HCOB Flash Composite Purchasing Managers’ Index (PMI) for June came in at 50.2—unchanged from May and slightly below the forecast of 50.5. The services sector showed modest improvement, with the services PMI ticking up to 50.0 from 49.7, signaling a tentative stabilization. However, manufacturing remains under pressure, with the manufacturing PMI holding steady at 49.4—missing expectations of 49.8 and reflecting continued weakness in industrial activity.

Adding to the euro’s support, European Central Bank President Christine Lagarde urged EU lawmakers to press forward with legislation on a digital euro, describing it as vital to safeguarding Europe's financial sovereignty. Separately, Bundesbank President Joachim Nagel stressed that large-scale bond purchases should be reserved for rare emergencies and reaffirmed that interest rates will remain the ECB’s primary policy tool moving forward. Uptrend May Accelerate After Bullish Reversal Pattern in EURUSD_1

Uptrend May Accelerate After Bullish Reversal Pattern in EURUSD_1

Technical Analysis

EUR/USD surged higher after bouncing off its 100-period moving average, currently located at 1.1467 on the 4-hour chart. This level has acted as a strong support area in recent sessions, and the inability to form a new local low may suggest that bearish pressure is fading.

The pair has printed three strong consecutive bullish candles—forming a classic “three white soldiers” pattern, which is typically seen as a signal of trend reversal or continuation to the upside. Given this structure, bullish momentum could extend toward the 1.1725 area, a level projected by the Fibonacci extension tool.

Meanwhile, the Relative Strength Index (RSI) dipped to a session low of 39, slightly below the neutral 50 level. The RSI’s inability to reach oversold territory before turning back up suggests limited selling interest and reinforces the potential for further gains. As long as the 1.1467 support zone remains intact, buying pressure is likely to remain dominant from this area.

Trading Recommendations

Trading direction: Buy

Entry price: 1.1605

Target price: 1.1725

Stop loss: 1.1500

Validity: Jun 30, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Commodity

Energy

Summary:

This rebound suggests that $72.50 may serve as a critical platform for a fresh bullish impulse, with the next upside target being the previous session’s high.

BUY WTI

Close Time

CLOSED

73.422

Entry Price

76.700

71.000

59.957 +0.148 +0.25%

242.2

Pips

Loss

71.000

70.999

Exit Price

73.422

Entry Price

76.700

The United States has officially joined Israel in military operations against Iran, reportedly striking and destroying critical nuclear facilities. This dramatic development could mark a major turning point for global markets, particularly for oil prices and the U.S. dollar, which often benefits during geopolitical shocks—especially when oil prices spike.

In response, Iranian officials have threatened to block the Strait of Hormuz, a vital maritime chokepoint through which nearly 20% of global oil supply flows. Should Tehran carry out this threat, some market sources suggest that crude prices could surge to the $120–$130 per barrel range. The market is now intensely focused on the next moves, with any sign of escalation likely to trigger further upward pressure on oil.

Tehran has also proposed legislation to suspend cooperation with the International Atomic Energy Agency (IAEA), warning of "severe consequences" in retaliation to the attacks. While the U.S. labeled the mission as a one-off strike, President Trump declared the operation a success. However, Israeli Prime Minister Benjamin Netanyahu took a more cautious tone, emphasizing that the nuclear threat has not been fully neutralized, as Iran’s heavily fortified Fordow facility remains intact.

In an effort to deescalate the situation, European diplomats from France, Germany, the United Kingdom, and the European Union held high-level talks with Iran's Deputy Foreign Minister Abbas Araghchi. Although no ceasefire agreement was reached, the meeting signaled a shared preference for diplomacy over open conflict.

From a monetary policy perspective, the Federal Reserve is expected to respond to the inflationary impact of soaring oil prices with a sufficiently restrictive stance. Technically speaking, an improvement in a country’s terms of trade can lead to real exchange rate appreciation—either through nominal exchange rate gains or higher inflation. Both outcomes ultimately reduce the competitiveness of U.S. goods abroad. Which channel prevails depends largely on how the central bank handles inflation expectations and interest rate policy.

In a new and potentially worrying development, Qatar has announced the closure of its airspace to civilian aircraft. Market participants view this as a signal of rising geopolitical risk in the region. If this move precedes a full blockade of the Strait of Hormuz, oil prices could experience a sharp resurgence in the coming sessions. WTI Faces Pivotal Moment as Conflict Intensifies and Support Holds_1

WTI Faces Pivotal Moment as Conflict Intensifies and Support Holds_1

Technical Analysis

Following the U.S. strikes on Iranian nuclear facilities, WTI crude surged to an intraday high of $76.67 during Monday’s market open. The heightened risk of retaliatory action by Iran against U.S. assets and infrastructure in the region has created a fragile environment for energy markets, keeping upward pressure on U.S. oil benchmarks.

WTI has found solid support around the $72.50 zone, a level that has historically acted as a reliable base for bullish reversals. The recent pullback toward this area was met with renewed buying interest, and the price has since recovered above the 100-period moving average. This rebound suggests that $72.50 may serve as a critical platform for a fresh bullish impulse, with the next upside target being the previous session’s high.

Meanwhile, the Relative Strength Index (RSI) has dropped to 36.8, approaching oversold territory. The RSI also reached its lowest level across recent sessions, creating bullish divergence—lower RSI values without corresponding new price lows. This could be an early signal that bearish momentum is weakening.

If the $72.50 level fails to hold, further downside could be expected, with the 200-period moving average at $70.95 acting as the next major support level. However, as long as geopolitical tensions remain elevated, the downside may be limited, and bullish momentum could resume swiftly.

Trading Recommendations

Trading direction: Buy

Entry price: 73.41

Target price: 76.70

Stop loss: 71.00

Validity: Jun 30, 2025 15:00:00

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The Australian Dollar rebounded from a one-month low against the US Dollar on Monday as fading geopolitical risk appetite and mixed US PMI data curbed Greenback demand.

BUY AUDUSD

Close Time

CLOSED

0.64350

Entry Price

0.64800

0.63900

0.66426 +0.00043 +0.06%

45.0

Pips

Profit

0.63900

0.64800

Exit Price

0.64350

Entry Price

0.64800

The Australian Dollar (AUD) staged an impressive intraday turnaround against the US Dollar (USD) on Monday, clawing back early-session losses that had pushed the currency pair to its lowest level in nearly a month. While the day began under a cloud of geopolitical tension and risk-off flows — triggered by a weekend U.S. military strike on Iran — market sentiment shifted in New York trading hours as the latest batch of U.S. economic data failed to reinforce bullish conviction in the Dollar.

At the time of writing, AUD/USD is trading near 0.6426, having bounced strongly from the session’s low at 0.6372. The pair was last seen down just 0.38% on the day, after recovering most of the ground lost during the Asian and European sessions. The comeback reflects a broader reassessment of the safe-haven trade and growing investor unease over the sustainability of the Greenback’s recent strength.

The initial bout of Aussie selling was fueled by escalating geopolitical tensions after the United States launched strikes against Iranian targets over the weekend, stoking fears of broader Middle East instability. The USD initially benefited from safe-haven inflows, with global risk sentiment subdued and commodity-linked currencies like the AUD on the back foot.

However, as the session progressed and no immediate retaliatory response from Iran emerged, markets began to unwind some of the safety-driven trades. Traders rotated back into risk-sensitive assets, including the Australian Dollar, as attention shifted from headlines to data.

A key catalyst for the Aussie’s rebound came from the release of mixed US Purchasing Managers’ Index (PMI) data from S&P Global. The Composite PMI dipped slightly to 52.8 in June from 53.0 in May — still signaling expansion, but indicating a marginal loss in momentum.

The Manufacturing PMI came in at 52.0, unchanged from the prior month’s 15-month high and above expectations, suggesting some resilience in the industrial sector. However, the Services PMI — the largest component of the U.S. economy — slipped to 53.1 from 53.7, reflecting softer demand and tempering enthusiasm for the USD.

The data did little to support a stronger case for the Federal Reserve to maintain a hawkish stance, particularly as inflation continues to trend downward and rate expectations for 2024 remain anchored to at least one rate cut before year-end. As a result, the US Dollar’s initial strength faded, giving the Aussie room to retrace losses.

Earlier in the Asia session, Australia’s own PMI data provided a degree of insulation against geopolitical volatility. According to S&P Global, the Australian private sector recorded its second-fastest expansion in ten months. The services sector, in particular, notched a three-month high in activity, while manufacturing held broadly steady — a welcome development for a market that has grown increasingly cautious on the domestic outlook amid soft employment and retail sales data in recent weeks.

The upbeat figures temporarily eased concerns about the Reserve Bank of Australia (RBA) needing to pivot toward policy easing. While some economists still forecast a potential rate cut in late 2024, the stronger PMI print may delay that narrative and keep AUD sentiment anchored in the near term.

Technical Analysis

From a technical perspective, AUD/USD is now testing a key pivot point at 0.6427, which could determine the pair’s direction over the next few sessions.

The Super Trend indicator has generated a clear long signal, and the Pivot Point HL is pointing to a bullish underlying structure in the market. The pair has also managed to hold above recent lows and climb back within a broader consolidation zone, adding to the near-term upside potential.

If momentum continues to build, the next upside target sits near 0.6480 — a level that would mark a full retracement of Monday’s geopolitical-driven drop and challenge short-term resistance.

TRADE RECOMMENDATION

BUY AUDUSD

ENTRY PRICE: 0.6435

STOP LOSS: 0.6390

TAKE PROFIT: 0.6480

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

USD/CAD extended its rally on Monday, trading near 1.3780, as geopolitical tensions in the Middle East and disappointing Canadian retail data fueled safe-haven demand for the U.S. Dollar

BUY USDCAD

Close Time

CLOSED

1.37500

Entry Price

1.40000

1.36700

1.38235 +0.00088 +0.06%

80.0

Pips

Loss

1.36700

1.36690

Exit Price

1.37500

Entry Price

1.40000

The U.S. Dollar continued to gain ground against the Canadian Dollar on Monday, with the USD/CAD pair trading firmly around 1.3780 in North American hours, after briefly touching a session high of 1.3803. The move extends a strong five-day rally for the pair, underpinned by a renewed wave of geopolitical anxiety and mounting concerns over the Canadian economy’s growth prospects.

Risk sentiment remains on edge after the United States launched airstrikes over the weekend on three Iranian nuclear facilities, an escalation that revived fears of a broader conflict in the Middle East. In a televised statement, former President Donald Trump described the operation as a “very successful attack” and issued a stern warning of additional military responses should Iran retaliate. The strikes raised alarm bells among investors already wary of geopolitical instability and the potential implications for global energy markets.

The airstrikes have intensified concerns around the Strait of Hormuz, one of the world's most strategically vital oil shipping lanes. Although oil prices rose in response, broader risk-off sentiment dominated trading floors, funneling capital into traditional safe-haven assets like the U.S. Dollar and pushing USD/CAD higher.

The U.S. Dollar’s strength has been bolstered by its status as a safe-haven currency during periods of global uncertainty. As markets digest the implications of increased military tension in the Middle East, the greenback has found consistent support — not only against commodity-linked currencies like the Canadian Dollar but also against a broader basket of major peers.

While higher oil prices would typically offer some support to the loonie, that historical correlation has weakened in recent months. This is largely due to a shifting domestic macroeconomic backdrop and an increasingly dovish stance from the Bank of Canada (BoC). As a result, the loonie is struggling to find traction, even amid favorable commodity moves.

Adding further downward pressure on the Canadian Dollar were Friday’s disappointing retail sales figures. According to preliminary estimates from Statistics Canada, retail sales volumes contracted by 1.1% in May — a stark reversal from April’s 0.3% growth and well below market forecasts. The data points to a deterioration in consumer spending, a key driver of domestic economic activity, and reinforces the narrative of a softening Canadian economy.

The weak consumption data comes on the heels of other tepid indicators, including a sluggish labor market and subdued business investment. With inflation cooling and growth indicators softening, markets are increasingly pricing in the likelihood of additional interest rate cuts from the Bank of Canada. The central bank already initiated a dovish pivot earlier this year, delivering a 25-basis-point cut, and the latest data may pave the way for further easing in the second half of 2025.

This diverging monetary policy outlook between the Federal Reserve — which remains cautious about inflation and has kept rates on hold — and the BoC is adding another layer of upward momentum to USD/CAD.

Technical Analysis

From a technical perspective, USD/CAD remains well supported within a short-term bullish correction wave. The pair has consistently traded above its 50-period exponential moving average (EMA50), indicating sustained upward momentum. After breaching the key resistance zone at 1.3760, the price is attempting to establish new ground in the 1.38 handle.

The Relative Strength Index (RSI) is showing positive signals, further strengthening the bullish case — though it is now nearing overbought territory. While this suggests a potential pullback or consolidation phase in the near term, the broader trend remains upward unless key support levels, such as 1.3700, are breached.

A successful hold above 1.3760 would open the door for a potential run toward 1.4000, especially if geopolitical tensions persist and Canadian macro data continues to underwhelm.

TRADE RECOMMENDATION

BUY USDCAD

ENTRY PRICE: 1.3750

STOP LOSS: 1.3670

TAKE PROFIT: 1.4000

Risk Warnings and Disclaimers

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Eva Chen

Economic

Forex

Summary:

PMI data hint at undercurrents in the UK's future prospects. The possibility of the Bank of England's rate cut in August is opening up.

SELL GBPUSD

Close Time

CLOSED

1.34205

Entry Price

1.32780

1.35900

1.33385 +0.00073 +0.05%

169.5

Pips

Loss

1.32780

1.35902

Exit Price

1.34205

Entry Price

1.35900

Fundamentals

A survey released on Monday showed that UK business activity expanded modestly in June, with new orders growing for the first time this year. However, the pace of job cuts by employers accelerated, and there was concern over the Middle East conflict.

The S&P Global UK Composite PMI, which measures the private sector economy, rose from 50.3 in May to 50.7, slightly above the 50.0 threshold for expansion. The dominant service sector in the UK economy achieved its fastest growth in three months. Factory activity declined for the ninth consecutive month, but this was the smallest contraction since January.

S&P stated that the report is in line with an economic growth rate of approximately 0.1% during the period from April to June, which also matches the Bank of England's estimate of the current basic pace of economic expansion. Additionally, S&P indicated that the employment, new export business, and future output indices of the Composite PMI in June deteriorated, with the latter being affected by "increasing global economic and political uncertainty."

Market Observations: The UK economy remains sluggish at the end of the second quarter. Although the business environment has been improving continuously since the recession in April, alleviating concerns over a recession, the growth of business activity remains disappointingly stagnant, indicating a quarterly GDP growth rate of only 0.1% in the second quarter. Compared to last year, business confidence remains low and declined again in June.

Apart from concerns over the impact of recent government policies and global trade protectionism, the data collection in June coincided with the escalation of tensions in the Middle East. With companies grappling with higher labor costs resulting from the budget last autumn, lower demand, and subdued confidence, job losses continued.

However, these circumstances have led to a significant cooling of inflationary pressures, especially in the service sector, which has been a major concern for the Bank of England. Thus, the near-stagnant growth, declining employment, and lower inflation have opened the door for the Bank of England to cut rates again at its next policy meeting in August.

Lackluster Economic Recovery, Rising August Rate Cut Expectations, and Short-term Downside Pressure on the Market_1

Technical Analysis

The intraday trend of GBPUSD currently remains neutrally downward. As long as the resistance level at 1.3592 holds, the risks will remain mildly to the downside. A break below 1.3370 will extend the corrective decline, reaching the 38.2% retracement of the 1.2076 to 1.3631 range, ultimately falling to 1.3278.