Momentum Remains in a Refueling Mode, but Structurally It Still Favors Buying Low and Selling High

Economic

Forex

Summary:

The persistent weakness of the Japanese yen is attributed to economic and trade uncertainties, which have dampened expectations for the Bank of Japan (BOJ) to raise interest rates. However, a cautious approach is warranted when considering new bullish positions on the USDJPY, given the technical context.

SELL USDJPY

Close Time

CLOSED

146.807

Entry Price

144.030

149.500

155.079 -0.266 -0.17%

28.8

Pips

Profit

144.030

146.519

Exit Price

146.807

Entry Price

149.500

Fundamentals

The USDJPY continued its upward trajectory on Tuesday, surpassing the 146.20 resistance level and currently trading near 146.35. The USDJPY has maintained a strong uptrend since late June. The yen remains under pressure due to domestic economic fragility and external headwinds.

Data released on Monday revealed a significant 2.9% drop in Japan's real wages for May, the fastest in nearly two years, highlighting the disconnect between inflation and nominal income growth. Inflation rose 4.0% year-over-year, while nominal wages increased only 1.0%. Despite a brief rebound in household spending, the decline in purchasing power raises concerns for Japan's fragile consumption recovery.

Monetary policy continues to impede economic progress. The BOJ's dovish stance, complicated by wage stagnation and inflation-adjusted growth, complicates any rate normalization efforts. These internal factors are exacerbated by external shocks, notably the 25% tariffs on Japanese imports announced by the US. The breakdown of US-Japan trade talks and the threat of retaliatory tariffs further undermine the economic outlook.

The yen reacted swiftly, breaching the 146.00 level against the dollar, driven by rising US Treasury yields and widening yield differentials. Technically, the asset has room to appreciate if safe-haven flows are limited and the BOJ maintains its current position.

However, geopolitical risks, weak consumer fundamentals, and trade-related uncertainties make the yen increasingly vulnerable. Short-term movements will depend on Tokyo's policy adjustments and the outcome of bilateral trade negotiations with Washington. Furthermore, the yen may strengthen in the coming months if the market increases bets on further rate hikes this year, as the market currently prices in only a 3-basis-point hike in September, which appears insufficient.

Momentum Remains in a Refueling Mode, but Structurally It Still Favors Buying Low and Selling High_1

Technical Analysis

The USDJPY's Relative Strength Index (RSI) has reached 75, entering overbought territory for the first time in weeks, indicating strong bullish momentum. However, a short-term pullback is possible unless the price consolidates below key resistance levels.

The MACD continues to show strong bullish momentum, with the MACD line above the signal line and expanding momentum histograms. No divergence or reversal signals are present.

The asset's recent trend remains in a refueling mode, supported by the 146.20 breakout level. Further gains could target 147.70 and potentially the June high of 148.60. Yet, overbought conditions and geopolitical uncertainties may trigger a short-term correction before further advances.

Trading Recommendations

Trading Direction: Sell

Entry Price: 147.29

Target Price: 144.03

Stop Loss: 149.50

Valid Until: July 23, 2025-07-23 23:55:00

Support: 146.20, 145.26, 144.18

Resistance: 147.08, 148.05, 148.68

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Warren Takunda

Traders' Opinions

Economic

Summary:

The British Pound fell on Tuesday as investors reacted to heightened fiscal concerns following Labour's proposed welfare spending increase.

SELL GBPUSD

Close Time

CLOSED

1.35000

Entry Price

1.34000

1.36500

1.33407 +0.00095 +0.07%

9.8

Pips

Profit

1.34000

1.34902

Exit Price

1.35000

Entry Price

1.36500

The Pound Sterling (GBP) came under renewed selling pressure on Tuesday, extending losses against major counterparts, as growing fiscal uncertainty in the United Kingdom weighed on sentiment. Markets responded negatively to the Labour government’s recent unveiling of a large-scale welfare expansion package, stoking concerns over future borrowing levels, debt sustainability, and the broader macroeconomic outlook for the UK.

At the center of the latest wave of Sterling weakness is last week’s welfare spending bill, introduced by the Labour-led government in the House of Commons. The proposed legislation includes a significant increase in the standard allowance for Universal Credit (UC), which would raise government expenditure by an estimated £4.8 billion by the 2029–2030 fiscal year. While the measure was broadly welcomed by social advocates, investors were far less enthusiastic.

The market's reaction was swift and clear. UK government bonds, or gilts, came under intense pressure as traders reassessed the UK’s debt trajectory in light of the new welfare spending. Yields on 10-year gilts climbed sharply, reflecting a combination of increased risk premium and expectations of greater issuance over the medium term. The yield spread between UK gilts and their U.S. Treasury counterparts also widened, underlining a loss of relative attractiveness for British assets.

Sterling followed suit, weakening notably across the board. The Pound’s decline was particularly pronounced against the U.S. Dollar (USD), as the GBP/USD pair dipped below the 1.3550 handle, marking a 0.43% intraday drop at the time of writing.

Market participants voiced concern over the absence of a concrete funding strategy for the new spending obligations. Chancellor of the Exchequer Rachel Reeves acknowledged that the plan would have budgetary implications but offered little clarity on how the additional burden would be absorbed.

“Of course, there is a cost to the welfare changes that Parliament voted through this week, and that will be reflected in the Budget,” Reeves told reporters. However, she stopped short of confirming whether the government would resort to tax increases, spending cuts, or additional borrowing—leaving investors in a state of unease.

The ambiguity surrounding Labour’s fiscal intent is creating headaches for policymakers and investors alike. After years of managing a delicate balancing act between public spending and fiscal prudence, the UK now finds itself at a crossroads. The push for welfare reform—while perhaps politically popular—risks clashing with the market’s demand for fiscal credibility, particularly at a time when borrowing costs remain elevated and economic growth remains patchy.

Adding to the uncertainty is the possibility that the UK’s fiscal path could strain relations with the Bank of England (BoE), which remains laser-focused on inflation containment. While UK inflation has been trending lower in recent months, it remains above the central bank’s 2% target, and any perceived fiscal loosening could complicate the BoE’s efforts to maintain a credible monetary stance.

In this environment, analysts are growing more cautious on the Pound. Many believe that unless the government provides a clearer blueprint for funding the welfare package—without compromising its fiscal rules—the Pound could remain under pressure for the foreseeable future.

Technical Analysis

Technically, the GBP/USD pair is showing signs of fatigue, with the recent drop below the 1.3550 level reinforcing a bearish near-term bias. The pair is currently trading at 1.3545, down 0.43% on the day. Resistance is forming around 1.3591—just shy of recent swing highs—while support is beginning to cluster near the 1.3470–1.3400 zone, which also aligns with the pair’s 50-day moving average.

Momentum indicators are starting to turn negative, with the Relative Strength Index (RSI) drifting toward the 40-level, signaling a loss of bullish control. A deeper move below 1.3470 could pave the way for an extended correction toward the 1.3400 target, especially if fiscal concerns remain unresolved and U.S. Dollar strength persists.

TRADE RECOMMENDATION

SELL GBPUSD

ENTRY PRICE: 1.3500

STOP LOSS: 1.3650

TAKE PROFIT: 1.3400

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The Euro rebounded modestly on Tuesday but failed to hold gains above 1.1770, as fears of escalating global trade tensions—sparked by President Trump’s tariff warnings—kept investors risk-averse.

SELL EURUSD

Close Time

CLOSED

1.17100

Entry Price

1.16100

1.18000

1.16543 +0.00117 +0.10%

12.1

Pips

Profit

1.16100

1.16979

Exit Price

1.17100

Entry Price

1.18000

The Euro (EUR) attempted a cautious rebound against the U.S. Dollar (USD) in early Tuesday trading, bouncing off nearly two-week lows near 1.1690 during the Asian session. However, the move was short-lived. Gains stalled around the 1.1770 mark as market sentiment remained fragile, pressured by renewed fears of a global trade war following a series of new tariff threats from the United States.

As of midday in Europe, EUR/USD was retreating toward 1.1730, keeping the broader bearish trajectory intact after last week’s failed rally. The pair remains well below its recent highs and continues to trade with a negative bias, weighed down by both macroeconomic headwinds and technical resistance.

Investor anxiety was reignited after U.S. President Donald Trump sent out formal letters to multiple countries announcing fresh import tariffs, a move interpreted by markets as a renewed hardline stance on trade. Although the Eurozone was not among the recipients—at least not yet—investors remain on edge, anticipating possible ripple effects if negotiations sour or new tariffs are extended to European goods in the near future.

Market chatter suggests that trade negotiations between the U.S. and the EU are progressing, with some sources hinting at a possible breakthrough announcement as early as Wednesday. This has provided a short-term reprieve for the Euro, helping it avoid a steeper decline. However, any potential gains are likely to be capped unless there's concrete resolution or clear de-escalation in broader trade disputes.

More broadly, the resurgence of global trade friction has revived demand for the safe-haven U.S. Dollar, to the detriment of risk-sensitive currencies like the Euro. With investors remaining defensively positioned and liquidity thinned by a relatively light economic calendar, short-term flows continue to favor USD strength.

On the macroeconomic front, trade data from France and Germany—the Eurozone’s two largest economies—did little to inspire confidence. Both countries posted mixed figures, with declining imports and exports suggesting a potential cooling of domestic demand and international competitiveness.

The weakness in trade volumes also raises fresh concerns about the health of the Eurozone’s economy heading into the third quarter. With inflation still well below the European Central Bank’s (ECB) target and growth projections softening, the region’s economic recovery appears vulnerable to external shocks—particularly from a deteriorating global trade environment.

This fragility may limit the ECB’s flexibility in the coming months, especially if monetary conditions tighten further as a result of a stronger Dollar and weaker Euro, which could export inflationary pressures back into the region.

Technical Analysis

From a technical standpoint, the EUR/USD pair remains locked in a bearish formation after failing to breach resistance at 1.1745. The pair retested this level earlier in the session, aligning with the 50-period Exponential Moving Average (EMA50), which acted as a dynamic resistance zone.

The subsequent pullback underscores the intensity of selling pressure at these levels. Compounding this is the Relative Strength Index (RSI), which flashed a bearish divergence after reaching overbought territory even as price momentum stalled—a classical setup for downside continuation.

If the pair remains below the 1.1745 barrier, downside risks will remain elevated. The next key support lies at 1.1610, a level that aligns with a previous consolidation zone and may serve as the next logical target for bearish momentum.

TRADE RECOMMENDATION

SELL EURUSD

ENTRY PRICE: 1.1710

STOP LOSS: 1.1800

TAKE PROFIT: 1.1610

Risk Warnings and Disclaimers

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Gerik

Economic

Forex

Summary:

GBP/JPY trades around 198.85, approaching the 198.90–199.00 zone a key resistance marked by recent highs. ...

SELL GBPJPY

Close Time

CLOSED

198.700

Entry Price

197.000

199.000

206.884 -0.216 -0.10%

30.0

Pips

Loss

197.000

199.001

Exit Price

198.700

Entry Price

199.000

Market Overview

GBP/JPY currently hovers around 198.85, up ~0.8% from the 196.79 pivot reached yesterday. Despite this rise, Bank of Japan's ongoing yield-curve control and UK’s fiscal jitters have capped broader upside.

Market Sentiment

On the daily chart, mood remains cautiously bullish as long as 193.99 holds. However, intraday charts reflect signs of exhaustion: price nearing upper band (198.87–199.00), which coincides with a triangle breakout earlier, and Stoch/RSI likely overbought on M15–H1.

Technical Analysis

GBP/JPY nearing 199.00 – Watch for a sell‑on‑rally near the upper band?_1

Bollinger Bands: Price touching the upper band, indicating potential pullback risk.

Ichimoku: On M15–H1, price is above Tenkan/Kijun but approaching cloud resistance, which may trigger a rejection.

Stochastic: Overbought region confirmed by divergence on M15–H1, suggesting potential short-term reversal if resistance doesn’t break.

Trade Plan

Entry (Sell): Short around 198.7 if a rejection candle forms on M15.

Take Profit: Target 197.50–197.00, aligning with recent intraday lows and supportive pivots.

Stop Loss: Above 199, just beyond upper band/resistance to limit risk on breakout continuation.

Risk Warnings and Disclaimers

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Alan

Commodity

Summary:

The Trump administration's escalation of tariffs has driven a resurgence in gold prices, with technical analysis indicating a head and shoulders bottom pattern that further enhances the potential for an upward trend.

BUY XAUUSD

Close Time

CLOSED

3326.37

Entry Price

3395.00

3295.00

4211.20 +13.29 +0.32%

313.7

Pips

Loss

3295.00

Exit Price

3326.37

Entry Price

3395.00

Fundamentals

The current upward momentum in gold prices is driven by policy expectation divergences, risk aversion premiums, and the weakening of the US dollar's creditworthiness.

Firstly, the escalation of tariffs under the Trump administration has heightened global supply chain risks: on July 7, tariffs of 25% to 40% were announced on imports from 14 countries including Japan and South Korea, effective August 1, affecting critical commodities such as semiconductors and agricultural products. This directly impacts industries accounting for 18% of global trade volume. The move not only elevates US import costs—Oxford Economics forecasts Q4 inflation could surge to 3.5%—but also accelerates de-dollarization among emerging market central banks. China's central bank has increased gold reserves for eight consecutive months, adding 70,000 ounces in June, continuing a trend of annual gold purchases exceeding 1,000 tons from 2022 to 2024, reinforcing gold's strategic long-term value.

Furthermore, the short-term rebound of the US dollar fails to conceal the deepening sovereign debt crisis: despite the US Dollar Index surging to 97.65 on the back of robust non-farm payroll data (a weekly increase of 0.58%), the passage of the "One Big Beautiful Bill Act" by the U.S. Senate will add US$3.4 trillion to the deficit over the next decade, potentially pushing total national debt beyond US$50 trillion. Federal Reserve Chairman Powell has acknowledged that the debt trajectory is "unsustainable," undermining the dollar's creditworthiness and highlighting gold's role as an inflation hedge.

Finally, the anticipation of interest rate cuts and geopolitical risks create a hedging support: although June's non-farm payrolls exceeded expectations, the contraction of 33,000 in ADP employment reveals structural vulnerabilities in the labor market, with market expectations for a September rate cut remaining anchored at 60%. Coupled with escalations in uranium enrichment activities at Iran's nuclear facilities and attacks on merchant ships in the Red Sea, the geopolitical conflict index has risen to 87 (near the critical threshold of 90), with safe-haven buying potentially triggering automated trading algorithms at any moment.

Technical Analysis

Tariff Escalation Sparks Another Wave of Bullish Sentiment_1

In the 1D timeframe, gold experienced a prior correction to 3250, forming a double bottom pattern, which reinforced bullish momentum. The SMA system continues to display a bullish alignment, indicating that the overall upward trend remains intact. This further enhances the likelihood of short-term continued rally.

Additionally, the previous day's candlestick closed with a long lower shadow doji, confirming the 3290-3300 range as a strong support level. After dipping to 3296 yesterday, prices quickly rebounded to close at 3336, validating the resilience of the bullish defense.

Tariff Escalation Sparks Another Wave of Bullish Sentiment_2

In the 4H timeframe, after establishing a support level at 3250, the gold price's candlestick pattern is gradually forming a head and shoulders bottom configuration, which further enhances the likelihood of a short-term upward trend. The initial resistance target is expected to be around the 3400 level.

Trading Recommendations

Trade Direction: Buy

Entry Price: 3330.00

Target Price: 3395.00

Stop Loss: 3295.00

Valid Until: July 22, 2025 23:00:00

Support: 3296.31, 3247.90

Resistance: 3365.54, 3400.00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

This level aligns closely with the 100-period moving average at 0.6517, creating a confluence zone that has historically provided a strong base for bullish reversals.

BUY AUDUSD

Close Time

CLOSED

0.65000

Entry Price

0.65800

0.64600

0.66437 +0.00054 +0.08%

40.3

Pips

Profit

0.64600

0.65403

Exit Price

0.65000

Entry Price

0.65800

On Monday night, the White House confirmed that U.S. President Donald Trump signed an executive order delaying the implementation of new tariffs from July to August 1, according to Bloomberg.

The Trump administration had previously announced 25% tariffs on goods imported from Japan and South Korea, but the latest executive order pushes the enforcement date to the start of August. Additional 25% duties were imposed on imports from Malaysia, Kazakhstan, and Tunisia, while South Africa faces a 30% tariff. Laos and Myanmar were hit with 40% levies, and other nations affected include Indonesia (32%), Bangladesh (35%), and both Thailand and Cambodia at 36%.

Economists have pointed to Trump’s unpredictable trade and fiscal policies as a significant factor behind the cautious tone surrounding the U.S. dollar. A recent Reuters poll conducted on July 2 revealed that approximately 37% of currency analysts view the ongoing tariff negotiations as a key element weighing on the greenback, alongside concerns about mounting U.S. debt and uncertainty over the interest rate outlook.

The Federal Reserve is widely expected to hold rates steady at its upcoming July 30 meeting, with market-based probabilities standing at 80.37%. Money market futures are currently pricing in a total of 50 basis points of rate cuts by December 2025, highlighting a more cautious stance on monetary policy in the face of trade uncertainty.

On the other side of the globe, the Reserve Bank of Australia (RBA) is broadly anticipated to cut interest rates by 25 basis points on Tuesday, lowering the Official Cash Rate (OCR) from 3.85% to 3.60%. This would mark the third rate reduction in 2025, as the central bank continues to respond to a weakening economic backdrop. Market pricing now reflects a more than 90% probability of a July cut, with additional easing projected for August and possibly even November.

Australia’s latest Consumer Price Index (CPI) data showed that annualized inflation fell to 2.1% in May from 2.4% in April, coming in below market expectations of 2.3%. The RBA’s trimmed mean CPI, which excludes volatile items, rose 2.4% year-over-year—its lowest level since November 2021.

Meanwhile, the Australian economy expanded at a slower-than-expected pace in Q1 2025, growing just 1.3% year-over-year versus forecasts of 1.5%. On a quarterly basis, the economy advanced by only 0.2%, falling short of the 0.4% forecast.

The combination of softer inflation and subdued growth continues to support the case for further rate cuts, especially as the RBA has maintained a patient "wait-and-see" approach—more so than any other major central bank. A New Bullish Leg May Begin from This Oversold Area_1

A New Bullish Leg May Begin from This Oversold Area_1

Technical Analysis

AUD/USD has recently declined toward the 200-period moving average on the 4-hour chart, which currently sits at 0.6496. This level aligns closely with the 100-period moving average at 0.6517, creating a confluence zone that has historically provided a strong base for bullish reversals. These levels could now represent the lower boundary of a broader ascending channel.

Additionally, the RSI has dropped into oversold territory, suggesting that bearish momentum may be losing strength—potentially setting the stage for a fresh upside leg.

If the pair manages to reclaim and close above the 100-period moving average, we could see a bullish acceleration toward the 0.6582 area, which corresponds to the upper boundary of the current channel and may act as the next key resistance.

Conversely, a decisive breakdown below the support zone would invalidate the bullish setup and expose AUD/USD to a renewed wave of selling pressure.

Trading Recommendations

Trading direction: Buy

Entry price: 0.6500

Target price: 0.6580

Stop loss: 0.6460

Validity: Jul 17, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Forex

Economic

Summary:

The recent bullish rejection candles formed around this low further indicate that buyers could be regaining control, potentially setting the stage for a recovery.

BUY USDCHF

Close Time

CLOSED

0.79868

Entry Price

0.84000

0.77600

0.80332 -0.00123 -0.15%

19.0

Pips

Profit

0.77600

0.80058

Exit Price

0.79868

Entry Price

0.84000

The Swiss National Bank (SNB) took a distinctly dovish turn in June, cutting its policy rate to 0% and signaling that a return to negative interest rates remains on the table should deflationary pressures intensify. This marks a significant shift in tone and has introduced a new level of caution into the Swiss policy outlook.

On the macroeconomic front, both the International Monetary Fund (IMF) and the Swiss government have revised down their growth forecasts for 2025, citing growing concerns over escalating global trade tensions. The IMF now expects Switzerland’s economy to expand by just 1.3% next year—down from a previous forecast of 1.7%.

Recent inflation data further underscore the fragile economic backdrop. Swiss consumer prices fell by 0.1% year-over-year in May, registering the first deflationary print in over four years. However, the June figures showed a modest recovery with a slight annual increase of 0.1%. This ongoing softness in price growth continues to reinforce expectations that the SNB will maintain a dovish policy stance for an extended period, although the Swiss franc remains supported by safe-haven flows and investor caution amid geopolitical and macroeconomic uncertainty.

In the U.S., President Donald Trump is expected to begin sending formal tariff notifications to trading partners this week, setting the stage for new import duties. Although the deadline to implement the tariffs is officially Wednesday, Treasury Secretary Scott Bessent’s comments—indicating that the measures may be delayed until August 1—have introduced a layer of uncertainty, leaving markets wary.

Three months after announcing a pause in tariff increases, the U.S. has only finalized trade agreements with China, the United Kingdom, and Vietnam. The deal with China, notably, was more about rolling back earlier tariffs than establishing a comprehensive trade accord. Nevertheless, optimism remains, as the Trump administration hints at further imminent deals. Market sources suggest that India may be nearing a mini-agreement, and Bessent has also mentioned positive progress with the European Union.

Meanwhile, the U.S. 10-year Treasury yield held steady near 4.35% on Monday, edging higher from Friday’s 4.30% close. The sustained rise in yields reflects fading expectations for near-term rate cuts by the Federal Reserve, particularly amid inflation concerns tied to Trump’s trade policies. While the dollar continues to benefit from its safe-haven status, high yields are providing a solid fundamental anchor, keeping the greenback resilient against major currencies. Potential Upside Correction Ahead as Sellers Lose Momentum_1

Potential Upside Correction Ahead as Sellers Lose Momentum_1

Technical Analysis

USD/CHF has reached a significant local low at 0.7879, a level not seen since 2015. This sharp decline followed a breakdown below the previous support at 0.8044. The historical significance of this multi-year low is drawing attention from bargain-hunting buyers, and the pair could be poised for a bullish reversal from this deeply discounted zone.

Supporting this view is the RSI, which dropped to 25—firmly within oversold territory—suggesting that bearish momentum may be waning. The recent bullish rejection candles formed around this low further indicate that buyers could be regaining control, potentially setting the stage for a recovery.

Additionally, the 100- and 200-period moving averages on the daily chart are located at 0.8426 and 0.8647, respectively. These levels may serve as potential targets in the event of a corrective upward move. Particularly, the 0.8398 area could act as strong resistance, as it aligns with a previously significant support zone now likely to flip roles. A decisive close above the 9-period moving average would strengthen the bullish outlook and could confirm the beginning of a fresh upward leg from the current lows.

Trading Recommendations

Trading direction: Buy

Entry price: 0.7985

Target price: 0.8400

Stop loss: 0.7760

Validity: Jul 17, 2025 15:00:00

Risk Warnings and Disclaimers

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