The U.S. Dollar came under heavy pressure on Thursday, reversing its modest recovery from the previous session as a complex blend of political tensions, macroeconomic risks, and monetary policy uncertainty sparked a sharp deterioration in investor sentiment. The catalyst for the renewed selloff was a fresh round of attacks from President Donald Trump targeting the independence of the Federal Reserve, a move that significantly undermined confidence in the credibility of U.S. monetary policy at a time when economic fragility is becoming more apparent.

According to reports from Washington insiders, Trump has recently escalated his rhetoric against Fed Chair Jerome Powell, allegedly using derogatory language and even entertaining the idea of replacing Powell before the end of his term. While the president has long been critical of the central bank's policy stance, the prospect of actively pursuing Powell’s dismissal represents a profound breach of the long-standing norms separating politics from monetary governance. Markets interpreted the remarks as an overt threat to institutional stability, prompting an immediate and sharp retreat in the dollar across the board.

This political drama unfolded just as Powell reiterated the Fed’s cautious tone regarding interest rates. In his latest public appearance, the Fed Chair suggested that the central bank remains in a strong position to manage inflation, even as the effects of U.S. tariffs continue to ripple through the economy. He offered no firm signal that a rate cut was imminent, instead emphasizing the Fed’s commitment to a data-driven approach.

Despite Powell's remarks, traders increasingly believe that policy easing is on the horizon. Expectations for a rate cut have surged in recent days. The CME FedWatch Tool shows that markets are now pricing in a 24% probability of a rate cut in July, up from just 14% a week ago. For September, the odds have soared to 90%, compared to 65% in the prior week. The spike in rate-cut bets is being driven not only by political pressure but also by fears that the administration’s escalating trade policy could push the U.S. economy into a period of stagflation—characterized by slowing growth and rising inflation.

Those fears were echoed by a recent report from JP Morgan, which warned that the imposition of unilateral tariffs could erode consumer and business confidence, slow investment, and feed into inflation through higher import costs. The bank raised its probability of a U.S. recession in the second half of 2025 to 40%, citing growing stagflationary pressures as the key risk factor.

Against this backdrop, the U.S. Dollar has lost favor even as global geopolitical tensions persist. The Dollar Index, which measures the greenback against a basket of major currencies, has broken below recent support levels. Demand has shifted toward currencies perceived to have more stable policy environments, despite broader market uncertainty.

One notable outperformer has been the Canadian Dollar. Despite a more than 16% collapse in crude oil prices—Canada’s primary export—the Loonie has gained nearly 0.5% against the U.S. Dollar this week. This divergence from traditional correlations suggests growing investor confidence in the relative strength of Canada’s macroeconomic fundamentals and its central bank’s policy discipline.

USD/CAD has been trading on the back foot, slipping toward critical support near the 1.3450 level. Technical signals point to further weakness ahead. The pair recently formed a head and shoulders reversal pattern, a classic bearish setup that signals an end to upward momentum. Additionally, the 50-day exponential moving average has moved above current price levels, a bearish crossover that indicates downside pressure is increasing.

Bearish engulfing candles have appeared on the daily chart, reinforcing the view that sentiment is turning against the greenback. Momentum indicators also show a shift in favor of sellers, and the price is now hovering near a potential break of market structure. A fair value gap has emerged just above the current level, suggesting that price may be seeking equilibrium at lower levels.

A descending trendline has consistently rejected upside attempts, further confirming that bulls have lost control. If the pair decisively breaks below 1.3450, technical momentum could drive it toward the 1.3380–1.3400 range. Conversely, any bounce is likely to face stiff resistance around 1.3560, the neckline of the head and shoulders pattern and a former support zone now acting as a ceiling.

SELL USDCAD

ENTRY PRICE: 1.3650

STOP LOSS: 1.3780

TAKE PROFIT: 1.3400

Gold prices attracted buying interest for a second consecutive day on Thursday, maintaining upward momentum during the European session. Sustained US Dollar selling momentum provided underlying support.

The divergence between falling safe-haven demand and sustained buying interest reflects a significant shift in market dynamics. Gold investors are increasingly positioning around monetary policy expectations rather than purely crisis-driven demand. This marks a broader trend toward more nuanced risk assessments and strategic asset allocations.

Federal Reserve Chair Jerome Powell, in his second day of testimony before Congress, defended the Fed’s cautious stance on interest rates, citing considerable uncertainty regarding the inflationary effects of tariffs. Powell acknowledged that tariff-driven price increases might prove transitory, but emphasized that the Fed must prepare for the possibility of more persistent inflation. “As the people who are supposed to keep stable prices, we need to manage that risk. That's all we're doing.” he said.

Powell stressed that the Fed is navigating largely uncharted territory, warning that the potential scale of new tariffs far exceeds those implemented during Trump’s first term — and that those earlier actions occurred in a low-inflation environment. “There is not a modern precedent.” he cautioned, advising against premature policy adjustments in the absence of clearer economic signals. On tariff-related inflation, Powell remarked: “If it comes in quickly and it is over and done then yes, very likely it is a one-time thing.” However, if the Fed misjudges the situation, “People will pay the cost for a long time.”

Investors appear to bet that political pressure, economic uncertainty, and Fed caution will ultimately favor looser policy. This suggests gold’s role as an inflation hedge and currency debasement protection remains attractive even with diminished traditional safe-haven demand.

Turning to price action: gold saw renewed buying interest on Thursday. However, a key bearish trendline is forming, with resistance near the $3360 level. A decisive break above this resistance could open further upside potential. The next major hurdle is around $3378, and beyond that, prices could revisit the $3400 handle.

Nonetheless, given gold’s historically poor performance in the month of June, upside momentum is likely to face significant headwinds. The path of least resistance remains to the downside.

Trade Direction: Sell

Entry Price: 3358

Target Price: 3259

Stop Loss: 3398

Valid Until: July 11, 2025 23:55:00

Support: 3329/3323/3295

Resistance Levels: 3350/3356/3360

The Swiss Franc extended its powerful rally on Thursday, breaching levels not seen in over two and a half years, as growing political turmoil in Washington accelerated the U.S. Dollar’s retreat across global markets. The USD/CHF currency pair tumbled sharply below the key psychological threshold of 0.8000, driven by investor angst over the Federal Reserve’s independence following a barrage of incendiary remarks from President Donald Trump.

Market participants scrambled into traditional safe-haven assets, with the Swiss Franc—often viewed as a shelter during times of geopolitical and institutional uncertainty—emerging as a top performer. The move marked a continuation of the “sell America” trade that has gained momentum in recent weeks as the U.S. Dollar’s credibility erodes under political interference and policy unpredictability.

Tensions between the White House and the Federal Reserve escalated dramatically on Wednesday after President Trump launched a blistering attack on Fed Chair Jerome Powell, labeling him “terrible” and “an average mentally person.” Trump went so far as to float the idea of publicly announcing Powell’s successor ahead of the scheduled end of his term in May next year—a suggestion that sent shockwaves through financial markets.

Such a move would be highly irregular and legally questionable, potentially creating a "shadow chair" that undermines the Fed's operational credibility. Investors viewed the remarks as a direct challenge to the independence of one of the world’s most powerful and respected central banks—an institution designed to be shielded from short-term political pressures in order to ensure long-term economic stability.

The market reaction was swift and brutal. Yields on U.S. Treasuries sank, risk sentiment deteriorated, and the U.S. Dollar came under intense selling pressure. The Swiss Franc, along with gold and the Japanese Yen, attracted heavy inflows as traders de-risked their portfolios.

Despite mounting political pressure, Fed Chair Jerome Powell has maintained a measured and deliberate tone. In his semiannual testimony to Congress earlier this week, Powell defended the central bank’s “wait-and-see” posture, emphasizing the importance of reacting to data rather than speculation.

Powell underscored that inflationary pressures—particularly those stemming from new and proposed trade tariffs—remain a real concern, and premature rate cuts could undermine the Fed’s credibility in anchoring inflation expectations. His stance came under fire from several Republican senators, who accused him of political bias, a charge Powell flatly denied.

Analysts suggest that while Powell’s commitment to central bank independence remains unwavering, the political noise surrounding the Fed is becoming a material risk in itself. The very notion of presidential interference in monetary policy—especially through the threat of an early replacement—risks institutional erosion and could diminish the Dollar’s long-held status as the global reserve currency.

Adding to the Dollar’s woes is the looming threat of unilateral tariffs. With a critical June 9 deadline fast approaching and no signs of resolution on key trade fronts, investors are bracing for another round of damaging import levies. These fears are magnified by recent soft U.S. economic data, which suggest that the post-pandemic growth cycle may already be losing steam.

In this environment, the combination of institutional instability, trade-related risks, and political volatility is accelerating the exodus from Dollar-denominated assets. The Swiss Franc, by contrast, is benefiting from Switzerland’s political neutrality, stable economic fundamentals, and historical role as a safe-haven currency.

From a technical standpoint, the breakdown in USD/CHF has opened the door to deeper losses. The pair decisively breached the key support level at 0.8055 during Thursday’s session, a level that had served as a floor for the past few weeks. The move confirmed the dominance of the prevailing bearish trend and was further supported by negative signals on the Relative Strength Index (RSI), which has turned lower after resetting from oversold conditions.

The Franc’s advance gained traction after rejecting off a key pivot level at 0.8070, now confirmed as near-term resistance. Price action suggests the pair is targeting the next support zone at 0.7962, with a break below that likely opening the path toward 0.7900 and potentially the October 2021 lows.

Should any signs of stabilization emerge, traders will watch the 0.8070–0.8100 zone closely for signs of a corrective bounce. However, as long as political instability dominates headlines and macroeconomic data supports a cautious Fed, the technical and fundamental bias for USD/CHF remains tilted to the downside.

SELL USDCHF

ENTRY PRICE: 0.8000

STOP LOSS: 0.8120

TAKE PROFIT: 0.7750

Starting June 23rd, the A-share market witnessed significant gains for three consecutive trading days. The Shanghai Composite Index climbed 2.86%, setting a new high for the year, the Shenzhen Component Index rose 3.88%, and the ChiNext Index surged 5.90%. This rally resulted from the convergence of multiple domestic and external factors:

Firstly, Iran-Israel Ceasefire:​​ An agreement between Iran and Israel significantly cooled geopolitical risks, despite minor subsequent friction. This prompted capital to flow back from safe-haven assets into equities. The ceasefire spurred a global rebound in risk assets, lifting major US indices, the Hang Seng Index, and Asia-Pacific markets. Foreign capital's appetite for Chinese assets strengthened. Data shows northbound capital recorded a net inflow exceeding CNY 12 billion on June 25th, hitting a nearly three-month high.

Secondly, the People's Bank of China (PBoC)'s Looser Policy Expectations Intensify:​​ On June 25th, the PBoC injected CNY 300 billion via its Medium-Term Lending Facility (MLF), resulting in a net liquidity injection of CNY 118 billion. Combined with CNY 200 billion in reverse repos, this brought the mid-June net liquidity injection to CNY 318 billion. The market anticipates a potential 0.5 percentage point reserve requirement ratio (RRR) cut and an interest rate cut by 30 basis points in H2 2025. These liquidity-easing expectations directly benefit financial heavyweights. Furthermore, six departments including the Financial Supervisory Administration jointly issued the "Guidance Opinions on Financial Support to Boost and Expand Consumption," explicitly promoting long-term capital inflows into the market and fostering stable capital market development. ​Regarding capital flows,​ margin financing balances have remained above CNY 1.8 trillion for 11 consecutive days. On June 25th, total trading volume on the Shanghai and Shenzhen exchanges surpassed RMB 1.6 trillion, expanding by over CNY 300 billion from the previous session. This indicates a synchronized recovery in leveraged capital and retail investor sentiment.

Notably, institutions like Goldman Sachs and UBS have upgraded their ratings on A-shares, forecasting the CSI 300 to reach a target level of 4,600 points, implying about 10% upside potential.

Based on the daily chart, the A50 index has rallied strongly following a deep correction starting in early April, testing the key 13,800 resistance level multiple times. This indicates robust short-term bullish momentum. Furthermore, after decisively breaking above multiple moving averages (MAs) in early May, subsequent pullbacks on June 2nd and June 23rd held firmly above the 60-day and 144-day MAs, reinforcing the bullish energy.

Regarding the moving average system, several MAs are showing signs of upward inflection, suggesting a gradually increasing probability of sustained near-term gains.

Currently, the A50 index faces near-term resistance at 13,800. As the price has touched this level several times, selling pressure has gradually been absorbed, increasing the likelihood of a breakout. A decisive break above 13,800 would open significant further upside potential, paving the way for a test of the previous high of 15,834.

Trading direction: Buy

Entry price: 13700

Target price: 14500

Stop loss: 13250

Valid Until: July 11, 2025, 23:00:00

Support: 13505/13264

Resistance: 13800/14566

The Bank of Japan’s Summary of Opinions from its June policy meeting, released earlier today, highlighted a growing divergence among board members regarding the timing and scale of future interest rate hikes. While some policymakers favored maintaining the current stance in light of global uncertainty and sluggish domestic growth, others emphasized persistent inflationary pressures and robust wage growth as reasons to consider further tightening.

This division has left markets without a clear signal on when the BoJ may act next, adding a layer of uncertainty to the yen’s outlook. Policymakers reiterated that any future rate hikes would be contingent upon economic and price developments materializing as expected. Although inflation has slightly exceeded earlier projections, the BoJ anticipates that Japan’s economic growth will slow, and improvements in consumer prices may remain moderate.

In the face of global risks such as trade tensions and geopolitical instability, the board generally agreed that maintaining the current accommodative stance remains appropriate for now—putting continued downward pressure on the Japanese yen.

Adding a more hawkish twist, BoJ board member Naoki Tamura offered a firmer view. Speaking in Fukushima, Tamura said there is a "good chance" the BoJ’s 2% inflation target could be achieved sooner than previously thought. He stressed the importance of timely and appropriate policy actions based on data trends, warning that inflation might accelerate more quickly than current forecasts suggest—potentially necessitating decisive tightening, even amid persistent global uncertainty.

Meanwhile, Fed Chair Jerome Powell reinforced the Fed’s cautious posture in his remarks on Tuesday, stating that the U.S. central bank is in no rush to cut rates. He cited uneven inflation data and pointed out that tariff-related price pressures are likely to appear in upcoming readings for June or July.

Powell’s message was in line with the tone of the June 18 FOMC meeting, during which policymakers penciled in two potential rate cuts in the second half of the year. Still, market participants remain split over the precise timing of any policy move, and interest rate expectations continue to shift with each new data release—keeping USD-sensitive assets like gold and the yen in sharp focus.

“If inflation pressures stay contained,” Powell said, “we’ll get to a point where rate cuts happen sooner rather than later, but I wouldn’t want to point to any specific meeting.” He also noted that any material deterioration in labor market conditions would influence the Fed’s decisions, although he added: “There’s no need to rush, because the economy is strong, and the labor market remains resilient.”

Boston Fed President Susan Collins echoed Powell’s stance, emphasizing that policy remains well-calibrated, the U.S. economy is solid, and there is still time to assess inflation’s trajectory before acting.

Adding to the uncertainty, U.S. consumer confidence data released Tuesday showed a decline, with the Conference Board’s index falling to 93.0 in June from 98.4 in May. The softer outlook suggests that consumers may pull back on spending in the months ahead, which could weigh on the Fed’s growth expectations and potentially influence the timing of interest rate adjustments.

USD/JPY has entered a correction phase after failing to hold above the 200-period moving average, which currently sits at 145.69. The pair initially attempted to build bullish momentum at this level, but strong selling pressure emerged. Price has since fallen sharply and closed below the 100-period moving average at 145.20—a technical breakdown that may pave the way for further downside acceleration.

Near-term bearish targets are now focused on the 144.40 area, which marks a previously tested support level. The RSI, meanwhile, is hovering just above oversold territory at 30.8. These levels often signal exhaustion among sellers and may spark a temporary rebound or consolidation before the broader downtrend resumes.

The 100-period moving average, now turned resistance, could act as a barrier if buyers attempt to push prices higher. However, as long as the pair remains below both key moving averages, the path of least resistance appears to be downward. Should RSI remain near oversold without a sustained bounce, it could confirm persistent bearish pressure and reinforce expectations of a deeper correction.

Trading direction: Sell

Entry price: 145.21

Target price: 144.40

Stop loss: 145.70

Validity: Jul 04, 2025 15:00:00

The recent agreement by Israel to the Trump-brokered ceasefire proposal with Iran has alleviated concerns regarding potential disruptions to Middle Eastern crude oil supplies, causing oil prices to fall to a two-week low. Although a risk premium remained embedded in crude oil prices, it has largely dissipated. If the ceasefire agreement is observed as announced, investors may anticipate a normalization of oil prices.

Looking ahead, the evolving situation in the Middle East continues to drive volatility in crude oil prices, with investors likely to monitor geopolitical developments for cues. Signs of de-escalation could trigger further profit-taking on prior gains, while an escalation of tensions could prompt a fresh rally in oil prices due to global supply concerns.

Furthermore, inventory data may also induce short-term fluctuations, with the API report indicating another substantial draw in inventories, leading traders to position themselves for a similar outcome from the EIA report.

Technically, the overnight sell-off in WTI crude oil prices reinforced the resistance zone between approximately US$78.45 and US$80.77 (year-to-date highs). It is evident that a breakout above this resistance zone will be challenging for crude oil.

WTI crude oil prices have retraced significantly from recent highs near US$76.71 and are currently trading around US$64.27. A death cross appears imminent as the 100-day SMA approaches the 200-day SMA from above.

This decline marks a notable reversal of the prior strong uptrend, indicating that profit-taking and bearish sentiment are weighing on prices. However, prices are testing a favorable area that could attract buyers and drive a resumption of the uptrend towards the next bullish target.

Based on Fibonacci extensions, WTI crude oil may retrace to the 38.2% level (US$70.93), but failed to provide sufficient support, subsequently rising to the 50% level (US$73.03). Sustained bullish momentum could drive it up to the 61.8% level (US$75.13), followed by the 76.4% level (US$77.73). The ultimate extension is at US$81.94 per barrel, assuming a favorable scenario.

However, technical indicators paint an increasingly bearish picture. The stochastic oscillator has plummeted from the overbought territory and is now approaching oversold conditions, suggesting potential continued selling pressure in the short term. Nevertheless, the rapid decline of the oscillator also indicates a possible rebound in the near term once extreme oversold levels are reached.

Similarly, the Relative Strength Index (RSI) has also declined significantly from its highs and is currently trending towards the oversold zone. The rapid weakening of momentum suggests that bears have firmly grasped control of the market, but the indicator's proximity to oversold conditions may signal an impending rebound.

Indeed, given that the 1D structure remains in a death cross, it is recommended to continue to go short at the highs.

Trading Direction: Sell

Entry Price: 64.80

Target Price: 60.42

Stop Loss: 67.95

Valid Until: July 10, 2025 23:55:00

Support: 63.68, 62.70, 60.58

Resistance: 65.29, 66.90, 67.84