The Rally Hits Resistance Amid Shifting ECB Rhetoric

Forex

Economic

Summary:

Last week, President Lagarde hinted at a more aggressive stance, suggesting inflation could stabilize around 2%. That pivot sparked a short-lived euro rally. But if you’ve been watching the markets like I have, you’ll notice that the momentum faded rather quickly. Why?

I've been closely tracking the EUR/USD pair lately, especially after the European Central Bank’s recent tone shift. It’s fascinating to see how market expectations have evolved from no hikes at all this year to pricing in a December move. But let’s take a step back.

The Rally Hits Resistance Amid Shifting ECB Rhetoric_1

Source: TradingView

Well, ECB members have since been walking that back. Lagarde herself emphasized there’s "no need to rush to premature conclusions," and Villeroy de Galhau called market reactions “too high.” That commentary was enough to push the 1-year forward OIS down by 12bps to 0.00% a sign that traders are starting to temper their rate hike bets again.So where does this leave EUR/USD? We're now caught in a tug-of-war between tightening expectations and cautious ECB communication. Unless inflation data forces their hand, I don’t expect a broad trend breakout soon. Especially with 62% of December’s euro-area inflation tied to volatile categories like energy and food, the underlying core remains tame.

GBP: Is the BoE Hike Already Priced In?

If you were expecting fireworks after the Bank of England's rate hike, you probably felt let down. I know I did.Despite a 25bps increase, GBP/USD actually slipped. And the pound lost over 1% against the euro. Why the underperformance?

The Rally Hits Resistance Amid Shifting ECB Rhetoric_2

Source: TradingView

The market had already priced in the move. More importantly, the details from the BoE’s Monetary Policy Report tell a more cautious story: tightening beyond current expectations could actually undershoot the inflation target.This is a critical point for traders. It’s not just about whether a central bank is raising rates it’s about the trajectory and the messaging behind it.

Chief Economist Huw Pill’s speech (titled “UK Monetary Policy Outlook”) further drove home that excessive tightening isn’t warranted. That’s why we saw the 1-year forward GBP OIS fall 11bps last week.So, while real yields still favor GBP/USD, broader growth risks like tax hikes and spiking energy bills are likely to limit upside potential. I’m staying nimble on this pair, especially ahead of upcoming UK retail and labor data.

In FX, narratives are changing fast. A central bank comment or a data surprise can reverse trends in a matter of hours. That’s why I stay grounded in both fundamentals and sentiment shifts. Right now, it feels like the market is hunting for clarity in a fog of conflicting signals.I’ll be keeping a close eye on upcoming inflation releases and central bank speeches this week particularly for signs that market pricing (especially in Europe and the UK) may be running ahead of policy reality.

Q1: Why did the EUR/USD rally stall after the ECB's hawkish comments?Even though ECB President Lagarde signaled a shift toward tightening, subsequent comments from other officials dialed back expectations. This inconsistency reduced momentum, and the market started to doubt whether the ECB would follow through aggressively especially given that eurozone inflation is still largely driven by energy and food.

Q2: If the BoE raised rates, why did GBP weaken?Markets had already priced in the BoE’s 25bps hike. More importantly, the Bank’s guidance emphasized that excessive tightening could actually harm the economy and undershoot inflation. This cautious tone weighed on the pound, despite a seemingly hawkish headline.

Q3: What does the BTP/Bund spread tell us about ECB policy risks?The widening spread between Italian and German bonds (BTP/Bund) signals stress in the periphery. If it continues, it could pressure the ECB to slow or adjust its tightening plans to avoid fragmenting financial conditions across the eurozone.

Q4: How do real yield spreads influence currency pairs like GBP/USD?In theory, higher real yields should support a currency. But in practice, broader economic concerns such as slowing growth, tax hikes, and energy costs can offset that support. That’s what’s happening with GBP/USD: strong real yields, weak price action.

Q5: What should traders focus on this week?Stay alert for speeches by central bank officials (BoE, Fed, BoC), inflation data releases (especially in the US and eurozone), and geopolitical developments. Markets are highly reactive to shifts in forward guidance, and volatility can pick up quickly when expectations change.

Source:ACY

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Gerik

Economic

Commodity

Crude Prices Buoyed by Geopolitical Risk

Brent crude hovered near $70 per barrel after a sharp 2.3% increase in the previous session, its largest two-week jump, while West Texas Intermediate (WTI) traded around $67. This upward momentum follows President Trump’s announcement of a 10–12 day deadline for Moscow to cease military operations in Ukraine or face new U.S. sanctions, including potential “secondary sanctions” that could affect non-Russian entities engaging in oil trade with Russia.

Markets have interpreted this stance as a precursor to further supply disruptions from Russia, a key member of OPEC+ and one of the largest global oil exporters. Trump’s public frustration with President Vladimir Putin marks a renewed hardline approach after previous diplomatic attempts yielded no significant progress toward a ceasefire.

Supply Concerns Amplified by Sanctions and Summer Demand

The threat of U.S. secondary sanctions builds on fresh EU penalties against Russian-linked companies, including India's Nayara Energy, and adds another layer of uncertainty to oil supply chains. This comes at a time when global inventories are already tightening due to summer-driven demand peaks in the Northern Hemisphere. Refineries are running near full capacity in several Asian and U.S. regions, drawing down stocks of gasoline and diesel.

Oil's rally is also underpinned by the August 1 trade deadline for several U.S. agreements and anticipation surrounding the upcoming OPEC+ policy meeting. The cartel is set to decide its production strategy for September, with analysts divided on whether output will be held steady or slightly increased. A conservative production stance by OPEC+ in light of Trump’s threat could further bolster oil prices in the short term.

Volatility Expected Amid Mixed Fundamentals

Despite recent price support, the oil market faces the possibility of oversupply in Q4 if OPEC+ continues to raise production and global demand begins to plateau. The International Energy Agency (IEA) and other forecasters have warned of a potential return to surplus later this year, especially if Chinese consumption weakens or if macroeconomic uncertainty limits industrial activity.

However, the immediate focus remains on Russia’s compliance with U.S. pressure. Should Moscow ignore Trump’s deadline, broader sanctions could cut into Russian crude exports likely forcing refiners in Asia to seek alternative sources, tightening supplies in key regions. Conversely, a swift truce could alleviate supply concerns and trigger a retracement in prices.

Traders will closely monitor diplomatic developments in the next two weeks as well as signals from the upcoming OPEC+ meeting. In the interim, geopolitical tensions are expected to keep crude prices supported, but underlying fundamentals suggest limited room for sustained upside unless further supply shocks occur.

Source: Bloomberg

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Gerik

Economic

Forex

Market Response: A Lopsided Deal Spurs Euro Weakness

The European currency suffered its steepest one-day drop in over two months, falling 1.3% on Monday and hovering near $1.1594 on Tuesday morning in Asia. The immediate trigger was the backlash from European leaders against the recently announced U.S.-EU trade deal, which imposes a 15% tariff on most EU goods. French officials denounced the agreement as a betrayal of European interests, calling it a “dark day,” while German Chancellor Friedrich Merz warned of “significant damage” to Germany’s export-reliant economy.

This political dissatisfaction swiftly translated into bearish sentiment in financial markets. As euro-area government bond yields fell, traders reduced exposure to the euro, shifting capital toward the dollar as a safe haven.

Investor Sentiment and Dollar Momentum

The euro's slump coincided with a sharp rise in the dollar index, which climbed 1% overnight and stabilized around 98.67. The euro's underperformance also spilled over to other currencies. Sterling fell to a two-month low at $1.3349, while the Japanese yen remained flat around 148.49. This price action reflects a consensus that, despite superficial progress, the deal has not improved growth prospects for the eurozone and may worsen them.

As Ray Attrill from National Australia Bank explained, the trade agreement may appear to signal cooperation, but its tangible effects undermine European economic recovery, especially at a time of weakening industrial production and subdued consumer demand in the region.

Political Dynamics and Global Repercussions

President Trump’s rhetoric has further complicated the global outlook. He warned that trading partners without specific bilateral deals with the U.S. would soon face tariffs of 15–20%, far higher than the blanket 10% tariff set in April. This aggressive trade posture reinforces the perception of a protectionist U.S. strategy and may further depress trade activity with Europe.

Meanwhile, global currency traders remained cautious ahead of key interest rate decisions from the Federal Reserve and the Bank of Japan later in the week. Although no changes are expected, any hints about policy direction especially from the Fed could influence dollar strength and emerging market stability.

Europe Faces an Uneven Path Forward

The euro’s sharp reaction underscores the market's concern about Europe’s vulnerability in an increasingly unilateral global trade environment. The imbalance in the U.S.-EU deal, combined with heightened trade uncertainty and weak eurozone fundamentals, creates downward pressure on the euro and casts doubt on any near-term economic revival.

Unless the European Union can counteract these external pressures with cohesive fiscal policy or stimulus measures, the bloc may continue to face capital flight and a weaker currency. Investors will closely watch ECB commentary in the coming weeks for any signal of countermeasures to offset the trade-driven drag on growth.

Source: Reuters

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Winkelmann

Cryptocurrency

Political

Economic

Trump Announces Global Tariff Standard

This declaration is a huge jump towards his protectionism trades policy with an ambitious statement of covering all imports with tariffs ranging between 15 and 20%.On Sunday, Donald and European Commission President Ursula von der Leyen confirmed a landmark agreement introducing a 15% baseline tariff on EU imports to the US.Describing the outcome as a “historic deal,” Donald emphasized its scale, calling it “the biggest of them all.” Von der Leyen acknowledged the agreement was tough but noted it was the most favorable outcome the EU could secure.

Trump later reiterated the 15% benchmark as a new standard during a Monday meeting in Scotland with UK Prime Minister Keir Starmer. He suggested that all future global trades deals would likely operate within the 15% to 20% Global trade fee range.

US-China Trade Talks Resume Amid Tensions

As world remains in a state of uncertainty, the US and China have resumed negotiations on trades. According to the South China Morning Post, markets are indifferent though in cautious optimism and most investors are anticipating a prolongation of the current trade armistice.However, U.S President recent comments suggest letters are being prepared for more than 200 countries, specifying new Global trade fee expectations under the emerging system.

The president indicated that Canada may face a sharp 35% Global trade fee on certain products outside the current US-Canada-Mexico Agreement. U.S President cited ongoing frustrations with Canada, stating past negotiations have produced little progress.

Legal Challenge Threatens New Tariff Authority

Trump’s aggressive use of tariff powers is now facing intense legal scrutiny. On Thursday, the US Court of Appeals for the Federal Circuit will hear a case that could determine the legality of his strategy.The case, VOS Selections v Trump, centers on Donald use of the 1977 International Emergency Economic Powers Act (IEEPA) to justify his Import charge actions.

A group of small business owners has stated that the legislation did not commission the tariffs. According to them, the president has gone too far, and these responsibilities are affecting their businesses negatively.The situation has also raised the beliefs of legal experts that the case may end up in the US Supreme Court since this has impacts on constitutional implications.

While a lower court previously ruled Donald had exceeded his legal authority, that decision was paused pending this week’s appeal. If the court strikes down the IEEPA-based justification, it could jeopardize Trump’s tariff policies and unravel recent trade deals.Another round of tariffs is set to go into effect this Friday, potentially targeting major trading partners such as Mexico and Canada.

Source: CryptoSlate

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Gerik

Cryptocurrency

Foundations of Innovation: What Sets Ethereum Apart

Ethereum was never just another cryptocurrency. From the outset, it differentiated itself by allowing the creation of programmable smart contracts, enabling developers to build decentralized applications (dApps) that could automate financial transactions without intermediaries. These self-executing contracts operate solely based on code, introducing a new architecture for decentralized finance (DeFi) and peer-to-peer trustless systems.

This technical capacity has led Ethereum to host over 50% of all circulating stablecoins and become a vital platform for NFTs and DeFi ecosystems. Compared to Bitcoin, which primarily functions as a digital store of value, Ethereum’s flexibility and use cases extend far beyond simple transactions.

Crisis and Evolution: From DAO Hack to The Merge

The 2016 DAO hack marked a critical turning point in Ethereum’s history. The decision to implement a hard fork and reverse the effects of a $50 million exploit was both controversial and defining, splitting the community into Ethereum and Ethereum Classic. This episode showcased Ethereum's adaptability and its community’s willingness to evolve an attribute that has underpinned its long-term success.

In 2022, Ethereum again redefined its architecture through “The Merge,” transitioning from energy-intensive proof-of-work mining to proof-of-stake consensus. This switch slashed its energy usage by 99.5%, aligning the platform with growing global concerns over sustainability and ESG investing. Ethereum co-founder Vitalik Buterin even suggested the upgrade could cut global energy usage by 0.2%, attracting eco-conscious investors and firms.

Institutional Endorsement and Retail Legitimacy

Over the years, Ethereum has attracted institutional validation. Visa’s 2021 decision to settle transactions using the USD Coin on the Ethereum blockchain marked a major milestone. As of 2025, Ethereum has gained even more traction with the passage of the GENIUS Act in the US Senate, which solidified stablecoin oversight and enhanced crypto asset legitimacy.

High-profile backers such as Eric Trump and industry leaders like JPMorgan Chase and Citigroup have openly expressed interest in Ethereum and digital assets. This growing Wall Street integration has not only reduced the stigma around cryptocurrency but has also sparked direct investments and derivative products, such as ETH-based ETFs filed by President Trump’s media company.

Capital Surge and New Ventures: The Ether Machine IPO

The recent 20% price rally, pushing Ethereum toward the $4,000 mark, reflects renewed investor optimism. New ventures like Ether Machine a merged entity between Ether Reserve and Dynamix Corporation have raised $1.5 billion in ether, showcasing Ethereum’s value as both a capital-raising vehicle and a yield-generating asset. Hedge fund activity and tech firms like Robinhood enabling ETH staking further signal Ethereum's increasing appeal as an investable, yield-bearing instrument.

As Ethereum continues to evolve, it is positioned not just as a cryptocurrency, but as a foundational layer for digital finance. The combination of programmability, energy efficiency, regulatory clarity, and institutional support gives Ethereum a unique edge over competitors. Its path mirrors the trajectory of traditional financial infrastructure, now backed by decentralized innovation.

In the years ahead, Ethereum’s challenge will be managing scalability and user costs, especially with increasing on-chain activity. But with updates like sharding and Layer 2 integrations underway, Ethereum seems well-prepared to maintain its status as the most versatile and foundational blockchain protocol of the digital era.

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MarketPulse by OANDA Group

Commodity

Forex

The weekly session has started with some great volatility, particularly as the US Dollar is breaking higher in a strong manner and with the EU-US Trade Deal being close to concluded.This volatility has been negative for Gold which had been going up on more tense global trade outlooks. As a matter of fact, global trade is felt to be looking better as more Deals are reached.

Gold Shows Signs of Fatigue Inside Established Range_1

Gold Daily Chart, July 28, 2025 – Source: TradingView

Gold was on a strong move towards that previously pointed to potentially hitting the all-time highs – A spike at the $3,439 highs got met with an Engulfing bearish candle after the reaching of the US-Japan Trade deal.Since, an over-$100 correction has brought the precious metal below the 2025 upwards trendline, particularly after opening down on the weekly open, just below its key 50-Day Moving average ($3,342).Buyers having failed to hold the rally above it gives more emphasis to the ongoing selling – However the action is still rangebound with the prices entering the $3,300 to $3,320 Support Zone.Any close below would look at the end-June $3,250 level that served as key support, with no other major support until $3,120 May lows

Gold Shows Signs of Fatigue Inside Established Range_2

Gold 4H Chart, July 28, 2025 – Source: TradingView

The weekly open has quickly built towards the Key support mentioned on the Daily timeframe, which leaves a last hurdle for the bulls to support the range before a potential $50 breakdown.$3,300 is not a pivot point to underestimate, and retracements in Gold tend to be short – Therefore even if the level breaks, it will be essential to see where other buyers step in ($3,250 is the next key support).There has been a long-tailed wick at the morning session selling candle leading to a small rebound – Any rebound from here will have to be strong enough to bring prices above the $3,350 Pivot Zone in confluence with the 4H MA 200.Any selloff from there would open the door for a more concrete downwards reversal in a break-retest fashion which would infer a need for further analysis.Reactions from here are a major key for the action to come.

Gold Shows Signs of Fatigue Inside Established Range_3

Gold 30M Chart, July 28, 2025 – Source: TradingView

Looking even closer, the battle is nnot won yet for the Bears.The formation of a intermediate-downwards channel shows a potential test of its higher bound which coincides with the 30m 50-period MA ($3,330); a first hurdle to break for the range to hold and to give a chance to regain higher levels.That MA is actually a key to intraday momentum, having served as resistance for sellers to step in so keep that one closely in check.

Source:OANDA

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Liam Peterson

Just last week, Prime Minister Netanyahu recalled his Israeli negotiating team from Doha - which is certainly not a first instance - as talks broke down, also after the US representative mentioned dissatisfaction with Hamas' position.

On Sunday night, the Houthis of Yemen declared it will target merchant ships belonging to any company that does business with Israeli ports. This part is nothing new, but what is a renewed escalation is that the Houthis statement made clear this will be regardless of nationality as part of the next phase of its operations.

This Red Sea war has been going for a long time, and has featured direct ballistic missile attacks on Tel Aviv - which have been waning in the last weeks, but the resulting shipping disruptions have wreaked havoc on a vital global transit point through which an estimated $1 trillion in goods usually passes each year.

The Houthis have been boasting of the return of attacks via slick social media videos.

The Houthi statement said they had “decided to escalate their military support operations and begin implementing the fourth phase of the naval blockade” against Israel. This also as international reports have acknowledged rising famine and deaths from hunger in the Gaza Strip.

The fresh statement warns the Iran-backed militants would target "all ships belonging to any company that deals with the ports of the Israeli enemy, regardless of the nationality of that company, and in any location within the reach of our armed forces." This is regardless of any final destination, it warned.

International companies and governments must pressure Israel to stop the war in Gaza and lift its blockade on the Palestinian territory "if they want to avoid this escalation" - the statement warns further.

Escalation has indeed been on the rise, despite months ago Trump ordering the US Navy to wind down and withdraw from its war with the Houthis, while pressuring the Europeans to take a more active posture in the theatre.

Already in July the Houthis have attacked and sank two Liberian-flagged, Greek-owned bulk carriers – identified as the Magic Seas and the Eternity C. The Houthis have boasted of these assaults by issuing high-production quality films detailing the operations, which even involved boarding the vessels.

These were deadly attacks and have resulted in four crew members dead and 11 more taken captive - though thankfully 22 crew members of the Magic Seas were able to be rescued.

As for the latest round of failed negotiations hosted in Qatar, reports indicated that Hamas offered to trade 10 Israeli hostages for 200 Palestinian prisoners serving life sentences.

Israel reportedly pushed for a 2-kilometer demilitarized buffer inside the Strip, while Hamas is said to have countered with one kilometer. All of this may be moot from the start, given much more land mass has already been utterly destroyed, and Israel is believed to be paving the way for eventual new settlements.

The fiery and loudly-issued new threat against Red Sea shipping:

The Israeli government has meanwhile opted for a military solution, and the complete eradication of Gaza. From the start Hamas has insisted on the removal of all Israeli military troops, which has been a non-starter for Netanyahu.

By and large, Washington has stuck by its closest Mideast ally, amid growing international criticisms linked to tens of thousands of civilian deaths, and a nightmarish humanitarian crisis. President Trump on Monday in comments from Scotland issued a rare admission that Gazans are indeed starving, and that we need to "feed the kids".