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The US dollar is retreating on all fronts, showing a daily decline since last Monday, when the military conflict between Israel and Iran came out of its hot phase and the tax bill in the US returned to the forefront.

Resuming its decline, interrupted by the bombing between Israel and Iran, the dollar index has been updating its more than three-year lows on a daily basis since the second half of last week. With total losses of over 12%, the first half of the year was the worst for the US currency since 1973, i.e. in the entire history of the free forex market.

A more neutral geopolitical background removed the ‘war premium’ from the dollar’s price and brought back the focus on Trump’s pressure on Powell and the discussion of Trump’s bill. This ‘One Big and Beautiful Bill’ promises to create a 7% budget deficit. The situation is not as serious as it was in September 2022 in Britain, but it is moving in the same direction.

However, we still see more influence in the changing mood of market participants, where expectations of a rate cut are growing. Markets are pricing in a 65% chance that there will be at least three cuts by the end of the year, almost double the figure a month ago.

On weekly timeframes, the RSI index has been updating its lows since early 2018, indicating an aggressive decline over the past seven years. This has dashed hopes for a bottoming out and rebound earlier this year.

The technical picture indicates the potential for the dollar to decline by another 7-8% to the 88-90 range on the DXY from the current 96.6. However, this is a rare case where the situation is in the hands of politicians. We turn our attention to representatives of the US Treasury and the Fed with comments on maintaining a strong dollar policy. Strong macroeconomic employment data this week may halt the dollar sell-off, but this is unlikely during a period of economic slowdown.

Source: FxPro

Escalating Tariff Risks Could Backfire on the U.S. Economy

Quantifying the Asymmetry in Economic Exposure

Policy Uncertainty as a Drag on Growth and Investment

Asset Markets at Risk Amid Recession and Inflation Scenarios

A High-Stakes Test for U.S. Trade Strategy

Source: Reuters

BaFin Greenlights Euro Stablecoin Issuance by DWS Venture

Stablecoins Gain Ground in Europe’s Regulated Financial Ecosystem

Implications for the Future of Digital Payments and Tokenization in Europe

Source: Reuters

July has historically been a bullish month for GBP/USD going back to the Bretton Woods Agreement in 1971 - will it hold this month?

July Forex Seasonality Key Points

• July has historically been a bullish month for GBP/USD going back to the Bretton Woods Agreement in 1971.
• In contrast, AUD/USD and USD/CAD have tended to consolidate in July over the last 50+ years.
• With US President Trump’s trade war in flux as we go to press, it’s worth watching the headlines to determine if deals, or more uncertainty, is likely in the second half of the year.

The beginning of a new month marks a good opportunity to review the seasonal patterns that have influenced the forex market over the 50+ years since the Bretton Woods system was dismantled in 1971, ushering in the modern foreign exchange market.

As always, these seasonal tendencies are just historical averages, and any individual month or year may vary from the historic average, so it’s important to complement these seasonal leans with alternative forms of analysis to create a long-term successful trading strategy. In other words, past performance is not necessarily indicative of future results.

Euro Forex Seasonality – EUR/USD Chart

Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.

Historically, July has been a modestly bullish month for EUR/USD, with the world’s most widely-traded currency pair sporting an average return of +0.32% over the last 50+ years. In June, EUR/USD followed its bullish seasonal trend, surging nearly 4% to reach its highest level in over 3.5 years.

While the momentum and seasonal tendency point to the potential for continued gains in July, it’s worth noting that the pair is very stretched relative to its medium- and long-term moving averages, suggesting that a near-term dip in the first half of the month may be more likely than usual.

British Pound Forex Seasonality – GBP/USD Chart

Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.

Looking at the above chart, GBP/USD has historically seen strength in July, with average returns of around +0.45% since 1971. Like the euro, the British pound traded higher in June to reach multi-month highs amidst broad-based US dollar weakness. After a run of five straight “up” months, it may be more difficult for bulls to build on this year’s gains through the summer without a near-term pullback or consolidation first.

Japanese Yen Forex Seasonality – USD/JPY Chart

Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.

July has historically been a modestly bearish month for USD/JPY, with the pair falling by an average of -0.25% since the Bretton Woods agreement. In line with its long-term seasonal trend, USD/JPY saw relatively quiet trade in June amidst a lack of clear progress in trade negotiations between the US and Japan. Traders will be watching the 2-year lows at 1.3950 for a potential breakdown if the seasonal trend asserts itself again this month.

Australian Dollar Forex Seasonality – AUD/USD Chart

Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.

Turning our attention Down Under, AUD/USD has historically seen quiet price action in July, with an average move of -0.2% going back to 1971. Last month, AUD/USD rallied more than 2%, following its bullish seasonal trend to break above the 61.8% Fibonacci retracement of the September 2024 to April 2025 drop at 0.6550. Following four straight positive months, a consolidation in line with the seasonal trend this month would not be surprising.

Canadian Dollar Forex Seasonality – USD/CAD Chart

Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.

Last but not least, July has been a modestly positive month for USD/CAD, with an average historical return of +0.09%. The US dollar fell against its Northern rival last month, and bulls are starting to warily eye the 1.5-year low at 1.3425 as a key support level that needs to hold to keep any semblance of optimism intact.

As always, we want to close this article by reminding readers that seasonal tendencies are not gospel – even if they’ve tracked relatively closely so far this year–so it’s important to complement this analysis with an examination of the current fundamental and technical backdrops for the major currency pairs.

Source: Investing

Gold Holds Gains as Fiscal Concerns and Fed Outlook Dominate Market Focus

All Eyes on Labor Data as Fed Rate Cuts Hang in Balance

Geopolitical Risks and Central Bank Demand Provide a Supportive Backdrop

Market Sentiment Mixed Amid Broader Economic Stability

Source: Bloomberg

The US Senate yesterday narrowly approved Trump’s so-called “big, beautiful budget bill.”

Elon Musk, who had previously criticised the bill for potentially adding $3.3 trillion to the national debt, warned that Republican lawmakers who supported it would face political consequences. In a post on X, Musk wrote:“Every member of Congress who campaigned on reducing government spending and then immediately voted for the biggest debt increase in history should hang their head in shame! And they will lose their primary next year if it is the last thing I do on this Earth.”

He also reiterated his intention to establish a third political force under the name “America Party.”

In response, President Trump issued sharp threats:

→ to apply federal pressure on Musk’s companies by revisiting existing subsidies and government contracts (estimated by The Washington Post at $38 billion);

→ to deport Musk back to South Africa.

The market responded immediately to this renewed escalation in the Trump–Musk conflict. Tesla (TSLA) shares fell by over 5% yesterday, forming a significant bearish gap.

Technical Analysis of TSLA Stock Chart

Eight days ago, we analysed the TSLA price chart, continuing to observe price action within the context of an ascending channel (indicated in blue). At that point:

→ In mid-June, when the initial Musk–Trump tensions surfaced, TSLA managed to hold within the channel. However, as of yesterday, the price broke below the lower boundary, casting doubt on the sustainability of the uptrend that had been in place since March–April;

→ The price breached the lower channel limit near the $315 level — a zone that previously acted as support. This suggests that $315 may now serve as a resistance level.

As a result, optimism related to the late-June launch of Tesla’s robotaxi initiative has been eclipsed by concerns that the Musk–Trump confrontation may have broader implications.

If the former allies refrain from further escalation, TSLA may consolidate into a broadening contracting triangle (its upper boundary marked in red) in the near term, ahead of Tesla’s Q2 earnings release scheduled for 29 July.

Source: FXOpen