Dollar Steady; Gold and Oil Prices Face Challenges: Market Focus

Trading Insights: Dollar Index holds steady; gold and oil prices face challenges. Insights on today’s major currencies, oil, and key economic events.

Asia Session Overview

It was a relatively quiet start to the day. The Dollar Index (DXY) lingered around 104.30, while spot gold prices held steady above $2,400 per ounce. Crude oil prices saw a slight uptick, with WTI oil climbing above $80.50 per barrel.

Outlook for European & US Sessions

Today’s trading environment is expected to be subdued, with no significant events on the economic calendar. The DXY showed early signs of weakness, dipping towards the 104 level as markets reopened, but demand for the dollar may increase as the day progresses.

The Dollar Index (DXY)

• Key News Events: None
• Expectations: The DXY rebounded by 0.32% last Friday, ending a two-week decline and closing at 104.36. After a significant drop earlier in July, the index stabilized at around 104. Today, it could test new ranges with support at 103.70 and resistance at 105.10.

Central Bank Notes:

• The Federal Reserve’s target range for the federal funds rate remains at 5.25% to 5.50%.
• The Fed aims to balance maximum employment with a 2% inflation target. Recent data suggests economic expansion and solid job gains, but inflation remains a concern.
• Based on incoming data, the Fed will continue to adjust its policy stance and remain cautious about reducing rates until inflation trends toward 2%.
• The Fed is also slowing the reduction of its holdings in Treasury securities starting in June.

Next Meeting: 30-31 July 2024

Next 24 Hours Bias: Weak, Bullish

Gold (XAU)

• Key News Events: None
• Expectations: Gold prices stalled last week, dropping 0.89% to close at $2,400.30 per ounce. The outlook remains under pressure, with support at $2,350 and resistance at $2,450.

Next 24 Hours Bias: Weak Bearish

The Australian Dollar (AUD)

• Key News Events: None
• Expectations: The AUD reversed gains from the previous five weeks, falling 1.5% last week to close at 0.6680. It is trading around 0.6690 as Asian markets opened. Key levels include support at 0.6630 and resistance at 0.6750.

Central Bank Notes:

• The RBA kept its cash rate at 4.35%, marking the ninth pause in ten meetings.
• Inflation is expected to return to the 2-3% target range by the second half 2025. However, economic activity is weakening, impacting the outlook for interest rates.

Next Meeting: 6 August 2024

Next 24 Hours Bias: Weak Bearish

The Kiwi Dollar (NZD)

• Key News Events: None
• Expectations: The NZD has lost nearly 2.3% in the past two weeks, closing at 0.6008. It trades above 0.6000 at the start of the Asian session, with support at 0.5980 and resistance at 0.6065.

Central Bank Notes:

• The OCR remains at 5.50%, focusing on returning inflation to the 1-3% target range by the second half of 2024.
• Inflation is easing but remains high, with moderate economic recovery expected.

Next Meeting: 14 August 2024

Next 24 Hours Bias: Weak Bearish

Dollar Steady; Gold and Oil Prices Face Challenges: Market Focus

The Japanese Yen (JPY)

• Key News Events: None
• Expectations: The JPY strengthened recently, causing USD/JPY to retreat from 162 to close at 157.44. It trades around 157.50, with support at 154.70 and resistance at 159.00.

Central Bank Notes:

• The BoJ’s QQE with Yield Curve Control and negative interest rate policy remain in place. The BoJ aims to guide short-term rates and continue JGB purchases while monitoring inflation and economic growth.

Next Meeting: 31 July 2024

Next 24 Hours Bias: Weak, Bullish

The Euro (EUR)

• Key News Events: None
• Expectations: The Euro retreated from a high of 1.0948 last week to close at 1.0891. It trades around 1.0890, with support at 1.0850 and resistance at 1.0950.

Central Bank Notes:

• The ECB kept interest rates unchanged in July following a rate cut in June.
• The ECB aims to bring inflation to its 2% target, while economic growth and inflation pressures influence its policy decisions.

Next Meeting: 12 September 2024

Next 24 Hours Bias: Weak Bearish

The Swiss Franc (CHF)

• Key News Events: None
• Expectations: The CHF weakened towards the end of last week, with USD/CHF closing at 0.8884. It is edging towards 0.8900, with support at 0.8820 and resistance at 0.8900.

Central Bank Notes:

• The SNB lowered its key policy rate to 1.25% in June. Inflation remains low, and GDP growth is moderate.

Next Meeting: 26 September 2024

Next 24 Hours Bias: Weak, Bullish

The Pound (GBP)

• Key News Events: None
• Expectations: The Pound retreated from a high of 1.3048 last week, closing at 1.2912. It is drifting towards 1.2900, with support at 1.2860 and resistance at 1.3050.

Central Bank Notes:

• The BoE kept its rate at 5.25% and held mixed views on future rate cuts. It expects inflation to rise slightly in the second half of the year.

Next Meeting: 1 August 2024

Next 24 Hours Bias: Weak Bearish

The Canadian Dollar (CAD)

• Key News Events: None
• Expectations: The CAD lost ground last week, with USD/CAD closing at 1.3730. It remains elevated around 1.3725, with support at 1.3660 and resistance at 1.3750.

Central Bank Notes:

• The BoC cut its overnight rate target to 4.75% and continues to monitor inflation and economic activity closely.

Next Meeting: 24 July 2024

Next 24 Hours Bias: Weak, Bullish

Oil

• Key News Events: None
• Expectations: Crude oil prices dropped nearly 4.5% over the past two weeks, closing at $80.29 per barrel. The outlook remains bearish, with potential for further declines.

Next 24 Hours Bias: Medium Bearish

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