Yesterday’s start to the week was relatively slow, with the news being quite light. The FX market saw some activity when US trading opened, with the dollar strengthening amid declining risk assets. Shortly after the market opened, the S&P 500 experienced a 1% gain but then pulled back, while Bitcoin’s price dropped from $70K to $67K.
Oil prices also fell below $76, while XAU returned below $2,400 after briefly peaking above this level, indicating that sellers are still in charge. The dollar made significant moves against the euro, with EUR/USD falling close to 1.08. However, the month-end flows were influencing the market.
Today’s Market Expectations
Today it starts with the Q2 GDP reports from a number of European countries. Quarter-over-quarter GDP is anticipated to decline to 0.2% from the previous 0.3%, while the year-on-year growth rate is expected to increase to 0.6% from 0.4%. In the first quarter, GDP growth improved from 0.0% to 0.3%, with ING attributing this to more stable energy prices, reduced inflation, and increased wage growth. This quarter, analysts at Investec are forecasting a positive growth outcome for the Eurozone, potentially marking the first consecutive quarterly GDP gains since 2022. However, the overall growth rate is expected to slow, primarily due to ongoing weak industrial output, particularly in Germany.
Job openings in the United States are projected to rise to 8.025 million, slightly up from the previous figure of 8.140 million. The number of job vacancies has been on a downward trend since reaching a peak in March 2022, gradually returning to levels seen before the pandemic. This trend is positive for the Federal Reserve, as it indicates the labor market is rebalancing through a decrease in job openings rather than through increased layoffs. However, it remains important to closely monitor the labor market during this phase of the economic cycle.
CB Consumer confidence in the United States is expected to dip to 99.5, down from 100.4. The index has been relatively stable since 2022, but recent surveys show a slight decline in confidence. Dana M. Peterson, Chief Economist of The Conference Board, noted that while confidence decreased in June, it remained within the narrow range observed over the past two years. Current positive perceptions of the labor market have helped maintain overall confidence, despite concerns about the future. However, should significant issues arise in the labor market, consumer confidence may weaken further as the year progresses.
Yesterday the USD continued to push higher, and the volatility was decent in forex, but stock markets calmed down after the tumble last week. The Euro was the hardest hit, as it fell to 1.08 lows, triggering the take profit target on our EUR/USD sell signal. We had three forex signals closed yesterday, all of which ended up being winning trading signal.
Gold Reverses Back Down After peaking Above $2,400
In the past two days, gold prices have risen during the early US trading sessions, climbing from $2,400 to a peak of $2,430. This upward movement reflects a broader trend of investors seeking safe-haven assets amid global stock market declines. Despite surpassing the 50-day Simple Moving Average (SMA), gold failed to sustain its momentum, reversing and forming a doji candlestick, which often signals a potential bearish reversal. Subsequently, the XAU/USD pair dropped back into its previous range, dipping below the 100-day SMA and under the $2,400 mark. Yesterday we saw a bullish move which sent the price above $2,400, but sellers returned, pushing the price $30 lower in the US session.
XAU/USD – H4 chart
EUR/USD Moves to 1.08 After Failing at the 100 Weekly SMA
Regarding the EUR/USD exchange rate, we anticipated it would move towards 1.08 rather than nearing the significant 1.10 level, especially given the worsening economic outlook for the Eurozone. This expectation was confirmed by the BCA, which reported that the Eurozone economy is heading into a recession. After gaining nearly 3 cents from late June to mid-July, the EUR/USD pair has since turned lower, now approaching the 1.08 level once again. This shift was mainly due to a weaker USD in the second week of July, bringing the pair close to 1.0950. However, without substantial bullish drivers for the Euro, the pair faced resistance at the 100 weekly SMA (red), leading to a downward reversal. In the past two weeks, the EUR/USD has continued this decline.
EUR/USD – Daily Chart
Cryptocurrency Update
Bitcoin Resumes the Upside Momentum
We continue to hold a long position on Bitcoin, maintaining a buy signal, while observing if buyers can push the price beyond $70,000. Over the weekend, former President Donald Trump downplayed concerns that Bitcoin could…
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