Forex News

• Gold price remains range-bound between $3,300 and $3,330 as traders stay cautious ahead of key US macro data.
• The Federal Reserve is widely expected to keep interest rates steady, but forward guidance on rate cuts is the main market driver.
• Safe-haven demand remains muted amid easing global trade tensions and improving risk appetite.

Gold (XAU/USD) is treading water on Wednesday, hovering near $3,330 during the European trading session. The precious metal is attempting to stabilize after falling to a three-week low of $3,301.90 on Monday. Although price action remains subdued, Gold is oscillating in a narrow range between $3,300 and $3,330.

Easing trade tensions have dampened Gold’s safe-haven appeal, keeping gains in check. However, a softer US Dollar (USD) and a modest pullback in Treasury yields are offering some support. Still, overall risk-on sentiment in the markets is limiting upside momentum as traders brace for the Federal Reserve’s (Fed) monetary policy decision, due Wednesday at 18:00 GMT.

Gold came under pressure last week as improving risk appetite, driven by a series of trade deals, reduced demand for safe-haven assets. The recently announced US-EU deal, which imposes a 15% flat tariff on a wide array of European imports, has added to market optimism that global trade tensions may be cooling. Earlier, the United States (US) also reached a preliminary deal with Japan. Adding to the cautious optimism, negotiations are underway with Canada, South Korea and other trading partners, with hopes high that several more deals could be finalized before the August 1 deadline on Friday.

Meanwhile, US-China trade talks concluded in Stockholm on Tuesday with both sides pledging to maintain open communication and uphold the current tariff truce, set to expire on August 12. While no formal extension was agreed upon, negotiators described the tone as constructive. US President Donald Trump is expected to make the final call on whether to extend the truce, keeping markets in wait-and-watch mode.

Looking ahead, a packed US economic calendar is in focus on Wednesday. The day begins with the ADP Employment Change report for July providing an early look at the health of the labor market ahead of the Non-Farm Payrolls (NFP) report later this week. That’s followed by preliminary readings of Core Personal Consumption Expenditures (PCE) and Q2 Gross Domestic Product (GDP), both of which will help shape expectations around inflation and growth. However, the main spotlight falls on the Fed’s monetary policy decision, followed by Fed Chair Jerome Powell’s press conference, where investors will be looking for clues on the future path of interest rates.

Market movers: Eyes on Fed, GDP, and jobs data

• The yield on the 10-year US Treasury note is holding near 4.33% on Wednesday, stabilizing after a sharp decline in the previous session. Meanwhile, the 30-year yield (US30Y) is trading around 4.86%  as investors adopted a cautious stance ahead of the Federal Reserve’s policy announcement.
• The ADP Employment Change report for July, released at 12:15 GMT, showed the U.S. private sector added 104,000 jobs, surpassing expectations of a 78,000 increase and rebounding sharply from June’s revised 33,000 decline.
• The advance reading of Q2 GDP is due at 12:30 GMT, with expectations pointing to a 2.4% annualized expansion, a notable rebound from the -0.5% contraction seen in the previous quarter.
• The core PCE Price Index, the Fed’s preferred inflation metric, is projected to slow to 2.4% QoQ in Q2, down from 3.5% previously.
• The Fed is expected to keep interest rates unchanged at 4.25%-4.50%. However, the real focus will be on the forward guidance as markets are increasingly pricing in a rate cut by September, with odds rising to around 65%, according to CME FedWatch. A dovish Fed tone could weigh on the US Dollar and real yields, offering a fresh upside push to XAU/USD. Conversely, if the Fed pushes back against market pricing or signals that rate cuts aren’t imminent, Gold could struggle to break above its recent range and may dip lower.
• Tuesday’s data offered mixed signals on the US economy. The JOLTS Job Openings report showed vacancies declined by 275,000 to 7.437 million in June, signaling a gradual cooling in labor demand. However, the Conference Board’s Consumer Confidence Index rose to 97.2 in July, up from 95.2 in June and well above expectations of 95.4.

Technical analysis: XAU/USD tests key support near 50-day EMA ahead of Fed

From a technical perspective, XAU/USD is testing a key confluence zone on the daily chart, where the 50-day Exponential Moving Average (EMA) at $3,323.22 overlaps with a rising trendline support drawn from March lows. While the price is currently trading marginally below the ascending trendline, the breach lacks strong momentum, suggesting it may be a false breakout.

The metal remains in a broader uptrend, but short-term momentum has weakened, suggesting indecision as traders await the next catalyst. That catalyst will likely be the Fed's monetary policy decision on Wednesday. A clear breakout above $3,350 could trigger a bullish continuation, while a breakdown below the 50-EMA might expose the 100-day EMA near $3,233.71.

Momentum indicators tilt bearish but lack conviction. The Relative Strength Index (RSI) has slipped below the neutral 50 mark, currently at 47, indicating weakening bullish momentum with further room to enter oversold territory. The MACD also remains in negative territory, with the signal line crossing above the MACD line and the histogram printing small red bars, pointing to mild downside pressure.

• The Euro remains depressed near one-month lows, weighed by concerns about the consequences of the EU-US trade deal.
• Preliminary Eurozone GDP data showed that the economy expanded, against expectations, in the second quarter.
• Forex markets are likely to remain in range ahead of the Federal Reserve's monetary policy decision.

The EUR/USD pair has resumed its broader bearish trend ahead of the US session opening on Wednesday, and is on track for its first monthly decline since December last year. The unexpected growth shown by the preliminary Eurozone Gross Domestic Product (GDP) has failed to ease concerns about the negative consequences of a recent trade deal between the Eurozone and the US, while the Dollar picks up ahead of the US preliminary GDP reading and the Federal Reserve (FED) monetary policy decision

The Euro (EUR) posted a mild recovery attempt from five-week lows in Asia, but it was capped at 1.1575 and price action retreated again, ahead of the US market opening, with bears aiming to retest Tuesday's high at 1.1515 at the time of writing. The pair has turned negative on the daily chart and is trading more than 2% below Monday's highs..

Traders are turning increasingly cautious as we head into the Fed's decision. The US central bank is widely expected to keep interest rates on hold. The attraction of the event will be Chairman Jerome Powell's comments to assess any sign of a potential rate cut in the coming months.

Wednesday's monetary policy decision will have a particular transcendence, as it comes after weeks-long unprecedented attacks from US President Donald Trump on the Fed chairman, calling for interest rate cuts, which have raised questions about the independence of the central bank.

In Europe, the preliminary Q2 GDP has shown a 0.1% expansion in the second quarter, down from the 0.6% growth seen in the first three months of the year, but above the 0% reading forecasted by market analysts. Somewhat earlier, German Retail Sales data from June beat expectations, in the same line as France's GDP. The impact of these figures on the Euro, however, has been muted.

Daily digest market movers: The US Dollar holds gains ahead of the Fed

• The US Dollar emerged as the biggest winner in a series of trade deals between the US and its main trading partners. A new round of talks with China held in Stockholm ended without any significant breakthrough, but comments from Trump were positive, which suggests that the trade truce between the world's two major economies might extend beyond the August 12 deadline.
• Earlier on Wednesday, Destatis data revealed that the German economy contracted by 0.1% in Q2 compared with the previous quarter, as expected. Meanwhile, German Retail Sales increased 1.0% in June, following a 0.6% contraction in May, twice as much as the 0.5% increment forecasted by market analysts.
• Likewise, France's GDP accelerated to 0.3% in the second quarter against expectations of a steady 0.1% reading. France's consumer spending also beat expectations in June, with a 0.6% rise, against the 0.1% decline anticipated by the market's consensus.
• Before the Federal Reserve's monetary policy decision, due later on the day, the US preliminary GDP is expected to show a 2.4% annualised growth in the second quarter after the 0.5% contraction in the first quarter.
• In the US, on Tuesday, US JOLTS Job Openings declined beyond expectations to 7.43 million from 7.77 million in May, suggesting some cooling in the labour market.
• Also on Tuesday, the Conference Board's Consumer Confidence Index showed a larger-than-expected improvement, but the survey confirmed that Americans remain wary of the impact of tariffs on their economies. The US Dollar pulled back from its highs after the figures were released.

EUR/USD remains bearish,the with the 1.1450 support coming into view

EUR/USD remains under bearish pressure, with upside attempts finding sellers. The pair's feeble recovery attempts have been capped well below Tuesday's highs, keeping the negative structure in play, aiming for a retest of Tuesday's low, at 1.1515. Further down, the next targets are the 1.1500 psychological level, and the June 18,19, and 23 lows, at the 1.1450 area.

Technical indicators are at oversold levels, but the pair, so far, is not showing signs of a trend shift. Upside attempts have been capped at 1.1575 earlier on Wednesday, and Tuesday's high of 1.1600 is expected to pose significant resistance. A successful break of that level would target 1.1680 (July 22 low) and the 1.1700 area (near July 23 and 25 lows).

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• FXStreet expects the Bank of Canada to maintain unchanged rates on July 30.
• The Canadian Dollar maintains a positive tone vs. the US Dollar.
• The July meeting could be the fourth consecutive decision with rates at 2.75%.
• US tariffs would remain in the spotlight at Governor Macklem’s press conference.

As the Bank of Canada (BoC) gets set to issue a new interest rate decision on Wednesday, July 30, there is a growing sense that the cutting cycle might have already ended.

The BoC decided to keep rates steady in June, citing a Canadian economy that is "softer but not sharply weaker" and noting "firmness in recent inflation data." Indeed, the policy rate stands at 2.75%, which remains within the bank’s estimated neutral range for interest rates, set between 2.25% and 3.25%.

President Donald Trump's tariff agenda continues to be a significant global influence. Since his January return to the White House, he has dangled a slew of new levies that could ripple through global supply chains, and those threats will likely dominate Governor Tiff Macklem’s post‑meeting press conference.

The BoC's Q2 Business Outlook Survey (BOS), out on July 21, indicated that Canadian firms are worried about the worst-case tariff situation but are still hesitant to hire and invest. The BOS revealed that companies' short-term inflation predictions have returned to where they were a year ago, and businesses now see a recession scenario as less likely. Earlier this year, businesses were worried that US tariffs would hurt the economy, but so far the effects have mostly been seen in the steel, aluminium, and vehicle industries.

Consumers are feeling the economy’s slowdown in their own pay cheques, the latest Survey of Consumer Expectations shows. With the job market looking softer, more people say they’re uneasy about hanging on to their positions. This anxiety is permeating everyday life as households are reported to be tightening their budgets and altering their shopping habits as the trade war noise intensifies. While they don't anticipate a surge in prices in the near future, many express concern that a new set of tariffs could hinder the central bank's ability to control inflation.

Previewing the BoC’s interest rate decision, analyst Taylor Schleich at the National Bank of Canada noted, "There’s growing momentum around the idea that the easing cycle is over. We disagree, and we don’t expect the Governing Council to validate this more hawkish view. Instead, they’re likely to keep guidance unchanged, reiterating that they’re proceeding carefully and monitoring the same four indicators: export demand; tariff impacts on investment, employment, and spending; inflation; and inflation expectations.”

When will the BoC release its monetary policy decision, and how could it affect USD/CAD?

The Bank of Canada will publish its policy decision on Wednesday at 13:45 GMT alongside its Monetary Policy Report (MPR). After that, Governor Tiff Macklem will attend a press conference at 14:30 GMT.

Most economists expect the Bank of Canada (BoC) to keep its policy rate anchored at 2.75% on July 30, extending the pause begun in May and June. The decision arrives as the Canadian Dollar quietly grinds higher, rebounding from winter lows near 1.4800 vs. its American counterpart to the current vicinity of 1.3700.

Pablo Piovano, a Senior Analyst at FXStreet, said that "USD/CAD maintains its rebound from the area of yearly in the 1.3550-1.3540 range. While below its key 200-day Simple Moving Average (SMA) at 1.4038, the bearish scenario is expected to prevail.”

"USD/CAD hit a new YTD bottom of 1.3538 on June 16. Once this level is cleared, more losses could go all the way down to the September 2024 floor of 1.3418 (September 25)," Piovano said.

Piovano adds that "on the upside, the pair should run into initial resistance at its June ceiling of 1.3797 set on June 23, prior to the May peak of 1.4015 reached on May 12.”

The Relative Strength Index (RSI) has rebounded beyond the 52 level, which means that further upside appears on the cards over a short-term horizon. Piovano ends by saying, "The Average Directional Index (ADX) below 15 also shows that the trend lacks conviction."

• Gold is on a corrective recovery against the US Dollar with resistances at $3,345 and $3,360.
• Market expectations of a strong GDP and a hawkish Fed keep the Greenback buoyed near highs
• XAU/USD is forming a Bearish Flag pattern, with its measured target at $3,245.

Gold (XAU/USD) is moving higher on Wednesday, favoured by a somewhat softer US Dollar, as investors trim their recent USD long positions ahead of the US Preliminary GDP release and the Fed monetary policy decision, due later today.

The precious metal, however, remains trading within recent ranges, as the strong US macroeconomic figures seen recently and market expectations of a significant recovery of the US Gross Domestic Product are feeding expectations of a “hawkish hold” by the Fed.

Technical analysis: The target of the Bearish Flag is $3,245

The XAU/USD is showing an increasing bearish momentum. The pair broke below the bottom of the ascending channel from late June lows, highlighting a bearish flag formation. The current rebound is likely to be a corrective reaction from oversold levels on intra-day charts.

Upside attempts are likely to be challenged at Monday’s high of $3.345 and the mentioned trendline support, now turned resistance, at $3,360. The pair needs to return above these levels to break the near-term bearish structure and shift the focus to the July 22 nd 23 lows, at $3,380.

To the downside, further depreciation below Monday’s low, at $3,295, might find support at the June 30 low of $3.245, which is the measured target of the bearish flag.

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• The US GDP is seen expanding at an annualised 2.5% rate in Q2.
• Investors will analyse the data from a monetary policy perspective.
• The US Dollar needs a strong release to take off from multi-year lows.

The United States (US) Bureau of Economic Analysis (BEA) is set to publish its preliminary estimate of second-quarter Gross Domestic Product (GDP) on Wednesday at 12:30 GMT. Analysts are expecting the data to show annualized growth of 2.5%, following the 0.5% contraction seen in the first three months of the year.

Markets expect a solid GDP report to eliminate stagflationary fears

One of the main highlights in this week’s economic calendar is the US’s second-quarter preliminary GDP figures, widely considered the most market-moving estimate of the three issued each quarter. The GDP will be released a few hours ahead of the Federal Reserve’s (Fed) interest rate decision, and is likely to have some impact on the central bank’s monetary policy stance.

 After the unexpected economic contraction seen in the first three months of the year, investors will be particularly attentive to the extent of the economic rebound in the second quarter. A steady labor market has contributed to keeping healthy consumption levels, while the tariff outlook is starting to clarify. Traders are eager to forget the stagflationary fears that gripped markets earlier this year.

Wednesday’s Gross Domestic Product report will frame the Federal Reserve’s monetary policy decision, due a few hours later on the same day. The bank will, highly likely, keep interest rates on hold, but markets will be attentive to spot any change in the bank’s stance, and more specifically, on the chances of a rate cut in September. Together with the economic performance data, the Bureau of Economic Analysis releases the GDP Price Index – also known as the GDP deflator – which measures inflation across all domestically produced goods and services, including exports but excluding imports. This is expected to have moderated to 2.4% in the second quarter from the 3.8% reading seen in the previous one. These figures are important because they remove the effect of inflation, allowing for a more accurate assessment of real growth.

In the same line, the Atlanta Fed’s GDPNow model – closely watched for its real-time tracking of economic activity – foresees a 2.4% growth in Q2 GDP as of its July 25 update.

When will the Gross Domestic Product print be released, and how can it affect the US Dollar Index?

The US GDP report, due at 12:30 GMT on Wednesday, might have a significant impact on the US Dollar (USD). Investors need hard data to consolidate the positive feelings triggered by recent macroeconomic releases and certify that the economy is out of the woods as trade uncertainty starts to dissipate. 

The US Dollar is likely to be more sensitive to a strong GDP reading than to a lower-than-expected one. A strong economic performance, combined with a robust labor market and with business activity accelerating, would provide a favourable fundamental background to the US Dollar’s recovery. Bear in mind, however, that the immediate market reaction might be limited, as markets might wait for the Fed to make investment decisions.
The most positive combination for the US Dollar would be a strong GDP reading and a hawkish Fed. Not an unlikely scenario. With the economy growing at 2.5% or higher, and consumer inflation closer to 3% than to the Fed’s 2% target, the Fed Chairman Jerome Powell is unlikely to hint at the September interest rate cut the market is wishing for.

This might give the US Dollar the necessary impulse to take off from the year lows and create the conditions for a deeper bullish reversal. A lower-than-expected reading, on the contrary, might keep hopes of a September cut alive and keep the US Dollar recovery limited.

The broader US Dollar Index (DXY) technical outlook remains bearish, but the immediate bias is showing signs of a potential bottom, after having depreciated about 12% from January´s high to July’s bottom. 

Technically, a higher low in late July combined with a bullish divergence and the improving bullish momentum seen on the daily Relative Strength Index (RSI) and the MACD indicators suggest that the downtrend has exhausted and that the US Dollar might be ready for a deeper recovery.
Bulls, however, need to breach the mid-July highs, at the 99.00 area, to confirm a trend shift, and set sail to 99.40, where the index was limited on June 10 and June 23, ahead of the psychological 100.00 level.

On the downside, the July 24 low, at 97.10, is a key level to defend the multi-year low of 96.40 hit in early July, keeping US Dollar recovery attempts alive. A bearish reaction below these levels might target the 161% Fibonacci retracement of the April-May recovery, at 95.40.

The Euro (EUR) is trading somewhat defensively into Wednesday’s NA session, ignoring the release of stronger than expected data with a modest surprise to euro area confidence figures and the Q2 GDP print, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

The EUR trend is bearish

"The EUR has traded poorly in the aftermath of the US/EU trade deal, reflecting a shift in sentiment with a notable erosion in the option market’s premium for protection against EUR upside."

"The EUR is vulnerable from a sentiment and positioning perspective, as CFTC data reveal a sizeable bullish position among the speculative community. Fundamentals remain supportive for the EUR however, as the outlook for relative central bank policy favors a narrowing in deeply negative German-US yield spreads."

"The trend is bearish following Tuesday’s break of the 50 day MA (1.0932) trend support level. The RSI is now clearly below 50 and pushing toward 40, signaling bearishness. We look to additional support in the mid-1.14s and see the near-term range bound between 1.15 support and 1.16 resistance."

• The Pound Sterling trades near 1.3350 against the US Dollar, with investors awaiting the Fed’s monetary policy announcement.
• Investors expect the Fed to leave interest rates steady.
• A slowdown in the UK labor demand paves the way for more interest rate cuts by the BoE.

The Pound Sterling (GBP) trades cautiously near 1.3350 against the US Dollar (USD) during the European trading session on Wednesday as investors await the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, holds onto gains near the new monthly high of 99.00 posted on Tuesday.

According to the CME FedWatch tool, bond markets are almost fully pricing in that the Fed will leave interest rates steady in the range of 4.25%-4.50%. This would be the fifth straight policy meeting in which the US central bank will hold borrowing rates at the current levels.

Investors will pay close attention to Fed Chair Jerome Powell’s press conference for fresh cues on the monetary policy outlook for the remainder of the year. At least two out of the 12 members of the Federal Open Market Committee (FOMC), Fed Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller, are expected to support lowering interest rates. Before the blackout period, both policymakers argued in favor of an interest rate reduction as early as this month, citing downside risks to the labor market.

On the contrary, other officials stated that there should be no rush for interest rate cuts as the impact of tariffs imposed by Washington on various imports has started feeding into prices. The Consumer Price Index (CPI) report for June also showed that prices of products that are largely imported in the US have increased partly due to the levies.

Daily digest market movers: Pound Sterling trades flat against its peers

• The Pound Sterling trades almost flat against its major peers, except the Japanese Yen (JPY), on Wednesday. The British currency is expected to remain under pressure in the medium term as the Bank of England (BoE) is almost certain to cut interest rates in next week’s monetary policy meeting.
• Traders have become increasingly confident that the BoE will reduce its key borrowing rates on August 7 as United Kingdom (UK) labor market conditions have cooled down, following an increase in employers’ contributions to social security schemes.
• The latest survey from the Confederation of British Industry (CBI) showed on Monday that households’ spending has diminished due to a slowdown in the labor demand. The agency reported that retail sales declined for the tenth straight month in July. However, the pace of decline in retail sales was less severe than what was seen in June.
• In the US, investors will also focus on the preliminary Q2 Gross Domestic Product (GDP) and Personal Consumption Expenditure Price Index (PCE), and the ADP Employment Change data for July, which will be published during the North American session.
• The data is expected to show that the economy grew at 2.4% after contracting by 0.5% in the first quarter of the year. Meanwhile, core PCE inflation, which is the Fed’s preferred inflation gauge, is expected to have grown at a more moderate pace of 2.4% compared to the 3.5% increase seen in the previous quarter.
• Economists expect the US private sector to have added 78K fresh workers in July after the 33K decline seen in June.

Technical Analysis: Pound Sterling forms H&S chart pattern

The Pound Sterling strives to hold the immediate support of 1.3300 against the US Dollar on Wednesday. The near-term trend of the GBP/USD pair remains bearish as the 20-day Exponential Moving Average (EMA) slopes downwards to near 1.3473.

The formation of a Head and Shoulder (H&S) chart pattern also suggests that the overall trend is bearish. The neckline of the H&S formation is plotted near 1.3413.

The 14-day Relative Strength Index (RSI) oscillates below 40.00, indicating that the bearish momentum is intact.

Looking down, the May 12 low of 1.3140 will act as a key support zone. On the upside, the July 1 high around 1.3790 will act as a key barrier.