Forex News
United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note that USD/SGD downside momentum has intensified after a sharp intraday swing, with firm support highlighted at 1.2875 and 1.2860. In the near term, the pair is expected to stay below 1.2910, while on a 1–3 week horizon a close under 1.2860 could trigger a deeper decline toward 1.2830, unless strong resistance at 1.2930 is broken.
Downside momentum targets key supports
"24-HOUR VIEW: On Wednesday, USD dropped to 1.2875 before snapping back up. When USD was at 1.2910 yesterday, we highlighted that “downward momentum has increased, but not significantly, and instead of continuing to decline, USD is more likely to consolidate between 1.2885 and 1.2930.” We underestimated the volatility as USD rose near 1.2930 with a high of 1.2928 before plummeting to a low of 1.2876. The sharp increase in momentum points to further downside, but any decline is expected to face firm support at 1.2860. Note that the 1.2875 level is expected to offer support as well. To keep the momentum going, USD must hold below 1.2910, with minor resistance at 1.2895."
"1-3 WEEKS VIEW: Yesterday (15 Jul, spot at 1.2910), we highlighted that “while there is scope for USD to weaken, given that there is no clear increase in downward momentum, any decline could be contained within a 1.2860/1.2955 range.” We did not quite expect USD to fall sharply to a low of 1.2876. Downward momentum is starting to build, and should USD close below 1.2860, it could trigger a deeper decline. On the upside, a breach of 1.2930 (‘strong resistance’ level) would mean that the risk of further downside has eased. Looking ahead, the next level to watch below 1.2860 is 1.2830."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- The Mexican Peso dives as US data beats reinforce Greenback comeback.
- Logan and Schmid keep Fed tightening risks firmly alive.
- USMCA talks could cushion Peso if progress continues.
The Mexican Peso depreciated by about 0.30% on Thursday as market participants turned risk-averse amid an escalation of the Middle East conflict, which has driven energy prices higher. Also, a round of positive US data triggered a U-turn in the overall trend, which could open the door to a recovery in the Greenback. At the time of writing, the USD/MXN trades at 17.43 after reaching a low of the day (LOD) of 17.37.
USD/MXN rebounds as Oil shock, US data boosts the USD
Strikes between the US and Iran continued, fueling fears that a prolonged conflict might trigger a second wave of inflation, due to high Oil prices. Consequently, the Greenback stages a comeback, bolstered by high US Treasury yields, as the 10-year T-note yields 4.569%, up 2 basis points.
Consequently, the US Dollar Index (DXY), which measures the performance of the American currency against other six, is up 0.27% to 100.76.
US data was positive, with Retail Sales up 0.2% MoM in June, below May’s 1% growth—mainly due to higher gasoline prices. Control Group Retail Sales, used for GDP, slowed from 0.8% to 0.5%, as expected. Other data revealed that Initial Jobless Claims for the week ending July 11 were 208K, below forecasts of 217K.
Fed officials turn hawkish
Fed Regional Bank Presidents Lorie Logan and Jeffrey Schmid crossed the wires and were hawkish. Logan from the Dallas Fed calls for a slightly higher policy rate to balance the outlook and risks. Schmid from Kansas City notes the labour market is stable but remains concerned about persistent inflation across many goods and services.
Mexico-US bilateral talks continued to progress
In Mexico, the economic docket was absent, yet negotiations between Washington and Mexico continued.
The US Trade Representative, Jamieson Greer, commented that formal trade talks with Mexico were progressing. Greer said that “So, it's going well with the Mexicans. They're quite pragmatic,” but added that “our trade deficit with Mexico really is a challenge. It really is a problem.”
Next week, US and Mexican officials will meet for a third round of formal bilateral USMCA negotiations in Mexico City. A positive outcome in trade negotiations could underpin the Mexican Peso, which is poised to weaken further as the interest rate differential is set to narrow.
The Bank of Mexico (Banxico) is expected to keep interest rates unchanged at 6.50%. Conversely, the swaps market expects the Federal Reserve to increase rates by 25 basis points, which would reduce the differential to 250 basis points.
USD/MXN Price Forecast: Technical outlook
In the daily chart, USD/MXN trades at 17.4309, holding slightly above the cluster of simple moving averages (SMA) around 17.3786, which acts as near-term support and keeps the broader tone mildly constructive. The pair is still capped by a descending resistance trend line drawn from 18.1651, whose latest reaction high at 17.5456 marks the first topside barrier, while the Relative Strength Index (14) around 49 suggests momentum is broadly neutral and consistent with a consolidative bias rather than a directional breakout.
On the topside, initial resistance is seen at the recent trend-line reaction near 17.5456, ahead of a more distant structural cap associated with the longer-term downtrend line, where the latest resisted close stands near 18.1200. On the downside, immediate support is provided by the multi-period SMA zone at 17.3786, and as long as USD/MXN stays above this moving-average floor, dips would likely remain shallow within the prevailing range.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
OCBC strategists Sim Moh Siong and Christopher Wong note that USD/CNY has extended its decline on softer United States (US) Consumer Price Index (CPI) and Producer Price Index (PPI), with firmer People's Bank of China (PBoC) fixings validating gradual RMB appreciation. China’s large trade surplus and exporter US Dollar (USD) selling offer a supportive backdrop, but soft domestic growth and potential policy easing should limit the pace of gains. Key USD/CNH support and resistance levels frame the near-term range.
USD/CNY downside and key levels
"USD/CNY extended its decline as softer US CPI, PPI weighed on the USD and pared back Fed tightening expectations. Firmer PBoC fixings reinforced the move, suggesting policymakers are comfortable allowing some gradual RMB appreciation rather than actively pushing the currency higher."
"China’s large June trade surplus provides a supportive flow backdrop, with market chatters of exporter USD sell flows, though this is better viewed as a possible amplifier than a confirmed driver."
"Near term, further downside in USD/CNY may depend on USD softness extending and the fix continuing to validate spot moves. China’s soft domestic growth backdrop and scope for further policy easing should still limit the pace of RMB gains."
"Decisive break may open room for 6.72 – 6.74 area. Meantime, resistance at 6.7860/ 6.79 (21, 50 DMAs)."
"USD/CNH last seen at 6.7690 levels. Bearish momentum on daily chart intact while RSI shows signs of turnaround from near oversold conditions. Support at 6.7540 (year-to-date low)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- EUR/USD falls near 1.1440 as stronger US labor-market data supports the US Dollar.
- US Initial Jobless Claims declined to 208K, while Retail Sales growth slowed to 0.2% in June.
- Eurozone core inflation is expected to remain at 2.4% YoY, with headline HICP forecast at -0.1% MoM.
EUR/USD trades lower near the 1.1440 area on Thursday, retreating around 0.2% as the US Dollar (USD) gains support from stronger-than-expected United States (US) labor market data.
US Initial Jobless Claims fell to 208K in the week ending July 11, below expectations of 217K and the previous 216K. The figures indicate that layoffs remain limited, supporting the Greenback despite signs of softer consumer spending.
US Retail Sales rose 0.2% MoM in June, matching expectations but slowing from May’s 1.0% increase. The Retail Sales Control Group advanced 0.5%, also in line with forecasts but below the previous 0.8%, suggesting that consumption momentum moderated.
In the Eurozone, investors await June inflation data. Core Harmonized Index of Consumer Prices (HICP) inflation is expected to remain at 2.4% YoY and 0.2% MoM, while headline HICP is forecast to decline 0.1% on the month. A softer inflation reading could strengthen expectations of a less restrictive European Central Bank (ECB) policy stance and place additional pressure on the Euro.
Short-term technical analysis:
On the 4-hour chart, EUR/USD trades at 1.1436, maintaining a mildly bullish bias as it holds above both the 20-period Simple Moving Average (SMA) at 1.1428 and the 100-period SMA at 1.1413. The short-term trade is underpinned by these clustered SMA supports, while the Relative Strength Index (RSI) around 50 suggests balanced momentum after the recent recovery earlier in the week, hinting that dips could continue to attract buying interest as long as the pair stays over the moving average floor.
On the topside, initial resistance is located at 1.1447, followed by a tighter band of barriers at 1.1457, 1.1466 and 1.1472, where prior horizontal caps could slow further gains. On the downside, immediate support is seen at the 20-period SMA at 1.1428, with stronger structural demand emerging at the 100-period SMA near 1.1413; a sustained drop below this latter level would weaken the current constructive tone and expose deeper consolidation.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Standard Chartered analysts Christopher Graham and Carol Liao discuss how the European Union is seeking to rebalance its trade relationship with China without shutting the door on engagement. They highlight a large and rising trade deficit, ongoing EU-China negotiations, and the development of new trade tools. The report stresses moderate escalation risk and a likely focus on supporting domestic industry.
EU weighs new trade defence tools
"Eurostat data shows the EU’s 12-month rolling trade deficit with China stood at EUR 376bn in May (8% higher than a year earlier), intensifying concerns among European leaders over what is perceived to be an increasingly lopsided trading relationship."
"Both sides have agreed to spend the next three months discussing ways to rebalance that relationship as part of their broader Trade and Investment Consultation launched in late June."
"In the background, the EU is developing new trade tools, including diversification and overcapacity instruments."
"If nothing tangible is delivered via talks, these tools could be activated in October."
"More EU trade defence measures are likely to materialise, but they will be carefully calibrated to avoid a tit-for-tat escalation."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Silver extends its decline as the US Dollar rebounds and Treasury yields stabilize.
- Higher Oil prices keep inflation risks and expectations of a Fed rate hike later this year alive.
- XAG/USD trades near the $55 floor, with the technical outlook tilted firmly to the downside.
Silver (XAG/USD) extends its decline on Thursday as the US Dollar (USD) rebounds and US Treasury yields stabilize following a two-day drop driven by softer-than-expected US inflation data. At the time of writing, XAG/USD trades around $55.75, down 3.50% on the day.
Despite the softer inflation readings, price pressures could pick up again as escalating tensions in the Middle East drive Oil prices higher. This keeps the possibility of a Federal Reserve (Fed) interest rate hike later this year alive, supporting the US Dollar and weighing on the non-yielding metal, which typically performs better in a low-interest-rate environment.
XAG/USD remains in a corrective phase. The latest leg lower has brought prices back to the December 2025 lows, a level that was also tested in June.
The metal is now trading more than 50% below its record high of $121 reached in January and remains vulnerable to further losses unless Fed rate hike expectations fade, which appears unlikely in the near term.
From a technical perspective, XAG/USD extends its decline within a well-defined descending parallel channel and trades below the 50-day, 100-day and 200-day Simple Moving Averages (SMAs), reinforcing the bearish outlook.
The Relative Strength Index (RSI) on the daily chart is near 34 and the Average Directional Index around 41, suggesting a strong but still downside-skewed trend as price consolidates only slightly above the $55 structural floor.
On the upside, initial resistance emerges at the upper boundary of the descending channel near $60, followed by the horizontal barrier at $62.50 before the clustered 50- and 200-day SMAs around $68.50-70.51, and the more distant 100-day SMA at $72.94.
On the downside, immediate support lies at $55.00, followed by the psychological $50 mark and the lower boundary of the channel near $45.50. These levels could slow the decline, but sellers retain control while XAG/USD trades below its major moving averages.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- Gold tumbles as Middle East tensions keep July Oil gains near 13%.
- Solid Retail Sales and claims reinforce resilient US economy.
- Logan and Schmid comments keep Fed tightening risks alive.
Gold price drops over 1.80% as tensions between the US and Iran fuel fears of a possible Oil supply disruption, driving energy prices higher and potentially triggering another round of inflation. The XAU/USD trades at $3,994.
XAU/USD drops as energy risks lift Dollar and yields
The effects of the Middle East conflict are well reflected by the strength of the US Dollar. The Greenback is up some 0.24%, as measured by the US Dollar Index (DXY). The DXY, which tracks the buck’s value against its peers, is at 100.74, still shy of revisiting the 101.00 mark.
The US currency appreciates due to its positive correlation with the West Texas Intermediate (WTI) Oil price, which despite trading modestly lower during the day is up over 13% in July. This heightens speculation that the US Federal Reserve (Fed) could raise interest rates later this year.
US economic data was also positive during the day with Retail Sales expanding by 0.2% MoM in June, as expected, but below May’s 1% increase — driven mostly by higher gasoline prices. Control Group Retail Sales, used primarily in calculating the Gross Domestic Product (GDP), slowed from 0.8% to 0.5% as expected.
US jobs data was also solid, as Initial Jobless Claims for the week ending July 11 came at 208K, beneath forecasts of a 217K increase. The Fed’s Beige Book acknowledged that the labour market is strong, with some districts showing “modest, moderate or solid gains.”
US Treasury yields are drifting higher, with the US 10-year T-note rising by nearly 3 basis points (bps) to 4.577%.
Comments by Fed Regional Bank Presidents Lorie Logan and Jeffrey Schmid revealed that both lean hawkish on the Federal Open Market Committee (FOMC). Logan from the Dallas Fed calls for a modestly higher policy rate to better balance the outlook and risks. Meanwhile, the Kansas City Fed's Schmid said that the labour market seems to be roughly stable, but that he remains concerned as “inflation is proving persistent across a broad selection of goods and services.”
Money markets expect the Fed to hold rates unchanged at the July meeting, with odds of a hold at 73%. However, the chances for an October rate hike remain high, at 57%, according to Prime Terminal data.
XAU/USD technical outlook: Gold’s downtrend extends, eyes on $3,900
Gold’s trend remains bearish, reaching a new 13-day low of $3,974, which if decisively cleared opens the door for a move toward the year-to-date low of $3,941. On further weakness, bears could drive XAU to test the $3,900 milestone before challenging the October 28, 2025 swing low at $3,886.
On the other hand, for a bullish reversal Bullion must clear a downslope resistance trendline between $4,125 and $4,175. Once cleared, a move to test the 50-day Simple Moving Average (SMA) at $4,305 is on the cards. Overhead lies the 200-day SMA at $4,495, which once hurdled clears the path to $4,500.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Scotiabank strategists Shaun Osborne and Eric Theoret note GBP/USD is slightly weaker as it gives back part of yesterday’s strong advance, helped by expectations of a centrist, market-friendly Burnham government. United Kingdom (UK) data were mixed, with robust Gross Domestic Product (GDP) offset by softer Industrial Production. From a technical perspective, they argue the early July bull reversal remains intact and see scope for gains toward at least 1.3650.
Bull trend targets retest of 1.3650
"The GBP is a mild underperformer on the session as markets give back some of yesterday’s solid gains. Investors appear to have been cheered by reports suggesting that team Burnham has vetoed Ed Miliband as an option for chancellor, preferring instead current Home Sec. Mahmood."
"PM-to-be Burnham’s rumored top team is going to be centrist which also means market-friendly. But that will ruffle feathers of left-wingers who effectively pushed Starmer out."
"UK data released earlier was mixed. UK May GDP was stronger than forecast, rising 0.7% in 3m/3m terms. The UK economy saw solid growth in H1 overall. But May Industrial Production was weaker than expected (-0.5% M/M), albeit with very mixed components while the Trade deficit narrowed."
"Bullish—Sterling has given back a little of yesterday’s solid gain but the spurt higher has livened up the charts and sets the pound up for a further extension of the early July bull reversal."
"The fresh short-term cycle high and a bullish alignment of short-, medium-, and long-term trend oscillators suggest minor dips are a buy and that GBP gains can extend towards a retest of 1.3650 at least in the near-term. EUR/GBP is trading back from yesterday’s one-year low but technical trends here also look positive for the pound overall."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- The Japanese Yen is recovering modestly on Thursday after several days of weakness.
- Markets continue to expect another European Central Bank rate hike later this year.
- Middle East tensions and higher energy prices are keeping risk aversion elevated.
EUR/JPY trades around 185.80 at the time of writing on Thursday, little changed on the day after reaching a one-month high earlier this week. The pair is edging slightly lower as the Japanese Yen (JPY) regains some footing, although expectations of further monetary tightening by the European Central Bank (ECB) continue to provide underlying support for the Euro (EUR).
Investors remain cautious as renewed hostilities involving Iran continue to push Oil prices higher and fuel concerns about a fresh inflationary shock. The rise in risk aversion is supporting the Japanese Yen, although the negative impact of higher energy costs on Japan's economy is limiting the currency's upside for now.
In the Eurozone, several European Central Bank (ECB) officials have recently reiterated their willingness to tighten monetary policy further if inflation risks intensify. Austrian central bank Governor and ECB Governing Council member Marin Kocher said the central bank stands "ready to act" should second-round inflation effects emerge, while Bundesbank President and ECB Governing Council member Joachim Nagel stated that it remains appropriate to "act decisively" if necessary.
These comments come as a Reuters poll shows that a large majority of economists expect the ECB to leave its deposit rate unchanged at 2.25% at its July meeting, while around 70% anticipate one additional rate hike before the end of the year, most likely in September. Rabobank shares this baseline scenario, arguing that the renewed escalation in the Middle East has increased upside inflation risks but is still unlikely to trigger a rate hike in July. ING also believes that a July hike remains a risk, although September continues to be the more likely outcome.
In Japan, doubts surrounding the government's plan to repatriate part of the Government Pension Investment Fund (GPIF) overseas investments continue to weigh on the Japanese Yen. Investors remain skeptical about how quickly the initiative can be implemented, limiting its positive impact on the currency. Japan's Finance Minister Satsuki Katayama nevertheless reiterated on Thursday that authorities stand ready to intervene in the foreign exchange market if necessary, while declining to comment on specific exchange rate levels.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.28% | 0.59% | 0.18% | 0.12% | 0.14% | 0.23% | 0.51% | |
| EUR | -0.28% | 0.31% | -0.09% | -0.16% | -0.07% | -0.03% | 0.23% | |
| GBP | -0.59% | -0.31% | -0.39% | -0.45% | -0.38% | -0.33% | -0.05% | |
| JPY | -0.18% | 0.09% | 0.39% | -0.09% | 0.02% | 0.05% | 0.33% | |
| CAD | -0.12% | 0.16% | 0.45% | 0.09% | 0.10% | 0.14% | 0.41% | |
| AUD | -0.14% | 0.07% | 0.38% | -0.02% | -0.10% | 0.06% | 0.31% | |
| NZD | -0.23% | 0.03% | 0.33% | -0.05% | -0.14% | -0.06% | 0.26% | |
| CHF | -0.51% | -0.23% | 0.05% | -0.33% | -0.41% | -0.31% | -0.26% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
- DJIA trades near 52,800, up roughly 160 points, outperforming the S&P 500 and NASDAQ as chip stocks bleed.
- UnitedHealth jumps more than 6% on an earnings beat, doing the price-weighted heavy lifting while more than 87% of early reporters top estimates.
- Initial Jobless Claims at 208K and a five-year high in the Philadelphia Federal Reserve survey flatter the real economy.
The Dow Jones Industrial Average (DJIA) added roughly 160 points, or 0.3%, to trade near 52,800 on Thursday while the S&P 500 slipped 0.2% and the NASDAQ Composite shed 0.9%. An early dip to 52,586 found buyers within the first hours, and the index has since ground to a session high at 52,828, leaving last week's record at 53,333 within 1% of the tape. The blue-chip benchmark is the only major index in the green, and the reason is as much about what it lacks as what it holds.
Outperformance by subtraction
Semiconductors are Thursday's problem, and the Dow Jones Industrial Average barely owns any. Taiwan Semiconductor (TSM) beat second-quarter expectations but raised its capital spending guidance to between $60 billion and $64 billion from a prior $52 billion to $56 billion range, and the market read the bill rather than the beat. The stock trades down about 2%, while Arm Holdings (ARM) drops more than 7%, Micron (MU) more than 5%, Advanced Micro Devices (AMD) more than 4%, Broadcom (AVGO) more than 3%, and the American listing of SK Hynix (SKHY) craters more than 9%.
The Dow's only pure semiconductor, Nvidia (NVDA), declined less than 3% but only makes up about 2.3% of the index.
The index's escape route runs through a health insurer. UnitedHealth Group (UNH) advances more than 6% after easily topping expectations. In a price-weighted construction, one expensive stock outweighs a sector's worth of silicon grief. Add the banks that cleared their bar earlier in the week and a beat rate above 87% across the first 40 S&P 500 reporters, and Thursday's leadership looks less like rotation into the old economy than rotation away from everything the old economy never bought. Strategists' verdict that earnings strength runs across all caps only sharpens the point; the weakness is concentrated in one crowded trade.
The data flatters main street and complicates the Federal Reserve
The 12:30 GMT data sweep came in hot where it counts. Initial Jobless Claims fell to 208K against a 217K consensus; the Philadelphia Federal Reserve's manufacturing index soared to 41.4 versus 13 expected, its strongest reading since November 2021; and the New York Federal Reserve's services gauge posted 8.7, its first positive reading in nearly two years. Retail Sales rose 0.2% MoM as expected with the Control Group matching its 0.5% consensus, though the Ex-Autos read slipped 0.2% and gasoline stations gave up 5.3% on falling pump prices.
Strength cuts both ways under a central bank that has removed its easing bias. Futures assign roughly an 83% probability to a rate hold at the July 28 to 29 Federal Reserve (Fed) meeting, September pricing tilts toward a hike, and half the committee's June projections penciled in at least one increase this year. Tuesday's cooler inflation print bought the doves a hearing, which is precisely why a 41-handle factory survey lands awkwardly. Three Fed speakers, including the Vice Chair, take the microphone from 16:30 GMT. Pending Home Sales, down 5.4% MoM against a 0.5% decline expected, supplied the 14:00 GMT reminder that the rate-sensitive corners are enjoying none of this.
A record within reach and nobody sprinting
The index sits within striking distance of its all-time high and trades like it would rather not discuss it. Volume-light grinding, a leadership list one earnings report deep, and a Middle East that reinstated a naval blockade this week without denting equities describe a market long of complacency and short of new money.
Daily momentum agrees with the hesitation: the Stochastic Relative Strength Index eases through the low 60s even as price holds within a percent of the top, the signature of a market marking time rather than accumulating. That posture holds until either the record breaks on its own or Friday's data hands the tape an excuse.
Friday brings the sentiment check
Friday's docket opens with June Housing Starts and Building Permits at 12:30 GMT, numbers that inherit extra weight after Thursday's Pending Home Sales miss, followed by Industrial Production at 13:15 GMT. The main event is the University of Michigan's preliminary July Consumer Sentiment report at 14:00 GMT, expected to rise to 51 from 49.5, alongside one-year inflation expectations last seen at 4.6%. A consumer who keeps spending through inflation expectations north of 4% is the entire bull case for the real-economy index. An expectations spike hands the hawks the back half of July.
Technical levels
Resistance: The session high at 52,828 caps the day so far, with the record at 53,333 the only structure above it on the daily chart.
Support: Thursday's low at 52,586 is the near shelf. Below that, the 52,000 handle and the rising 50-day Exponential Moving Average at 51,349 frame the July uptrend.
Bias: Higher. Breadth is ugly, but this index does not carry the ugly parts. Earnings are beating, the real-economy data is accelerating, and a hold above 52,586 keeps a record retest as the path of least resistance into next week.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
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