USD

On Thursday, the US Dollar Index rebounded following the Federal Reserve's meeting on Wednesday. Although the likelihood of a rate cut in September increased, the strong performance of the US economy led Chairman Jerome Powell to request more data before proceeding with further cuts, which slightly reduced the possibility of a September rate hike, although it remains high. After the Fed’s decision was absorbed by market participants, the dollar performed strongly. Despite signs of deflation, the resilience of the US economy made the Fed’s data-dependent stance crucial. The possibility of a rate cut in September decreased but remains significant. The dollar, tracked by the US Dollar Index, declined before the Fed meeting on Wednesday but managed to recover post-announcement. Powell's stance opened the door for a September rate cut, and with clearer signals on when the Fed might begin cutting rates, the dollar fell again. The signs of deflation began to seep into the US economic landscape, confirming market confidence in an imminent September rate cut. However, recent unexpected data, such as Q2 GDP and the July S&P Global PMI, emphasized the continued strong performance of the larger economy.

Despite a positive start to the week, the US Dollar Index is experiencing weakness, falling below the 20-day moving average (104.41) and the 200-day moving average (104.30). These indicators seem to be approaching a bearish crossover around 104.00, which may increase selling pressure. The 14-day Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) have not fully recovered but show signs of gradually returning to neutral. If they move into the positive region, the US Dollar Index may decline further. The index continues to find support at 104.00 (psychological level), and at the July 17 low of 103.65 and 103.60 (downtrend channel lower boundary). Resistance is found at 104.79 (Tuesday high) and 104.84 (50-day moving average).

Consider shorting the US Dollar Index around 104.50 today, with a stop loss at 104.60 and targets at 104.15 and 104.10.

AUD/USD

The AUD/USD pair broke below 0.6500 amid a strong rebound in the US dollar, widening the gap with the key 200-day moving average and exposing further downside risks in the short term. The pair extended Tuesday’s losses, falling below the crucial 200-day moving average (0.6590) for the first time since early May. The recent decline in the Australian dollar is largely due to weak economic prospects in China, falling commodity prices, intermittent strength in the US dollar, and recent rate cuts by the People’s Bank of China (PBoC). Given Australia’s close economic ties with China and the AUD’s role as a proxy for Chinese yuan liquidity, the PBoC’s recent rate cuts have pressured the AUD. Conversely, the Reserve Bank of Australia’s (RBA) potentially restrictive stance may provide support for the AUD/USD in the coming months, while the Fed’s possible mid-term easing could also support the AUD/USD.

Initial support for further declines in the AUD/USD might be found at the July low of 0.6479 and the May low of 0.6465. On the upside, should the pair reverse, resistance may be encountered around the 200-day moving average of 0.6590, followed by the psychological level of 0.6600 and the 100-day moving average at 0.6603. Overall, as long as the AUD/USD remains below the 200-day moving average, further retracement is expected. The 4-hour chart indicates a speeding downtrend. The 14-day RSI suggests that short-term momentum remains weak.

Consider going long on AUD/USD around 0.6485 today, with a stop loss at 0.6470 and targets at 0.6530 and 0.6540.

EUR/USD

Before the release of key US labor market data on Friday, the strong dollar and ongoing risk aversion pushed EUR/USD below the 1.0800 level, reaching a four-week low. Earlier in the week, EUR/USD fluctuated around key technical levels following the Fed’s decision to hold rates, as expected. The upcoming US nonfarm payrolls data on Friday is anticipated to influence market expectations of a September Fed rate cut. With limited EU data available for the latter part of the week, investors will focus on the upcoming US employment report. Market expectations are for continued slowing in the US labor market. Chairman Jerome Powell outlined specific conditions for a September rate cut, including sustained improvements in inflation and a stable or weakened US labor market, setting clear criteria for upcoming data releases.

The daily chart shows EUR/USD falling below the key levels of 1.0810 (50-day simple moving average), 1.0807 (50% Fibonacci retracement of 1.0666 to 1.0948), and 1.0800 (psychological level). This weakening trend suggests further downside risk. Support levels to watch include 1.0773 (61.8% Fibonacci retracement) and 1.0719 (July 1 low). Despite the recent pullback from the high of 1.0948, long-term technical indicators suggest that bulls may attempt to push EUR/USD higher. Resistance may be encountered at 1.0800 (psychological barrier) and 1.0807 (50% Fibonacci retracement).

Consider going long on EUR/USD around 1.0775 today, with a stop loss at 1.0760 and targets at 1.0840 and 1.0850.

GBP/USD

Earlier, the Bank of England (BoE) reduced its key borrowing rate by 25 basis points to 5% with a 5-4 majority vote by the Monetary Policy Committee (MPC), in line with market expectations. Broader risk aversion in the forex market pressured the pound, causing GBP/USD to retreat to around 1.2726, a four-week low. GBP/USD oscillated within its recent range on Wednesday, following the Fed’s decision to hold rates in July, which impacted market expectations of a September Fed rate cut. Chairman Powell indicated that the Fed needs to see continued declines in inflation and either stable or weakened US labor market conditions before implementing a September rate cut, providing clear benchmarks for upcoming key US data. Friday’s US nonfarm payroll data is anticipated to meet at least one of the Fed’s criteria, with July’s job additions expected to further decelerate.

GBP/USD has recently declined from the 12-month high around 1.3045, dropping to a near-weekly low of 1.2726. The market is now trying to find bullish momentum, with the pound trading above 1.2700. The long-term trend on the daily chart remains bullish, provided the recent pullback does not fall below 1.2714 (76.4% Fibonacci retracement) and 1.2700 (psychological level). A higher low formation may bolster GBP/USD towards the 50-day moving average at 1.2785 and the psychological level of 1.2800. On the downside, watch for support around 1.2700; a break below this level could target the 200-day moving average at 1.2642 and the June 27 low of 1.2612.

Consider going long on GBP/USD around 1.2720 today, with a stop loss at 1.2710 and targets at 1.2770 and 1.2780.

USD/JPY

The Japanese yen is appreciating following an unexpectedly hawkish policy announcement by the Bank of Japan (BoJ). The Japanese Ministry of Finance reported spending 5.53 trillion yen ($36.8 billion) in July to stabilize the yen. The yen has strengthened for the third consecutive day against the dollar, reaching a four-month high of 148.50. This rise is attributed to the BoJ’s surprise hawkish policy announcement and its plan to reduce monthly Japanese government bond purchases to 3 trillion yen starting Q1 2026. The Ministry of Finance confirmed suspicions of market intervention, having spent 5.53 trillion yen in July to stabilize the yen, which had fallen to a 38-year low. The USD/JPY pair is under pressure, with traders looking for more guidance from upcoming US economic data.

The daily chart shows USD/JPY trading around 149.30 on Thursday. The pair has broken below the descending wedge pattern, indicating a continuation of the bearish trend rather than a reversal. Additionally, the 14-day RSI around 20 suggests the asset is in an oversold condition, potentially leading to a short-term rebound. USD/JPY may test the support level of 146.48, a four-month low recorded in March. On the upside, resistance could be found at the psychological level of 150.00 and 150.89 (250-day moving average), with a break above these levels targeting the low of 151.20 recorded since April.

Consider shorting USD/JPY around 149.50 today, with a stop loss at 149.75 and targets at 148.80 and 148.50.

XAUUSD

After initially falling to $2,430, gold regained traction and traded around $2,450 during the US session. The decline in the benchmark 10-year US Treasury yield to below 4% by over 1% after weak US data helped stabilize gold prices. Gold continues to consolidate July’s strong gains, with buyers in control following a dovish Fed policy statement in early August. The escalating geopolitical tensions between Iran and Israel also support gold’s safe-haven appeal. Following the Fed’s interest rate decision and Chairman Jerome Powell’s comments, both the dollar and US Treasury yields fell sharply, leading to gold prices climbing to $2,448.50 early Thursday. In addition to the weaker dollar, the reported assassination of Hamas political leader Ismail Haniyeh in Tehran reignited geopolitical concerns, further supporting gold prices.

From a technical perspective, the overnight breakout above the $2,412-$2,413 resistance level, supported by the recent rebound from the 50-day simple moving average (SMA) at $2,363 and the $2,362 level (61.8% Fibonacci retracement of $2,286.80 to $2,483.70), suggests a bullish outlook for gold. The subsequent breakout above $2,450, combined with the oscillators on the daily chart showing positive momentum, indicates a potential rally towards the $2,483-$2,484 region or the July peak. Resistance beyond that may target the psychological level of $2,500. On the downside, support is seen around $2,437, with further declines potentially finding support at $2,432 before hitting the next major support zone around $2,413-$2,412. Further sell-offs might push gold below the $2,400 support area.

Consider going long on gold around $2,442 today, with a stop loss at $2,440 and targets at $2,465 and $2,470.

XTIUSD

Amid mixed fundamental signals, WTI crude oil retraced more than 2% overnight after three consecutive gains over the weekend. Following a larger-than-expected decrease in US crude oil inventories reported by the Energy Information Administration (EIA), recent reductions in US crude oil stocks intensified. WTI crude oil briefly rebounded to $79.00 on Wednesday. The Federal Reserve, as widely anticipated, kept rates unchanged and indicated a potential path for a September rate cut, which bolstered commodity risk sentiment. Chairman Powell’s cautiously optimistic remarks helped maintain high risk appetite. The situation in the Middle East, following the confirmed assassination of an Iranian military leader, further heightened oil market risk aversion. Reports of Iranian officials calling for military action against Israel could escalate the Israel-Palestine conflict, impacting global oil markets.

The daily chart shows that WTI oil prices rebounded significantly to around $79.00 on Wednesday, recovering 6% from the eight-week low of $75.23 on Tuesday, with a peak at $79.18. Despite this rebound, US crude oil remains weak, trading below the 50-day moving average of $79.83 and the psychological level of $80.00. WTI prices are in a downtrend, with bearish momentum prevailing, as evidenced by the price closing lower on 14 out of the past 18 trading days. Although the 14-day RSI has recovered above 47, momentum remains bearish. On the downside, short-term support may be found at $77.27 (61.8% Fibonacci retracement of the $72.67 to $84.73 range), with further declines possibly reaching the $75.19 level from Tuesday and near the June 4 high of $74.00.

Consider going long on crude oil around $77.20 today, with a stop loss at $77.00 and targets at $78.40 and $78.60.

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