The offshore yuan rose to around 6.76 per dollar on Monday, its strongest level since mid-June, as easing geopolitical tensions in the Middle East reduced safe-haven demand for the US dollar. US Ambassador Mike Waltz said President Trump had paused strikes on Iran for a second consecutive night to facilitate diplomatic efforts, while an Iranian military spokesperson said Tehran had suspended its retaliatory operations. The development signals a tentative easing in tensions after nearly two weeks of reciprocal attacks that had effectively undermined the June ceasefire. On the domestic front, investors are turning their attention to the upcoming Politburo meeting later this week, where President Xi Jinping and other top policymakers are expected to outline priorities for the second half of the year. Expectations for additional policy support have grown after recent economic indicators pointed to an uneven recovery, reinforcing calls for measures to bolster growth and stabilize demand.
Three markets to watch next week
The past week was marked by crude oil prices returning to triple digits on expiring September contracts and a continuation of the equity market selloff. Geopolitics once again served as the primary driver for investors, fueled not only by the situation in the Middle East but also by broad new US tariffs. Wall Street earnings season delivered solid corporate results, though these proved insufficient to lift investor sentiment. A fresh wave of reports from tech giants such as Microsoft and Apple might alter that dynamic. Furthermore, decision day arrives for two key central banks, namely the Federal Reserve and the Bank of Japan. Given this concentration of high-impact events, three markets warrant close attention in the coming days: USD/JPY , Gold and US100 .
USDJPY
The Japanese currency has struggled recently, with the past week defined by mounting inflationary pressure in Japan driven in part by higher global energy costs. This week brings a direct showdown between two major central banks. On Wednesday, the FOMC will announce its policy decision, followed by the second press conference from the new Fed Chair Kevin Warsh. On Friday, the Bank of Japan will present its stance on interest rates, preceded in the morning by the Tokyo consumer price index release. Market consensus anticipates that both the Fed and the BoJ will hold interest rates at current levels, with the BoJ policy rate currently at 1.0 percent. Investors will focus heavily on potential guidance regarding future monetary tightening, particularly given that the yen trades near 40-year lows alongside rising import costs. Historical currency interventions in Japan demonstrate that verbal pressure alone, lacking decisive BoJ action, offers only temporary relief for the yen. Moreover, sentiment conveyed by the US central bank remains the primary catalyst for USD/JPY trends. Should the Fed maintain a hawkish stance while the BoJ holds back from aggressive signals due to growth concerns, USDJPY could resume its upward trajectory toward the 165 level. Conversely, a hawkish surprise from the BoJ, supported by a hotter Tokyo CPI reading and upwardly revised inflation forecasts, could trigger a sharp rally in the yen and force a rapid unwinding of massive speculative short positions.
Gold
While last week was shaped by shifting sentiment surrounding Middle Eastern geopolitical tensions and oil prices, this week presents a direct test for the gold market from US monetary policy and incoming economic data. The principal catalyst for volatility will be Wednesday’s FOMC decision, followed on Thursday by US GDP figures and the June PCE inflation metric, which remains the Federal Reserve’s preferred inflation gauge. Gold continues to show high sensitivity to real interest rates and the trajectory of US Treasury yields. The bullion’s historic gains during periods when rate cuts are priced in clearly illustrate this relationship: as real yields decline, capital shifts smoothly into non-yielding assets. If Thursday’s PCE report points to persistent inflationary pressures and the Fed signals that rates must remain elevated for longer, gold could stay under pressure, particularly if crude oil marches back toward 100 dollars per barrel. In the alternative scenario, featuring a cooler PCE reading and waning geopolitical risk, the precious metal would gain strong momentum to break out of its recent downtrend.
US100 (Nasdaq 100 Futures)
The past week delivered another wave of selling across the global semiconductor and AI memory sectors. This week introduces the next slate of Big Tech quarterly earnings on Wall Street, coinciding directly with the Federal Reserve meeting. On Wednesday, Microsoft and Meta Platforms will report their quarterly results, followed by Apple and Amazon on Thursday. These announcements overlap with the FOMC interest rate decision on Wednesday and the US GDP and PCE releases on Thursday. Investors will scrutinize not only top-line revenue growth but primarily the return on capital expenditure dedicated to artificial intelligence infrastructure. Stretched valuations among Big Tech firms leave a remarkably narrow margin for error. Market dynamics seen during previous tech corrections demonstrate that even minor disappointment regarding forward margin outlooks can trigger index-wide selling, regardless of robust current earnings. Strong reports from market leaders coupled with measured commentary from the Fed could provide the US100 with the momentum needed to rebound from its recent pullbacks. Conversely, disappointing forward guidance paired with hawkish rhetoric from Kevin Warsh risks deepening the ongoing correction.
Euro falls even amid strong Eurozone PMIs
- EUR/USD trades lower near 1.1370 despite stronger-than-expected German and Eurozone PMI data.
- US Services PMI jumped to 53.6, keeping the US Dollar supported, while Manufacturing PMI eased to 53.8.
- Attention turns to next week’s Fed meeting with rates expected to remain at 3.50%–3.75%.
EUR/USD trades lower near the 1.1370 area on Friday, struggling despite stronger-than-expected Eurozone business-activity figures. The US Dollar Index (DXY) remains firmer near 101.50, offering limited support to the pair.
Germany’s preliminary HCOB Composite Purchasing Managers Index (PMI) climbed to 51.2 in July from 49.5, exceeding expectations of 49.8 and returning to expansion territory. Manufacturing PMI improved to 52.2 from 50.3, while Services PMI rose to 49.6 from 48.6 but remained below the 50.0 threshold separating expansion from contraction.
Activity across the wider Eurozone also strengthened. The Composite PMI increased to 51.9 from 50.0, beating the 50.3 forecast. Manufacturing PMI advanced to 52.0, while Services PMI rose sharply to 51.6 from 49.4, indicating that the services sector returned to expansion.
The United States (US) preliminary S&P Global Manufacturing PMI eased to 53.8 and missed expectations of 54.5, while the Services PMI surged to 53.6 from 51.2, significantly exceeding the 51.0 forecast. The strong services reading may keep US Treasury yields supported and prevent a deeper decline in the Greenback.
Risk sentiment also improved after reports that Pakistan and Iran are exploring a potential path toward renewed US-Iran negotiations under a China-backed diplomatic initiative. A possible reduction in regional tensions has contributed to a sharp decline in Oil prices and reduced some safe-haven demand for the US Dollar, although significant obstacles to negotiations remain.
Investors will now turn their attention to the Federal Reserve’s (Fed) July 28–29 meeting. The Fed is expected to maintain its target range at 3.50%–3.75%. The meeting will not include new economic projections or an updated dot plot, leaving the policy statement and Chair Kevin Warsh’s press conference as the main drivers for EUR/USD.
Short-term technical analysis:
On the 4-hour chart, EUR/USD trades at 1.1369 with a bearish near-term bias, holding beneath both the 20-period Simple Moving Average (SMA) at 1.1397 and the 100-period SMA at 1.1422. The pair is also trading under nearby horizontal caps at 1.1387 and 1.1391, reinforcing a topside ceiling, while the Relative Strength Index (RSI) hovers near 37, hinting at persistent downside pressure but not yet oversold conditions.
On the downside, immediate support is clustered just below the market at 1.1368 and 1.1366, where a break would open the door to an extension of the recent decline. On the topside, a recovery above the 1.1387–1.1391 band is needed to ease immediate pressure, with the 20-period SMA at 1.1397 then acting as the next barrier ahead of the 100-period SMA at 1.1422, whose clearance would be required to challenge the broader bearish structure.
NZD/USD Price Forecast: Kiwi tests 0.5800 as bullish momentum fades
- NZD/USD tests 0.5800 as 50-day SMA caps recovery.
- RSI turns bullish but fading slope warns of downside risk.
- Break below 0.5762 exposes 0.5743 and 0.5700 supports.
The New Zealand Dollar gains over 0.30% against the US Dollar on Friday. The pair is poised to test key resistance levels with the 50-day Simple Moving Average (SMA) at 0.5793, slightly below the 0.5800 figure. At the time of writing, the NZD/USD trades at 0.5789, after bouncing off daily lows of 0.5767.
NZD/USD Price Forecast: Technical outlook
The Kiwi Dollar seems to recover during the day, but the overall trend is downwards, until the pair reclaims the May 29 high of 0.5995. Momentum turned bullish as depicted in the Relative Strength Index (RSI), but seems to be fading as the index is about to pierce bearish territory.
As of writing, the NZD/USD is testing key resistance below 0.5800. A breach of the latter will expose the confluence of the 100- day and 200-day Simple Moving Averages (SMAs) at 0.5823, followed by the July 21 high at 0.5874. Above this area, the next resistance is the 0.5900, followed by the May 29 high beneath 0.6000.
On the other hand, if NZD/USD breaches the low of the week (LOW) of 0.5762, it opens the door for further downside. The next key support is the July 13 low of 0.5743, followed by 0.5700. Beneath lies the July 7 high at 0.5672.
NZD/USD daily price chart
South Korean Won: Strong GDP and inflows support Won – Commerzbank
Commerzbank reports that South Korea’s advance Q2 GDP rose 0.6% quarter-on-quarter and 3.7% year-on-year, beating expectations. Robust AI-related semiconductor demand and resilient domestic spending underpin growth. The strong data support prospects of a further 25bp Bank of Korea hike in August. USD/KRW fell to 1,475, with the Won aided by portfolio inflows into bonds and equities.
Growth surprise bolsters BoK hike case
“The advance Q2 GDP rose 0.6% qoq sa (Bloomberg consensus: 0.4%) vs 1.8% in Q1. This suggests that growth momentum remained resilient despite energy supply disruptions.”
“On an annual basis, the economy expanded 3.7% yoy (Bloomberg consensus: 3.5%) vs 3.8% previously. The Ministry of Economy and Finance (MoEF) recently upgraded its 2026 growth forecast to 3.0% from 2.0%, reflecting the stronger outlook for exports and investment.”
“On monetary policy, the strong Q2 GDP reading supports the case of another 25bp hike to 3.0% by the Bank of Korea (BoK) at the 27 August meeting. At the previous meeting, Governor Shin Hyun-sung described August as a “live” meeting, reinforcing the BoK’s data-dependent approach.”
“With growth remaining resilient, inflation above target, and the AI-driven export boom broadening into wages and domestic demand, policymakers have scope to continue normalising policy.”
“In FX, USD-KRW fell 0.2% to 1,475 yesterday. The pair initially dropped 0.9% following the GDP release before paring some of its losses later in the session. Portfolio inflows provided support for KRW, with foreign investors purchasing USD1.0bn of domestic bonds and USD3.7bn of equities so far this week.”
Mexican Peso Gains on Trade Advantage
The Mexican peso strengthened to around 17.48 per USD in late July from 17.52 earlier in the month as investors viewed Mexico’s trade position with the US as relatively favorable. The US announced new tariffs ranging from 10% to 12.5% on imports from roughly 60 economies. For Mexico, imports that do not qualify for preferential treatment under the USMCA will face a 10% tariff, while goods that comply with the agreement’s rules of origin will remain exempt, preserving the country’s preferential access to the US market. Existing exemptions also remain in place for products already covered by sector-specific tariffs, including automobiles, steel, aluminum, and pharmaceuticals. Mexico was included among the countries subject to the minimum 10% tariff, while many economies without trade agreements will face 12.5% duties, preserving Mexico’s competitive advantage over several export rivals. The peso also found support from a pullback in global energy prices.
Japanese Yen remains pinned near 40-year low as Fed-BoJ rate gap keeps carry trade active
- USD/JPY consolidates the previous day’s strong gains amid looming intervention risks.
- The wide US-Japan rate differential holds back the JPY bulls from placing aggressive bets.
- US-Iran tensions and Fed rate hike expectations favor USD bulls, supporting spot prices.
The USD/JPY pair edges lower on Friday as bulls turn cautious in anticipation of a potential government intervention to prop up the Japanese Yen (JPY). Nevertheless, spot prices remain within striking distance of the four-decade high, touched on Thursday, and the 164.00 mark amid a supportive fundamental backdrop.
A stark contrast in monetary policy between Japan and the rest of the world keeps the so-called carry trade active, which might continue to undermine the JPY. Despite the recent Bank of Japan (BoJ) rate hike to 1%, or the highest since 1995, borrowing costs in Japan remain exceptionally low relative to other major economies, including the US. Furthermore, economic risks stemming from energy supply disruptions due to the Middle East conflict contributed to the JPY’s relative underperformance.
The US military announced that it has completed another round of strikes against Iran on Thursday, marking the 13th straight night of operations. Meanwhile, Iran and its allies launched retaliatory strikes against US-linked military assets in Kuwait, Bahrain and Jordan. Adding to this, Iran-aligned Houthis extended the Middle East war to a second major shipping chokepoint and struck two Saudi oil tankers in the Red Sea, describing the action as part of a naval blockade against Saudi Arabia.
This comes on top of the closure of the Strait of Hormuz and further exacerbates supply disruption concerns, lifting crude oil prices to a fresh high since June 11 on Thursday. Investors remain worried that elevated energy prices will rekindle inflationary pressure and force major central banks, including the US Federal Reserve (Fed), to adopt a more hawkish stance. Moreover, data showed on Thursday that US Jobless Claims fell to the lowest level since September 1969, pointing to a resilient labor market.
This reaffirmed market expectations that the US central bank will raise borrowing costs by the end of this year, which favors the US Dollar (USD) bulls and backs the case for the emergence of dip-buying around the USD/JPY pair. Traders, however, seem hesitant and opt to move to the sidelines ahead of the highly anticipated FOMC policy meeting next week. Nevertheless, spot prices remain on track to register strong weekly gains for the third straight week and seem poised to climb further.
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.39% | 0.99% | 0.87% | 0.45% | -0.33% | 0.83% | 0.99% | |
| EUR | -0.39% | 0.61% | 0.43% | 0.06% | -0.71% | 0.44% | 0.59% | |
| GBP | -0.99% | -0.61% | -0.17% | -0.54% | -1.30% | -0.16% | 0.03% | |
| JPY | -0.87% | -0.43% | 0.17% | -0.32% | -1.14% | -0.09% | 0.22% | |
| CAD | -0.45% | -0.06% | 0.54% | 0.32% | -0.74% | 0.24% | 0.58% | |
| AUD | 0.33% | 0.71% | 1.30% | 1.14% | 0.74% | 1.16% | 1.35% | |
| NZD | -0.83% | -0.44% | 0.16% | 0.09% | -0.24% | -1.16% | 0.20% | |
| CHF | -0.99% | -0.59% | -0.03% | -0.22% | -0.58% | -1.35% | -0.20% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Rupee Near Record Low on Oil, US Tariffs
The Indian rupee weakened to around 96.58 per dollar, hovering near record lows as a sharp surge in crude oil prices and fresh US tariff measures weighed on sentiment. Brent crude jumped more than 7% to above $100 per barrel after Yemen’s Houthis attacked two Saudi oil tankers in the Red Sea, exacerbating supply concerns as trade through the Strait of Hormuz remained severely disrupted. Sentiment was further dampened after the US imposed new tariffs of 10% to 12.5% on imports from around 60 economies under a forced-labor investigation, including a 10% duty on Indian goods, fueling concerns over global trade, India’s export outlook, and broader emerging-market assets. Investor focus also remained on the Reserve Bank of India, with traders watching for further intervention after state-run banks were reportedly seen selling dollars on the central bank’s behalf to curb volatility and prevent the rupee from breaching record lows.
