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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.

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Oil Slides Into The Weekend!

Brent futures (OIL) down 3.5%! Diplomacy is back? Oil prices sharply turned lower following reports that, under pressure from Beijing, Pakistan and Iran are considering a return to the negotiating table with the US. Brent futures (OIL) immediately pulled back by 1% to around $90.50 per barrel, deepening today’s losses and erasing nearly all of yesterday’s gains (currently: -3.5%).

Mixed Signals from the Middle East: A Potential Return of Diplomacy?

Following the recent escalation of Middle East tensions and oil prices returning to a monthly high, the market is eagerly snapping up the slightest mention of returning diplomacy, attempting to extract some end-of-week optimism. Over the longer term, Pakistan’s efforts alone will not be enough, especially since both sides of the conflict are playing solely to safeguard their own interests, and reports of resuming talks are accompanied by further warnings for US citizens in the region.

Below are the key headlines from recent hours:

  • Omani delegation in Tehran regarding the Strait of Hormuz: An Omani delegation arrived in Iran to discuss mechanisms for managing ship traffic in the Strait of Hormuz. Tehran advocates co-managing the waterway alongside Oman, but the US and Gulf states reject such a setup.
  • China and Pakistan push for a resumption of peace talks: Under pressure from China, Pakistan is considering attempting to resume stalled negotiations between the US and Iran aimed at ending the nearly five-month-old war. Exploratory discussions took place this week in Islamabad during a visit by the Iranian interior minister.
  • Tough rhetoric from Iran’s foreign minister: Abbas Araghchi stated that Iran will not bow to the US nor tolerate threats, pointing to Washington’s stance as the main obstacle to peace talks. He also reported continuous consultations with Russia and China, pledging unconditional protection of Iran’s interests in the Strait of Hormuz.
  • US warning for citizens in the Middle East: The US Embassy in Jordan urged Americans to reconsider travel to the Middle East due to escalation risks and potential attacks by Iran and its allies. Warnings were issued regarding airspace closures and flight cancellations, and citizens were advised to avoid US military bases in Jordan.
  • Trump warns Iran’s allies: In his latest social media post, the US President stated that Russia or China supplying weapons to Iran “will end badly for them.” Donald Trump added, however, that Xi and Putin said they do not plan such sales.

Technical Analysis: OIL (Brent Futures)

Reports of potential de-escalation in the Middle East sparked selling pressure on Brent crude (OIL). On the H1 chart, price dynamically dropped into a key support zone defined by the 120-period EMA ($90.48) and the 50.0% Fibonacci retracement ($90.16). A breakdown below this area could open the door for further declines toward the 61.8% Fibo level ($88.93). Conversely, defending current levels could favor a corrective bounce. The immediate resistance lies at the 38.2% Fibo retracement ($91.38), followed by the 24-period EMA ($92.47). The RSI is approaching oversold territory (32.1), suggesting the possibility of a temporary easing in bearish pressure, especially if no new pro-war comments emerge from the White House.

Source: xStation5

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Indonesian Rupiah: BI pause seen as hawkish hold – UOB

UOB Global Economics & Markets Research notes that Bank Indonesia kept its policy rate at 5.75%, opting to let earlier tightening filter through. Despite the pause, the team still expects three further hikes totalling 75 bps by end-2026 to stabilise the Rupiah and inflation expectations, while USD/IDR edged slightly higher after what markets perceived as a hawkish hold.

Further BI hikes expected to support Rupiah

“Bank Indonesia maintained its benchmark policy rate at 5.75% at the Jul MPC meeting, likely choosing to allow the cumulative 100 bps tightening implemented between May and June to fully transmit through the real economy.”

“Despite the policy pause, risks on rupiah’s trajectory coupled with market’s divided expectation of US Fed’s policy direction and upside risks to global inflation forecasts amid the rising energy prices continue to underpin our expectation of two additional 25 bps rate hikes in3Q26 and a final 25bps in the final quarter of 2026 to anchor rupiah’s stability and inflation expectations.”

“This will bring the policy rate to a terminal level of6.50% by end-2026.”

“In South East Asia, USD/IDR inched higher from

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Trade of The Day – AUD/CAD

cts: The main trend on AUDCAD remains downward for a few days The price bounced off the upper limit of 1:1 structure at 0.9800

Recommendation: Trade: Short AUDCAD at market price Target: 0.9780, 0.9769 Stop: 0,9807

Opinion: Looking at the M15 interval, AUDCAD has been trading in a downward trend recently. Following an upward correction, the price failed to break above the resistance marked with the upper limit of 1:1 structure and 100-period moving average from the M15 interval, and started to pull back. According to the Overbalance methodology, the main sentiment prevails and we should expect the price to continue to fall. We recommend going short AUDCAD at market price with two targets: 0.9780 and 0.9769 . We also recommend placing stop loss at 0.9807. Source: xStation5

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Oil prices sharply up after Iran escalation

Brent crude tests $85 per barrel amid intensified attacks between the US and Iran Oil prices are rising for the second day in a row due to tensions in the Middle East. Brent crude is up over 2%, testing the vicinity of $85 per barrel. This is the highest level since the downward gap that occurred between June 12 and 15. Situation in the Strait of Hormuz and US plans: President Donald Trump reinstated the blockade of Iranian ships passing through the Strait of Hormuz. Although the United States indicates that it will act as a security guarantor on this key waterway, Trump announced plans to collect a 20% fee (compensation) from all other cargo benefiting from this protection.

Iran’s reaction and plans: Despite the American blockade imposed on Iranian merchant ships, Tehran is not backing down and firmly announces the continuation of exporting its raw materials to world markets. At the same time, it reports an attack on two supertankers passing through the Strait of Hormuz. Market background: Further exchange of blows between Washington and Tehran postpones the prospect of quickly unblocking the Strait of Hormuz. This situation raises renewed inflation concerns and increases the likelihood of further interest rate hikes by the US Fed.

It is worth noting that US crude oil inventories are already extremely low from the perspective of recent years, and reserves are the lowest since the 1980s. If vessel traffic is not resumed, oil prices could rise even to the level of $100 per barrel. If the situation is tense but the ship flow is continued to a limited extent, prices will likely reach an important supply zone in the vicinity of $88-$90 per barrel, where important technical levels are located. Zapasy i rezerwy strategiczne w USA

US commercial inventories are the lowest since 2018, while strategic reserves are at their lowest since the 1980s. A further decline in inventories and reserves could raise concerns about energy security in the US, despite near-total self-sufficiency. It is worth noting, however, that the United States has served as a buffer for supplies to Asian countries. Source: Bloomberg Finance LP, XTB Brent crude chart on the D1 interval

The price of crude oil has risen by over 20% from its last local low at the turn of the month and is approaching the 61.8 retracement of the upward wave associated with the Iranian conflict. The 88-90 USD zone is reinforced by local lows and the 50-period average. Source: xStation5

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Today Markets – The Week Ahead

The Week Ahead: Geopolitical risks push the oil price higher It’s a shaky start to the week for financial markets. The oil price has risen by nearly 4% and Brent crude is trading above $79 per barrel. This comes after more attacks between the US and Iran in the Gulf, and statements from the Iranian regime that it has closed the Strait of Hormuz. The US is disputing this claim, but commercial traffic has slowed through the Strait once more, which is adding to the negative sentiment seen in financial markets today.

Will the oil price move higher?

This week will be a test to see if the continued skirmishes between the US and Iran can be absorbed by financial markets without causing major damage. The oil price remains below $80 per barrel for now, and the prevailing view is that the current situation will not evolve into another full-scale war, even if President Trump believes that the ceasefire is over. Thus, for now, oil price gains remain contained, and the price of Brent crude has not risen above $80 per barrel.

South Korean Kospi stays volatile

Stocks were sharply lower in Asia overnight, and the Nikkei fell about 2%. The South Korean Kospi plunged 9%, proving that it is one of the most volatile indices out there. This comes after SK Hynix, which listed on the Nasdaq last Friday, fell 15% overnight, eroding the gains made at the end of last week and experiencing its worst day ever. The South Korean listed stock price is down 19% in the past month, however, the sell off should prove to be temporary. There is huge structural demand for chips and memory, and this could be reinforced this earrings season, with high expectations for capex spending from the major hyperscalers to remain elevated into next year. Thus, any sell-off could be seen as a buying opportunity.

Momentum trade gets reality check

US futures are pointing to a lower open later today, led by the Nasdaq, which is forecast to decline more than 1%. The Dow Jones is expected to see the mildest sell off, with futures only predicting a 0.3% decline at this time. This suggests that the rise in geopolitical tensions and the spike in the oil price are disrupting the momentum trade once again, which will hit the tech trade and the chip stock rally. The reaction in the Kospi, which is dominated by chip stocks, could be replicated in a less volatile fashion elsewhere.

Why are chip stocks selling off?

The question is, why do geopolitical risks hit chip stocks and tech stocks more than other sectors of the market, even though the chip sector is more insulated from the chaos of the war? There are a couple of reasons for this: 1, the chip trade is big in the retail community, especially in Asia, who also have access to leveraged ETFs, thus when the external environment changes, some of these retail traders may take fright. If they have leveraged positions, this can magnify the sell-off. 2, when geopolitical tensions rise, it can lead to risk aversion and increase demand for physical assets including cash. This leads to some cutting of the most profitable trades, which are South Korean equities and global chip stocks so far this year. The South Korean market is now considered a key barometer of sentiment towards the chip sector, so when it declines it can have ripple effects across the world. With geopolitical risks rising once more, the focus for investors will be earnings season. Analysts remain upbeat on the earnings outlook, which could be why US stocks managed to eke out gains last week, even though President Trump said on Wednesday that the ceasefire was over with Iran.

US still managing to outperform

US indices outperformed their European and Asian counterparts last week. The S&P 500 rose more than 1%, the Nasdaq eked out a 0.9% gain, and the Dow Jones rose 0.4%. This compares with a 1.4% decline in the FTSE 100 last week, and a 1.6% drop in the Eurostoxx 50 index. If US tech stocks sell off sharply today, we could see European indices try and claw back some recent losses, however, over the past month, Europe has been a laggard compared to Asian and US indices, and this may continue as we move through earnings season.

The economic outlook

Overall, the economic data front is proving supportive, US ISM surveys showed a resilient service sector, as tech spending continues to boost economic activity. Added to this, the latest initial jobless claims suggest that the labour market remains solid, even though last month’s payrolls report was weak. In Europe, there were encouraging signs from Germany that its manufacturing sector is getting back on its feet after a long period of decline. In China, CPI is running in the opposite direction from the West and came in lower than expected at 1% YoY.

Andy Burnham to feel the strain from rising oil prices

In the UK, Andy Burnham is expected to be made leader of the Labour Party at the end of this week, before becoming PM next week. He faces a huge set of challenges and is attempting to put together a ‘mega’ budget in the next three months to lay out his plans for tax and spending by October. This means two things, he will likely keep quiet about his economic plans over the summer months, which could backfire on him and lead to wild speculation, secondly, expect a summer of horse trading, as Labour MPs clamor to get a slice of Burnham’s pie. The problem for Burnham remains the UK’s debt costs. Bond yields rose again last week, the 10-year Gilt yield was 12 bps higher.

Although this was in line with gains in yields across Europe, it is a keen reminder that UK bonds are sensitive to oil prices, and any extra borrowing from Burnham will come at a high price. We will be watching bonds and the pound in the coming days, to see if Burnham’s coronation causes any fluctuations in UK asset prices. As trading gets started this morning, bond yields are ticking higher and the gold price is also lower as the dollar catches a bid. This is another reminder that traditional safe havens, like government bonds and gold, offer no protection when geopolitical risks threaten inflation. Thus, if we see continued escalation in the conflict, and the oil price rises back towards $90, we will likely see a deeper selloff in sovereign bonds and in the gold price.

Events to watch this week

Geopolitical risks combine with monetary policy risks this week, as Kevin Warsh, the new

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EUR/JPY Price Edges higher above 184.50, but stays capped by clustered resistance

  • EUR/JPY gains momentum to near 184.65 in Monday’s Asian session. 
  • The cross keeps a bearish vibe in the near term, with the RSI holding below the midline. 
  • The first upside barrier emerges in the 184.80-184.85 zone; the initial support level is seen at 183.53.

 The EUR/JPY cross trades in positive territory around 184.65 during the Asian trading hours on Monday. However, the potential upside for the cross might be limited as heightened geopolitical tensions in the Middle East could boost a safe-haven currency. 

Furthermore, speculation over domestic asset shifts could underpin the Japanese Yen (JPY) against the Euro (EUR). Japan’s Finance Minister Satsuki Katayama said on Friday that the government is pursuing measures that would include the Government Pension Investment Fund (GPIF) to make “substantially greater investments in Japanese financial assets. Analysts said this move could offer greater support to ‌the battered currency than intervention.

Chart Analysis EUR/JPY

Technical Analysis:

In the daily chart, EUR/JPY keeps a mildly bearish near-term tone as spot holds beneath the 100-day Simple Moving Average (SMA) and the Bollinger Bands’ 20-day middle line. The pair is drifting in the lower half of the recent volatility envelope, with the lower Bollinger band acting as the next downside reference, while the Relative Strength Index (RSI) at 47.6 hovers just under the neutral 50 line, hinting at subdued, consolidative downside pressure rather than a strong trend.

On the topside, initial resistance emerges in the 184.80-184.85 zone, representing the Bollinger 20-day middle band and the 100-day SMA. A daily close above this clustered band would be needed to ease the current downside bias and expose the upper Bollinger band near 186.12. On the downside, the first notable support is the lower Bollinger band at 183.53, where buyers could attempt to slow the decline; a break below this level would reinforce the bearish bias and open the door to a deeper corrective slide.

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Three markets to watch next week

The past week brought a sharp bout of volatility to global markets, particularly within the commodities sector.

An initial rebound in crude prices, fueled by escalating tensions in the Middle East, reverberated with redoubled force across weather-sensitive agricultural commodities. Markets enter the new week with attention firmly fixed on the United States. The macroeconomic calendar is packed with pivotal events poised to shape investor sentiment over the coming days.

The main highlights include the release of US consumer price index (CPI) data for June, congressional testimony by the newly appointed Fed Chair Kevin Warsh, and the official kickoff of the Wall Street earnings season. Given this confluence of catalysts, three markets warrant close scrutiny in the near term: GOLD , US500 and COCOA .

GOLD

This week, investor focus in the gold market will shift entirely toward the US dollar and the interest rate outlook, both of which face two powerful catalysts. On Tuesday, the US June CPI reading will be released, with consensus expectations pointing to a moderate deceleration in price growth. Following the release of the FOMC minutes, the market will pivot to the next Warsh-related event: the Fed Chair’s semi-annual testimony before Congress. Warsh will appear before the House Financial Services Committee on Tuesday, followed by questioning from the Senate Banking Committee on Wednesday.

Historically, during leadership transitions at the Federal Reserve, markets closely parse every word for clues regarding the future path of monetary policy. Hints of a more dovish tilt would provide potent fuel for a rally in gold, whereas unyielding hawkish rhetoric could unleash heavy selling pressure. However, it is worth noting that Warsh himself has signaled he does not intend to offer forward guidance to the markets. Consequently, the market’s own interpretation of his remarks will be critical.

US500 (S&P 500 Futures)

For the US equity market and its benchmark S&P 500 index, this week marks the commencement of another crucial corporate earnings season. Traditionally, the cycle kicks off with Wall Street’s banking giants; JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs, and Bank of America are all scheduled to report on Tuesday.

Beyond financials, investors will closely dissect earnings from tech heavyweights ASML and TSMC (Wednesday and Thursday) as well as Netflix (Thursday). Juxtaposing these corporate results with Wednesday’s release of the Federal Reserve’s Beige Book and Thursday’s US retail sales data will provide a more comprehensive economic mosaic. This will allow market participants to gauge whether the US economy and its consumers remain resilient enough to sustain corporate earnings capable of justifying today’s stretched equity valuations.

COCOA

Cocoa has enjoyed a spectacular first half of the year. Following a sharp sell-off early on, the soft commodity is currently staging a massive rebound. While current prices remain below the historic highs printed in 2024, they have surged by roughly 60% since the El Niño weather phenomenon was officially declared last month. Measured from its recent troughs, the pace of the rebound reaches as high as 120%. Violent volatility in recent days has been driven by supply anxieties out of West Africa, where cocoa crop development was initially hit by torrential rains, and plantations are now threatened by the hot, dry conditions associated with El Niño.

Furthermore, the ICE exchange raised margin requirements in response to market instability, a move that only exacerbated swings and forced the capitulation of some speculative capital. This week will prove pivotal for investors in this market as attention shifts from weather patterns to hard demand data. Crucial quarterly European cocoa grindings data is due on Thursday.

A recent report from industry giant Barry Callebaut did register the first increase in sales volumes in over two years—partly driven by an earlier price correction—but the company simultaneously warned that global confectionery consumption remains under pressure. Following such a monumental rally from its lows, the upcoming grindings data will serve as an absolute litmus test of whether high prices have triggered genuine demand destruction, or if the market still has room to run.