Forex

The internationally known barometer for US dollar performance, the dollar basket (DXY), gained ground as the euro, pound sterling, and Japanese yen gave up recent gains in July 2023.

Renowned ECB hawk Klaas Knot conceded that future rate hikes are uncertain, while higher- than-expected UK inflation reduces the need for aggressive hikes. Besides, Japanese officials maintained their support for the ultra-low interest rate strategy. The dollar basket aims to close above 101.00, implying that the bullish trend will continue at the start of next month.

For USD/JPY, the 50-Day Exponential Moving Average, located near the 140.25 level, supports the long-term bullish outlook for the currency despite this little setback. A key point of interest for traders is the 142.50 level, which, if breached, might open the door for further gains toward 145 can be the next destination.

The EUR/USD achieved a high of around 1.12760 on 18th July, a level last seen in late February 2022. The pair also matched general Forex circumstances and created a relatively quick sell-off after reaching below 1.1050 during the third week of the month. The downward swing in the currency pair serves as a reminder that Forex is never a one-way street, which may frustrate day traders who are still enthusiastic about the currency pair.

The Consumer Price Index data from the U.K. revealed weaker inflation statistics than expected on 19th July. The UK's economic statistics, though, continue to be underwhelming. Britain's retail sales showed a small rise, but consumer confidence levels were lower than expected. Beginning in late May, the GBP/USD generated a lot of upward force, which was turned around by a series of sell-off events during the second half of July, pushing the price below 1.2900.

On 6th July, the USDCAD hit the monthly high at 1.3386. Although, it failed to keep up the bullish momentum and reversed back to 1.3091 on 14th July, following a huge sell-off from the top. Despite the downfall, the pair is still hovering above the 200-Week EMA. Assuming all other factors remain constant if we break over the candlestick's top, we may see a move above the 1.33 level and possibly the 1.34 level in the next month. At the same time, the fact that we are often trading in a narrow range suggests that additional consolidation is likely to come.

Commodities

In the greatest 24-hour stretch since June 13th, WTI crude oil prices increased by roughly 2.8 percent on 24th July. The commodity has risen an impressive 12% this month so far. The crude oil price has already exceeded the 200-day moving average, which was not being crossed since August 2022. If this surge continues, the next 20 days could be the best for WTI since January 2022.

The gold market has, however, been more cautious as the Fed's policy pronouncements approach in July 2023. A dovish Fed forecast might cause the price of gold to surge toward the two-month high of $1,988, above which the $2,000 barrier will once more be tested. The 14-day Relative Strength Index is still firmly above the midline, indicating that the price of gold appears to be headed higher.

The strongest 5-day stretch since mid-June saw a 6.9% increase in natural gas prices in July 2023. While natural gas eventually crossed the downward trendline from August, there hasn't been much momentum on the upside. The heating commodity, generally speaking, is still trapped in a band between 1.967 and 3.027. The technical prognosis continues to be largely neutral unless a breakout is shown in either direction.

Indices

The S&P 500 trades primarily within the ascending channel as it continues its strong climb. Within the larger upswing, prices have been accelerating during late July. The zone of convergence between 4550 and the 78.6% Fibonacci retracement of the 2022 sell-off (4589) comes into focus once more. In fact, the weekly RSI is edging toward overbought territory, and prices seem ready to test the channel barrier at 4600/4610 oncemore.

NASDAQ 100 continues to experience brief pullbacks as buyers are already entering the market. As long as the 15,400 level can be successfully held, additional advances will aim for the 15,930 level, which was the high point of last week. The 50-day SMA and the 14,900 level, which served as support earlier in July, might be reached if there is a reversal back below 15,400, which is what sellers will be looking for.

Despite recent indications of more support for the Chinese economy, the Nikkei 225 is still carving out a rounded bottom, which is encouraging. Gains over 33,000 have proven tough to maintain during July, but buyers have frequently entered the market around 32,000, preventing a further decline from the June highs.

Market Events

US Institute for Supply Management reported the ISM Manufacturing PMI as 46.0 on 3rd July, 1.9% lower than the previous month, causing a mixed reaction in the market. The US non-farm employment change suffered a decline of 97K compared to last month, with the average hourly earnings remaining unchanged (4%) published on 7th July.

UK Office of National Statistics announced the claimant count change hit 25.7K, which was 5.2K more than the expectation. On 12th July, the US Bureau of Labor Statistics reported a 50% increase in CPI, but the Core CPI appeared conversely 50% lower than the last month.

Following the U.S. Federal Reserve policy statement on 26th July, the European Central Bank is also set to announce its interest rate decision on 27th July. During this period, both the ECB and the Fed are anticipated to increase their lending rates by 0.25%.