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Last week’s market action displayed a familiar theme: investors are choosing to focus on growth — even if it’s fragile — and political clarity, however fleeting. US equities roared to record highs as a wave of macro and policy news washed over Wall Street.

Yet the outlook is far from simple. The 90-day tariff truce expires July 9. Markets are now facing a unilateral shift in US policy that threatens to escalate trade tensions. The era of bespoke deals appears to be giving way to a blanket tariff regime. The risk of fragmentation in global trade architecture is also growing by the day.

In the currency markets, Swiss Franc stood out as the strongest performer, supported by a better-than-expected inflation report that eased deflation fears. On the flip side, Sterling was hammered by domestic political uncertainty. The contrast is clearly reflected in the downturn of GBP/CHF, logging the largest weekly drop among major currency pairs and crosses.

Overall, Lonnie was the second best, while Euro was third. Dollar was the second worst, trailed by Kiwi. Euro and Yen ended in the middle.

US Equities Hit Record Highs Amid Policy Deluge

US stocks ended the shortened week on a high note,, with S&P 500 and NASDAQ closing at fresh record highs and DOW not far behind. Investors digested a flood of major developments, from economic data to fiscal and trade news, and came away still leaning risk-on. The positive mood suggests that the combination of resilient jobs growth and aggressive fiscal support is outweighing concerns around tighter monetary for longer or geopolitical headwinds.

A stronger-than-expected June non-farm payroll report dented hopes of a July rate cut. But the solid data — coupled with signs of wage deceleration — pointed to cooling, yet healthy labor market, fueling optimism about a soft landing. Meanwhile, the final passage of President Donald Trump’s sweeping tax-and-spending bill added to market momentum, despite raising longer-term deficit risks.

Trump signed the bill into law on July 4, securing a political victory. While the bill passed by a razor-thin margin, markets responded positively to the policy clarity. A blend of corporate tax cuts, defense spending hikes, and welfare reductions added fuel to the rally, even as concerns simmer over its inflationary consequences.

Markets also took comfort in the fact that the Fed is now seen as staying on hold in July, avoiding premature policy action. At the same time, cooling wage pressures imply that the door remains open for gradual easing later in the year. The balance between data-dependent Fed patience and fiscal stimulus-driven growth is proving to be equity-friendly.

Technically, S&P 500's upside re-acceleration, as seen in D MACD caught us by surprise. Nevertheless, with the sold break of 6147.43 resistance. long term up trend has resumed. Near term outlook will now stay bullish as long as 6059.30 resistance turned support holds.

The key hurdle for S&P 500 is now between 61.8% projection of 3491.58 to 6147.43 from 4835.04 at 6476.35, and long term channel resistance (now at around 6640). Strong resistance could be seen from this zone to cap upside, at least on first attempt.

Tariff Truce Ends, Global Trade to be Redefined

Trump confirmed on Friday that letters have been signed to 12 countries, detailing specific tariff rates they will face — a clear shift from earlier pledges of bilateral deals. These "take it or leave it" offers will be sent on Monday, just ahead of the July 9 truce deadline. Markets are bracing for fallout as the era of blanket tariffs inches closer to reality.

Back in April, Trump initially floated a 10% base tariff and additional charges up to 50%. Those surcharges were suspended for 90 days to allow for negotiations. But with the grace period ending, the administration may now opt for even higher rates, possibly up to 70%, and most measures are slated to take effect August 1.

So far, only two countries — the UK and Vietnam — have struck deals. The UK retained a 10% rate and won carve-outs for auto and aerospace industries. Vietnam secured lower-than-feared tariffs, with a 20% rate on many goods and a 40% levy on suspected transshipments. US exports to Vietnam will face no tariffs.

Europe’s talks with Washington appear stuck. European Commission President Ursula von der Leyen acknowledged the best hope might be a thin political agreement. She warned that if no deal is reached by July 9, "all instruments are on the table." The EU could resort to retaliatory tariffs or legal challenges at the WTO.

Beyond official negotiations, global supply chains are shifting. Malaysia announced provisional duties on Chinese, Korean, and Vietnamese steel, effective Monday, signaling broader trade fragmentation. These duties range from 3.86% to nearly 58%, pending a final ruling in November.

Meanwhile, China has retaliated against Europe. Duties up to 34.9% will be imposed on EU brandy, effective Saturday. Large cognac makers can avoid them by agreeing to minimum price floors. The move is widely seen as payback for the EU’s tariffs on Chinese EVs.

Chinese foreign minister Wang Yi recently told the EU that Beijing opposes a Russian defeat in Ukraine — a warning that excessive Western pressure on Moscow may eventually boomerang toward China. Trade is becoming a key theater in this broader contest.

While investors may hope for de-escalation, the trend is clear: Washington is consolidating control over its trade terms, and other nations are scrambling to respond. How this plays out over the next few weeks will shape the second half of 2025.

Dollar Finds No Lift from Fed Caution

The latest data flow confirmed the Fed’s baseline — the economy is solid, but not overheating, and there’s no urgency to cut rates in July. The solid NFP report gave Fed Chair room to remain patient. While inflation risks from tariffs persist, the resilient labor market buys the Fed time.

Still, while a July cut is off the table, the shift in outlook has been subtle. September cut odds slipped back to 70% from 91% last week. Markets now see less than a 35% chance of three total cuts this year. While the easing cycle is intact, its pace appears slower.

Atlanta Fed President Raphael Bostic offered a longer-term view. He warned that the impact of trade and fiscal changes won’t be immediate, but rather unfold over a year or more. That could keep inflation elevated for longer than textbook models assume.

Bostic’s view supports a cautious Fed. If the inflation path is flatter but stickier, interest rates may need to stay higher for longer. That means even a resilient economy could coexist with slow policy adjustments — a Goldilocks scenario for risk assets, but less helpful for Dollar.

Technically, the most pressing question is whether Dollar Index could draw enough support from long term channel (now at around 96) to complete the decline from 114.77 (2022 high). Strong rebound from current level will keep such decline corrective, and keep the up trend from 70.67 (2008 low) intact. However, sustained break of the channel support will argue that whole up trend has completed, and deeper medium term fall would be seen to 61.8% retracement at 87.52, even still as a corrective move.

For the near term, Dollar Index's decline slowed a little bit, but there is no clear momentum for a bounce. Near term outlook will continue to stay bearish as long as 99.39 resistance holds. Next target is 61.8% projection of 110.17 to 97.92 from 101.97 at 94.40.

Franc Finds Relief in Inflation Data, Sterling Weakens on UK Political Risks

GBP/CHF was last week’s biggest mover, falling -1.12% as a mix of renewed UK political risk and strengthening Swiss Franc pushed the cross lower. While the Swiss currency’s broad-based gains drove some of the move, domestic issues within the UK also added pressure to Sterling.

On the Swiss side, inflation data surprised slightly to the upside, with CPI rebounding to 0.1% yoy in June. This offered SNB some breathing room in its battle against deflationary pressures and boosted confidence that the May dip into negative territory was transitory. While inflation remains subdued, the data SNB more reason to pause rather than proceed with another cut in September.

With policy rates already at 0%, further easing by the SNB would require stronger justification. Ongoing Franc strength still poses downside risks to inflation, but barring further persistent deterioration in price pressures, the central bank might stay put for now.

In the UK, political drama around Chancellor Rachel Reeves and the Labour government’s policy U-turns have reignited fears of fiscal instability. The government’s retreat from welfare reform plans erased anticipated savings, raising doubts over its fiscal roadmap. Gilt yields spiked and Sterling came under renewed pressure, drawing comparisons to the 2022 Truss-led market meltdown.

Speculation of a cabinet reshuffle—and whether Reeves herself might be replaced—only deepens investor unease. Traders will be watching closely for any concrete developments, especially before the summer recess.

Technically, GBP/CHF's extended, accelerated decline indicates that rebound from 1.0610 should have completed at 1.1204 already. Deeper fall is expected as long as 1.0930 support turned resistance holds, to retest 1.0610 low first.

In the bigger picture, prior rejection by 55 W EMA is a medium term bearish sign. Down trend from 1.1675 (2024 high) is likely still in progress. Break of 1.0610 will target 100% projection of 1.1501 to 1.0610 from 1.1204 at 1.0313.

EUR/USD Weekly Outlook

EUR/USD edged higher to 1.1829 last week but turned sideway since then. Initial bias stays neutral this week for more consolidations first. But downside should be contained by 1.1630 resistance turned support to bring rebound. Firm break of 1.1829 will resume the rise from 1.0176 and target 61.8% projection of 1.0176 to 1.1572 from 1.1064 at 1.1927.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 1.1604 support holds.

In the long term picture, a long term bottom was in place already at 0.9534, on bullish convergence condition in M MACD. Further rise should be seen to 38.2% retracement of 1.6039 to 0.9534 at 1.2019. Rejection by 1.2019 will keep the price actions from 0.9534 as a corrective pattern. But sustained break of 1.2019 will suggest long term bullish trend reversal, and target 61.8% retracement at 1.3554.

EUR/USD edged higher to 1.1829 last week but turned sideway since then. Initial bias stays neutral this week for more consolidations first. But downside should be contained by 1.1630 resistance turned support to bring rebound. Firm break of 1.1829 will resume the rise from 1.0176 and target 61.8% projection of 1.0176 to 1.1572 from 1.1064 at 1.1927.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 1.1604 support holds.

In the long term picture, a long term bottom was in place already at 0.9534, on bullish convergence condition in M MACD. Further rise should be seen to 38.2% retracement of 1.6039 to 0.9534 at 1.2019. Rejection by 1.2019 will keep the price actions from 0.9534 as a corrective pattern. But sustained break of 1.2019 will suggest long term bullish trend reversal, and target 61.8% retracement at 1.3554.

USD/JPY was bounded by range trading between 142.10 and 148.01 last week and outlook is unchanged. Initial bias remains neutral this week first. On the upside, firm break of 148.01 resistance will resume the rise from 139.87 to 61.8% retracement of 158.86 to 139.87 at 151.22. However, break of 142.10 will bring deeper fall back to retest 139.87 low.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). There is no clear sign that the pattern has completed yet. But still, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.

In the long term picture, there is no sign that up trend from 75.56 (2011 low) has completed. But then, firm break of 161.94 is needed to confirm resumption. Otherwise, more medium term range trading could still be seen.

GBP/USD retreated notably after edging higher to 1.3787 last week. Initial bias stays neutral this week and more consolidations could be seen. Deeper pullback cannot be ruled out, but downside should be contained by 1.3369 support to bring rebound. Firm break of 1.3787 will resume larger up trend to 100% projection of 1.2099 to 1.3206 from 1.3138 at 1.3813.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.2985) holds, even in case of deep pullback.

In the long term picture, for now, price actions from 1.0351 (2022 low) are still seen as a corrective pattern to the long term down trend from 2.1161 (2007 high) only. However, firm break of 1.4248 resistance (38.2% retracement of 2.1161 to 1.0351 at 1.4480) will be a strong sign of long term bullish reversal.

USD/CHF recovered after dipping to 0.7871 last week. Initial bias remains neutral this week for consolidations. Stronger recovery cannot be ruled out, but upside should be limited by 0.8054 support turned resistance to bring another fall. Below 0.7871 will extend the larger down trend to 61.8% projection of 0.9200 to 0.8038 from 0.8475 at 0.7757. Firm break there will pave the way to 100% projection at 0.7313 next.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8475 resistance holds.

In the long term picture, price action from 0.7065 (2011 low) are seen as a corrective pattern to the multi-decade down trend from 1.8305 (2000 high). It's uncertain if the fall from 1.0342 is the second leg of the pattern, or resumption of the down trend. But in either case, outlook will stay bearish as long as 0.9200 resistance holds. Retest of 0.7065 should be seen next.

AUD/USD edged higher again but the rally stalled after hitting 0.6589. Initial bias stays neutral this week first and more consolidations could be seen. Further rise is expected as long as 0.6372 support holds. Firm break of 0.6589 will resume the rise from 0.5913 and target 0.6713 fibonacci level.

In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. While stronger rally cannot be ruled out, outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Nevertheless, considering bullish convergence condition in W MACD, even in case of another fall through 0.5913, downside should be contained above 0.5506 (2020 low).

In the long term picture, fall from 0.8006 is seen as the second leg of the corrective pattern from 0.5506 long term bottom (2020 low). Hence, in case of deeper decline, strong support should emerge above 0.5506 to contain downside to bring reversal. On the upside, firm break of 0.6941 will argue that the third leg has already started back to 0.8006.

USD/CAD gyrated lower last week but lost momentum ahead of 1.3538 support. Initial bias is turned neutral this week first. On the downside, decisive break of 1.3538 will resume whole fall from 1.4791. Nevertheless, break of 1.3666 will turn bias to the upside, and extend the corrective pattern from 1.3538 with another rising leg to 1.3797 first.

In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4014 resistance holds. Next target is 61.8% retracement of 1.2005 (2021 low) to 1.4791 at 1.3069.

In the long term picture, as long as 55 M EMA (now at 1.3494) holds, up trend from 0.9056 (2007 low) should still resume through 1.4791 at a later stage. However, sustained trading below 55 M EMA will argue that the up trend has already completed, with rise from 1.2005 to 1.4791 as the fifth wave. 1.4791 would then be seen as a long term top and deeper medium term down trend should then follow.

GBP/JPY retreated last week as rise from 184.35 turned into consolidations. Initial bias remains neutral this week first and further rally is expected as long as 193.99 support holds. Break of 198.78 will target 199.79 resistance. Break there will target 100% projection of 180.00 to 199.79 from 184.35 at 204.14.

In the bigger picture, price actions from 208.09 (2024 high) are seen as a correction to rally from 123.94 (2020 low). The pattern might still extend with another falling leg. But in that case, strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. Meanwhile, decisive break of 208.09 will confirm long term up trend resumption.

In the long term picture, there is no sign that the long term up trend from 122.75 (2016 low) has concluded. But firm break of 208.09 is needed to confirm resumption. Otherwise, more medium term range trading could still be seen.

EUR/JPY's rise from 154.77 extended higher last week and met 100% projection of 154.77 to 164.16 from 161.06 at 170.45 already. Initial bias stays on the upside this week. Sustained trading above 170.45 will target 138.2% projection at 174.03. On the downside, however, break of 168.44 support will indicate short term topping, and turn bias to the downside for deeper pullback.

In the bigger picture, price actions from 175.41 (2024 high) are seen as correction to up trend from 114.42 (2020 low). The pattern might still extend with another falling leg. But in that case, strong support should be seen from 38.2% retracement of 114.42 to 175.41 at 152.11 to contain downside. Meanwhile, decisive break of 175.41 will confirm long term up trend resumption.

In the long term picture, there is no sign that the long term up trend from 94.11 (2021 low) has concluded. But firm break of 175.41 is needed to confirm resumption. Otherwise, more medium term range trading could still be seen.

EUR/GBP's rise from 0.8354 accelerated higher to 0.8668 last week, before forming a temporary top there and retreated. Initial bias remains neutral this week and more consolidations could be seen. But further rise is expected as long as 0.8506 support holds. Above 0.8668 will target a retest on 0.8737 high. Decisive break there will resume the whole rise from 0.8221 low.

In the bigger picture, the structure from 0.8221 medium term bottom are not impulsive enough to suggest that it's reversing the downside from 0.9267 (2022 high). But even if it's a correction, firm break of 0.8737 will still pave the way to 61.8% retracement of 0.9267 to 0.8221 at 0.8867.

In the long term picture, price action from 0.9499 (2020 high) is seen as part of the long term range pattern from 0.9799 (2008 high). Range trading should continue between 0.8201 and 0.9499, until there is clear signal of imminent breakout.