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• Geopolitics, Kevin Warsh and inflation data are likely to cause sharp fluctuations in the USD index.
• Gold is under pressure from real Treasury yields.

The US dollar began the week on an upward trend against the backdrop of escalating tensions in the Middle East. Donald Trump declared that the ceasefire is over, whilst Tehran denied the White House’s claims that it was seeking opportunities for negotiations. Confrontation is evident, and with it, the direct correlation between oil prices and the dollar is re-emerging.

Markets are factoring geopolitics into their expectations of potential Fed rate adjustments. Consequently, the probability of two rate rises in 2026 has risen from 36% to 50% over the past week.

However, investors’ attention is focused not only on geopolitics, but also on the release of US inflation figures for June and Kevin Warsh’s testimony before the US Congress. Warsh has twice caused turmoil in the financial markets. First, at his first FOMC meeting, he stated that the Fed intended to do everything in its power to bring consumer prices back to target, which caused the dollar to rise. Then, in Sintra, Portugal, the new Fed Chair’s comments on progress in the fight against inflation, by contrast, weakened the greenback.

Consumer prices are expected to fall by 0.1% month-on-month in June, marking the first decline since the pandemic and suggesting the indicator peaked in May. However, FOMC hawks may seize upon the acceleration in core inflation from 0.2% to 0.3% month-on-month. The market’s reaction will depend on the actual figures.

The escalation of the conflict in the Middle East has caused gold to retreat towards $4,000 per ounce. The precious metal is sensitive to movements in real Treasury bond yields, which for 10-year bonds have reached their highest level in over a year. This, combined with the strengthening of the US dollar and the increasing likelihood of aggressive monetary tightening by the Fed, is creating headwinds for gold.

The FxPro Analyst Team

Intraday bias in EUR/USD remains neutral and more consolidations would be seen above 1.1323. With 1.1499 support turned resistance intact, further decline is expected. On the downside, break of 1.1323 will resume the fall from 1.2081 to 100% projection of 1.2081 to 1.1408 from 1.1848 at 1.1175. However, decisive break of 1.1499 will turn bias back to the upside for 1.1621 resistance.

In the bigger picture, focus is back on 38.2% retracement of 1.0176 to 1.2081 at 1.1353. Decisive break there will revive the case of medium term bearish trend reversal after rejection by 1.2 key cluster resistance level. Further fall should be seen to 61.8% retracement at 1.0904. Nevertheless, strong rebound from 1.1353, followed by break of 1.1621 resistance, will retain medium term bullishness.

Range trading continues in USD/JPY and intraday bias stays neutral. In case of deeper pullback, downside should be contained by 38.2% retracement of 155.01 to 162.83 at 159.84. On the upside, firm break of 162.83 will resume larger up trend.

In the bigger picture, rise from 139.87 (2025 low) is seen as another rising leg of the long term up trend. Next target is 61.8% projection of 139.87 to 159.44 from 152.25 at 164.34. For now, outlook will remain bullish as long as 155.01 support holds, even in case of deep pullback.

Intraday bias in GBP/USD is turned neutral with current retreat. On the upside, firm break of 1.3459 will argue that whole correction from 1.3867 has completed, and target 1.3657 resistance for confirmation. On the downside, break of 1.3451 will turn bias back to the downside for 1.3139 support instead.

In the bigger picture, price actions from 1.3867 are a corrective pattern within the broader up trend from 1.0351 (2022 low). With 1.3008 support intact, medium term bullishness is maintained and break of 1.3867 is in favor for a later stage, towards 1.4248 key resistance (2021 high). However, firm break of 1.3008 will at least bring deeper fall to 38.2% retracement of 1.0351 to 1.3867 at 1.2524, with increased risk of bearish reversal.

Range trading continues in USD/CHF and intraday bias stays neutral. With 0.8009 support intact, further rise is expected. On the upside, above 0.8139 will extend the rally from 0.7760 to 100% projection 0.7603 to 0.8041 from 0.7600 at 0.8198 next. However, sustained break of 0.8012 will bring deeper fall to 0.7909 support instead.

In the bigger picture, while a medium term bottom was formed at 0.7603, it's still early to call for bullish trend reversal. As long as 38.2% retracement of 0.9200 (2025 high) to 0.7603 at 0.8213 holds, the larger down trend could still continue through 0.7603 at a later stage. However, firm break of 0.7603 will argue that the trend has reversed and turn focus to 0.8332 support turned resistance (2023 low) for confirmation.

Intraday bias in AUD/USD remains neutral and more consolidations would be seen above 0.6864. Further fall is expected as long as 0.6977 support turned resistance holds. Below 0.6864 will target 0.6832 support. Firm break there will target 0.6756 fibonacci level. However, sustained break of 0.6977 will bring stronger rebound to 0.7087 resistance instead.

In the bigger picture, considering bearish divergence condition in D MACD, a medium term top could be formed at 0.7277 after failing to sustain above 61.8% retracement of 0.8006 (2021 high) to 0.5913 (2024 low) at 0.7206. Deeper fall could be seen to 38.2% retracement of 0.5913 to 0.7277 at 0.6756 as a correction. But strong support should be seen there to bring rebound. Consolidations would continue below 0.7277 for a while.

Intraday bias in USD/CAD remains neutral and more consolidations could be seen below 1.4247. Deeper pullback cannot be ruled out. But downside should be contained above 1.3965 resistance turned support. Above 1.4247 will resume the rally from 1.3480 to 61.8% retracement of 1.4791 to 1.3480 at 1.4290. Firm break there will pave the way back to 1.4791 high.

In the bigger picture, current development suggests that fall from 1.4791 has completed as a three wave correction to 1.3480. It's still early to judge if rise from there a corrective bounce, or resumption of the larger up trend from 1.2005 (2021 low). But in either case, retest of 1.4791 high should be seen next.

Intraday bias in GBP/JPY remains neutral and more consolidations could be seen below 217.99 temporary top. Further rally is expected as long as 214.69 support holds. On the upside, above 217.99 will target 220.90 fibonacci projection level next.

In the bigger picture, the long term up trend is in progress. Next target is 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90. For now, outlook will remain bullish as long as 55 W EMA (now at 208.22) holds, in case of pullback.

EUR/JPY is staying in sideway trading and intraday bias remains neutral. On the upside, firm break of 186.30 will resume the rebound from 182.10 towards 187.93 high. On the downside, break of 183.14 will bring deeper fall to retest 182.10.

In the bigger picture, there is no sign of reversal yet. Uptrend from 114.42 (2020 low) is still expected to resume at a later stage to 78.6% projection of 124.37 (2022 low) to 175.41 (2025 high) from 154.77 at 194.88. However, sustained break of 55 W EMA (now at 179.93) will argue that it's already in a medium term down trend to 175.41 resistance turned support and below.

Intraday bias in EUR/GBP is turned neutral with current recovery, and some consolidations could be seen above 0.8507. Upside should be limited below 0.8610 support turned resistance to bring another fall. Below 0.8507 will resume larger down trend to 61.8% retracement of 0.8221 to 0.8863 at 0.8466.

In the bigger picture, current development suggests that rise from 0.8221 (2024 low) has completed at 0.8863, just ahead of 38.2% retracement of 0.8221 (2024 low) to 0.8863 (2025 high) at 0.8618. Deeper fall would be seen back to 0.8201 (2022 low). For now, outlook will be neutral at best as long as 0.8863 hold.