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Daily Pivots: (S1) 1.3249; (P) 1.3290; (R1) 1.3326; More...

No change in GBP/USD's outlook and intraday bias stays neutral for the moment. On the upside, sustained break of 1.3363 support turned resistance will indicate that the fall has completed as a three-wave correction. Further rally should then be seen back to 1.3587 resistance next. Nevertheless, sustained trading below 38.2% retracement of 1.2099 to 1.3787 at 1.3142 will target 61.8% retracement at 1.2744.

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 1.3049) holds, even in case of deep pullback.

Daily Pivots: (S1) 0.8043; (P) 0.8070; (R1) 0.8111; More….

Intraday bias in USD/CHF stays neutral for the moment. On the downside, below 0.8020 will affirm that case that corrective bounce from 0.7871 has completed at 0.8170. Bias will be back on the downside for 07871/7910 support zone. On the upside, though, break of 0.8170 will resume the rise from 0.7871 to 38.2% retracement of 0.9200 to 0.7871 at 0.8379 instead.

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.

Daily Pivots: (S1) 146.60; (P) 147.35; (R1) 147.82; More...

USD/JPY recovered after brief dip to 146.61 and outlook is unchanged. Intraday bias stays neutral at this point. As long as 145.84 support holds, larger rebound from 139.87 is still in favor to continue. On the upside, above 148.07 minor resistance will bring stronger rebound back to retest 150.90. However, on the downside, firm break of 145.84 support will argue that whole rise from 139.87 might have already completed. Deeper fall should then be seen to 142.66 support for confirmation.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.

• Gold has been the biggest gainer year-to-date.
• Dovish Fed bets after soft NFP benefited the metal.
• Higher tariffs could increase safe-haven demand.
• Central bank purchases are also a driving variable.

Rise and shine

Gold has been the biggest performer among the major assets under our radar since the beginning of the year, outperforming even the crypto king Bitcoin. Although it has been range-bound since it hit a record high of $3,500 in April, investors still have the opportunity to lock profits of around 30% this year.

On Friday, the precious metal rebounded strongly from around the $3,280 zone after the US nonfarm payrolls for July disappointed, increasing speculation that the Fed may need to cut interest rates more aggressively than previously thought. As gold’s correlation with the US dollar and Treasury yields has strengthened in the last three months or so, the slide in the greenback and borrowing cost allowed gold to spike higher as the opportunity cost for holding the precious metal declined.

Opportunity cost falls amid dovish Fed bets

In terms of Fed expectations, according to Fed funds futures, a September quarter-point rate reduction is now nearly fully priced in, despite Fed Chair Powell reiterating his wait-and-see approach at the latest FOMC decision, at a time when investors were penciling only a 60% chance of a September rate reduction. As for the total number of basis points expected to be cut by year end, it rose from 45 to 60, suggesting that the market has once again turned a bit more dovish than the Fed itself.

This means that should US data continue to disappoint, dovish bets are likely to increase, allowing gold to extend its recovery and perhaps resume its prevailing uptrend.

Are gold traders “tarrified”?

But what could be the catalyst for a deteriorating US outlook? The answer is: Tariffs. On August 1, which was the deadline for the grace period regarding reciprocal tariffs, Trump announced steep duties on imports from dozens of countries, with the rates ranging from 10% to 41%. The levies are set to kick in on August 7, with a 35% tariff on Canadian goods already in effect.

Yes, ahead of the August 1 tariff deadline, the dollar was acting as a safe haven, gaining ground when Trump was hardening his stance, and pulling back on easing tensions. However, although the US secured deals with some of its major trading allies, like the UK, Japan and the EU, the massive duties announced on Friday heighten not only the upside risks to US inflation but also add to concerns about the performance of the global economy. Thus, should upcoming US economic releases revive recession fears, the US dollar could extend its tumble on speculation that the Fed may prioritize safeguarding economic activity even if that means allowing inflation to run hot for a while longer. Gold could benefit from that, as well as from increasing safe-haven demand amid heightened uncertainty.

Central bank demand increases in June

Besides the Fed and Trump’s tariffs, another variable that needs to be examined are central bank purchases, especially from the People's Bank of China (PBoC). The latest data available is for the month of June and although outdated, it is revealed that demand saw a modest increase for the third consecutive month. Back then, the deadline for finding common ground with the US was July 9 and perhaps central banks rushed into gold in order to further loosen their dependency on the US dollar should things fall out of orbit.

From here onwards, the spotlight falls on the PBoC as the world’s two largest economies failed to agree on extending a 90-day pause on tariffs during the latest round of talks in Stockholm, Sweden, last week. The deadline for a US-China trade deal is August 12, and should no common ground be found until then, tariffs could surge above 100% again. A new full-blown trade war between those two economic powerhouses could prompt Chinese officials to resume the selling of US Treasuries in favor of buying gold.
Gold rebounds, but stays range-bound for now

From a technical standpoint, gold rebounded from near the $3,280 zone on Friday, which has been acting as the lower boundary of the sideways range that’s been containing most of the price action since May 20. The upper bound is around $3,440 and since the price is still within the range, the near-to-medium-term outlook remains neutral.

For the prevailing uptrend to resume, a break above $3,440 may be needed. Such a move may initially target the record high of $3,500, hit on April 22, the break of which could aim for the next round figure of $3,600. On the downside, a break below the lower bound of the range at $3,280 could initially aim for the $3,245 barrier, marked by the lows of May 29 and June 30. A move lower could intensify speculation about a bearish trend reversal.

• EUR/USD stalls NFP rally near 1.1600.
• Technical signals are mixed.
• Break above 1.1760 could revive bullish appetite.

EUR/USD failed to attract sufficient buying interest to extend Friday’s post-NFP rally above its 20-day simple moving average (SMA) and the psychological 1.1600 level on Monday.

Price momentum remains weak for a second consecutive day, raising concerns that the recent rebound from the eight-week low of 1.1390 may be just a temporary correction within the developing downtrend that began in July.

However, technical signals are currently mixed. A bullish hammer candlestick pattern formed last week, and an upward-sloping stochastic oscillator are counterbalancing the bearish signals from the falling RSI and MACD.

The 50-day SMA, currently at 1.1554, is now in focus. A move below this level could undermine bullish hopes and push the price back toward the 1.1400 support zone. A deeper decline could lead the bears into the 1.1200–1.1270 region – a key area that includes the 38.2% Fibonacci retracement of the 2025 uptrend – and possibly bring the 200-day SMA near 1.1150 into play.

On the upside, if the pair manages to climb above its 20-day SMA, immediate resistance could be found between 1.1690 and 1.1760. A decisive close above this area could revive bullish sentiment, potentially opening the door for a new higher high around the 1.1900–1.1980 trendline zone.

Summing up, EUR/USD is currently in a neutral phase. Despite Friday’s sharp rebound, the bulls will need to reclaim the 20-day SMA at 1.1600 to regain control. Failure to do so, especially a drop below 1.1550, could invite renewed selling pressure.

The Japanese yen is in negative territory on Tuesday. In the European session, USD/JPY is trading at 147.74, up 0.45% on the day.

BoJ minutes: BoJ will hike as inflation, growth increase

The Bank of Japan minutes from the June policy meeting were somewhat dovish, but the yen has still headed lower today.

The minutes indicated that most BoJ members favored keeping interest rates unchanged, since there were downside risks to Japan's economy due to US tariffs. Still, Governor Ueda and most members support further rate hikes down the road, provided that inflation and growth continue to increase in line with the BoJ projections.

This stance was reiterated at last week's meeting, with the BoJ signalling that it planned further rate hikes if inflation and growth increased. At the meeting, the BoJ revised up its inflation forecasts for this fiscal year to 2.7%, from 2.2% in the April forecast. The central bank also raised its growth forecast by 0.1% from the April forecast .

The June meeting took place prior to the US-Japan trade agreement, which the BoJ said has reduced trade uncertainty. The trade deal should pave the way for another rate hike before the end of the year. The BoJ reacted positively to the agreement, which applies 15% tariffs on most Japanese imports to the US.

US ISM Services PMI expected to improve

The ISM services PMI is expected to accelerate to 51.5 in July, compared to 50.8 in June. The services sector is back in expansion territory after a rare contraction (49.9) in May. Services purchase managers pointed to the uncertainty over tariff impacts as their number one concern.

On Friday, ISM Manufacturing PMI slipped to 48.0 for July, down from 49.5 in June. This marked the fifth consecutive contraction for manufacturing.

USD/JPY Technical

• USD/JPY has pushed above resistance at 1.4720 and is testing resistance at 147.42. Above, there is resistance at 147.81
• 1.4681 and 1.4659 are the next support levels

USDJPY 4-Hour Chart, Aug. 4, 2025

Key takeaways

• Hong Kong 33 CFD Index rose 6% after a bullish breakout but retraced by 5% due to a stronger US dollar, testing key support at 24,290.
• July's Caixin Services PMI surged to 56.6, the highest since May 2024, signaling renewed expansion driven by new business and foreign demand.
• Net capital inflows from mainland China into Hong Kong equities have turned positive, supporting a medium-term bullish outlook.
• Key technical indicators suggest renewed upside momentum for the Hong Kong 33 CFD Index, with 24,290 acting as a pivotal support for a potential move toward 26,200 and 27,500.

Since our last publication, the Hong Kong 33 CFD Index (a proxy for the Hang Seng Index futures) has staged the expected bullish move and rallied by 6%. It surpassed the first medium-term resistance of 25,080 and printed an intraday high of 25,738 on 24 July 2025.

Thereafter, the Hong Kong 33 CFD Index recorded a decline of -5% that almost wiped out the prior gains to print a recent intraday low of 24,246 on 1 August on the backdrop of a firmer US dollar.

Right now, let's examine the latest relevant macro and momentum factors to determine whether the two-week corrective decline may extend further to the downside or a new bullish impulsive up move has been reignited.

Services activities in China have improved

Fig. 1: China Caixin Services PMI as of Jul 2025 (Source: Trading Economics)

Manufacturing activities continued to show a lacklustre performance since April, where the official NBS Manufacturing PMI for July contracted for the fourth consecutive month with a reading of 49.3, its steepest decline since January.

In contrast, the services sector has started to show signs of picking up after a slew of expansionary stimulus measures to improve consumer sentiment and negate the risk of a deflationary spiral.

China Caixin Services PMI, a leading indicator to gauge services activities that includes small and medium enterprises, rose to 56.6 in July, from June’s nine-month low of 50.6 and exceeding market expectations of 50.4. The reading signalled the fastest expansion in the services sector since May 2024, driven by rising inflows of new business and a renewed increase in foreign demand (see Fig. 1).

The latest pick-up in the services activities in China is likely to act as a positive cushion to boost consumer sentiment to negate the negative feedback loop from the trade tension between the US and China, where a trade truce is likely to be extended for 90 days from the 12 August deadline, pending approval from US President Trump.

Southbound fund inflows from China have ticked up

Fig. 2: Southbound net inflows with 20-day moving average trend as of 1 Aug 2025 (Source: MacroMicro)

A pickup in Chinese consumer sentiment may see an increase in mainland China investment in equities bound for Hong Kong via the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect Programmes. The total number of the two programmes is known as southbound fund inflows.

Southbound fund flows have shown signs of recovery, with net inflows improving steadily after a decline from 22 April to 23 May. The 20-day moving average of southbound inflows rose to 6.959 billion yuan as of 1 August, up from a negative 1.48 billion yuan on 23 May (see Fig. 2).

This uptrend in capital inflows from mainland China is likely to support a medium-term bullish outlook for the Hong Kong Hang Seng Index.

Start of a new potential impulsive bullish leg for the Hang Seng index

Fig. 3: Hong Kong 33 CFD Index major & medium-term trends as of 5 Aug 2025 (Source: TradingView)

The recent 6% corrective decline seen in the Hong Kong 33 CFD Index (a proxy of the Hang Seng Index futures) has managed to stall at a key support/inflection level of 24,290, which is defined by the 50-day moving average, lower boundary of the medium-term ascending channel from the 2 June 2025 low, and Fibonacci retracement.

In addition, the daily RSI momentum indicator has managed to stage a bounce right above a parallel horizontal support at the 41 level and inched back up above 50, which suggests the revival of medium-term bullish momentum (see Fig. 3).

Bullish bias; 24,290 as the key medium-term pivotal support for the next medium-term resistance to come in at 26,200 before the major resistance of 27,500 (Fibonacci extension cluster and long-term secular descending trendline from January 20218 swing high).

On the other hand, a break below 24,290 invalidates the bullish scenario for an extension of the corrective decline sequence to expose the next medium-term support at 22,670.

The EUR/USD pair edged lower on Tuesday, dipping to 1.1556 amid subdued trading activity. Market participants are cautiously assessing the latest trade signals and recalibrating their expectations for monetary policy.

Trade tensions resurfaced as US President Donald Trump threatened India with steep tariff hikes over its continued purchases of Russian oil. Meanwhile, the European Union postponed retaliatory tariffs against the US by six months, with both sides pledging further negotiations.

The US dollar faced downward pressure last week following the release of a disappointing US employment report. July’s figures fell short of forecasts, reinforcing market bets on a Fed rate cut in September. Investors are now pricing in over 60 basis points’ worth of easing by year-end.

Political uncertainty also weighed on sentiment. The resignation of a Federal Reserve Board member and the dismissal of a key statistical agency head under Trump’s administration have fuelled concerns over stability in the US economic leadership.

Market focus now shifts to June’s foreign trade data and the latest ISM PMI report, which could offer fresh insights into the health of the US economy.

Technical Analysis: EUR/USD

H4 Chart:

The EUR/USD corrected to 1.1590 before entering consolidation below this level. A breakout towards 1.1615 remains possible, but the primary expectation is a resumption of the downtrend, targeting 1.1348 as the next key support. This bearish view is supported by the MACD indicator, with its signal line firmly below zero and pointing downward.

H1 Chart:

The pair has formed a consolidation range around 1.1555, with the minimum correction target already met. A downside breakout is anticipated, initiating the fifth wave of decline towards 1.1348. The Stochastic oscillator reinforces this outlook, with its signal line below 50 and trending sharply downward towards 20.

Conclusion

The EUR/USD remains vulnerable to further losses, driven by a combination of weakening technical structure and external macroeconomic pressures. Traders should monitor US economic data for signals on near-term direction, as the broader downtrend remains intact.

In the Eurozone, PPI rose 0.8% mom and 0.6% yoy in June, slightly missing monthly expectations but beating on the annual rate. Energy prices surged 3.2% on the month, offsetting modest gains elsewhere. Intermediate goods prices slipped -0.2%, reflecting some ongoing input cost disinflation in the manufacturing sector.

More encouragingly, Eurozone PMI Services was finalized at 51.0 in July, up from June’s 50.5. Composite PMI rose to 50.9 from 50.6. Germany and Italy showed gains, while Spain led the bloc at a five-month high of 54.7. France, however, slipped to a three-month low of 48.6. HCOB noted that services inflation is easing, with input costs growing at the slowest pace in nine months. That, alongside decelerating wage growth, strengthens the case for one more ECB rate cut in the second half of the year.

In the UK, the tone was more cautious. July’s PMI Services was finalized at 51.8, down from June’s 52.8, while Composite PMI eased to 51.5 from 52.0. Despite softer prints, S&P Global noted that business confidence improved, supported by receding US tariff concerns and hopes for domestic rate cuts later this year.

The release of disappointing US labour market data on Friday unsettled both stock market participants and the President of the United States:

→ Donald Trump promptly dismissed Erica McEntarfer, Commissioner of the Bureau of Labor Statistics, accusing her of falsifying employment data.

→ Stock indices accelerated their decline, with the Nasdaq 100 Index (US Tech 100 mini on FXOpen) falling below its 16 June low.

However, US stock indices staged a strong recovery on Monday. According to Reuters, yesterday marked the largest daily percentage gain since 27 May.

Why Did Stock Indices Rise?

Possible reasons include:

→ Buyers were attracted by the falling share prices of companies that, for the most part, had delivered strong quarterly earnings;

→ Market participants are betting on a potential rate cut by the Federal Reserve in September (a move strongly advocated by Trump), which could support both the economy and the stock market.

Technical Analysis of the Nasdaq 100 Chart (US Tech 100 mini on FXOpen)

In our earlier analysis of the Nasdaq 100 Index (US Tech 100 mini on FXOpen), we:

→ Identified a primary ascending channel (marked in blue);

→ Highlighted that the price had risen above the upper boundary of the channel (a sign of excessive optimism);

→ Anticipated a potential correction towards the 23,020 level.

However, the correction turned out to be more substantial than initially expected.

As a result of the price movements on Friday and Monday:

→ The blue channel was widened twofold;

→ The price found support at its new lower boundary and reversed upwards;

→ As of today, the Nasdaq 100 index is trading near the median line.

This can be interpreted as the market aggressively digesting recent corporate earnings reports and the prospects of a rate cut in light of a deteriorating labour market. Demand and supply may reach a new equilibrium, potentially leading to a consolidation phase around the median of the widened channel.

It is also possible that the area marked in orange—where the price previously rallied strongly, indicating a buyer-driven imbalance—may now act as support. Resistance levels might include:

→ Former support at 23,320;

→ 23,440 – the level at which bears broke through the purple channel.

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