Market Update - 26 July 2023

EUR/USD remains sidelined at two-week low, prods six-day downtrend. Downbeat Eurozone, German statistics challenge ECB hawks and favor Euro sellers amid welcome United States data. Concerns about Federal Reserve’s priced-in 0.25% rate hike, inability to fuel interest rates further prod pair bears. Risk catalysts, Treasury bond yields eyed for clear directions ahead of Fed showdown. (FXStreet)

USD/JPY turns lower for the third straight day and is pressured by modest USD weakness. The fundamental backdrop warrants some caution before positioning for additional losses. Traders might also refrain from placing aggressive bets ahead of the FOMC policy decision. (FXStreet)

GBP/USD remains confined in a narrow range near the 1.2900 area heading into the European session. Economists anticipate a rate hike by the Bank of England (BoE) to 5.25% in the next meeting. Investors will watch the Federal Open Market Committee's (FOMC) meeting and the press conference. (FXStreet)

AUD/USD recovers some losses and holds above 0.6765. The key resistance level is located at 0.6800; the strong support level is seen at 0.6700. The Relative Strength Index (RSI) hovers around 50, indicating the non-directional movement of the pair. (FXStreet)

USD/CAD reverses from intraday high on softer US Dollar ahead of Federal Reserve Interest Rate Decision. Oil price prints the first daily loss in five amid mixed sentiment, receding optimism about China stimulus. Cautious markets, light calendar will restrict Loonie pair’s immediate moves ahead of FOMC. Fed Chair Powell’s speech will be crucial as 0.25% rate hike is priced in. (FXStreet)

The index loses further momentum and approaches 101.00. The Fed is anticipated to hike rates by 25 bps later on Wednesday. Markets’ attention remains on Powell’s upcoming comments. The greenback, in terms of the USD Index (DXY), remains offered and trades close to the 101.00 region on Wednesday. (FXStreet)

USD/CHF drifts lower for the second straight day and is pressured by modest USD weakness. The risk-on mood could undermine the safe-haven CHF and help limit any further downside. Traders might also refrain from placing aggressive bets ahead of the crucial FOMC decision. (FXStreet)

GBP/JPY struggles to defend the previous day’s gains amid sluggish session. Treasury bond yields remain sidelined amid mixed concerns about Japan economic forecasts, Bank of Japan. Intact UK growth forecasts, hawkish BoE concerns put a floor under cross-currency pair. Risk catalysts eyed for clear directions amid light calendar. (FXStreet)

EUR/GBP remains sideways below 0.8600 ahead of ECB’s policy decision. The uncertainty about ECB’s guidance for September’s monetary policy is building pressure on the Euro. Investors are interested to know whether UK PM Rishi Sunak would meet his promise of easing inflation to 5% by the year-end. (FXStreet)

EUR/JPY remains sidelined during the first profit-making day in three. Yields benefit from sour sentiment ahead of key central bank announcement, China news. Disappointing Euro data, IMF’s suggestion to BoJ prod pair buyers. Risk catalysts eyed for clear directions ahead of ECB, BoJ monetary policy decisions. (FXStreet)

AUD/NZD takes offers to refresh intraday low after downbeat Australia inflation. Australia’s headline CPI, RBA Trimmed Mean CPI and Monthly CPI all print softer figures in the latest readings. 200-SMA, one-week-old rising support line test sellers despite bearish MACD signals. Bulls need clear break of 1.0945 to retake control. (FXStreet)

NZD/USD attracts dip-buying on Wednesday and draws support from modest USD weakness. Hopes for more stimulus from China also benefit antipodean currencies, including the Kiwi. The fundamental backdrop favours bulls, though traders might wait for the FOMC decision. (FXStreet)

WTI prints the first daily loss in five, reversing from three-month high. Bearish chart formation, impending bear cross on MACD and overbought RSI lures Oil sellers. Downside break of immediate support triggers commodity’s weakness towards mid-July top. 50-EMA adds strength to wedge’s support line, highlights $76.70 as the key level for energy bears. (FXStreet)

Tuesday’s uptick in prices of natural gas was on the back of shrinking open interest, which hints at the idea of a corrective move in the very near term. Looking at the broader picture, prices of natural gas seem to have embarked on a gradual recovery since early April. Against that, the next target now emerges at the weekly high near $2.80 per MMBtu seen on July 20. (FXStreet)

Gold price runs north swiftly as investors seem clear that a small interest-rate hike from the Fed cannot be ruled out. The US Dollar Index is under pressure as Fed’s July rate hike could be the last one in the current tightening spell. US GDP numbers are due Thursday, keeping FX in action. (FXStreet)

Silver edges higher during the Asian session, though the downside remains cushioned. Traders now seem reluctant to place aggressive bets ahead of the key FOMC decision. The mixed technical setup further warrants some caution before placing directional bets. (FXStreet)

Source: FXStreet, DailyFX

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