All Eye on Powell’s Testimony

• Eyeing Powells testimony, be cautious about the impact on the dollar. 

• RBNZs interest rate is due tomorrow, and a potential hawkish stance from the RBNZ may bolster the Kiwi. 

• Gold slid as the Middle East Ceasefire talk progressed. 

Market Summary

Jerome Powells 2-day testimony at Capitol Hill begins today, and traders will be closely monitoring his statements for insights into the rate cut schedule. With the U.S. presidential election approaching, it is believed that the Fed will maintain its independence and possibly delay any rate cut policy until after the election. The dollar is trading near the 105 mark, though downside pressure persists as the market anticipates U.S. inflation gradually approaching the 2% target rate.

Meanwhile, the Reserve Bank of New Zealand‘s interest rate decision is due tomorrow. With high inflation in the country, it is expected that the central bank will maintain a tight monetary policy, potentially bolstering the Kiwi’s strength. In France, the snap election called by the president has resulted in a deadlock in the lower house, with no party securing a majority, adding to political uncertainty and weakening the euro.

In the commodity market, gold slid in the last session as the dollar strengthened and positive news emerged from the Middle East. Ceasefire talks are underway, which has led to lower oil prices as the supply outlook improves. Additionally, the OPEC monthly report due on Wednesday is expected to impact oil prices further.

Current rate hike bets on 31st July Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (93.3%) VS -25 bps (6.7%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index experienced a technical rebound from its recent low, but the recovery was minimal as risk appetite revived in the market. Meanwhile, traders are holding steady ahead of Powell‘s testimony, which is expected to directly impact the dollar’s strength. If the Feds chief maintains a dovish stance at Capitol Hill, the dollar is anticipated to remain below the $105.15 mark.

The Dollar index experienced a marginal technical rebound in the last session but remained within its bearish trajectory. The RSI remained close to the oversold zone, while the MACD remained in the lower region, suggesting that the index's bearish momentum remained intact. 

Resistance level: 105.15, 105.50

Support level: 104.75, 104.40

XAU/USD, H4

Gold prices have declined to their previous liquidity zone, weighed down by a revived risk appetite in the market. Additionally, China's PBoC has halted gold purchases for the second straight month, dampening demand and pressuring prices. The progressing ceasefire talks in the Middle East have further impacted the safe-haven asset.

Gold prices dropped to their liquidity zone at near $2355 levels; a rebound from such levels suggests that gold remains trading within its uptrend trajectory.  The RSI has declined while the MACD has crossed on the above suggest the bullish momentum is vanishing. 

Resistance level: 2367.85, 2387.10

Support level: 2345.60, 2335.00

GBP/USD，H4

The GBP/USD pair retraced in the last session, primarily due to the strengthening of the dollar, which had dipped to recent lows before recording a technical rebound. The Pound Sterling‘s strength improved after the UK general election, as confidence in the UK economy was restored with the change in power. Meanwhile, the market is closely watching Powell’s testimony, which commences today and may also impact the pair.

The GBP/USD pair recorded a technical retracement at its recent high level but remained trading within its uptrend trajectory. The RSI flowing closely toward the overbought zone while the MACD continues to edge higher, suggesting the pair's bullish momentum remains intact. 

Resistance level: 1.2850, 1.2940

Support level: 1.2760, 1.2660

EUR/USD，H4

The EUR/USD pair is currently consolidating at its recent high level, awaiting a catalyst to determine its direction. The snap legislative vote called by French President Emmanuel Macron last month has resulted in a political deadlock, hindering the euros strength. No single party has won a majority of seats in the lower house, leading to uncertainty about who will be able to form the next government.

EUR/USD traded sideways at the elevated levels, suggesting the pair remain trading within its bullish trajectory. The RSI is flowing closely toward the overbought zone while the MACD has moved upward, suggesting the pair remain trading with bullish momentum. 

Resistance level: 1.0853, 1.0900

Support level: 1.0767, 1.0735

Nasdaq  (US100), H4

The Nasdaq closed at an all-time high in the last session, indicating extremely strong bullish momentum. As Wall Street enters the Q2 earnings report season, strategists have upgraded earnings estimates for major companies. This growing confidence is driving the index higher. 

Nasdaq has gained more than 4% in July and is continuing climbing, suggesting the index is trading with strong bullish momentum. The RSI remains in the overbought zone while the MACD edges higher, suggesting the bullish momentum remains strong. 

Resistance level: 20560.00, 20700.00

Support level: 20330.00, 20150.00

NZD/USD, H4

The New Zealand Dollar was rejected at its resistance level of 0.6145 due to a lack of a catalyst. However, with the Reserve Bank of New Zealand set to announce its interest rate decision tomorrow, the market anticipates a hawkish tone from the central bank as it continues to address persistent inflation. This expectation could boost the Kiwi's strength.

The NZD/USD pair failed to break above its resistance level at 0.6145, suggesting that bullish momentum is lacking. A break below its short-term support level at 0.6105 suggests a bearish signal for the pair. The RSI is easing, while the MACD is about to cross at the above, suggesting that bullish momentum is easing. 

Resistance level: 0.6145, 0.6210

Support level: 0.6080, 0.6015

CL OIL, H4

Oil prices continue to slide from their recent high, finding support at the $82.10 level. Negotiations for a ceasefire in Gaza are underway, potentially improving oil supplies from the region once the conflict ends. Meanwhile, the market is closely monitoring Hurricane Beryl, which may harm oil export facilities in Texas and lead to short-term supply disruptions.

Oil prices continue to slide; a break below the current support level at $82.10 level suggests a bearish signal for oil prices. The RSI dipped to near the oversold zone while the MACD has broken below the zero line and is diverging, suggesting the bearish momentum is gaining. 

Resistance level: 84.75, 86.35

Support level: 82.10, 80.05