Daily Market Analysis By zForex

"Asia-Pacific Gains, SoftBank Shifts to Offensive Mode, Powell’s Forecasts Impact Global Markets, and Bitcoin Surges"

Asia-Pacific markets mostly experienced gains, although the Nikkei 225 in Japan fell by 0.19%, undoing its progress from Wednesday. On the other hand, the Topix index increased by 0.53%. The decline in the Nikkei 225 was influenced by U.S. Federal Reserve Chairman Jerome Powell’s statement, in which he predicted additional interest rate hikes this year and highlighted the time required to achieve the 2% inflation target.

SoftBank Chairman and CEO, Masayoshi Son, announced plans to shift from a defensive stance to an offensive one, aiming to seize opportunities in the AI industry. SoftBank’s strategy involves building up cash reserves, and the company has amassed five trillion yen ($35.3 billion) to support its objectives. Son expressed enthusiasm about embracing an offensive approach and emphasized SoftBank’s aspiration to lead the AI revolution.

In contrast, European markets are expected to open negatively on Thursday, following the cautious sentiment sparked by Jerome Powell’s forecast. During his testimony before the House Financial Services Committee, Powell revealed that most participants in the Federal Open Market Committee (FOMC) anticipate raising interest rates to some extent by the year’s end.

Investors in the United Kingdom are closely monitoring the Bank of England’s upcoming monetary policy announcement. It is anticipated that the central bank will increase rates due to persistently high inflation, although there is disagreement among market participants regarding whether the rate hike will be 25 or 50 basis points.

On Thursday morning, Powell is scheduled to present the Semiannual Monetary Policy Report to the Senate Banking Committee. Investors will be attentive to any further remarks he makes regarding inflation and interest rates.

During Wednesday’s trading session, the price of Bitcoin reached a peak of $30,749.45, marking its highest level since April 14. This surpasses the previous occasion when Bitcoin traded as high as $31,102 on April 26.


Federal Reserve Chairman Jerome Powell confirmed that more interest rate increases are likely due to persistently high inflation. However, he acknowledged that bringing inflation down to the target of 2% will take time. Despite signs of a loosening labor market, there is still a shortage of available labor compared to job openings. The Federal Open Market Committee (FOMC) expects two additional interest rate hikes by the end of the year. Inflation, particularly core inflation, remains well above the target despite some moderation. The Fed decided to hold off on rate hikes in a recent meeting to assess the impact of previous tightening measures and suggested a more moderate pace for future increases.

In a different context, the German IFO Institute warned of a sharper-than-expected recession in Germany. European Central Bank (ECB) member Kazimir expressed uncertainty about the ECB’s continuation of rate hikes in September. However, ECB members Schnabel and Nagel maintained a hawkish stance, emphasizing that there is still work to be done. Market expectations support further rate hikes from the ECB, which has been favorable for the euro.

The price action of the EURUSD continued higher at the 1.1000 level as market pricing a more ECB hikes in the next meetings but still not sure about the Fed ones. The next resistance level to watch would be 1.1050.

Resistance 3 Resistance 2 Resistance 1 Support 1 Support 2 Support 3
1.1080 1.1050 1.1000 1.0950 1.0912 1.0860


The expectation is widespread that the Bank of England (BoE) will raise its policy rate by 25 basis points (bps) to reach 4.75%. Given the absence of a post-meeting press conference, market participants will carefully scrutinize the policy statement for any new insights into the future direction of the policy.

Although unlikely, a 50 bps rate hike would represent a significant and unexpected shift towards a more hawkish stance, potentially favoring the GBP/USD exchange rate. In May, two policymakers voted in favor of maintaining the policy rate. If these policymakers adopt a more hawkish stance and the BoE raises the rate with a unanimous vote, the Pound Sterling could display resilience against other currencies. In such a scenario, remarks on inflation developments could influence the currency’s valuation.

Since the last policy meeting, both inflation and wage inflation in the UK have remained uncomfortably high, contradicting the BoE’s earlier forecasts of a sharp decline in inflation starting from April. Recognizing the persistence of elevated inflation and acknowledging the need for further tightening could stimulate demand for the Pound Sterling.

The GBP/USD pair remains in a downtrend, with market participants eagerly awaiting the upcoming Bank of England (BoE) meeting. The level of 1.2700 is currently acting as a support level, while 1.2750 is serving as resistance. Moving forward, the next anticipated resistance level for GBP/USD is around 1.3000. However, there are additional factors to consider.

Resistance 3 Resistance 2 Resistance 1 Support 1 Support 2 Support 3
1.3200 1.3000 1.2800 1.2650 1.2540 1.2460


During discussions on the exchange rate and inflation outlook, Bank of Japan (BoJ) board member Asahi Noguchi emphasized the importance of continuous wage increases and expressed a desire for higher wages next year. Noguchi believes that nominal wages should exceed the 2% inflation target. Concerns were raised about the rapid decline of the yen last year, noting that while it negatively affects households through rising prices, it benefits firms with increased overseas profits and tourism. Noguchi emphasized the significance of domestic demand for Japan’s economic recovery, especially considering the expected slowdown in overseas growth. They clarified that FX should reflect fundamentals and highlighted that monetary policy does not directly target the exchange rate.

In addition, the BoJ’s decision to widen the yield target band is not considered monetary tightening, and Noguchi sees no immediate need for operational changes to the Yield Curve Control (YCC) policy. The BoJ remains committed to maintaining extraordinarily low-interest rates, leading to a prevalent strategy of shorting the yen. The market is focusing on reaching the ¥142.50 level, and a breakthrough could potentially lead to further upward movement. Many investors are seeking yield opportunities and holding the US dollar against the Japanese yen, or other currencies against the yen, provides positive swap earnings.

The USDJPY pair is currently hovering near the resistance level of 142.20, indicating a consolidation of price as market participants await further direction. A breakout above this level would signal a potential move toward the significant level of 145. However, it is worth noting that this level is considered sensitive, as it may prompt intervention from the Bank of Japan (BOJ) in the market. On the other hand, in the event of a correction, the next support level to watch for is at 140.2.

Resistance 3 Resistance 2 Resistance 1 Support 1 Support 2 Support 3
142.80 142.20 141.50 141.00 140.20 139.50


During his bi-annual testimony to the US House Financial Services Committee, Federal Reserve Chairman Jerome Powell maintained a hawkish stance. However, the absence of new comments and conflicting statements from other Fed officials are putting downward pressure on the US Dollar and constraining movements in the XAU/USD (gold) pair.

Despite this, major central banks’ commitment to a “higher for longer” interest rate outlook and doubts surrounding China’s recession concerns, along with tensions between the US and China, are exerting downward pressure on the price of gold.

Looking ahead, monetary policy announcements from the UK and Switzerland are forthcoming, which could contribute to increased market volatility. Additionally, the Bank of Canada (BOC) and Bank of Australia (BOA) are expected to raise interest rates, adding further pressure on the metal.

Gold has recently breached the support level of 1938 on the Daily chart, signaling a potential shift into selling territory. Confirmation of this trend awaits further information on future policies from central banks, particularly as the majority of developed world central banks remain hawkish and are increasing interest rates. If gold continues to decline, a significant and robust support level can be found around the 1870-1860 area, which aligns with the downward parallel of the bullish long-term trend and the 200-day moving average (200MA) on the daily chart.

Resistance 3 Resistance 2 Resistance 1 Support 1 Support 2 Support 3
2000 1980 1960 1933 1870 1800

DAX 40
European shares started the day with losses as concerns over ongoing monetary policy tightening persisted. London stocks were particularly impacted due to uncertainty surrounding the magnitude of the Bank of England’s interest rate increase scheduled for later in the day.

The Bank of England is expected to raise interest rates for the thirteenth consecutive time, following the release of higher-than-anticipated inflation data. However, market predictions for the rate hike were divided, with nearly equal bets placed on a 25-basis-point or 50-basis-point increase.

Rate-sensitive technology shares experienced a 1.2% decline, while auto stocks saw a more significant drop of 1.9%, leading the overall market decline.

Corporate news in Europe was relatively scarce, although a few merger and acquisition headlines garnered attention.

The DAX index managed to find temporary support around 16,000, but the today second meeting of Powell’s testimonial could impact European equities. Additionally, the US equities continue the slow down.

Resi Level 3 Resi Level 2 Resi Level 1 Suppo level 1 Suppo level 2 Suppo level 3
16800 16600 16370 15650 15400 15100

“Asia-Pacific Markets Lower as Inflation Data and Manufacturing Activity Awaited; European Equities Head for Lower Open”

Asia-Pacific markets declined on Friday as investors awaited inflation data from Japan and Singapore, along with flash estimates on Japan’s manufacturing and services activity from the au Jibun Bank. Despite paring some losses, the Nikkei 225 still fell 1.45% to 32,781.54, ending an eight-day run above the 33,000 mark. The Topix, driven primarily by industrials, also dropped 1.38% and closed at 2,264.73.

Japan’s core inflation rate in May eased slightly to 3.2% year-on-year, lower than April’s 3.4% but still above the BOJ’s 2% target. The May core inflation rate was slightly above the 3.1% expected by economists polled by Reuters.

Japan’s business activity expanded at a slower rate in June, according to flash estimates by the au Jibun bank. The composite purchasing managers index fell to 52.3 in June, compared to 54.3 in May.

European equity markets were headed for a lower open on Friday, with benchmark indexes in the region set to end the week sharply lower as aggressive monetary tightening by major central banks threatened the outlook for global economic growth, hurting investor sentiment. Both the Bank of England and the Norges Bank delivered a larger-than-anticipated 50 basis point rate hike on Thursday, while the Swiss National Bank lifted rates by 25 bps. The downbeat sentiment has been reflected globally, with Wall Street heading for a losing week and Asia-Pacific markets largely lower.

In terms of data on Friday, the GfK survey showed that U.K. consumer confidence increased for a fifth consecutive month, surpassing expectations, despite significant cost-of-living pressures.

The dollar received support on Friday due to increased risk aversion, caused by hawkish comments from global central banks, including the Federal Reserve. These comments raised concerns that their aggressive monetary tightening could lead to a deeper economic downturn. Federal Reserve Chair Jerome Powell stated on Thursday that the central bank would proceed with interest rate adjustments at a cautious pace. A majority of the Federal Open Market Committee members anticipate more rate hikes in the future.

While higher interest rates typically strengthen currencies, the risk of triggering an economic downturn has prompted some investors to seek safe-haven assets such as the U.S. dollar. The market’s next significant concern will revolve around the possibility of a recession and the level of aggressiveness policymakers will adopt.

"Asia-Pacific Markets Lower as Inflation Data and Manufacturing Activity Awaited; European Equities Head for Lower Open"

Asia-Pacific markets rose as investors digested a slew of manufacturing activity reports that showed slowing output in the region.

China’s Caixin manufacturing purchasing managers index for June came in at 50.5, slightly higher than expectations of 50.2 by a Reuters poll. China’s official government PMI readings posted a third straight month of contraction.

Mainland China markets demonstrated positive movement, with the Shanghai Composite increasing by 0.72% and the Shenzhen Component rising by 0.18%. Hong Kong’s Hang Seng index also experienced gains, climbing 1.29%, while the Hang Seng Tech index surged over 2%.

The People’s Bank of China again pushed back on a weaker yuan by fixing the currency well above expectations, but these official fixings are having less and less of an impact in the market and offshore dealers are testing to see if Chinese banks actually sell dollars to support the yuan.

Japan’s Nikkei 225 led the region in gains, rising by 1.46%, accompanied by a 1.11% increase in the Topix index. South Korea’s Kospi advanced by 1.39%, while the Kosdaq surged by 1.81%. Private surveys conducted in South Korea and Japan also indicated a slowdown in factory activity for the month.

European stock markets are set to open higher on Monday after closing the first half of the year 8.8% higher.

Eurozone inflation fell more than expected for the month of June, down to 5.5%, but core inflation continued to increase. The rate of price prices remains well above the European Central Bank’s 2% target.

Asia-Pacific markets rose Monday as investors digested a slew of manufacturing activity reports that showed a slump in output from the region.

News that U.S. Treasury Secretary Janet Yellen will visit China from July 6-9 was taken as another sign the two powers were trying to defrost their relationship, though expectations are far from high.

The text discusses factors influencing the EUR/USD pair in the market. Rising bets for a 25-basis points interest rate hike by the European Central Bank (ECB) in July provide support for the pair. However, the US Dollar (USD) is gaining strength due to the Federal Reserve’s (Fed) hawkish stance, which is holding back bullish investors. The Euro Zone Harmonized Index of Consumer Prices (HICP) decelerated in June, but the Core HICP increased, reaffirming expectations for more rate hikes by the ECB. The Fed’s indication of potential borrowing cost increases and the likelihood of a 25-basis points lift-off in July also impact the market. The US PCE Price Index slowed down, but it remains above the Fed’s target, supporting the possibility of further policy tightening. Elevated US Treasury bond yields support the USD and limit the EUR/USD pair.
In the short term, there are indications that the EUR/USD pair may be forming a descending triangle pattern, implying the likelihood of continued downward movement. At the same time, the DXY (US Dollar Index) is also displaying a third leg higher, potentially signaling a breakout above the critical resistance level at 103.40.

Resistance 3 Resistance 2 Resistance 1 Support 1 Support 2 Support 3
1.1080 1.1050 1.1000 1.0950 1.0912 1.0860

Consumer confidence in the UK improved in June, reaching its highest level since January 2022. The British economy has managed to avoid a predicted recession, as indicated by the GfK Consumer Confidence data. However, concerns about a potential recession and the Bank of England’s actions continue to weigh on the GBP/USD pair. The BoE surprised the market by raising interest rates by 50 basis points, leading to a temporary spike in the pound but later a decline. The Pound Sterling faces downward pressure despite the rate hike due to expectations of an earlier end to the tightening cycle. In the US, the Federal Reserve Chairman reiterated previous remarks, while the US Dollar had a strong week but was impacted by softer-than-expected inflation figures, reducing expectations of future rate hikes.
Currently, the GBP/USD pair is demonstrating a downward trend in the short term, with the support level identified around 1.2600-1.2550. A decisive drop below this level has the potential to indicate the conclusion of the prevailing bullish long-term trend.

Resistance 3 Resistance 2 Resistance 1 Support 1 Support 2 Support 3
1.3200 1.3000 1.2800 1.2650 1.2540 1.2460

The USD/JPY pair is influenced by Japan’s Tankan Manufacturing Survey, which supports the Bank of Japan’s dovish monetary policy stance due to expectations of low inflation. Disappointing final prints of Japan’s Jibun Bank Manufacturing PMI for June also impact the pair. Concerns about Japan’s intervention in the market have eased, but mixed news about China and upcoming data/events create caution among USD/JPY bulls. US Treasury Secretary Janet Yellen’s visit to China yields mixed responses. US inflation figures, including the Personal Consumption Expenditure (PCE) Price Index, show a slight slowdown, challenging the Federal Reserve’s rate hike expectations. These factors influence the behavior of USD/JPY buyers.
The USD/JPY pair has approached the critical resistance level of 145.00 and is currently hovering around it. There are concerns in the market about a potential intervention, which is impacting sentiment, as the Yen is depreciating at a faster pace.

Resistance 3 Resistance 2 Resistance 1 Support 1 Support 2 Support 3
142.80 142.20 141.50 141.00 140.20 139.50

The US Dollar (USD) has rebounded, attracting buyers and impacting the price of gold. Recent US data shows a slowdown in inflation, but it remains above the Federal Reserve’s target. Market expectations indicate a high probability of a rate hike at the upcoming FOMC meeting. Fed Chair Jerome Powell’s remarks support the possibility of further rate increases. Other central banks’ hawkish outlooks and upcoming economic data also influence market sentiment. The focus will be on the release of the US ISM Manufacturing PMI and the FOMC meeting minutes this week.
The correction in the price of gold on Friday was a temporary movement, as the market continues to see selling pressure today. The support level around 1912 is being tested, and there is an expectation that it will be broken. The next target on the daily chart is anticipated to be the 1870-1860 area, which is considered a significant reference point.

Resistance 3 Resistance 2 Resistance 1 Support 1 Support 2 Support 3
2000 1980 1960 1933 1870 1800

European shares were slightly up on the first trading session of July, after booking a third consecutive quarter of gains, as investors braced for a week full filled with important releases, including worldwide manufacturing and services PMI data and the US jobs report.

Meanwhile, Tesla shares listed in Frankfurt rose 5% in early trading after the company said on Sunday that it delivered a record number of vehicles in the second quarter.

Last week, data showed that the Eurozone inflation fell more than expected in June but remained well above the European Central Bank’s 2% target.

The DAX, along with other US and Asian indices, concluded the second quarter on a positive note. However, the underlying fundamentals are not supportive of a further continuation of this bullish trend. There is a divergence between the macro economy and the market, which suggests that a correction may occur in the coming weeks. The current resistance level of 16400 could potentially serve as the final barrier for the price to reach.

Resi Level 3 Resi Level 2 Resi Level 1 Suppo level 1 Suppo level 2 Suppo level 3
16800 16600 16370 15650 15400 15100

“Asia-Pacific Mixed as Australia Holds Rates, Europe Cautious, and US Fed Eyes Restrictions”

The Asia-Pacific markets experienced mixed performance as investors evaluated the Reserve Bank of Australia’s decision to maintain interest rates at 4.10%. The central bank, in its June meeting minutes, acknowledged an upward shift in inflation risks. The Australia Bureau of Statistics’ monthly inflation indicator indicated a slight slowdown in the price increase, with May’s rate at 5.6%, primarily driven by housing prices, food, and non-alcoholic beverages. The Reserve Bank of Australia aims to keep inflation within a range of 2% to 3%.

In Australia, the S&P/ASX 200 index rebounded from earlier losses and closed its session at 7,279, representing a 0.45% increase. Meanwhile, the Australian dollar weakened by 0.3% against the U.S. dollar, reaching 0.665.

In Japan, the Nikkei 225 index retraced from its recent 33-year high established on Monday, falling by 0.98% to 33,422.53. The Topix index incurred a more modest decline of 0.62% and settled at 2,306.37. Masato Kanda, Japan’s top financial diplomat, emphasized the authorities’ ongoing close communication with U.S. Treasury Secretary Janet Yellen and other international officials, with a particular focus on currency-related matters.

In Europe, the stock markets traded cautiously on Tuesday, exhibiting minimal fluctuations due to thin trading. Investors were eagerly anticipating forthcoming economic data, such as the U.S. jobs report scheduled for release on Friday, as well as the commencement of the second-quarter earnings season. Major European indices, including the FTSE 100, DAX, and CAC 40, exhibited choppy movements and traded close to the flatline.

On Tuesday morning, German trade figures showed a 0.1% monthly decrease in exports and a 1.7% rise in imports, resulting in a foreign trade balance of 14.4 billion euros ($15.7 billion). Disappointing manufacturing activity data for the eurozone in June revealed contraction in all four of the region’s largest economies, mainly due to the European Central Bank’s ongoing policy tightening measures.

The U.S. Federal Reserve is set to release the minutes of its previous meeting on Wednesday, following Chairman Jerome Powell’s indication that further restrictions are on the horizon. According to CME’s FedWatch tool, market expectations currently imply an 89.9% likelihood of a 25-basis-point interest rate hike in July.

“Asia-Pacific Markets Decline as Investors Digest Private Surveys on Services Activity”

Asia-Pacific markets experienced a significant decline as investors responded to newly released private surveys on services activity in the region. The Caixin services purchasing managers index for China dropped to 53.9 in June, indicating a slower rate of expansion compared to May’s 57.1. Similarly, Japan’s final au Jibun Bank Services purchasing managers’ index (PMI) decreased from a record high of 55.9 in May to 54 in June, though both remained comfortably above the 50-mark, which separates contraction from growth.

Despite the decline, services activity in both Japan and China remained in the expansion territory for the month, albeit with a softer pace of growth. The Nikkei 225 in Japan fell 0.25% to close at 33,338.7, and the Topix also experienced a slight decline to 2,306.03. South Korea’s Kospi index lost 0.53%, while the Kosdaq managed a modest 0.16% increase.

Greater China markets also faced losses, with the Shanghai Composite down 0.45% and the Shenzhen Component decreasing by 0.7%. Hong Kong’s Hang Seng index dropped 1.41%, and the Hang Seng Tech index saw a decline of 1.6%.

Looking at the European markets, they were expected to open lower on Wednesday. Investors were cautious due to the signs of China’s economic rebound slowing down, coupled with global economic uncertainties and the possibility of further monetary tightening. Additionally, investors were closely monitoring the upcoming Federal Reserve policy meeting minutes and the US monthly jobs report, as they could influence the outlook for US interest rates.

The European and UK calendar Today is dominated by final services and composite PMIs for June, also expected to confirm a slowing in what has been a consumption-led economic recovery.

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“Asia-Pacific Markets React to Divided Fed and Anticipate Economic Data and Secretary Yellen’s Visit”

The Asia-Pacific markets experienced significant declines following the release of minutes from the U.S. Federal Reserve, which revealed a divided stance on the decision to pause rate hikes in June. The central bank also indicated that future rate hikes would occur at a slower pace. The central bank also signaled a slower pace for future rate increases. The temporary pause in the Fed’s tightening cycle aims to evaluate the impacts of these forceful moves, the most significant since the early 1980s.

Among the regional markets, Hong Kong’s Hang Seng index led the losses, plummeting by over 3%. In mainland China, the Shanghai Composite was down by 0.65%, while the Shenzhen Component experienced a loss of 0.7%. Japan’s Nikkei 225 fell by 1.7% to reach 32,773.02, and the Topix dropped by 1.3% to 2,277.08.

Goldman Sachs Group Inc. reports that Chinese investors have low expectations for significant stimulus or major economic reforms to be revealed during an upcoming key meeting later this month.

Australia’s trade surplus for June amounted to 11.79 billion Australian dollars, surpassing the 11.15 billion recorded in April.

U.S. Treasury Secretary Janet Yellen is commencing her visit to Beijing this week, during which she is expected to meet with senior Chinese officials. This follows China’s unexpected cancellation of the visit by the EU High Representative for Foreign Affairs Josep Borrell on Wednesday.

Traders are also eagerly awaiting U.S. jobs data scheduled for release over the next two days, as it will provide further insight into the future direction of interest rates.

The upcoming series of U.S. employment reports on Thursday and Friday will be crucial. The JOLTS report, which examines job openings, is projected to indicate a decrease in available positions, while a separate measure of jobless claims is expected to show a slight increase, suggesting a slowdown in the labor market.

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