EUR/USD's rally from the June 24 low is now at risk, and long-positioned investors may be considering an exit as yield differentials and oil's potential impact on Fed policy create downside risks for the pair.

In early July, the U.S.-German 2-year yield spread

—which EUR/USD typically correlates with—began tightening as U.S. inflation data caused yields to soften, a trend that persisted until last week and helped support EUR/USD's gains. However, the pair's rally stalled just short of resistance in the 1.1500 area, and spreads have since started widening again, increasing the dollar's yield advantage.

Compounding this, a recent sharp rally in oil prices has investors leaning toward the possibility of a more hawkish Fed

stance to combat oil-driven inflation pressures. This combination has pushed the spread back below -140 bps and toward -145 bps, becoming a growing weight on EUR/USD.

Technical factors add further pressure. EUR/USD's rally off the June low only briefly broke above the downtrend line from the May 11 high, and the pair has since fallen back below that line as well as its 10- and 21-day moving averages. The pair is now threatening to break the uptrend line drawn from the June 24 low.

Should that uptrend line break, it would suggest the recent rally was merely corrective within a broader downtrend, raising the possibility that the pair's longer-term decline could resume.
deus


eurusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Bank of America Global Research previews this week's July ECB policy meeting.

"We expect the ECB to leave policy rates unchanged this week. With no large surprises in data (inflation a bit weaker but activity data still showing a resilient economy) and energy prices not far from the ECB’s baseline forecasts, there is not enough sense of urgency to move policy rates now. Focus, as usual, will be on communication. But also, as has been the case over the last few meetings, we expect very little new from the ECB, either in the statement or from Lagarde during the press conference. The written communication is likely to stay close to what we had in June, hence keeping a hiking bias given that the June forecasts included more hikes than just the one that month," BofA notes.

"As a reminder, we expect one final hike from the ECB in September. A hold is not unthinkable: with oil prices around USD 70/bbl, the case for the ECB to pause had strengthened considerably (although it was not our base case)," BofA adds.

Morgan Stanley Research maintains a neutral bias on JPY in the near-term.

"We remain neutral on JPY. While a deterioration in global risk sentiment, driven by the sell-off in AI-related stocks,  should weigh on USD/JPY, this is likely to be offset by factors that are negative for JPY, including elevated US terminal  rate expectations and a worsening of Japan’s terms of trade amid renewed escalation of Middle East tensions," MS notes.

"As a  result, we expect USD/JPY to remain confined to a relatively narrow range. A more meaningful decline in USD/JPY  would likely require both a sharper deterioration in risk sentiment and a repricing lower in US terminal rate expectations. However, with market attention increasingly focused on US inflation, we view such a scenario as unlikely  in the near term," MS adds.

• U.S.-listed shares of copper miners rise premarket, tracking higher prices of the red metal [MET/L]

• Benchmark three-month copper on London Metal Exchange up 1.7% to $13,851 a metric ton

• Copper prices supported by firm demand in top consumer China, declining inventories and hopes that mediators can revive a ceasefire in the Iran war

• Shares of global mining giants Rio Tinto and BHP Group gain 1.4% and ~3%, respectively

• Copper miners Southern Copper and Freeport-McMoRan up 3.4% and ~4%, respectively

• Canada's Hudbay Minerals up 4%, Ero Copper advances ~6% and Teck Resources

gains ~2%

(Reporting by Dharna Bafna in Bengaluru)

• U.S.-listed shares of gold miners up premarket, tracking rise in bullion prices [GOL/]

• Spot gold up 1.5% at $4,067.64 per ounce as investors weighed diplomatic efforts to ease the U.S.-Iran conflict, which could temper oil-driven inflation risks and influence the Federal Reserve's interest rate path

• Top miners Newmont , Barrick Mining up 3% and 2.7%, respectively

• South African miners Gold Fields rises 2.5%, Harmony Gold jumps 3.6%, AngloGold Ashanti gains 3.4% and Sibanye Stillwater up 4.4%

• Canadian miners Agnico Eagle Mines rises 4.2% and Kinross Gold adds 3.3%

(Reporting by Pooja Menon in Bengaluru)

(Adds slug) Gold's rally on Tuesday is a concern for the many traders betting that the dollar rises, because stronger gold prices tend to precede drops in the dollar's value.

This was the case throughout the rally stemming from the trade war in 2025 from near $2,600/oz toward $5,600, until the rise in the price of gold became so severely stretched that it resulted in a drop. That fall met the target for a minor correction of gold's rise from near $1,600/oz in 2022 (38.2% at $4,073/oz) and alleviated the overbought conditions that led to the reverse.

Following a drop that has purged many of the investments in gold that were helping to stop it from rising further, the metal seems well-placed to resume a rally that seems logical amid conflicts in the Middle East and Ukraine that should support safe assets. Given the resulting spike in energy costs, an asset also deemed to be an inflation hedge could be eyed as an ideal investment.

Currency traders who have bought many dollars have seen little reward for their efforts. This heightens the chance of them paring risk. The dollar index has only gained around 3% during the establishment of the $42 billion net long, which is the second biggest bullish wager on record.

When the dollar fell almost 15% between February 2025 and January 2026, far fewer dollars were sold, with the net short less than half the size of the current long position. The dollar fell far more easily than it has risen this year and the resulting minor correction of the bigger slide could pave the way for a drop that is being signalled by gold's rally.
Gold


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• After forming base above key levels, gold rallying

• Gold is considered to be safe

• The precious metal thought to be an inflation hedge

• There is a war that has boosted the cost of energy

• Rally was severely stretched, leading to correction

• Correction may be platform for rise beyond $6000

•
Gold


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• FX option implied volatility sits on long term lows amid the lack of FX realised volatility

• Volatility is the lifeblood of options, so without it - volatility risk premiums drop and activity slows

• EUR/USD fits that mould, with large and soon-to-expire options/hedging flows helping to contain

• However, its worth noting the support for EUR put over call implied volatility premium on risk reversals

• Shows greater concern about EUR/USD losses than gains

• Any drop toward recent/1-year lows at 1.1325 is clearly expected to lift implied vol and option premium

• Related - FX options wrap - Summer lull trumps war risk
EUR/USD FXO implied volatility


EUR/USD 25 delta risk reversals


(Richard Pace is a Reuters market analyst. The views expressed are his own)

(Adds chart)

July 21 (Reuters) - Gold flagged a major bearish reversal signal in March and breached a key support level in June. Two further potential tipping points are now emerging on the monthly chart.

March's warning came via a bearish engulfing candle — a two-bar reversal pattern in which a decisive down-month completely swallows the prior month's gain, open to close. The scale of the reversal, erasing the entirety of the preceding advance, marked a significant shift in sentiment after gold's extended rally.

Confirmation followed in June, when gold closed below its 10-month moving average, exposing a low of $3,942 — a near-30% correction from January's $5,594 record high.

Gold has attempted to claw back some ground in July, but the recovery now sits just above two levels that remain critical to the broader downside picture: the 20-month moving average at $3,821 and the 50% Fibonacci retracement at $3,702. Should these give way on a fresh leg lower, the 61.8% "golden ratio" retracement at $3,255 would come into play.

A more constructive longer-term outlook would require gold to reclaim the 10-month moving average, now at $4,453 — the same level whose breach in June first signalled trouble.
Gold monthly chart:


(Peter Stoneham is a Reuters market analyst. The views expressed are his own)

• FX option strikes expire at 10am New York/14:00 GMT on Tuesday July 21

• EUR/USD: 1.1375-80 (636M), 1.1390 (316M), 1.1400 (2.6BLN), 1.1425 (428M), 1.1445-50 (1.8BLN)

• 1.1470-75 (2BLN), 1.1480-85 (2.6BLN), 1.1500 (1.9BLN)

• GBP/USD: 1.3375-85 (413M). AUD/NZD: 1.1900 (435M), 1.1950 (170M)

• AUD/USD: 0.6925 (1.9BLN), 0.7000-10 (1BLN), 0.7020-30 (520M). NZD/USD: 0.5860 (251M)

• USD/CAD: 1.4045 (300M), 1.4080 (285M), 1.4100 (507M), 1.4120-25 (1BLN), 1.4135 (480M)

• USD/JPY: 162.00 (680M), 162.15-25 (580M), 163.00 (571M), 163.15-20 (704M), 163.45 (3.5BLN)

• EUR/JPY: 186.15 (200M), 186.50 (330M)

• FX options wrap - Summer lull trumps war risk (Richard Pace is a Reuters market analyst. The views expressed are his own)

• USD/JPY doing little in tight 162.44-53 EBS range in Asia

• Essentially sideways since July 6, between 161.28 July 10, 162.71 July 8

• Threat of Japan FX intervention still on tries higher

• Hawkish Fed expectations, Middle East war, good Tokyo FX demand supportive

• Technically, USD/JPY holding above its 162.26-37 ascending hourly Ichi cloud

• Flat hourly kijun ahead of cloud at 162.41, 100/200-HMAs 162.31/23 in/below

• Nearby option expiries today 162.00-30 $1.4 bln, 162.50-75 $504 mln

• Massive $5.9 bln above between 163.00-50, below $1.4 bln between 161.25-75

• EUR/JPY 185.44-51 EBS, heavy but above 184.99-185.15 daily Ichi cloud

• Option expiries today include total E690 mln above between 186.15-50

• GBP/JPY 218.02-38, well off 219.58-60 double top July 16/15

• Holding above 217.91 daily Ichimoku tenkan but below 218.34-72 hourly cloud

• CHF/JPY on heavy side too, 200-27-64, tracking away from 200.59 200-HMA

• NZD/JPY, AUD/JPY better bid, hawkish CB expectations cited, NZD especially

• NZ inflation data high, suggests more RBNZ rate hikes in the offing

• NZD/JPY 94.70 to 95.42, best since 95.41/42 double top May 29/June 1

• AUD/JPY bid in sympathy, 113.58-90, towards 114.91 peak June 2?

• Tomorrow sees A$496 mln in option expiries just above at 114.00 strike

• Related , on NZD/JPY, GBP/JPY ,
USD/JPY hourly:


NZD/JPY hourly:


AUD/JPY hourly:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• Shares of Australia's Dundas Minerals rise as much as 6.4% to A$0.05, their biggest intraday pct gain since July 9

• Stock at its highest level since July 10

• Gold explorer gets Aboriginal heritage (native title) clearance over its Capricorn Gold project in Western Australia, clearing the way to commence its planned drilling programme

• Stock has risen 16.3% this year, including session's moves
(Reporting by Roshan Thomas in Bengaluru)

• GBP/JPY on back foot following rise on feel-good effects of new UK PM

• 219.60 peak July 15 on Andy Burham's expected lock on premier-ship

• GBP/JPY downhill since from 219.60/58 double top July 15/16, today 218.02-34

• On hold just above daily Ichimoku tenkan at 217.91

• Also above hourly tenkan at 218.16 but below 218.38-72 Ichimoku cloud

• Hourly kijun near base of cloud at 218.39, 200/100-HMAs 217.80/218.51

• 200 and 100-HMAs likely define core parameters for now

• May take some time for market to digest ramifications of new Burnham cabinet

• That said, Gilt yields high, still good destination for summer carries

• Related comment , also , on UK cabinet
GBP/JPY daily:


GBP/JPY hourly:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• NZD/USD up 0.3% on higher-than-expected New Zealand inflation

• Q2 inflation at 4.1% y/y, above analysts' forecasts of 4.0%

• Data reinforces expectations of further RBNZ rate hike

• Westpac expects further rate hikes at the Sept, December rate meetings

• NZD set for a retest of 0.5863, a one-month high; break opens 0.5900-10

• Support 0.5825-30, 0.5800-05; Asia range 0.5853-0.5859
NZD:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• Seems little in way of movement in USD/JPY during Tokyo's long weekend

• USD/JPY remains relatively weak, still in stasis on 162, 162.49-50 EBS today

• Essentially sideways since July 6, between 161.28 July 10, 162.71 July 8

• Wider 160.49 low July 3, 162.84 high July 1 parameters into the fall?

• Threat of Japan FX intervention still on tries higher

• Hawkish Fed expectations, Middle East war, good Tokyo FX demand supportive

• JGB-US Treasury rate differentials narrower, in 2s @269, 10s @183 bps

• Technically, USD/JPY holding above its 162.26-37 ascending hourly Ichi cloud

• Flat hourly kijun ahead of cloud at 162.41, 100/200-HMAs 162.31/23 in/below

• Nearby option expiries today 162.00-30 $1.4 bln, 162.50-75 $504 mln

• Massive $5.9 bln above between 163.00-50, below $1.4 bln between 161.25-75

• Related comments , , ,

• And , also , on US-Iran ,

• US markets , , ,
USD/JPY daily:


USD/JPY hourly:


NYMEX WTI crude oil futures:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• AUD/USD opens 0.25% higher despite broadly stronger U.S. dollar

• Risk aversion, higher oil prices, U.S-Iran escalation taken in stride

• Rally despite higher Treasury yields impressive; U.S. 10-year yield up 5bps

• 38.2% Fibo of May-June drop at 0.7023 continues to cap AUD rise

• AUD/NZD recovers from a near 4-month low hit Mon; Tue NZ Q2 CPI key

• AUD rally continues to be capped by 38.2% Fibo of May-June drop at 0.7023

• Strong support at 0.6960-65; Monday range 0.6960-0.7014
AUD:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

Danske Research maintains a bullish forecasts profile for USD/CAD targeting the pair at 1.43 in 6-months, and 1.46 in 12-months.

"The Bank of Canada (BoC) held its policy rate at 2.25% in July, judging the current stance appropriate amid two-sided risks. We expect the BoC to stay on hold through 2026 while the Fed hikes in December, leaving front-end rate differentials in favour of the USD. Markets price close to one BoC hike by YE.," Danske notes.

"We keep an upward-sloping USD/CAD profile, supported by still-wide rate differentials and our structurally constructive USD view. Near-term CAD support from higher energy prices and stretched long-USD positioning is possible but should fade as energy markets stabilise," Danske adds.

(Updates to afternoon trading)

• Dollar largely steady as Iran war keeps markets cautious

• Brent crude futures pare earlier gains

• Burnham names Healey as finance minister

By Chuck Mikolajczak

NEW YORK, July 20 (Reuters) - The dollar rose on Monday as investors weighed contradictory developments in the Iran war, while the pound fell from earlier levels as markets prepared for new British Prime Minister Andy Burnham.

Yemen's Iran-aligned Houthis said they were imposing a naval blockade on Saudi Arabia, a move that opens a new front against the United States in its war on Iran and widens the threat to global energy supplies and trade beyond the Gulf.

But crude prices came off their initial move higher as Iran and the United States signaled they wanted to resume diplomacy.

U.S. crude advanced 0.22% to $82.67 a barrel and Brent rose to $88.78 per barrel, up 0.77% on the day, after earlier hitting their highest levels in more than a month.

The dollar index , which measures the greenback against a basket of currencies, climbed 0.18% to 100.92, with the euro down 0.19% at $1.1417.

"There's a lot of conflicting news coming from the Middle East — on one hand, it looks like it could be escalating, on the other hand, it looks like there's another ... last-ditch effort to try to like get a new ceasefire and that's why oil came off," said Marc Chandler, chief market strategist at Bannockburn Capital Markets in New York.

The economic calendar for the week is light, and Federal Reserve officials are in a "blackout period" of public comments ahead of the central bank's meeting next week. Recent reports on U.S. inflation and the labor market have caused markets to sharply curb expectations for a rate hike from the Fed next week, pricing in only a 16.6% chance for an increase, according to CME FedWatch, down from more than 40% a week ago. Expectations for a hike at the September meeting are at 62.8%, however.

A bevy of Fed officials, including Chairman Kevin Warsh, have flagged concerns about inflation pressures in recent weeks while noting the labor market remains stable.

The European Central Bank (ECB) will hold a policy meeting later this week, with markets pricing in only a 13.1% chance of a hike, according to LSEG data, with a 78% chance for an increase at its September meeting.

The ECB is seen as being more likely to be aggressive in raising rates than the Fed due to the sensitivity to energy prices in the region and its single mandate of price stability.

UK CHANCELLOR CHOICE IN FOCUS

Sterling weakened 0.12% to $1.3437 after climbing to $1.3481 as Burnham took over from Keir Starmer, becoming Britain's seventh Prime Minister in a decade as he pledged to reshape the country's politics and deliver a new economic model.

The pound pared declines after Burnham named John Healey as finance minister from a session low of $1.341.

UK assets last week were supported by reports that the job would likely go to Shabana Mahmood, widely regarded as a centrist, rather than a more left-leaning candidate.

"Markets have delivered their first verdict on Andy Burnham, which is cautious optimism. Investors appear comfortable with the idea of a more active government, but only if it can deliver faster economic growth without stretching the public finances," said Lale Akoner, global market strategist at eToro. Elsewhere, the U.S. dollar was down 0.14% at 6.769 against the Chinese yuan in offshore trade after China kept its benchmark lending rates unchanged for a 14th consecutive month on Monday, in line with market expectations.

Against the yen , the dollar edged up 0.03% to 162.46 in thin liquidity as Japan observed the Marine Day holiday.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Chuck Mikolajczak, additional reporting by Sophie Kiderlin in London and Gregor Stuart Hunter in Singapore; Editing by Jamie Freed, Andrei Khalip, Andrew Heavens, Will Dunham and Susan Fenton) ((; @chuckmik.bsky.social))

• NY opened near 0.7005 after 0.6960 traded overnight, the rally extended

• Rallies in silver, copper, equities & gold's upward mover helped lift AUD/USD

• The pair hit 0.7015 but bulls could not maintain upward momentum

• USD buying & firmer yields weighed on the pair

• 0.6995 neared before the pair settled near 0.7005 late, it was up +0.32% late

• AUD/JPY's rally helped to keep AUD/USD higher on the session

• Techs lean bullish; RSIs rising, 10-DMA supports, pair above t-l off May 13 high
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Goldman Sachs sees good value in CHF funding on a three-month basis

"USD/CHF offers exceptional levels of carry for a pair that has acted as a clear risk-hedge in this environment, which we think places it as an attractive portfolio hedge in an environment where energy shock risks are still simmering. At the same time, CHF's gold connection is also the clearest risk to the case for funding in our view," GS notesa.

"We continue to see a pivot back to a neutral CHF intervention bias by the SNB as another potential route to Franc outperformance, though after the SNB's weak tweak in June, this process appears to us to be a more gradual one. We see good value in CHF funding on a three-month basis where these key risks appear more remote, offering greater carry in G10 crosses than the more typical choice of the Yen," GS adds.

Sterling's near-term prospects look relatively upbeat as the pound consolidates recent gains, near 1.3450, as Andy Burnham became Britain's seventh prime minister in a decade with a pledge to change politics.

The currency was trading just below mid-July highs at 1.3556 and well above late-June lows in the mid-1.31s, suggesting stability near trend highs. With summer liquidity issues prevailing, sterling is likely to hover around its flattening daily cloud near 1.3420.

As the market assesses Burnham's initial moves as head of government, GBP traders and the broader FX market will stay focused on the fluid Middle East situation and its effects on oil, macro themes, and downstream UK inflation, growth and fiscal dynamics.

Fiscal concerns will also remain a focal point. While Burnham has said he will honor fiscal rules, he has set ambitious goals to tackle homelessness, while also building more public housing to help bring down welfare spending, which would help fund higher defense investment. For now, UK macro traders appear willing to give Burnham a chance. But if geopolitical ructions lift oil toward late-March highs above $100/bbl, the new prime minister may face difficult spending decisions, which will spotlight gilt yields as a fiscal sustainability barometer.

Technically, a dip below the flat 200-DMA at 1.34 would put the July 8 low at 1.3323 in sharper focus; a rise in UK 10-yr gilts above 5.2% could lead bears to target the mid-1.31s.
Sterling Chart:


(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

Bank of America Global Research discusses Gold and DXY technical and seasonality outlook and flags a scope further USD gains supported by Gold's death cross signal.

"On June 26, 2026, at $4,088.74, gold triggered a “death cross” signal. This is when the 50d SMA crosses below the 200d SMA to imply a downtrend is underway. • After 30 signals since 1975, gold was lower 67-70% of the time 40-50 trading days later with negative average and median returns. This suggests gold may be lower than $4,088.74 around August 24-September 8," BofA notes.

"Gold’s death cross signal implies support and strength for the DXY in the Aug 3-Oct 21 period, with a little more emphasis on late August through September," BofA adds.

• EUR/GBP anchored below 0.8500 as rebound attempts continue to fade on approach to topside resistance

• Recent GBP outperformance leaves scope for upside extension more constrained in the near term

• Positive UK narrative largely in the price - incremental political impulse now diminishing

• Rates market remains skewed hawkish BoE with ~40bps priced by year-end

• Raises the bar for incoming data to validate further GBP strength (labour market, CPI due Tue/Wed)

• Initial resistance: 0.8520–22 (200H MAs), break would likely encourage dip buyers

• Support: 0.8455 (15 Jul low), then 0.8400
EURGBP hourly chart


Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

Morgan Stanley Research adopts a neutral to slightly bullish bias on EUR in the near-term.

"We see modest near-term idiosyncratic upside risks to the EUR, as our economists see the ECB tone as likely to keep  a September hike on the table. They note risks that core inflation moves up in 3Q26, as the ECB expects. A relatively  hawkish tone from President Lagarde this week would likely solidify hiking expectations, potentially leading investors  to seek alternative funders for long EM carry trades," MS notes.

"One potential near-term catalyst is the July 24th expiry of across the-board US tariffs. The absence of any announcement of 232 or 301 replacements (as expected) may boost EUR, as  data from Yale Budget Lab suggest that the effective tariff rate on Germany may fall over 3 percentage points in the  absence of the section 122 surcharge, more than a number of other developed economies," MS adds.