Risk sentiment fading

Frank Walbaum FX Strategies.Asia

lmportant news this week:

Thu, 23rd, 03:30 CET AU Employment Change.
Thu, 23rd, 14:15 CET EU ECB Interest Rate Decision.

ECB takes center stage as markets search for direction

Markets are sending mixed signals ahead of today's ECB meeting. The US Dollar remains under pressure, yet equities are also correcting, suggesting that investors are becoming more cautious rather than simply rotating into risk assets. The Euro is outperforming ahead of the policy decision, with traders positioning for the ECB's announcement and, more importantly, President Christine Lagarde's press conference. While interest rates are widely expected to remain unchanged, any shift in the ECB's language regarding inflation or future policy could trigger increased volatility in EUR pairs.

The Canadian Dollar is also regaining strength against several major currencies, supported by improving sentiment and firmer commodity prices. Oil prices are climbing once again, adding support to commodity-linked currencies and reviving concerns that higher energy costs could slow the recent decline in inflation. Gold and Silver are correcting after recent gains, with traders taking profits ahead of today's central bank event. Equity markets remain under slight pressure, although the broader uptrend has not yet been challenged.

Market talk

Today's ECB meeting is the clear highlight for FX markets. While the rate decision itself is unlikely to surprise, President Lagarde's comments on inflation, economic growth, and the timing of future policy adjustments will be closely analysed. The US Dollar remains technically weak, but if the ECB delivers a more cautious message than expected, the recent strength in the Euro could quickly fade. At the same time, rising oil prices and resilient commodity currencies suggest inflation risks remain present, keeping central banks under pressure to maintain a cautious approach.

Tendencies in the markets

Equities correcting, USD weaker, BTC sideways, oil strong, Silver correcting, Gold correcting.

Author

Frank Walbaum

FX Strategies.Asia

Frank has been working in the TV business for several years. Acquiring his skills in Germany’s biggest broadcasting station, he then chose to work and live in Asia, which was in 2007.

GBP/USD remains below 1.3400 as USD recovers

GBP/USD stalls its rebound and stays below 1.3400 in the European trading hours on Thursday. The pair's upside remains capped by a modest US Dollar bounce and cooler-than-expected UK inflation data amid escalating Middle East tensions.

EUR/USD stays firm above 1.1400 ahead of ECB policy decision

EUR/USD holds its upbeat momentum for the second consecutive day, above 1.1400, in the European session on Thursday. The pair stays supported ahead of the European Central Bank's interest rate decision, with any hints on further rate hikes to be closely eyed.

Gold holds losses near $4,100 on surging Oil-led inflation fears

Gold holds the pullback near the $4,100 round figure in Thursday's European session. US crude oil prices climb to a fresh six-week high toward $90 amid a further escalation of tensions between the US and Iran, fueling inflation fears and bolstering US Fed interest rate hike expectations. Hawkish Fed bets weigh negatively on the yieldless bullion.

Hyperliquid, Robinhood could lead crypto’s next bull market as DeFi and TradFi converge

The next crypto bull market could be driven by the growing convergence between blockchain-based financial infrastructure and traditional finance, according to Bitwise CIO Matt Hougan. In a report published late Tuesday, Hougan argued that crypto may be showing early signs of a market bottom, with Bitcoin gaining 9% since July 1 even as the NASDAQ 100 declined 6%.

Ripple and Stellar await direction amid cautious sentiment

Ripple and Stellar trade cautiously as both tokens hover around key technical levels. XRP is testing resistance at its 50-day EMA, while XLM continues to consolidate around the $0.187 support zone. Meanwhile, mixed derivatives data with a slight bearish tilt suggests traders remain cautious, keeping the next directional move uncertain.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.