Risk sentiment improving

Frank Walbaum FX Strategies.Asia

lmportant news this week:

Wed, 29th Jul, 03:30 CET AU Consumer Price Index.
Wed, 29th Jul, 20:00 CET US FOMC Interest Rate Decision.
Thu, 30th Jul, 13:00 CET UK BoE Interest Rate Decision.
Thu, 30th Jul, 14:30 CET US PCE Price Index.
Fri, 31st Jul, tentative JP BoJ Interest Rate Decision.

Risk-on sentiment returns as Dollar Weakens

Risk appetite is improving across global markets as the US Dollar continues to soften. The US Dollar Index (DXY) remains above the psychologically important 100 level but is drifting lower, suggesting the recent Dollar rally may be turning into nothing more than a technical retracement. Whether the Dollar can hold this support will likely determine the next move across FX and equity markets.
Equities have started the session on a positive note, with the S&P 500 extending gains above its 50-day moving average on the daily chart, reinforcing the medium-term bullish outlook. The Nasdaq is also recovering but still trades below its own 50-day average, making it the weaker of the two major US indices. Precious metals are benefiting from the weaker Dollar, with both Gold and Silver moving higher. In FX, the Australian Dollar is one of the strongest performers, breaking above an important technical resistance level and signalling improving global risk sentiment. The Euro and British Pound are also firmer against the Dollar, while cryptocurrencies continue to recover. Ethereum is leading gains in the digital asset space, outperforming Bitcoin as investor confidence gradually returns.

Market talk

Geopolitical tensions have eased after reports that the US and Iran have paused military strikes around the Strait of Hormuz, helping to improve overall market sentiment. The reduced risk of immediate supply disruptions has supported the broader risk-on environment, encouraging investors to move back into equities, commodity currencies, and cryptocurrencies. The key question now is whether the recent Dollar weakness develops into a broader downtrend or proves to be only a temporary correction. As long as the DXY remains above the 100 level, the possibility of a renewed Dollar rebound cannot be ruled out, making this one of the most important technical levels to watch in the days ahead.

Tendencies in the markets.

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.

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