US 500, EUR/USD, USD/JPY [Video]

Ceasefire and trade relief  – US 500

US stock indices have climbed to record highs as markets recover from the turbulence sparked by April’s tariff announcements. The recent rally, however, is seen as fragile, with investors remaining cautious due to President Trump’s unpredictable policy approach. A key catalyst for the latest upswing was a US-brokered ceasefire between Israel and Iran, which ended a 12-day conflict that had driven oil prices higher and stoked inflation fears. The easing of geopolitical tensions provided relief to markets already rattled by trade uncertainty. In April, Trump’s abrupt imposition of reciprocal tariffs had sent shockwaves through global markets, pushing the S&P 500 close to bear market territory. But sentiment improved after he scaled back some of the more extreme measures, helping to stabilize investor confidence. While the ceasefire and softened trade rhetoric have fueled gains, many traders remain wary, viewing the rally as vulnerable to renewed volatility from policy surprises or global flashpoints.

The US 500 cash index skyrocketed to a fresh record high of 6,200 earlier in the day, creating the seventh consecutive green day and adding around 29% since the beginning of April. The golden cross between the 50- and the 200-day simple moving averages (SMAs) endorses the bullish bias as well as the momentum oscillators are heading north. The next obstacle to the upside may come from the 161.8% Fibonacci extension level at 6,400 of the down leg from 5,790 to 4,800. In case of downside pressures first support could come from 6,147 and then at 6,070.

Eurozone flash CPI – EUR/USD

The preliminary Eurozone CPI data for June, set to be released on Tuesday, is expected to show a slight uptick in inflation, largely due to rising energy prices during the month. Analysts anticipate headline inflation to come at around 2.0%, in line with the European Central Bank’s medium-term target. Core inflation, which excludes volatile food and energy prices, is also expected to remain stable, reinforcing the view that price pressures are broadly contained.

As for the ECB, following its 25 basis point rate cut in June—the eighth in its current easing cycle—markets widely expect the central bank to pause at its July 24 meeting. With inflation near target and borrowing costs already significantly reduced, the ECB is seen as nearing the end of its rate-cutting phase. Most analysts anticipate one more cut in December, but geopolitical risks and uncertainty around US trade policy could influence the timing and extent of further easing.

EURUSD printed a fresh almost four-year high around 1.1750 over the previous week, extending the buying interest within the short-term upward sloping channel. More advances could lead investors toward the August 2021 peak at 1.1900. However, a decline below the immediate support region of 1.1625-1.1700 may raise the likelihood of downside movements by 1.1450. Technical oscillators are fluctuating within overbought levels.  

US NFP report – USD/JPY

This week’s US non-farm payrolls report, set for release on Thursday due to the July 4 holiday on Friday, is expected to show continued labor market cooling. Economists forecast a gain of around 100,000 jobs in June, down from 139,000 in May. The unemployment rate is projected to rise slightly to 4.3% from 4.2%, signaling a gradual loosening in labor conditions. These developments come as the Federal Reserve maintains a cautious stance. At its June meeting, the Fed held interest rates at 5.25%-5.50%, emphasizing the need for more evidence of sustained disinflation before resuming its rate cuts. While markets are increasingly pricing in a potential rate cut in September, Fed officials have not committed to a timeline. A softer-than-expected NFP report could reinforce expectations for easing, but the Fed is likely to wait for clearer signs of labor market and inflation data converging towards its targets.

USDJPY has seen aggressive selling interest from the 148.00 round number in the previous sessions, sending the market back below the long-term downtrend line and finding strong support near the 143.75 support and the short-term uptrend line. In case of more losses, the market would battle with the 142.00-142.60 zone again. MACD and RSI are weakening their momentum.