Market Overview
- The market witnessed significant movements, with the Federal Reserve's cautious stance on rate cuts and the ceasefire between Iran and Israel playing key roles.
- Major currency pairs experienced fluctuations, with the Indian Rupee strengthening for a second day due to lower crude oil prices and a weaker US Dollar.
- The Swiss Franc also strengthened against the US Dollar as geopolitical tensions eased.
- Gold prices fell as risk appetite increased due to the ceasefire, with investors closely monitoring Federal Reserve Chair Jerome Powell's testimony.
Fundamental Analysis
- Federal Reserve Chair Jerome Powell outlined plans to hold off on rate cuts until Q4, expressing openness to the idea that tariff inflation pass-through may be less than expected.
- The Indian Rupee strengthened due to lower crude oil prices and a weaker US Dollar, with S&P Global Ratings raising India's FY2025 growth forecast to 6.5%.
- Bank of England Deputy Governor Dave Ramsden highlighted potential acceleration in rate cuts if evidence suggests inflation will fall below target.
- In June, the CB Consumer Confidence Index dropped to 93 from 98.4 in May.
Technical Analysis
- The EUR/USD pair traded positively near 1.1600 as the USD struggled to find demand due to an improved market mood following a ceasefire between Iran and Israel.
- GBP/USD reached a weekly high near 1.3600 on Tuesday, supported by an improved market mood due to the Iran-Israel ceasefire.
- USD/JPY is experiencing strong selling pressure due to a weaker US Dollar and divergent Fed-BoJ policy expectations.
- Gold price has rebounded from nine-day lows near $3,335 on Tuesday due to revived talks of a July Fed rate cut.
Conclusion
- The market outlook remains cautious with potential trading opportunities arising from geopolitical developments and central bank statements.
- Investors are closely watching Federal Reserve Chair Jerome Powell's testimony for insights into the Fed's policy outlook.
- The ceasefire between Iran and Israel has eased tensions, leading to a risk-on sentiment in the market and impacting currency pairs and gold prices.
- Central bank decisions, particularly from the Federal Reserve and Bank of England, are expected to significantly influence market movements in the coming period.
