During the week ended July 7, currency trades were marked by fresh highs: the USDJPY hit a 37-year high of 161.95 mid-week, while the EURUSD and GBPUSD also reached highs at about the same time. However, the USDJPY would then fall from that high, with the EURUSD and GBPUSD entering a nearly unbroken bullish streak to finish the week.

The uptrend in the EURUSD and GBPUSD was spurred by a tempered dollar due to weak economic indicators, while political tensions calmed in the U.K. and France.

Let's review the market movements through the week.

On Monday, July 1, the U.S. released its June ISM Manufacturing PMI, with a result of 48.5 falling below the forecast of 49.2. Following the PMI's release, the USDJPY briefly fell below 161, but quickly reversed to restore its bullish trend.

On Tuesday, June 2, the Eurozone's June Harmonised Index of Consumer Prices (preliminary values) was released. The year-on-year change in the core index indicated a slightly inflationary bearing, with a result of 2.9% versus a forecast of 2.8%.

On Wednesday, July 3, the U.S. released its June ADP National Employment Report, showing 150,000 jobs added, a weaker result than the expected 160,000.

Also released on Wednesday was the U.S. June ISM Non-Manufacturing PMI (composite), with the reading of 48.8 falling well below the expectation of 52.5. This triggered a sharp downturn in the USDJPY, marking a turning point for the week.

On Friday, April 5, the highly anticipated U.S. jobs report for June was released. With the exception of a slight increase in the unemployment rate, the results were largely in line with expectations, but did not have enough impact to change the overall market trend.

Economic Indicators and Statements to Watch this Week
(All times are in GMT)

July 9 (Tue)
14:00, U.S.: Conference by Federal Reserve Chairman Jerome Powell

July 10 (Wed)
14:00, U.S.: Conference by Federal Reserve Chairman Jerome Powell

July 11 (Thu)
06:00, U.K.: May monthly gross domestic product (GDP, month-on-month data)
12:30, U.S.: June Consumer Price Index (CPI, month-on-month data)
12:30, U.S.: June Consumer Price Index (CPI, year-on-year data)
12:30, U.S.: June Consumer Price Index (CPI core index, month-on-month data)
12:30, U.S.: June Consumer Price Index (CPI core index, year-on-year data)

The highlight of the coming week will be the Thursday CPI release. The USDJPY, which had risen to just below 162, has been pushed back to below 161. Now, weak dollar-related economic indicators are reviving speculation of two rate cuts before the end of 2024.

A CPI release supporting this conclusion could easily spur the pair to fall below 160.

The following currency pair charts are analyzed using an overlay of the ±1 and ±2 standard deviation Bollinger Bands, with a period of 20 days.

The CME FedWatch tool has fallen to a 22.1% probability of the FOMC keeping rates unchanged at its September meeting. A week ago, that probability was 35.9%, indicating that the direct economic indicator results suggest that inflation is receding, and that the expectation of a rate cut is increasing.

Next is an analysis of the USDJPY daily chart.

Though there was a longstanding upward bandwalk within the bounds of the +1 and +2 standard deviation Bollinger Bands, Friday's candle broke below the +1 standard deviation band.

This decline, however, was reversed by a resistance turned nearly entirely to a support at 160.21, and the pair closed the week's trading just below 161, though still under the +1 standard deviation band. If the pair remains unable to climb above the band and downward adjustment continues, it may follow the likely pattern of falling to the -1 standard deviation Bollinger Band. Any traders considering long positions in this pair should carefully judge the timing before doing so.

We continue with an analysis of the USDJPY weekly chart.

Though this week's trades closed with nearly zero net movement, leaving a crosshair-like candle, it remains on an upward bandwalk, indicating there is still rising momentum.

The key will be whether this pair can hold its ground above 160.

The stormy political situation in France appears to be abating; the ruling party and a leftist coalition are expected to prevent the far-right from winning control of the National Assembly in the deciding round of voting.

The EURJPY's significant climb is a clear indicator of the euro's strength.

Next is an analysis of the EURUSD daily chart.

The currency opened the week much higher, and then rallied four consecutive days beginning Tuesday. The week's rally already sent candlesticks shooting above the +2 standard deviation Bollinger Band, demonstrating a strong upward momentum.

We continue with an analysis of the EURUSD weekly chart.

On a weekly basis, the pair has rebounded off the lower edge of its triangle formation and is now on the rise again. Which way the pair breaks from here will be of great interest.

Bullish pressure is also strong for the pound, shown in its yen cross (GBPJPY) reaching 205 at a climb even more pronounced than that of the USDJPY.

Now, we analyze the daily GBPUSD chart.

Starting Tuesday, there have been four consecutive positive candles, with Friday's candle closing above the high resistance line. The pattern may continue to move into an upward Bollinger Band walk.

We continue with an analysis of the GBPUSD weekly chart.

The pair has closed above the upper edge of its triangle formation for the week, the possible opening move of a combined daily/weekly uptrend.