The first wave of the energy crisis caused by the conflict in the Middle East has subsided, but it is far too early to assume the worst is over. A second wave could begin as early as this autumn—and it may prove even more severe than the first.

When the conflict between Iran and the United States began, many countries still had strategic reserves of oil and natural gas. During the blockade of the Strait of Hormuz, these reserves naturally began to decline. By the time a second wave of the crisis emerges, stockpiles may be significantly depleted. With winter approaching only a few months later, demand for fuel, oil, and natural gas is expected to increase, while supplies available to offset potential shortages could be limited.

Experts warn that if Iran and the United States fail to reach another ceasefire agreement and reopen the Strait of Hormuz, the situation could spiral out of control this autumn. Global oil inventories continue to decline even after the strait remained open for about a week. Naturally, that short period was insufficient to replenish strategic reserves.

It is also important to consider the production capacity of Middle Eastern countries, much of which has reportedly been damaged or destroyed by Iranian missile strikes. On one hand, a substantial share of the region's oil exports remains trapped in the Persian Gulf. On the other, Iran could also block the Bab el-Mandeb Strait. In addition, oil production and refining capacity across the Middle East have declined significantly.

According to analysts, the current situation is not substantially better than it was at the peak of the conflict in February and March. The ceasefire has collapsed, oil tankers remain unable to pass through the Strait of Hormuz, while Washington continues to insist that maritime traffic will eventually resume by one means or another. In reality, however, the opposite appears to be occurring. The strait remains closed, another strategically important maritime route could also become blocked, and Donald Trump's repeated attempts to persuade Iran to return to negotiations and sign a new agreement have so far been unsuccessful.

Analysts also note that oil prices did not reach $200 per barrel during the spring and summer only because China reduced imports while the United States increased exports. If the conflict remains limited to disruptions in maritime shipping, the crisis is likely to develop more gradually. Several alternative export routes from the Middle East do exist, including Saudi Arabia's pipeline to Yanbu and the UAE's pipeline to Fujairah. However, many planned pipeline projects have yet to become fully operational, while further Iranian strikes against regional oil and gas infrastructure would deepen a crisis that already appears increasingly difficult to avoid.

Based on these factors, if Iran and the United States fail to reach an agreement, oil prices could quickly climb back above $100 per barrel and are likely to move considerably higher during the autumn and winter.

EUR/USD Wave Analysis

Based on the analysis, EUR/USD remains within a broader upward trend (see the lower chart), while in the shorter term it continues to develop within a downward trend segment. Current market conditions provide a reasonable opportunity to begin considering long positions. However, the pair may still decline toward the 1.13 level as part of wave 5 of wave C. Elliott Wave structures often produce unexpected developments, so attention should already be shifting toward potential buying opportunities.

GBP/USD Wave Analysis

The wave structure of GBP/USD has become relatively complex. At present, the pair has completed three downward waves, while EUR/USD may ultimately complete a five-wave decline. Consequently, the British pound may still form one additional downward wave, similar to the euro. However, this move could represent the second wave within a new bullish trend segment.

As a result, the difference between the wave structures of the euro and the pound is likely to remain relatively small and of limited significance. Therefore, I expect another corrective decline in the near term, followed by the beginning of a new upward trend, with the initial upward targets located in the 1.37–1.38 level.

Core Principles of My Analysis

1. Wave structures should be simple and easy to interpret. Complex wave formations are difficult to trade and frequently change as new market data emerge.
2. If the market outlook is unclear, it is better to stay out of the market.
3. No market forecast is ever certain. Always use protective Stop-Loss orders to manage risk.
4. Wave analysis should be combined with other analytical methods and trading strategies.

The pair remains under significant pressure amid escalating tensions in the Middle East, while the market has already fully priced in the recent change in the UK's leadership and yesterday's stronger-than-expected economic data. Most likely, the Bank of England, following the Federal Reserve's policy stance, which is unlikely to change in the foreseeable future, will also refrain from raising interest rates. This continues to weigh on the pound's ability to sustain a stronger upward move.

From a technical perspective, the pair is testing the 1.3435 support level.

Technical Outlook and Trading Idea

The price is trading below the middle Bollinger Band, as well as below the 5-period and 14-period Simple Moving Averages (SMAs), whose bearish crossover has generated a sell signal. The Relative Strength Index (RSI) is declining and has crossed below the 50 level. The Stochastic Oscillator has already entered oversold territory.

A confirmed break below the 1.3435 support level would open the way for a deeper decline. A potential entry point for short positions is 1.3424.

The GBP/USD pair has posted strong gains in recent weeks, which may mark the beginning of a new bullish trend. This week, the bears proved unable to capitalize on developments, even though the Middle East experienced two additional escalations and negotiations once again reached a deadlock.

Donald Trump has already revoked Iran's authorization to export oil under the peace agreement and reinstated restrictions on Iranian ports. Meanwhile, Iran has once again closed the Strait of Hormuz from its side. The United States has now been conducting strikes against Iran for nearly a week, while Donald Trump continues to announce additional military action. As we can see, there is no real ceasefire in place.

For now, traders do not believe the conflict will escalate into a full-scale war, as similar situations have occurred several times before. In reality, however, hostilities have already resumed. Nevertheless, the geopolitical factor was largely priced in between February and May. Therefore, only exceptionally significant developments in the Middle East are likely to encourage investors to buy the US dollar again based on its safe-haven status.

This week, bullish traders received an unexpected boost as US inflation slowed to 3.5%. Shortly afterward, Kevin Warsh refrained from promising further monetary tightening during his testimony before Congress, triggering another wave of disappointment among dollar bulls. As a result, there is no longer any certainty that the Federal Reserve will begin tightening monetary policy as early as September.

Moreover, by September, the market should have a much clearer picture of the conflict in the Middle East, autumn oil and natural gas prices ahead of winter, and how inflation responds to the evolving energy and geopolitical environment.

Initially, the market expected US inflation to continue rising unless the FOMC intervened. Later, concerns about further price increases eased as oil prices declined to around $70 per barrel. This week, however, oil climbed to the $85–87 range, while the renewed escalation in the Middle East and the blockade of the Strait of Hormuz could push prices even higher.

If events develop according to the most pessimistic scenario, oil could return to the $100–120 per barrel range. Under such circumstances, any meaningful slowdown in inflation in either the United States or the eurozone would become highly unlikely. Conversely, if the situation develops according to a more optimistic scenario, oil prices could fall back to the $60–70 range, reducing the need for further monetary tightening.

Technical analysis indicates that the bulls remain in control and may continue their advance. Price first swept liquidity below the April 6 low and then below the March 31 low. Therefore, there were solid technical reasons to expect further strength in the pound over recent weeks.

Given that the US dollar still lacks compelling long-term bullish drivers, despite its impressive gains during 2026, I believe the bears are unlikely to regain control. In addition, Bullish Imbalance 23 formed last week, and price reacted to it twice, providing traders with opportunities to open long positions. Bearish Imbalance 21 has now been invalidated.

Therefore, I expect either a continuation of the pound's advance or a resumption of the uptrend following the corrective pullback observed over the past two trading sessions. I would also note that a new bullish imbalance formed on Thursday. However, it is relatively small, so I have not yet marked it on the chart. Even so, there is a price gap in the 1.3440–1.3460 level that could still attract market attention.

Friday's economic calendar was relatively quiet. No significant data were released in the United Kingdom, while several US reports had little impact on market sentiment. This week's trading was dominated by inflation data, which substantially weakened the outlook for the US dollar.

Overall, the broader fundamental backdrop still leads me to expect further long-term weakness in the US dollar. Neither the conflict between Iran and the United States nor the possibility of Federal Reserve rate hikes in 2026 has materially altered that outlook.

Geopolitical tensions temporarily reminded the market of the dollar's safe-haven appeal, but the conflict has already moved beyond its most active phase. Although the Federal Reserve intends to raise interest rates during 2026, which is supportive for the dollar, tighter monetary policy would also slow economic growth and weaken the labor market.

It should also be remembered that Kevin Warsh was appointed by Donald Trump to lead the FOMC specifically because he was expected to pursue a more accommodative monetary policy than Jerome Powell. Consequently, in my opinion, any appreciation of the US dollar should be viewed as temporary rather than the beginning of a sustainable long-term trend.

Economic Calendar for the United States and the United Kingdom

The economic calendar for July 20 contains no significant scheduled releases. Therefore, macroeconomic data are not expected to influence market sentiment on Monday.

GBP/USD Forecast and Trading Recommendations

The long-term outlook for the pound remains bullish. Following liquidity sweeps below the two most recent swing lows, bulls regained control of the market.

The pound could still resume its decline toward 1.3007, the level that would invalidate the broader bullish trend, but such a move would require fresh bearish technical signals. Since Bearish Imbalance 21 has already been invalidated, no such signal is currently present.

The bullish case is supported by two liquidity sweeps as well as Bullish Imbalance 23. Price has already reacted to Imbalance 23, while the next upside targets are the highs of May 1 (1.3656) and January 27 (1.3867).

A new Bullish Imbalance also formed yesterday following Wednesday's strong rally in the pound.

The EUR/USD pair remains within the local bearish impulse that began on April 17, while over the past three weeks bulls have managed only to push bears back slightly. The euro's gains have been limited. The bulls have made their move, but the pair's further prospects will depend on geopolitical developments, inflation data, and signals from the Federal Reserve.

This week, it became known that US inflation slowed to 3.5% year-on-year, rather than the 3.8% expected by the market, significantly reducing the likelihood of further Federal Reserve monetary policy tightening in the near term. I do not believe the Fed will abandon the idea of raising interest rates altogether, but inflation nevertheless slowed by 0.7 percentage points in a single month.

This week also featured testimony by Federal Reserve President Kevin Warsh before Congress. As I had expected, Warsh's rhetoric remained broadly unchanged from the Fed's press conference a month ago, and he once again emphasized that elevated inflation remains a concern in the United States. However, the market had anticipated more hawkish remarks and did not receive them. As a result, the US dollar neither gained meaningful support this week nor suffered significant losses. For the past three weeks, neither bulls nor bears have shown much willingness to take decisive action, leaving the pair largely range-bound.

It is also worth recalling that the latest US labor market data remained relatively weak. Job creation continues to disappoint. Over the past three months, the number of new jobs has been approximately 100,000 below market expectations. As a result, the combination of slowing labor market momentum and easing inflation is forcing the Federal Open Market Committee (FOMC) to weigh any decision on further monetary tightening much more carefully.

Geopolitical developments have temporarily faded into the background. Tehran and Washington have once again violated the terms of the ceasefire agreement reached on June 17, but this came as little surprise to market participants. Donald Trump signed an executive order revoking authorization for Iranian oil exports, reinstated restrictions on Iranian shipping, while Iran once again closed the Strait of Hormuz and attacked vessels attempting to transit the waterway.

The market barely reacted to the end of the conflict and therefore is unlikely to respond strongly to its renewed escalation. We did not see the widely expected weakening of the US dollar following the easing of geopolitical tensions, nor did we witness sustained euro strength after the European Central Bank tightened monetary policy. Bears remain resilient despite both the fundamental and geopolitical backdrop. Now that geopolitical tensions are escalating again, bears have at least a formal justification for launching another wave of selling. In my opinion, however, traders are pricing in geopolitical developments for the third time, including events that have not yet occurred.

The current technical picture continues to indicate that the bearish impulse that began on April 17 remains intact. Bearish Imbalance 17 has not yet been filled, while Imbalance 18 was invalidated following weak US labor market data. No bullish patterns have formed, and none are likely to appear in the coming days as the market remains largely directionless.

Therefore, bulls may continue the corrective advance toward Imbalance 17, but there is currently no clear technical basis for trading this move. It is also worth noting that liquidity has been taken below the August 1 low (marked by the red line on the chart). Shortly afterward, liquidity was also taken above the July 2 high. Consequently, bears now have even more reasons to resume selling pressure. However, it should be remembered that liquidity grabs are not trading patterns in themselves.

Friday's economic calendar was once again relatively quiet. The eurozone released its June inflation report, while the United States published data on Housing Starts and Building Permits. These releases had virtually no impact on the US dollar, much like most economic reports this week, with the exception of inflation data.

Bulls still have numerous reasons to resume buying the euro in 2026, and even the renewed conflict in the Middle East has not materially changed that outlook. Structurally and fundamentally, Trump's policies—which contributed to the sharp decline in the US dollar last year—remain largely unchanged. At present, I see few strong fundamental factors supporting the US dollar despite the FOMC's hawkish stance.

EUR/USD has now approached a series of significant lows and swing points where liquidity may be taken, potentially providing the catalyst for a reversal of the current bearish impulse.

Economic Calendar for the United States and the Eurozone

The economic calendar for July 20 contains no significant scheduled releases. As a result, macroeconomic data are unlikely to influence market sentiment on Monday.

EUR/USD Forecast and Trading Recommendations

In my view, the pair remains in the process of forming a bullish trend. Although the fundamental backdrop shifted sharply in favor of the bears four months ago, the broader trend cannot yet be considered invalidated or complete.

Therefore, bulls may begin a fresh advance after liquidity has been taken below clearly established lows. However, opening long positions at this stage is not advisable. Traders should first wait for confirmed bullish technical patterns to emerge.

At present, the only meaningful technical structure available is Bearish Imbalance 17. Liquidity has already been taken around the latest swing levels, while the fundamental case for further US dollar appreciation remains questionable. Therefore, I continue to expect a bullish recovery, but it is important to wait for at least some technical confirmation of this scenario. Alternatively, traders may wait for a new sell signal to emerge within Bearish Imbalance 17.

EUR/USD is currently trading around 1.1443, above the 21-day SMA and rebounding within the uptrend channel formed since July 13.

If the euro consolidates above 1.1438 in the coming hours, we could expect it to continue rising until it reaches 1.1472, where the 6/8 Murray level is located. Ultimately, EUR/USD could reach the upper band of the uptrend channel around 1.1520.

Conversely, if the euro falls below the 21 SMA at 1.1438, the outlook could turn negative, and we could expect the downtrend to continue until EUR/USD reaches the lower band of the uptrend channel and, ultimately, the 5/8 Murray level around 1.1352.

If the euro faces strong resistance around the 200 EMA at 1.1472, this could be considered an opportunity to open short positions. The strong Murray 6/8 resistance level is also located around this level, which could act as a significant barrier for the euro.

Given that the Eagle indicator is entering overbought territory, we could technically expect the instrument to continue falling in the coming days. Should EUR/USD reach resistance levels such as the 6/8 Murray level or the upper band of the uptrend channel, this could suggest an opportunity to sell.

Bitcoin is trading around $62,900, pulling back after reaching the 1/8 Murray key level, which acts as a strong resistance barrier. Bitcoin is now trading below the 200 and below the 21 moving averages, which gives us a negative outlook for the coming days.

If, in the coming hours, Bitcoin breaks below the 0/8 Murray level and below the uptrend channel formed since June 27, we could expect the decline to continue, potentially reaching the -1/8 Murray level around $59,350.

Conversely, if Bitcoin consolidates above $62,500 in the coming hours, this could be seen as an opportunity to resume its uptrend, as it is currently reaching a key support level that coincides with the lower band of the uptrend channel. We could expect a recovery in the coming days, with Bitcoin potentially returning toward the 1/8 Murray level.

Given that the Eagle indicator is showing a bearish signal, we must be cautious, as a break below $62,500 could send Bitcoin down toward the psychological level of $60,000 or even back to the June 30 lows around $58,000.

As long as the price remains within the uptrend channel, a technical bounce above $62,500 will be seen as an opportunity to take long positions.

On the surface, everything looks benign: the S&P 500 is trading upwards for a second consecutive day, inflation is cooling faster than expected, and Wall Street traders have sharply pared back bets on Fed tightening. Behind the rally, however, there are details that temper the optimism.

Producer prices rose by 4.7% y/y in June, below consensus. Falling energy costs eased price pressures, Treasury yields declined, and money markets now push out a policy rate increase to the end of the year (not before December). Fed Chair Kevin Warsh's comments that the AI investment boom will exert upward pressure on prices were read by markets as further justification for keeping rates on hold in July. Follow the link for more details.

US dollar index pauses in consolidation after slide

The US dollar index (USDX) ends the week consolidating around a key short-term support at 100.49 (200-EMA on the 4-hour chart) after a sharp drop driven by weaker-than-expected US inflation data. Monthly CPI fell by 0.4% (the largest monthly decline since April 2020), annual CPI slowed to 3.5% from 4.2%, and PPI also disappointed — a combination markets interpreted as a reason for a Fed pause.

These prints cut the odds of a July rate hike to roughly 10% on CME FedWatch, and the dollar lost more than 1% over two sessions. Economists caution that the dollar's decline could be overdone: Middle East geopolitical risk and relative US economic resilience keep the possibility of a rebound alive. Follow the link for more details.

US consumer prices see biggest monthly drop in six years

US consumer prices declined sharply in June, marking the biggest monthly drop in six years, slightly reducing pressure on the Federal Reserve and lowering the odds of immediate further rate hikes.

CPI fell by 0.4% month-on-month (consensus -0.1%, May +0.5%). Headline inflation slowed to 3.5% year-on-year (consensus 3.8%, May 4.2%). Core CPI (ex food and energy) rose by 2.6% year-on-year (consensus 2.8%, May 2.9%). Follow the link for more details.

Today, on Friday, West Texas Intermediate (WTI), the benchmark of the US market, is in a bullish consolidation amid the risk of further escalation between the US and Iran.

The US military has continued airstrikes on Iran for six consecutive nights, including an attack on an empty oil tanker bound for Kharg Island, part of a renewed naval blockade of Iranian ports. Iran, in turn, is actively striking US military bases in the region, heightening fears of a return to full?scale war and keeping geopolitical risk levels elevated. This factor continues to have a significant impact on the oil market.

In Bandar Abbas in southern Iran, local authorities reported strikes on civilian infrastructure, including power plants and railway stations. Iran's Islamic Revolutionary Guard Corps has threatened to expand the conflict by attacking additional regional energy supply routes. Reuters also reports that Iran has urged Yemeni Houthi groups to be ready to cut an oil pipeline in the Red Sea, creating another serious threat to global energy supplies.

These events, combined with reduced maritime traffic through the Strait of Hormuz, provide additional support for oil prices and confirm the likelihood of further upside. However, before opening new long positions, it is prudent to wait for a sustained price advance and a confident breakout above the current range. At the same time, fundamental factors suggest any pullback would likely be seen by buyers as an opportunity to accumulate at lower prices.

From a technical standpoint, oil is in a bullish consolidation, facing resistance at the 50?day EMA. Support is provided by the round level of 78.00. If resistance is overcome, the next hurdles will be the 50?day SMA and the 100?day SMA, after which bulls will have a better chance to take control of the market. On a pullback, the next support will be the 9?day EMA. Note that oscillators are mixed, indicating market uncertainty about direction.

Weak US inflation data and large inflows into spot Ethereum ETFs pushed ETH back to around $1,900. Asian exchanges slid amid a broad semiconductor sell-off and a re-rating of AI investments. Mixed quarterly results at Netflix — rising ad revenue and top line, but a cautious outlook — are weighing on investor sentiment. Google again delayed the launch of its most powerful Gemini AI model — 3.5 Pro.

Ethereum back at $1,900 — weak US inflation and ETF inflows fueled the rally

On Wednesday, July 15, Ethereum (ETH) returned to around $1,900 for the first time since June 2, after US inflation data came in weaker than expected and sparked a broad crypto market rally. According to Yahoo Finance, the asset opened at $1,889.97 in the morning, up 6.6% from the previous day's open.

The primary trigger was Bureau of Labor Statistics data: the consumer price index (CPI) fell 0.4% in June — the largest monthly decline since April 2020. Year-on-year inflation eased to 3.5% versus economists' forecast of 3.8%. Core inflation (excluding food and energy) was unchanged month?on?month and stood at 2.6% year-on-year.

Institutional demand provided an additional boost. On July 14, US spot Ethereum ETFs recorded a net inflow of $58.34 million, with all of the day's flows going into BlackRock's iShares Ethereum Trust (ETHA). ETHA's cumulative net inflows are now estimated at $11.24 billion, and total assets in spot Ethereum ETFs reached $10.09 billion.

The recent inflows continued a trend reversal that began at the start of the month. For the week ended July 11, spot Ethereum ETFs attracted $84.42 million — the first positive week after eight consecutive weeks of outflows.

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Semiconductor sell-off drags Asian markets down

On Friday, July 17, Asian exchanges slid sharply: Japan's Nikkei 225 lost more than 5%, falling to levels not seen since June 11, while Taiwan's Taiex plunged more than 4% in morning trading. This was the second painful trading day in a row as investors exited positions tied to the AI theme.

The reason for the sell-off is clear: sectoral expectations for semiconductors have rapidly faded. The Philadelphia Semiconductor Index has retraced roughly 19% from its peak since June, Bloomberg notes — skepticism is growing over whether the hundreds of billions invested in AI infrastructure will pay off. In the US on Thursday, the VanEck Semiconductor ETF fell nearly 4%, pushing its weekly decline to almost 7%.

Even companies with strong results did not save their stocks. TSMC, a barometer of AI-chip demand, reported a record Q2 profit of $22.36 billion, up 77% year-on-year and well above analysts' expectations. Nevertheless, its shares fell 4.5% on the Taipei exchange on Friday — markets reacted to a rise in forecast capital expenditures and analysts' concerns about rising costs and fatigue from years of AI hype.

It's not only TSMC at risk. In Japan, Kioxia (recently larger than Toyota by market cap) has lost about half its value over the past month. The MSCI Asia Pacific index fell 2.1%, and Chinese AI and tech stocks continued to decline.

Netflix reports Q2 2026 — advertising grows, revenue just misses

Netflix released its quarterly results after the close on Thursday, producing a mixed report. The service beat profit estimates but missed revenue consensus by a small margin. The company reported revenue of about $12.56 billion — up 13% year-on-year, but slightly below the $12.57–12.58 billion range analysts expected.

Management attributes the performance to two factors: price increases in some markets and the active expansion of the advertising business. The ad tier now covers more than 250 million monthly active viewers worldwide — a milestone Netflix highlighted at its May 2026 upfront presentation.

Management had previously pledged that ad revenue would double to $3 billion in 2026, and the quarterly results suggest the company is moving in that direction.

For investors, advertising has become a key driver of optimism. Some analysts, including those at Bank of America and Cowen, had viewed Netflix shares as a play on rising ad revenue, and the quarter confirmed that advertising is gaining weight in the revenue mix.

Netflix's guidance for Q3 came in below analysts' expectations — a trend that has pressured the stock for several quarters. In Q1 2026, the company beat revenue and profit estimates, yet the shares fell almost 10% in after-hours trading due to cautious guidance.

The company also announced it will move its audience report — formerly published twice a year with viewing hours for individual projects — to an annual cadence. This change removes one of the relatively few sources of content performance metrics for investors and the industry.

At the time of the report, Netflix shares were under pressure: trading roughly 35% below their 52-week high of $134.12 and down about 24% in the first half of 2026. The options market had priced in a move of about 7.3% in either direction around the earnings release.

Google delays Gemini 3.5 Pro — internal frustration grows, shares fall

Google again postponed the launch of its most powerful Gemini AI model — 3.5 Pro. According to a Bloomberg report, the release is delayed by several months, causing notable frustration among engineers, AI researchers and managers inside the company.

The main reason for the delay is work on the model's programming skills. Bloomberg's sources say Google is trying to close a gap in code generation that emerged after new models from OpenAI and Meta, which have shown stronger coding performance than current Gemini versions. Late last month, Google updated Gemini's training data, but the changes have not yet produced the expected results — internal tests remain unsatisfactory.

Gemini 3.5 Pro was first announced at the I/O conference on May 19, 2026, together with Gemini 3.5 Flash. Sundar Pichai then promised that Pro would appear "next month," but June passed without a broad release. At the end of June, Business Insider reported the launch was pushed to July to collect feedback from initial testers.

To date, the model is available only in a limited corporate preview on Vertex AI; the wider developer community is still waiting. Mid-July materials show several test builds have not reached the company's stated performance targets, especially compared with products like OpenAI's GPT-5.6.

After Bloomberg's report this week, Alphabet shares plummeted.

For Google, the delay is an unwelcome signal because the company risks losing momentum in the race for leading AI models — a gap competitors may exploit. For the market, it's another reason to reassess valuations of tech giants and sector return expectations.

The instruments discussed in the article — Alphabet shares and other tech assets — are available for trading on the InstaForex platform. Users who want to take advantage of the current market situation should open a trading account with InstaForex and download the company's mobile app for fast access to quotes and mobile trading.

With US earnings season wrapping up — and overall results broadly positive — tech's index Nasdaq failed to launch significantly higher and instead has merely held near record levels.

So why is a substantial correction now a realistic possibility?

Market participants have arguably already priced in earnings, and attention is shifting to the absence of new, breakthrough growth themes that would sustainably lift demand for equities. Even the relief from falling crude, which has helped slow US inflation and reduce the odds of a rate hike at the September FOMC meeting, has not rekindled buying. Futures markets show the probability of a July Fed hike has fallen from 51% to about 46% at the time of writing.

Another supporting factor for equities would be lower Treasury yields. This week, the two-year note yield, which reacts sensitively to rate-change expectations, fell from a local peak of 4.298% to about 4.118%, while the 10-year yield eased from 4.632% to 4.529%. The overall message from the bond market is that the chance of a near-term rate rise has diminished, and even that wasn't enough to support the Nasdaq.

Taken together, the available evidence suggests a correction in the US market is not just overdue but perhaps overripe.

What to expect from markets today?

Given that many drivers have already been priced in and concerns about an inflated AI bubble are now on investors' radar, we should expect a correction in the Nasdaq index and in the corresponding CFD contract.

Daily forecast:

#NDX

The Nasdaq 100 futures CFD has slipped below the support level of 28,668.00. From a technical perspective, consolidation below this level could pave the way for further losses, first toward 28,220.50 and then to 27,500.00 next week. A sell entry could be placed at 28,470.00.

GOLD

Gold is trading above 3,982.50. Renewed Middle East tensions could push the price down toward 3,950.00 and then 3,900.00. A sell entry could be considered at 3,975.00.

A Bloomberg survey leaves little room for surprises: all respondents expect the ECB to keep its deposit rate unchanged on July 23. However, most economists anticipate a 25-basis-point rate increase to 2.50% in September, when the ECB will have updated quarterly economic projections. The reasoning is straightforward: the conflict involving Iran has driven oil prices higher, triggering the strongest inflation surge in the eurozone since 2023.

Economists' ECB Rate Forecasts

However, the hawkish scenario is far from certain. Inflation slowed more than expected in June, while there are still no signs of a wage-price spiral taking hold. Bundesbank President Joachim Nagel continues to call for vigilance, describing current interest rates as "appropriate," but has stopped short of explicitly endorsing a September rate hike. ECB President Christine Lagarde, for her part, has deliberately refrained from providing forward guidance, leaving markets to speculate about the central bank's next move.

As usual, developments in the Middle East remain the key variable. The fragile ceasefire between the United States and Iran reached last month has already given way to renewed military action. A limited escalation would likely justify an extended pause by the ECB, whereas a major disruption to oil and natural gas supplies could revive second-round inflation effects and force policymakers to revisit inflation expectations.

HSBC questions whether a September rate hike is a foregone conclusion. If progress continues in peace negotiations and energy supply conditions improve, the ECB may have no need to tighten policy further. Danske Bank, by contrast, maintains a bearish outlook for EUR/USD, targeting 1.1100, based on expectations of stronger US economic growth and a more aggressive Federal Reserve.

The US dollar, however, is not without its vulnerabilities. MUFG argues that softer US inflation and dovish comments from Kevin Warsh, who described AI-related inflationary pressures as temporary, support the case for a Federal Reserve pause and a subsequent weakening of the greenback. Bank of America takes the opposite view, identifying three major bullish drivers for the US dollar in the second half of the year: developments in the Strait of Hormuz, a hawkish Federal Reserve with the potential for three additional rate hikes, and continued capital spending on artificial intelligence by hyperscale technology companies.

The result is an interesting market picture. Nearly everyone expects the ECB to pause next week, but opinions diverge sharply regarding September, the Federal Reserve's policy path, and the direction of geopolitical developments and their impact on currency markets. Ultimately, the outcome will be determined not by economists' surveys but by events unfolding in the Middle East.

From a technical perspective, the daily chart shows EUR/USD continuing to trade within the 1.1370–1.1470 consolidation range. The strategy of selling the euro near the upper boundary of this range has already provided an opportunity to establish short positions. For now, those positions remain worth holding.

Gold (XAU/USD) is struggling to hold above the $3,960 level. At the same time, the overall bearish fundamental backdrop suggests that the path of least resistance for the precious metal remains to the downside.

Oil prices have risen by more than 10% over the past week as renewed hostilities between the United States and Iran have increased the risk of supply disruptions, revived inflation concerns, and strengthened expectations that the Federal Reserve will keep interest rates higher for longer. This, in turn, supports the US dollar and limits gold's recovery potential.The conflict between the United States and Iran has entered a more dangerous phase. On Thursday, both sides exchanged new strikes, while Tehran reportedly expanded its military operations beyond its traditional targets. Officials in Bandar Abbas, southern Iran, reported damage to civilian infrastructure, including power plants and a railway station. In response, Iran launched missile and drone strikes against US allies in the Persian Gulf.

Additional tensions persist in the Strait of Hormuz, where the United States has intercepted commercial vessels attempting to breach Iran's maritime blockade. At the same time, Iran's Islamic Revolutionary Guard Corps threatened to expand the conflict by targeting additional regional energy supply routes. Reuters also reported that Iran had asked Yemen's Houthi movement to be prepared to block the Red Sea oil shipping route.

These developments have helped keep oil prices near their monthly highs while intensifying concerns about energy-driven inflation.The US dollar is also receiving additional support from strong US macroeconomic data and hawkish comments from Federal Reserve officials, reinforcing expectations of at least one more interest rate increase before the end of the year.

The US Department of Labor reported that initial jobless claims for the week ending July 11 fell to 208,000 on a seasonally adjusted basis. The reading exceeded market expectations and confirmed the resilience of the US labor market.

Meanwhile, the Philadelphia Fed Manufacturing Index rose from 10.3 to 41.4 in July, reaching its highest level since November 2021 and indicating a sharp acceleration in regional manufacturing activity. Additional data also showed that both price indicators continue to signal rising inflationary pressures.

Dallas Federal Reserve President Lorie Logan stated that this week's favorable consumer and producer inflation data are still insufficient to conclude that US households are experiencing meaningful relief. She reiterated her support for a moderate increase in interest rates to continue the fight against inflation, which, in her view, has persisted for the past five years.

Federal Reserve Vice Chair Philip Jefferson also stated that he would be prepared to support additional rate hikes if inflation does not begin to decline in the near future. According to the CME Group FedWatch Tool, traders are currently pricing in nearly a 75% probability of a 25-basis-point Federal Reserve rate hike by December.

Taken together, these factors continue to support US dollar bulls and suggest that any further recovery in gold prices is likely to attract renewed selling pressure.

To identify better trading opportunities today, traders should focus on Friday's US economic releases, including Building Permits, Housing Starts, Industrial Production, and the preliminary University of Michigan Consumer Sentiment Index and Inflation Expectations.

These reports, together with any comments from Federal Reserve officials, are expected to influence US dollar price action and are likely to keep pressure on gold, which risks posting a second consecutive weekly decline.

From a technical perspective, XAU/USD remains under pressure. The first resistance level is the psychological $4,000 mark, followed by the 20-day Simple Moving Average (SMA). Initial support is located at $3,960, below which lies the yearly low. Momentum indicators remain in negative territory, confirming that sellers continue to hold the advantage. The path of least resistance remains to the downside.

The wave structure on the hourly chart remains bearish despite the bulls' prolonged advance. The latest completed downward wave failed to break the previous low, while the most recent upward wave has not yet surpassed the previous high. Geopolitical tensions have escalated again as Iran and the United States have resumed blockades in the Strait of Hormuz and active military operations. It will only be possible to confirm the end of the bearish trend once the 1.1473 high is broken, but the bulls have demonstrated little strength over the past three weeks.

Thursday's news background was very light, but the bears still received modest support from the Philadelphia Fed Manufacturing Index and reports that the United States has been conducting strikes against Iran for six consecutive days. Donald Trump has threatened to destroy all power plants in the country unless Tehran returns to the negotiating table, while Iran has responded with threats to block the Bab el-Mandeb Strait and the Red Sea. It should be noted that this is another critically important route for energy exports from the Middle East to global markets. Therefore, if both key maritime chokepoints were blocked simultaneously, oil prices could potentially double, triggering a sharp surge in global inflation and forcing central banks to tighten monetary policy further. The situation in the Middle East remains highly explosive. On Friday, the eurozone will release its inflation report, although traders have already seen the preliminary estimate. The bulls may resume buying today.

On the 4-hour chart, the pair remains in a sideways range. Consolidation above 1.1411 suggests the possibility of further gains; however, price direction has changed too frequently in recent sessions, while trading activity remains subdued. No emerging divergences are currently observed on any indicator. The descending trend channel remains intact.

Commitments of Traders (COT) Report

During the latest reporting week, professional traders closed 12,228 long positions and opened 5,098 short positions. Over the seven weeks spanning February and March, the bulls' overwhelming advantage disappeared because of the war involving Iran, while during the past fifteen weeks, market positioning has become more balanced amid the suspension of hostilities in the Middle East. Speculative traders currently hold approximately 223,000 long positions and 239,000 short positions.

Overall, large institutional traders continue to maintain a constructive long-term view of the euro. Naturally, the wide range of global events that have dominated recent years continues to influence investor sentiment. In particular, the market remains focused on developments in the Middle East, where military operations have paused and negotiations have begun, potentially paving the way for a lasting peace agreement. At the same time, the market continues to largely ignore the improvement in geopolitical conditions, as well as several other factors that support the euro.

Economic Calendar for the US and the Eurozone

Eurozone

• Consumer Price Index (09:00 UTC)

United States

• Building Permits (12:30 UTC)
• Housing Starts (12:30 UTC)
• Industrial Production (13:15 UTC)
• University of Michigan Consumer Sentiment Index (14:00 UTC)

The economic calendar for July 17 contains five scheduled releases, none of which I consider particularly important. As a result, macroeconomic data are expected to have only a limited impact on market sentiment on Friday, mainly during the second half of the day.

EUR/USD Forecast and Trading Tips

Long positions may be considered today following a rebound from the 1.1438 level on the hourly chart, targeting 1.1472 and 1.1507. Alternatively, long positions may also be considered after a confirmed close above 1.1472. Short positions may be considered following a confirmed close below 1.1438 on the hourly chart, targeting 1.1395. Market movements remain extremely subdued.

Fibonacci retracement levels are drawn from 1.1620 to 1.1325 on the hourly chart and from 1.1411 to 1.1850 on the 4-hour chart.

The wave structure remains bullish. The latest completed downward wave did not break the previous low, while the new upward wave exceeded the previous high. Therefore, the bulls continue to dominate. In my view, the bearish impulse that began in 2026 is complete, and only geopolitical developments could prevent the bulls from extending their advance. However, at this stage, geopolitical factors are likely to trigger only a corrective pullback.

Thursday's news background offered little support for the British pound. Nevertheless, traders had already positioned themselves for a corrective pullback, while the technical picture pointed to further downside. Earlier in the day, the UK released GDP and industrial production data, which, in my opinion, became one of the key drivers behind the pound's decline.

The UK economy expanded by just 0.1% month-on-month and 0.7% year-on-year in May, broadly matching market expectations. While the GDP report cannot be described as weak or disappointing, the industrial production figures certainly can. Industrial output fell by 0.5% month-on-month in May, compared with market expectations of a 0.1% decline. Thus, the economic data confirmed that the pound was ready for a corrective pullback, which ultimately materialized.

There will be only a limited number of economic releases today, so the bulls are unlikely to launch another strong advance at the end of the trading week. Geopolitical developments may also support the US dollar, as tensions in the Middle East continue to escalate and Donald Trump has threatened new strikes against Iran. Personally, I have little doubt that such strikes would provoke a response.

On the 4-hour chart, the GBP/USD pair rebounded from the 23.6% Fibonacci retracement level at 1.3538, reversed in favor of the US dollar, and declined toward the 1.3467–1.3482 support level. A rebound from this area today would support renewed growth toward 1.3538, while consolidation below it would signal a further decline toward the 50.0% Fibonacci level at 1.3409. No emerging divergences are currently observed.

Commitments of Traders (COT) Report

Sentiment among the Non-commercial group became less bearish during the latest reporting week, although it remains bearish overall. The number of long positions held by speculative traders increased by 7,415, while short positions declined by 6,829. The current balance stands at approximately 45,000 long positions versus 132,000 short positions.

Bears have dominated the market for several months. However, while this dominance previously raised a few questions, it has become less convincing as the fundamental backdrop has changed significantly. Even so, bearish positions still outnumber bullish ones by nearly three to one.

I still do not believe in the continuation of a long-term bearish trend for the pound. In the near term, however, market direction will depend less on economic indicators, Trump's trade policy, or central bank monetary policy, and more on the duration, scale, and consequences of the conflict in the Middle East. In recent weeks, the market has become more optimistic about the prospects for peace, but negotiations between Iran and the United States may prove lengthy and difficult. Moreover, there is no guarantee that they will end with the signing of a nuclear agreement.

Economic Calendar for the US and the UK

United States

• Building Permits (12:30 UTC)
• Housing Starts (12:30 UTC)
• Industrial Production (13:15 UTC)
• University of Michigan Consumer Sentiment Index (14:00 UTC)

The economic calendar for July 17 contains four releases, none of which I consider particularly important. Therefore, the impact of macroeconomic data on market sentiment is likely to remain limited and confined mainly to the second half of the day.

GBP/USD Forecast and Trading Tips

Short positions were justified after a rebound from the 1.3526–1.3543 resistance level on the hourly chart, targeting the 1.3454–1.3457 support zone. This target has been reached. New short positions may be considered following a confirmed close below the 1.3454–1.3457 support level, with a target at 1.3382. Long positions may be considered after a rebound from the 1.3454–1.3457 support level, targeting the 1.3526–1.3543 resistance level.

Fibonacci retracement levels are drawn from 1.3457 to 1.3139 on the hourly chart and from 1.3158 to 1.3655 on the 4-hour chart.

In practice, the S&P 500 saw a classic "sell the news" response. Traders have become increasingly selective about AI stories all year, rotating favorites on concerns that massive capex is not yet translating into commensurate profit. The four largest US AI operators are expected to spend more than $725bn this year. The crucial question is whether those investments will pay off.

S&P 500 sector dynamics in July

The PHLX Semiconductor Index plunged by more than 4%, dragging down Sandisk, Seagate, Micron, Intel, and AMD. Goldman Sachs reports that hedge funds' net exposure to a broad basket of AI-linked names has dropped to a one-year low, which is a clear sign that big players are locking in profits after the explosive rally.

That said, it would be wrong to assume the entire US equity market has been damaged. The equal-weighted S&P 500 rose by 1% to a record, outperforming the market-cap-weighted S&P 500 by the widest margin since 2024. That demonstrates the rest of the market is holding up well, while a handful of tech megacaps pay the price for overly ambitious expectations.

Dynamics of Fed rate expectations

Fed commentary is also contributing to market jitters. Dallas Fed President Lorie Logan said the central bank should raise interest rates to combat elevated inflation, becoming one of the clearest hawks ahead of the July meeting. Yet, futures markets are not rushing to price in immediate tightening — the odds of a July move are only about 10%.

Macro data does not help clarify the picture. Retail sales in June rose by just 0.2% month-on-month, a notable slowdown after a revised 1% gain in May. Consumers are clearly tiring of spending at the previous pace.

In short, the chip sell-off is not a market-wide verdict but a painful re-pricing of a single stretched growth story. Investors will need to learn to separate real revenue from glossy promises. The open question remains: can AI justify hundreds of billions in investment before investor patience finally runs out?

Technically, the daily chart shows that the S&P 500 is consolidating in the 7,500–7,580 range. A break above this area would be a buy signal, while a break below it would trigger a sell signal.

In my opinion, the resilience of the pair can be explained by the fact that the market has stopped perceiving it solely as a derivative of the greenback's dynamics. In recent weeks, the main driver of growth has been not so much the dollar as the yen's structural weakness. Therefore, even on days when the DXY declines, the USD/JPY pair either holds its previous positions or retraces very slightly.

If we consider the specific reasons for the pair's behavior, we can highlight several factors.

First, the market, in my view, has almost abandoned expectations of further tightening from the Bank of Japan. Just a few months ago, investors hoped to see at least one or two rate hikes by the end of the year, but now those expectations have been significantly adjusted. Japan's economy continues to show weak domestic demand, real incomes remain under pressure, and recent macroeconomic reports signal a slowdown in business activity. In these conditions, the Bank of Japan has little room for further interest rate hikes — at least in the near term.

The second reason for the "stress resilience" of USD/JPY buyers is the widening yield differential between the United States and Japan. Even with some dollar weakening (especially after the weak CPI and PPI growth reports in the U.S.), the yield on Japanese government bonds remains significantly lower than that of American bonds. If the yield on 10-year U.S. Treasuries only retraces slightly, while the yield on JGBs remains virtually unchanged, the attractiveness of dollar assets compared to Japanese ones remains largely unaffected.

The third reason, largely stemming from the previous ones, is the continued attractiveness of the carry trade strategy. Even if the market begins to factor in a softer trajectory for Federal Reserve policy, the cost of funding in Japan remains so low that investors are still actively using the yen as a funding currency. In other words, they continue to sell JPY and direct the raised funds into higher-yielding assets, which automatically supports demand for USD/JPY.

There is also another important point contributing to the growth of the pair. The market has practically stopped taking the threat of currency intervention by Japanese authorities seriously. As soon as the pair approaches the upper boundary of the established price range (i.e., in the area of 162.60 – 162.70), representatives of the Ministry of Finance of Japan announce verbal interventions, but the market has "built up an immunity" to such verbal signals. For example, today, Finance Minister Satsuki Katayama reiterated that authorities are prepared to take "decisive measures" if necessary. However, the market's reaction was practically zero. The pair continued trading around 162.30 – 162.50, close to multi-year highs. This again indicates that market participants no longer perceive such statements as signals for immediate intervention. Furthermore, in recent months, Katayama has repeatedly used nearly identical phrases ("ready to act," "will take appropriate measures," "prepared for decisive action," etc.). The regular repetition of such statements has significantly reduced their effectiveness—the market has essentially stopped viewing them as signals for immediate government action. Thus, we are observing a classic example of the diminishing effect of verbal interventions. Until clear signs of preparation for large-scale currency interventions emerge, market participants are likely to continue buying USD/JPY after each notable pullback.

Moreover, even if Japanese authorities intervene, long positions will remain a priority. A large-scale currency intervention can only temporarily strengthen the yen, since its fundamental "weaknesses" (the interest rate gap between the U.S. and Japan, the retention of carry trade attractiveness, and the wait-and-see stance of the Japanese central bank) will persist.

Thus, the current fundamental backdrop favors further USD/JPY growth. However, the pair's immediate proximity to the potential intervention zone of the Japanese authorities significantly increases the risk of sharp downward movements. Corrective pullbacks should be viewed as opportunities to open long positions, but in the area of 162.60 – 162.70, it makes sense to take profit, as approaching the boundaries of the 163 figure significantly raises the chances of a real currency intervention by Japanese authorities.

Meanwhile, well-known online analyst PlanB, who developed his own Stock-to-Flow forecasting model, stated that the $126,000 peak reached last year is not the peak of the current four-year cycle. According to PlanB, Bitcoin could rise to $500,000 between 2026 and 2028. Bitcoin might temporarily drop to around $53,000, but the four-year cycles are still in play and are related to halvings. According to the analyst, 2026 should be the "bottom" of the four-year cycle, and the next all-time high (ATH) should be set in 2029. Each halving establishes a new average level for Bitcoin, which determines future prices.

We would like to remind you that any trend is not eternal. Halvings will continue for at least another 100 years until the last coin is mined. This implies that Bitcoin is destined to rise for at least the next 100 years, which sounds absurd. Of course, nothing is impossible in this world. If the money supply expands over the next century, both Bitcoin and stock markets will rise. However, it is unlikely to rely solely on the halving for forecasting. For Bitcoin to rise to $500,000, investments must increase several times. Investors must stop allocating funds to gold, silver, equity indices, stocks, and the AI sector.

Overall Picture of BTC/USD on the 1D Timeframe

On the daily timeframe, Bitcoin continues to form a downtrend. The trend structure is identified as bearish, and the Change of Character (CHOCH) line has been moved to $82,800, as a new Lower Low (LL) has been formed. Only above this level can we consider the bearish trend to be completed. Since there are still no signals indicating an upward trend reversal, we believe that the decline will continue. On the daily timeframe, a bearish FVG has formed in the $68,000–$70,700 range. New sell signals may be formed within this pattern. However, the pattern has not been worked out yet.

Overall Picture of BTC/USD on the 4H Timeframe

On the 4-hour timeframe, Bitcoin is in a downtrend, but the overall correction is not yet completed. After the removal of liquidity for buying, a rise began, which we had warned about. Recently, only small, local FVGs have been formed, and the response to them has usually been very weak. The last formed FVG is bullish. Currently, the price has returned to it and may react. Thus, traders may find an opportunity to open long positions today. However, any growth of Bitcoin now is a correction. Whether to act on the correction is a decision for each trader to make.

Trading Recommendations for BTC/USD:

Bitcoin continues to form a full-fledged downtrend. We continue to expect a decline targeting $57,500 (the 61.8% Fibonacci level from the three-year uptrend), although this level has essentially already been worked out. However, we do not believe the downtrend will end here. The last bearish FVG pattern formed in the $68,000–$70,700 range on the daily timeframe, making this area a point of interest (POI) for short positions in the coming weeks. On the 4-hour timeframe, Bitcoin continues the second phase of correction, but sell trades remain more attractive since any rise now is inherently a correction. A buy signal may form within the bullish FVG on the 4-hour timeframe.

Explanations for Illustrations:

CHOCH – Change of Character in trend structure.

Liquidity – Stop Loss, pending orders that market makers use to build their positions.

FVG – Fair Value Gap. Price moves through such areas very quickly, indicating a complete absence of one side in the market. Consequently, the price tends to return and react to such areas in continuation of the main trend.

IFVG – Inverse Fair Value Gap. After returning to such an area, the price does not react to it and impulsively breaks through, then tests it from the other side.

OB – Order Block. The candle on which the market maker opened a position to capture liquidity to form their own position in the opposite direction.

There are a few macroeconomic publications scheduled for Friday, and none are significant. In the European Union, the second estimate of inflation for June will be released today and is unlikely to differ from the first estimate. In the United Kingdom, the macroeconomic calendar is empty today. In the U.S., reports on new housing starts, building permits, and the consumer sentiment index from the University of Michigan will be released. Of all the reports mentioned, we can highlight only the consumer sentiment index, as it may provoke a market reaction if the actual value deviates from the forecast.

Analysis of Fundamental Events:

There is nothing noteworthy among the fundamental events on Friday. Recent speeches by Federal Open Market Committee (FOMC) representatives indicated a softening of the American central bank's hawkish stance, at least for the next two meetings. Inflation in the U.S. has slowed from 4.2% to 3.5%, raising hopes for further declines without Federal Reserve intervention. In the coming months, the Fed is unlikely to rush into raising the key rate. In this case, the dollar loses yet another source of support. However, inflation and Fed decisions will remain dependent on oil prices and the conflict in the Middle East.

The geopolitical backdrop remains stably "conditionally positive." Iran and the U.S. have signed an agreement; however, too many important questions remain unresolved. In particular, the "nuclear question," the war between Lebanon and Israel, and the status of the Strait of Hormuz. Theoretically, the market may fear the resumption of full-scale war, but this is clearly insufficient for the dollar to begin rising actively again. After all, Tehran and Washington have not fully exited the negotiation process. Recent events in the Middle East demonstrate the fragility of any ceasefires between the U.S. and Iran. The Strait of Hormuz is currently again under blockade.

General Conclusions:

During the last trading day of the week, both currency pairs may move very sluggishly, as no significant events are expected today. The euro can be traded from the area of 1.1461-1.1466, while the British pound can be traded from the area of 1.3456-1.3476. The euro has not shown a significant rise and appears inclined towards a new decline, while the British pound has been in an upward trend for three weeks but may continue to correct today.

Basic Rules of the Trading System:

1. The strength of a signal is evaluated based on the time it takes to form (bounce or breakout). The less time required, the stronger the signal.
2. If two or more trades were opened at a particular level based on false signals, all subsequent signals from that level should be ignored.
3. In a flat market, any pair may generate many false signals or none at all. Technical levels may be overlooked.
4. On the hourly timeframe, trading signals from the MACD indicator should be executed only when volatility is good, and a trend is confirmed by a trend line or channel.
5. If two levels are too close together (5 to 20 pips), they should be considered a support or resistance area.
6. After moving 15 pips in the correct direction, a Stop Loss should be set at breakeven.

What's on the Charts:

Price levels (areas) of support and resistance are targets when opening long or short positions or sources of signals.

Red lines indicate channels or trend lines that display the current trend and indicate the preferred direction for trading.

The MACD indicator (14,22,3) – histogram and signal line – is a supplementary indicator that can also be used as a source of signals.

Important speeches and reports (contained in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or one should exit the market to avoid sharp reversals against preceding movements.

Beginners trading in the forex market should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.

1H Chart of GBP/USD

The GBP/USD pair corrected on Thursday after a significant rise the day before. The British pound lost approximately 90 pips. In the morning, relatively mediocre GDP and industrial production data for May were published in the UK, which partially triggered the decline of the British currency. However, we do not consider these reports to be the main reason for the fall. The GDP in May was +0.1%, as expected. Industrial production declined by 0.5%, although traders had anticipated only a 0.1% drop. Essentially, it was the industrial production figure that worked against the pound sterling. However, it is unlikely to cause a decline of nearly 1 cent. In the U.S., the retail sales report was neutral, while the Philadelphia Fed business index showed a value of 41.4 against forecasts of 13. However, we believe that the main reason for the pair's decline is technical. The pound sterling has been rising for three consecutive weeks, so a technical correction is what is needed right now.

5M Chart of GBP/USD

On the 5-minute timeframe, no trading signals were formed on Thursday. Only by the end of the day did the pair test the 1.3456-1.3476 area, so trading signals may only form in this area on Friday.

How to Trade on Friday:

On the hourly timeframe, the GBP/USD pair continues its three-week upward trend. We believe that the last rise of the pound is a recovery of fair value and a technical movement justified by the sideways channel on higher timeframes. The trend line on the hourly timeframe has been redrawn and again supports growth prospects. A consolidation below it would allow the pair to begin a downward correction. A new dollar trend, in our view, can only be expected in the event of a resumption of full-scale war in the Middle East.

On Friday, novice traders may open short positions with targets at 1.3380-1.3386 if the price consolidates below the 1.3456-1.3476 area. A bounce from the 1.3456-1.3476 area will allow for new long positions with targets at 1.3587-1.3598.

On the 5-minute timeframe, the following levels can be traded: 1.3096-1.3107, 1.3175-1.3180, 1.3259-1.3267, 1.3319-1.3331, 1.3380-1.3386, 1.3456-1.3476, 1.3587-1.3598, 1.3631-1.3641, and 1.3695. There are no significant publications scheduled in the UK for Friday, while the U.S. will release data on the housing sector and the University of Michigan's consumer sentiment index. We do not expect strong movements today unless something geopolitically unexpected occurs.

Basic Rules of the Trading System:

1. The strength of a signal is determined by the time required to form it (a bounce or a breakout). The less time taken, the stronger the signal.
2. If two or more trades were opened at a particular level based on false signals, subsequent signals from that level should be ignored.
3. In a flat market, any pair may form many false signals or none at all. Technical levels may be disregarded.
4. On the hourly timeframe, trading signals from the MACD indicator should be executed only when volatility is good, and a trend is confirmed by a trend line or channel.
5. If two levels are too close together (5 to 20 pips), they should be considered a support or resistance area.
6. After moving 15 pips in the correct direction, a Stop Loss should be set at breakeven.

What's on the Charts:

Price levels (areas) of support and resistance are targets when opening long or short positions or sources of signals.

Red lines indicate channels or trend lines that display the current trend and indicate the preferred direction for trading.

The MACD indicator (14,22,3) – histogram and signal line – is a supplementary indicator that can also be used as a source of signals.

Important speeches and reports (contained in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or one should exit the market to avoid sharp reversals against preceding movements.

Beginners trading in the forex market should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.

1H Chart of EUR/USD

The EUR/USD currency pair showed no interesting movements during Thursday's trading. Earlier, the European currency demonstrated decent growth, and two days prior, it also rose well. Over these two days, the euro gained about 100 pips, which is quite good. However, there is no rationale for this movement, as the pair remains in a weak upward trend bordering on a flat condition. Essentially, what we have been observing for several weeks is a flat. The price spends 98% of the time between 1.1377 and 1.1461. Although there is formally an upward trend in the market, there were no notable publications or events in the European Union yesterday, while U.S. reports prompted a slight increase in the dollar, as they did not underperform market expectations. However, the reports themselves were secondary, so we did not see strong movements again. For the past three weeks, there has not only been a flat in the EUR/USD pair, but volatility has remained extremely low.

5M Chart of EUR/USD

On the 5-minute timeframe, only one trading signal was formed on Thursday. For several hours, under minimal volatility, the price attempted to break through the area of 1.1461-1.1466, eventually succeeding. Naturally, we did not see a strong downward movement after the signal was formed, but the price moved about 15 pips downwards.

How to Trade on Friday:

On the hourly timeframe, both trend lines have been broken and are no longer relevant. The flat may be coming to an end, as the pair has surpassed the 1.1461 level. Considering all the market events and movements over the past months, we believe the euro should continue to rise – and much more strongly than it currently is. However, in fact, the current upward movement is a correction. After the correction, a new trend phase begins...

On Friday, novice traders may remain in short positions targeting 1.1363-1.1377, as the price has consolidated below the area of 1.1461-1.1466. Long positions may be opened with a target of 1.1527-1.1531 if the price consolidates above the area of 1.1461-1.1466. We still would not expect strong movements.

On the 5-minute timeframe, levels to consider include 1.1267-1.1275, 1.1363-1.1377, 1.1461-1.1466, 1.1527-1.1531, 1.1584-1.1594, 1.1655-1.1666, and 1.1745-1.1754. On Friday, the European Union will release the second estimate of June inflation, which is of little interest. In the U.S., data on the housing market will also be published, along with the University of Michigan's consumer sentiment index, which is not among the most significant reports.

Basic Rules of the Trading System:

1. The strength of a signal is determined by the time it takes to form (a bounce or a breakout). The less time it took, the stronger the signal.
2. If two or more trades were opened at a particular level on false signals, all subsequent signals from that level should be ignored.
3. In a flat, any pair can form many false signals or none at all. Technical levels may be ignored.
4. On the hourly timeframe, trading signals from the MACD indicator should be executed only when volatility is good, and a trend is confirmed by a trend line or channel.
5. If two levels are too close together (5 to 20 pips), they should be considered a support or resistance area.
6. After moving 15 pips in the correct direction, a Stop Loss should be placed at breakeven.

What's on the Charts:

Price levels (areas) of support and resistance are targets when opening long or short positions or sources of signals.

Red lines indicate channels or trend lines that display the current trend and indicate the preferred direction for trading.

The MACD indicator (14,22,3) – histogram and signal line – is a supplementary indicator that can also be used as a source of signals.

Important speeches and reports (contained in the news calendar) can significantly impact the movement of the currency pair. Therefore, during their release, trading should be conducted with maximum caution, or one should exit the market to avoid sharp reversals against preceding movements.

Beginners trading in the forex market should remember that not every trade can be profitable. Developing a clear strategy and practicing money management are key to long-term success in trading.

The GBP/USD currency pair declined by 90 pips on Thursday, losing a significant portion of what had been "hard-earned" on Wednesday. Recall that on Tuesday and Wednesday, inflation and the producer price index were published in the U.S., both showing a significant decrease in figures. Weak inflation data reduced the probability of the Federal Reserve tightening monetary policy at its next two meetings, leading to a decline in the dollar. The euro responded very weakly, while the British pound behaved as expected. On Thursday, there were no important events or reports, so the market began to correct. Overall, both the euro and the pound have been rising for three consecutive weeks, with the euro showing extremely weak growth and the pound showing impressive growth. Thus, the technical correction in the pound raises no questions. We fully support further growth in the British currency, as it can rise to 1.3700 or even higher within the sideways channel on higher timeframes. Most likely, after the downward correction, the upward movement will continue. It is also worth noting the rather weak report on UK industrial production, which may have contributed to a slight correction in the British currency.

From a technical perspective, the British pound continues its upward trend. Currently, the GBP/USD pair remains above the 1.3465-1.3480 area and the critical line. Thus, a new growth phase may begin from these levels. However, if they are broken, the correction could continue to the area of 1.3369-1.3377.

On the 5-minute timeframe on Thursday, no trading signals were formed. Only by the end of the day did the pair test the 1.3465-1.3480 area, where it remains on Friday morning. Therefore, we need to wait for a bounce from this area or a break of the Kijun-sen line.

COT Report

COT reports for the British pound show that non-commercial traders have dominated the market with sales for several months. The net position is negative, despite the long-term uptrend remaining intact. Given the events in the Middle East, it is not surprising that demand for risk currencies remains weak. The war is formally over, but the conflict persists. It is geopolitical factors that may support demand for the U.S. dollar in the near term. However, until a consolidation below the trend line occurs, we would not expect significant declines in the pair.

In the long term, the dollar will continue to decline due to Donald Trump's policies, as is clearly visible on the weekly timeframe (illustration above). The trade war will continue in one form or another for a long time, and Trump's policies are aimed directly and indirectly at weakening the U.S. currency. The long-term upward trend remains, as indicated by the trend line. The price recently tested this line and rebounded from it. According to the latest COT report (dated July 7), the "Non-commercial" group opened 7,400 BUY contracts and closed 6,800 SELL contracts. Thus, the net position of non-commercial traders increased by 14,200 contracts over the week, which does not significantly influence the overall sentiment of professional players.

GBP/USD 1H Analysis

On the hourly timeframe, the GBP/USD pair may begin a correction, as the growth has lasted for three weeks. The market continues to ignore geopolitics, and in the last three weeks, we have observed a technical rise supported by weak inflation data in the U.S. We would not be surprised if the British currency continued to strengthen, as it is on track to reach the upper boundary of the sideways channel, which lies in the range of 1.3720-1.3800.

For July 17, we identify the following important levels: 1.3042-1.3050, 1.3096-1.3115, 1.3179-1.3187, 1.3301-1.3309, 1.3369-1.3377, 1.3465-1.3480, 1.3588, 1.3671-1.3681. The Senkou Span B line (1.3334) and Kijun-sen line (1.3450) may also serve as sources of signals. It is recommended to set the Stop Loss at breakeven after the price moves 20 pips in the correct direction. The Ichimoku indicator lines may move during the day, which should be considered when determining trading signals.

On Friday, there are no significant events or reports scheduled in the United Kingdom, while the U.S. will release reports on housing starts, building permits, and the consumer sentiment index from the University of Michigan. We do not consider these reports to be significant; they may provoke only a weak market reaction. Technical factors will take precedence today.

Trading Recommendations:

Today, traders may open short positions targeting the area of 1.3369-1.3377 if the pair consolidates below the Kijun-sen line. New long positions can be opened in the event of a bounce from the area of 1.3465-1.3480 or the critical line, targeting 1.3588.

Explanations for Illustrations:

Support and resistance price levels – thick red lines around which movement may end. They are not sources of trading signals.

Kijun-sen and Senkou Span B lines – lines of the Ichimoku indicator, transferred to the hourly timeframe from the 4-hour one. They are strong lines.

Extreme levels – thin red lines where the price has previously bounced. They are sources of trading signals.

Yellow lines – trend lines, trend channels, and any other technical patterns.

Indicator 1 on COT charts – the size of the net position for each category of traders.

The EUR/USD currency pair once again failed to continue its upward movement on Thursday, despite being in a bullish trend for three weeks. Of course, this movement can only be termed a "trend" formally, as the euro has managed to gain only about 150 pips over the three weeks with significant difficulty. Thus, this movement resembles a mere correction before another prolonged decline. On Wednesday, the euro broke out of the sideways channel at 1.1362-1.1461, but, as it turned out on Thursday, only to return to it the following day. The volatility of the pair on this day was, as usual, weak, and the market reacted primarily to the secondary Philadelphia Fed business index, which turned out to be four times stronger than forecasts. The retail sales report matched expectations. In total, the dollar gained 30 pips from these two publications.

From a technical perspective, the pair maintains a minimal bullish bias and is positioned above the Ichimoku indicator lines. Thus, a weak upward movement may continue. However, in reality, the price has returned to the sideways channel of 1.1362-1.1461, and the upward movement in recent weeks has been so weak that it is difficult to even discuss it as a trend.

On the 5-minute timeframe on Thursday, one sell signal was formed. During the American trading session, the pair broke the 1.1461 level, and by the end of the day, it had dropped to a critical line. Thus, traders could open a short position that yielded a profit of 10-15 pips by the end of the day.

COT Report

The latest COT report is dated July 7. The illustration on the weekly timeframe clearly shows that the net position of non-commercial traders remains "bullish" but has significantly decreased due to geopolitical events. Traders have been shedding the euro in favor of the U.S. dollar in recent months. Donald Trump's policies have remained unchanged, but for some time the dollar has acted as a "reserve currency." However, this process may already have concluded.

We still do not see any fundamental factors for strengthening the euro, while there are plenty of factors for the dollar's decline. The war in the Middle East made the dollar temporarily super-attractive, but when the "shelf life" of this factor expires, everything will return to normal, and it may have already expired. In the long term, the euro could drop to the level of $1.08 (trend line), but the upward trend will still remain relevant. Moreover, during the recent months of dollar growth, the pair did not get significantly closer to this line.

The positioning of the red and blue lines of the indicator indicates parity between bulls and bears. During the last reporting week, the number of longs for the "Non-commercial" group decreased by 12,200, while the number of shorts increased by 5,100. Consequently, the net position fell by 17,300 contracts over the week.

EUR/USD 1H Analysis

On the hourly timeframe, a corrective upward trend continues to form within a two-month downtrend, and the flat is presumably over. The situation in the Middle East remains tense and has not improved. The market continues to ignore many factors in favor of the euro, but the euro is rising from its knees as the market has reassessed the U.S. dollar. However, the euro's growth appears to be a prelude to a new decline...

For July 17, we highlight the following levels for trading—1.1234, 1.1274, 1.1362, 1.1461, 1.1536-1.1542, 1.1585, 1.1657-1.1666, 1.1750-1.1760, 1.1786, 1.1830-1.1837, as well as the Senkou Span B line (1.1417) and Kijun-sen line (1.1430). The Ichimoku indicator lines may move during the day, which should be considered when determining trading signals. Don't forget to set a Stop Loss order to breakeven if the price moves in the correct direction by 15 pips. This will protect against potential losses if the signal proves false.

On Friday, the U.S. will publish reports on housing starts, building permits, and the consumer sentiment index. In the European Union, a second estimate of inflation for June will be released. All of the above reports are secondary and may provoke only a weak market reaction. The pair's volatility remains low, so strong movements are unlikely.

Trading Recommendations:

Today, traders may consider short positions targeting 1.1362 if the price consolidates below the Senkou Span B line. Long positions can be opened with targets at 1.1461 and 1.1480 if the pair bounces off the Ichimoku indicator lines.

Explanations for Illustrations:

Support and resistance price levels – thick red lines around which movement may end. They are not sources of trading signals.

Kijun-sen and Senkou Span B lines – lines of the Ichimoku indicator, transferred to the hourly timeframe from the 4-hour one. They are strong lines.

Extreme levels – thin red lines where the price has previously bounced. They are sources of trading signals.

Yellow lines – trend lines, trend channels, and any other technical patterns.

Indicator 1 on COT charts – the size of the net position for each category of traders.

The GBP/USD currency pair retraced slightly from the day-before highs but remains generally positioned for further growth. Over the past few weeks, the British currency has risen by 400 pips and is trading quite reasonably. Recall that three weeks ago, the GBP/USD pair dropped to the lower boundary of its sideways channel on the daily and weekly timeframes, so, with the continued flat movement, a rise to the upper boundary was expected. It is worth noting that the long-term technical picture for the euro is approximately the same, so the euro should have shown a similar movement. However, something inexplicable is happening with the euro, which many experts do not even attempt to explain afterward. We would like to remind you that illogical movements in the market frequently occur. When this happens, it is best to acknowledge that the movement is illogical rather than concoct various fantastic explanations.

The pound sterling has risen because the last phase of its decline was completely unjustified. The dollar rose on the market's expectations of a tightening of the Federal Reserve's monetary policy, and in July, it became known that inflation is slowing in the U.S. without the central bank's assistance. How the conflict in the Middle East will develop remains unclear. Donald Trump is already calling for Iran to return to the negotiating table, as this is primarily in his interest. Therefore, we do not rule out that this time the escalation will end with reconciliation, a ceasefire, and the opening of the Strait of Hormuz for a couple more days. Regardless, the fact that oil prices are rising today does not mean they will be high in a couple of weeks. U.S. inflation for July could be nearly anything. If the Strait of Hormuz opens, it will slow down; if the Strait of Hormuz remains blocked and the Houthis also block the Bab el-Mandeb Strait, prices could rise even higher than 4.2%.

Incidentally, Iran, according to unverified information, has instructed the Houthis to close the Red Sea and the Bab el-Mandeb Strait if Trump resumes attacks in the region. In simple terms, if Trump continues to pursue a path of coercive pressure on Tehran, he will get a closed Bab el-Mandeb Strait alongside a closed Hormuz. In principle, Trump doesn't care about "some straits somewhere in Asia or Africa." American oil does not flow through them, and the problem of drowning Europeans is the responsibility of the Europeans themselves. Of course, ahead of the congressional elections, Trump needs to end the war with Iran to lower fuel and oil prices in the U.S. And along with them, inflation. However, it should be understood that Trump is unlikely to make concessions to Iran. A U.S. refusal of the free status of the Strait of Hormuz and the nuclear deal would mean total defeat and would label the president as a failure to the world. The same European Union would finally understand that if you are pressured, you must respond in kind. Iran responds, and therefore it wins. If Trump cannot succeed with Iran, Greenland will be next.

The average volatility of the GBP/USD pair over the last 5 trading days is 93 pips, which is considered "average" for this pair. On Friday, July 17, we expect the pair to move within a range bounded by the levels of 1.3384 and 1.3570. The upper linear regression channel is directed downward, indicating a downtrend. The CCI indicator has formed a "bearish" divergence and has entered the overbought area, signaling an impending downward correction.

Nearest support levels:

S1 – 1.3428

S2 – 1.3367

S3 – 1.3306

Nearest resistance levels:

R1 – 1.3489

R2 – 1.3550

R3 – 1.3611

Trading Recommendations:

The GBP/USD currency pair maintains a downward trend. Trump's policies will continue to exert pressure on the U.S. economy, so we do not expect growth from the U.S. dollar in the long term. The year 2026 is shaping up to be very positive for the dollar, driven by geopolitics and now by the Fed's readiness to raise interest rates. However, the weekly timeframe shows a flat range between levels 1.3150 and 1.3780 within a four-year uptrend. Long positions with targets at 1.3550 and 1.3570 can be considered when the price is above the moving average. If the price is below the moving average line, trading on the downside can be considered with a target of 1.3306.

Explanations for Illustrations:

Linear regression channels help determine the current trend. If both are directed in one direction, it means the trend is currently strong;

The moving average line (settings 20,0, smoothed) determines the short-term trend and the direction in which trading should currently be conducted;

Murray levels are target levels for movements and corrections;

Volatility levels (red lines) represent the likely price channel in which the pair will move over the next day based on current volatility indicators;

The CCI indicator's entry into the oversold zone (below -250) or overbought zone (above +250) indicates that a trend reversal in the opposite direction is approaching.

The EUR/USD currency pair traded very calmly on Thursday. On the 4-hour timeframe, it is clear that over the past three weeks, the euro has risen by only 140 pips. Thus, we have witnessed a prolonged correction, which will likely end with a new decline of the single European currency. Are there solid reasons and grounds for this? No. There weren't even any during the period from June 17 to June 24 when the market was actively factoring in a future interest rate hike by the Federal Reserve, which may not even occur, and it seems to be preparing for another completely inadequate rise of the U.S. dollar.

Of course, no matter how the movement of the past three weeks looks, we cannot be certain that a new leg of the downtrend is inevitably ahead. However, it is hard to disagree that if the price declines by 285 pips in a week and then crawls up by 140 pips over three weeks, it's worth questioning where the trend is and where the correction is. The most interesting thing is that the market continues to ignore almost any macroeconomic or fundamental information. Three weeks ago, the market was confident in the Fed's monetary tightening in 2026, ignoring the European Central Bank's already implemented policy tightening and the (at that time) resolution of the conflict in the Middle East. Now it actively disregards the decline in inflation in the U.S. and the moderating hawkish tone of Fed representatives. If Kevin Warsh were to openly refuse a rate hike tomorrow, the dollar would likely rise in that case as well.

This week, the pair essentially traded only one day — Tuesday. On that day, the U.S. inflation report for June was released, raising significant doubts about the Fed's willingness to hike interest rates in the near future. Inflation dropped to 3.5%, and Warsh began speaking much more gently and cautiously about inflation and monetary policy. This suggests that the U.S. dollar should have lost the last market support factor, but instead, it is preparing for another rise.

It is worth noting that the British pound showed a brilliant rise of 400 pips over the past three weeks, which, in our view, is completely logical and justified. We expect growth from the British currency, as well as from the euro, in the medium term. However, the European currency demonstrates only one thing — a complete unwillingness to rise, regardless of fundamentals and macroeconomic conditions. Perhaps the problem lies not with the traders? Perhaps the ECB has begun currency interventions, or the reasons are not visible to most traders? After all, the British pound cannot rise while silently watching the euro fall.

Let's say this: any new decline of the EUR/USD pair would be inherently illogical. However, the market (especially market makers) cannot be prohibited from buying dollars, selling euros, or trading in a more logical manner. Therefore, traders may soon witness another illogical rise in the dollar, accompanied by explanations from analysts who will speak of "growing risk-averse sentiment." We can only hope for common sense.

The average volatility of the EUR/USD currency pair over the last 5 trading days as of July 17 is 62 pips and is characterized as "average." We expect the pair to move between levels 1.1384 and 1.1508 on Friday. The upper linear regression channel is directed downward, indicating the continuation of the downtrend. The CCI indicator has entered the oversold zone and formed two "bullish" divergences, suggesting a possible end to the downtrend.

Nearest support levels:

S1 – 1.1414

S2 – 1.1353

S3 – 1.1292

Nearest resistance levels:

R1 – 1.1475

R2 – 1.1536

R3 – 1.1597

Trading Recommendations:

The EUR/USD pair maintains a downward trend, presumably a correction within a global uptrend, clearly visible on the daily or weekly timeframe. The global fundamental backdrop for the dollar remains negative, but in 2026, first geopolitics and then the Fed's "hawkish" stance provided strong support for the U.S. currency. If the price is located below the moving average, shorts can be considered with targets at 1.1384 and 1.1353. Above the moving average line, long positions are relevant with targets at 1.1475 and 1.1508. Bears are maintaining winning positions, and the market has been flat for three consecutive weeks.

Explanations for Illustrations:

Linear regression channels help determine the current trend. If both are directed in one direction, it means the trend is currently strong;

The moving average line (settings 20,0, smoothed) determines the short-term trend and the direction in which trading should currently be conducted;

Murray levels are target levels for movements and corrections;

Volatility levels (red lines) represent the likely price channel in which the pair will move over the next day based on current volatility indicators;

The CCI indicator's entry into the oversold zone (below -250) or overbought zone (above +250) indicates that a trend reversal in the opposite direction is approaching.

However, it's essential to understand the reasons behind Thursday's correction. Traders reacted quite painfully to the economic growth data released for the United Kingdom. The release was indeed ambiguous, but it cannot be described as catastrophic for the British currency.

According to the released data, monthly GDP grew by only 0.1% in May, following a 0.1% decline the previous month. At first glance, this is a weak result. But the "devil is in the details."

First, the headline indicators emerged in the "green zone." For instance, most analysts had forecasted zero growth on a monthly basis. However, the economy did not present an unpleasant surprise that many feared after the April decline and rising energy prices. As mentioned earlier, GDP increased by 0.1% on a monthly basis, and the fact that the economy returned to growth under such challenging conditions is a positive signal.

Secondly, the most important figure is not the monthly measure but the three-month measure, which the Bank of England traditionally considers a more reliable indicator of economic dynamics. Over three months (including May), the British economy grew by 0.7%, compared with a forecast of 0.4%. On the one hand, this is slightly lower than the previous three-month period, in which GDP increased by 0.8%. On the other hand, this growth rate remains high, indicating that the economy maintains resilience despite deteriorating external conditions. Moreover, on a year-on-year basis, GDP grew by 1.3% — the strongest growth rate in the past nine months.

Finally, it is worth noting that the report's structure looks quite encouraging.

Thus, the key driver of growth has once again been the services sector, which grew by 0.3%. Particularly impressive dynamics were shown by high-tech industries, including software development, scientific research, and the pharmaceutical sector.

It is important to remember that the services sector accounts for about 80% of the British GDP, so its resilience is much more significant than any temporary weakness in industry or construction. These sectors of the economy indeed disappointed: the manufacturing sector shrank by 0.5%, while the construction sector contracted by 0.8%. However, these industries faced pressure largely due to external factors — rising energy prices and increased geopolitical uncertainty. Even amid these shocks, the British economy maintained positive dynamics, indicating its resilience.

In other words, the release published on Thursday cannot be deemed "dovish." The sustained growth in the services sector and strong three-month dynamics suggest that the central bank is unlikely to feel the need to rush to ease monetary policy. Thursday's release rather supports maintaining a wait-and-see position, which, under the current circumstances, is a fundamental factor supporting the pound.

Here, it is necessary to revisit the reasons that caused Wednesday's surge in GBP/USD by nearly 200 points. This dynamic was driven less by the weakening of the dollar than by the strengthening of the pound amid political events in the United Kingdom.

The future Prime Minister of the UK, Andy Burnham, stated on Wednesday that he intends to adhere to principles of budget discipline and will likely appoint Shabana Mahmood as Chancellor of the Exchequer, whom investors view as a proponent of more conservative fiscal policy. Her candidacy was perceived as a signal of continuity in government financial control and adherence to budget rules, whereas the appointment of a more left-leaning candidate (for example, Ed Miliband) would raise concerns about rising government spending and a widening budget deficit.

This is an important point for GBP/USD traders, as a stricter fiscal policy means lower levels of government borrowing, reduced risk of rapid debt growth, and increased investor confidence in British assets. Moreover, the market still remembers the crisis of confidence following Liz Truss's "mini-budget" in 2022 — hence, any signals favoring budgetary responsibility are now seen as positive for the British currency.

Therefore, in my view, the pair continues to have potential for further growth — any downward price retracements could be seen as opportunities to open long positions. From a technical standpoint, the pair is positioned between the middle and upper lines of the Bollinger Bands indicator on the four-hour chart, as well as above all lines of the Ichimoku indicator, which has formed a bullish "Parade of Lines" signal. The upper limit of the "working" price range is the 1.3560 mark, corresponding to the upper line of the Bollinger Bands indicator on the H4 timeframe.