Gold, EUR/USD, S&P 500 Break Out as USD Tanks; Tesla Earnings Eyed

Most Read: Euro Forecast: EUR/USD Breakout Gains Momentum but Fibonacci Resistance on Radar

Last week, traders looking for volatility had plenty of it. There were significant moves across all asset classes, but perhaps most notable was the sharp drop in the U.S. dollar in the run-up to the June inflation report and, more importantly, after it.

The CPI numbers released on Wednesday and the following day’s PPI data surprised to the downside, reinforcing the argument that price pressures are cooling more rapidly than initially envisioned. This sentiment led traders to reprice lower the Fed’s tightening path, reducing the likelihood of additional tightening beyond the quarter-point hike already discounted for the July FOMC meeting.

With U.S. interest rates expectations shifting in a less hawkish direction, gold prices took off after subdued behavior in recent weeks. Risk assets also commanded bullish momentum, especially rate-sensitive stocks in the technology sector. When it was all said and done, the Nasdaq 100 advanced 3.52% on the week, while the S&P 500 managed to gain 2.42%

In currency markets, the DXY index plummeted about 2.23%, breaking below the psychological 100 mark and hitting its weakest point since April 2022. Meanwhile, EUR/USD and GBP/USD staged an explosive rally, with both pairs overcoming key technical hurdles and reaching their strongest levels since the first quarter of 2022.

WEEKLY PERFORMANCE KEY ASSETS

Source: TradingView

Turning to next week’s high-impact events, the highlight of the U.S. economic calendar will be June retail sales data, with estimates calling for a monthly rise of 0.5%. A strong readout would signal robust household spending, bolstering bets for another Fed hike sometime in the fall. Conversely, a weak print would have the opposite effect: it would further reduce the odds of a tightening beyond July.

Across the pond, UK inflation figures for June will take center stage. Annual headline CPI is seen slowing to 8.2% from 8.7% previously, while the core indicator is forecast to remain unchanged at 7.1%. If price pressures stay sticky, expectations for the Bank of England’s terminal rate could drift higher, boosting sterling in the short term.

INCOMING ECONOMIC DATA

Source: DailyFX Economic Calendar

Last but not least, traders should also keep an eye on the U.S. earnings season, which got officially underway on Friday after major banks announced numbers. Heavy players such as JP Morgan Chase, Wells Fargo and Citi all delivered better-than-expected results, but their guidance failed to impress investors, leading several financial stocks to come under pressure heading into the weekend.

Next week, more financial institutions will unveil their results, with Bank of America, Morgan Stanley and Goldman Sachs being the top three to watch. Commercial and investment banks have a front row view of the economy, so their forward-looking comments may offer insight into the outlook. That said, any signs of worsening economic conditions could be negative for confidence.

In the tech space, Netflix and Tesla’s quarterly results will steal the limelight. Both companies are huge in terms of market capitalization, so fluctuations in their share prices can have an outsize effect on the performance of the S&P 500 and Nasdaq 100. Check out DailyFX’s earnings calendar for a more complete list of the top companies announcing their revenue and EPS in the coming days.

FUNDAMENTAL AND TECHNICAL FORECASTS

British Pound Outlook: Inflation Data Will Drive GBP/USD and EUR/GBP

US inflation is on the way down, taking the wind out of the US dollar’s sails. Will next week’s UK inflation report temper Sterling’s recent surge?

Australian Dollar Outlook: US Dollar Rout Boosts the Aussie

The Australian Dollar got a spring in its step last week as the US Dollar tumbled following soft inflation readings. A new RBA Governor might mean more of the same for monetary policy.

Euro Forecast: EUR/USD Breakout Gains Momentum but Fibonacci Resistance on Radar

EUR/USD rallied aggressively this past week, rising to its best level since February 2022. With momentum on its side, the pair’s outlook remains positive, but Fibonacci resistance may cap its upside going forward.

S&P, Nasdaq Weekly Forecast: US Stocks Eye Further Upside as Q2 Earnings Get Underway

US stocks enjoyed another prosperous week as US inflation surprised to the downside, sending the dollar sharply lower and stocks higher. Q2 Earnings up next

Gold Weekly Forecast: Breakout Fails to Kick on as Technicals Flash Mixed Signals

Spot Gold attempted a slight recovery on Friday as the $1960 handle continues to hold firm. Can Gold prices finally kick on toward the coveted $2000/oz mark?

US Crude Oil Weekly Forecast: Upbeat Market Looks to China GDP

Crude oil prices have risen for a third straight week bolstered by a wide variety of support and this trend looks likely to continue.

Renewed Weakness in US Dollar: EUR/USD, GBP/USD, USD/JPY Price Setups

The US dollar’s fall to new multi-month lows against its peers coupled with the break below key support levels is a sign of renewed bearishness in the greenback. What is the outlook for EUR/USD, GBP/USD, and USD/JPY?

Article Body Written by Diego Colman, Contributing Strategist for DailyFX.com

— Individual Articles Composed by DailyFX Team Members