Forex Weekly Outlook: Key Support Levels and Market Dynamics Shape Trading Opportunities

Fundamental Analysis & Market Sentiment

Last week’s top-performing trades included:

1. Long USD/JPY, yielding a 0.21% gain.

2. Short EUR/USD, delivering a 0.16% profit.

These moves generated a cumulative return of 0.37%, averaging 0.19% per trade.

Key market developments included:

1. FOMC minutes indicated a slightly hawkish tilt among members, with divided views on future rate trajectories.

2. US ISM Services PMI came in marginally below expectations.

3. The Reserve Bank of New Zealand raised the Official Cash Rate by 0.25% as forecast and signaled additional tightening, boosting the NZD as the strongest performer in currencies.

4. Canada’s unemployment rate unexpectedly dropped to 6.5% from 6.6%, while employment increased.

The Federal Reserve’s latest policy minutes revealed a modest shift toward hawkishness, suggesting tighter monetary conditions may remain in focus.

Equally significant was the Reserve Bank of New Zealand’s decisive tightening stance, which propelled the kiwi to standout gains among major currencies.

External geopolitical tensions also intensified as the ceasefire between the United States and Iran further deteriorated, with naval exchanges escalating around the Strait of Hormuz. This region, a critical oil transit corridor, saw Iranian strikes targeting regional allies including Bahrain, Kuwait, Qatar, Jordan, and Iraq. Energy markets began reacting by the week’s close, as shipping disruptions hinted at tighter supply and elevated crude prices likely to persist unless de-escalation occurs soon.

Notably, these tensions have yet to significantly dent equity market performance.

Commodity markets, particularly oil, remain vulnerable to escalating Middle East volatility, while equities have so far demonstrated resilience to the ongoing geopolitical developments.

The Week Ahead: 13th – 17th July

Next week is expected to be relatively subdued, yet several high-impact data releases could drive volatility. The key events, ranked by potential market influence, are:

1. US Consumer Price Index (CPI)

2. US Producer Price Index (PPI)

3. Fed Chair Warsh’s congressional testimony

4. Bank of Canada policy announcement

5. UK GDP data

Sunday marks a public holiday in France, reducing market liquidity for part of the week.

Monthly Forecast: July 2026

Currency Price Changes and Interest Rates

The monthly outlook projects a decline in EUR/USD against a rising USD/JPY pair. Current readings confirm these directional forecasts are tracking in line with initial expectations.

Weekly Forecast: 12th July 2026

No specific forecast was issued for the previous week due to minimal directional movement. This week’s outlook remains unchanged, as recent price action has been unremarkable.

Volatility has risen, with nearly one-fifth of tracked currency pairs and crosses experiencing intraday swings exceeding 1%. Anticipated volatility for the upcoming week should remain elevated, particularly among dollar-denominated pairs.

These analyses provide actionable insights for execution across both live and demo trading environments.

Technical Analysis

Key Support/Resistance Levels for Popular Pairs

Key Support and Resistance Levels

US Dollar Index (DXY)

Last week’s candlestick formed an inside doji, indicating indecision, yet closed higher, maintaining a bullish tone that eyes a potential breakout above the key long-term resistance at 101.39.

While a clear uptrend is evident with prices above three- and six-month highs, the failure to reclaim 101.39 introduces uncertainty into the momentum.

The bias remains neutral pending a decisive close above 101.39. A successful breakout—potentially catalyzed by stronger-than-expected CPI data—could extend gains toward new 13-month highs.

US Dollar Index Weekly Price Chart

USD/JPY

The pair approached a potential 39-year peak before forming an inside bar with near-pin bar characteristics, suggesting caution. While no confirmed yen intervention is evident, underlying pressure exists on the downside.

Despite bullish trend dynamics supported by a rising channel dating back to April 2025, recent volatility has introduced a bearish edge. Fundamental support for the U.S. dollar persists, while the yen faces structural weakness tied to Japan’s elevated debt burden.

A sustained move above 101.39 in the DXY would likely drive USD/JPY toward fresh record highs. The author maintains a long position, favoring trend-following strategies, and views the pair favorably for longer-term exposure.

USD/JPY Weekly Price Chart

EUR/USD

The pair briefly tested long-termlows before rebounding with a strong bullish candle. While a deeper bearish structure remains intact, the euro’s relative strength versus the yen suggests caution. The author retains a short stance but acknowledges limited bullish momentum.

Maintaining the short exposure aligns with the broader downtrend, though retracements remain frequent and pronounced. Fundamentals do not favor the euro over the dollar in the near term.

EUR/USD Weekly Price Chart

S&P 500 Index

A strong bullish candle closed near the session high, featuring a meaningful lower wick—both bullish signals. The index is technically outperforming the NASDAQ 100, which recently broke out of a narrowing triangle.

Shifting sentiment away from AI-related stocks, now considered overbought, suggests broader market strength may continue. The author awaits a daily close at or above 7,623 before initiating long exposure, citing favorable historical validation for such entries at new all-time highs.

S&P 500 Index Daily Price Chart

Gold

A bearish candle emerged, but its substantial lower shadow diminishes bearish conviction. The metal remains constrained beneath a descending trendline, with potential reversal signs appearing near $4,200. The prior dip below $4,000 has held, creating a tentative floor.

A decisive breach of the descending trendline at $4,200 would signal a more convincing upward shift, offering a cleaner entry point for bullish positions.

Gold Weekly Price Chart

WTI Crude Oil Futures

After testing support at $67.11—the “stairstep” level that previously acted as resistance—the contract recorded its first weekly gain in recent weeks.

Last week’s improvement coincided with escalating tensions in the Strait of Hormuz, though profit-taking erased much of the intraday surge following de-escalation rhetoric from U.S. and Iranian representatives and a lack of follow-through on statements by President Trump.

Further deterioration over the weekend, including Iranian strikes on Gulf states, has reopened the pathway for upward pressure. With the strait effectively sealed, oil prices are poised to rise upon market open.

The author identifies scope for a short-term long trade from the $67.11 support, while day traders may consider entering on pullbacks during the U.S. session.

WTI Crude Oil Spot Weekly Price Chart

Bottom Line

For this week, the recommended trades are:

1. Long USD/JPY

2. Short EUR/USD

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