Powell poured cold water on expectations of interest rate cuts! US dollar index surges more than 1%

On July 31, early trading in the Asian market on Thursday, Beijing time, the US dollar index hovered around 99.77. On Wednesday, the US dollar index rose for the fifth consecutive trading day, approaching the 100 integer mark, and finally closed up 1.04% to 99.92, a new high in more than two months, due to strong U.S. economic data and Powell insisted on a wait-and-see stance. U.S. Treasury yields rose across the board, with the benchmark 10-year U.S. Treasury yields closed at 4.379%, and the 2-year U.S. Treasury yields closed at 3.951%. Spot gold returned to its decline, falling below the $3270 mark for a time, rebounded slightly at the end of the trading session, and finally closed down 1.55%, closing at $3274.85/ounce, the largest single-day decline in more than a month; spot silver followed gold and finally closed down 2.8% at $37.11/ounce. International crude oil rose for three consecutive days as investors focused on Trump's more urgent ultimatum to Russia and its tariff threat to oil-trading countries. WTI crude oil hit the $70 mark during the session and finally closed up 1.32% to $69.79 per barrel; Brent crude oil finally closed up 1.18% to $72.6 per barrel.

Analysis of major currencies

Dollar Index: As of press time, the US dollar index hovered at US$99.77. The dollar received a buy on Wednesday, after Fed Chairman Jerome Powell warned that the Fed was unlikely to lower interest rates unless the U.S. central bank received solid evidence that inflation would continue to ease rather than rise due to tariffs. Technically, the U.S. dollar index is trying to close above resistance at 99.20–99.40. If this attempt is successful, the U.S. dollar index will move to the next resistance level 100.40–100.60.

Euro: As of press time, the euro/dollar hovers around 1.1433. The euro/dollar fell for the third consecutive day, with a drop of more than 1.20%, as the Federal Reserve kept interest rates unchanged and Jerome Powell was inclined to hawkishness. In addition, strong U.S. growth data and scarcity of the eurozone economic agenda have pushed the pair below 1.1430, down more than 2.71% so far this week. Technically, successful testing of support level 1.1450–1.1465 will push the EUR/USD toward the next support level 1.1350–1.1365.

GBP: As of press time, GBP/USD is hovering around 1.3253. U.S. economic data will become particularly important this week in the context of cautious Federal Reserve. The GBP/USD fell for the fifth straight day on Wednesday as the US dollar (USD) gained wide market buying after the Fed kept interest rates unchanged and held on its stubborn wait-and-see stance, weakening hopes for a September rate cut. With the possibility of a rate cut on September 17 being left behind, market pressure will focus on the large amount of U.S. economic data to be released in the second half of this week. Technically, breaking below the support level 1.3250–1.3270 will open the way for testing the next support level 1.3140–1.3160.

Analysis of gold and crude oil market trends

1) Analysis of gold market trends

On Thursday, gold hovered around 3287.57. On Wednesday, the Federal Reserve decided to keep interest rates unchanged with a 1.50-9 vote, and gold prices plummeted more than 2% on Wednesday. Federal Reserve Chairman Jerome Powell was flirting with hawkishness at a press conference, coupled with strong GDP data in the second quarter of 2025 that weighed on gold prices.

Technical: From a technical perspective, after the gold price falls below $3,300/ounce, the short-term target may be around $3,250/ounce (the low on June 30 was $3,247.87/ounce). If the decline further, $3,200 per ounce will be the key psychological barrier. On the contrary, if the Fed releases a clearer signal of interest rate cuts in the future, or global geopolitical risks further heat up, gold prices may rebound quickly and return to above $3,300 per ounce.

2) Analysis of crude oil market trends

On Thursday, crude oil trading around 69.79. WTI crude oil rise room to oneThe highest level in many months as traders focus on potential developments in U.S. President Donald Trump’s deadline for ending the Ukrainian war.

Technical: Technically, US crude oil is currently oscillating and consolidating at a high level, and the technical side is intertwined with long and short signals. The RSI value is 57.58 and the trend is smooth, indicating that the current long and short forces are relatively balanced and lack clear direction guidance. The red column of the MACD column has begun to appear, and there is a short-term bottoming rebound signal, but the energy of the red column is weak, so it is necessary to observe whether it can continue to amplify. In the short term, we will pay attention to the 50% Fibonacci retracement level 66.86 support. If we hold it and the MACD red column continues, the price is expected to break the resistance of 69.59; if we fall below 66.86, we will most likely fall below 64.13 support.

Forex market trading reminder on July 31, 2025

To be determined Bank of Japan announced interest rate resolution

09:30 China's July official manufacturing PMI

14:30 Switzerland's June actual retail sales annual rate

14:30 Bank of Japan Governor Kazuo Ueda held a press conference

14:45 France's July CPI monthly rate initial value

15:55 Germany's July seasonally adjusted unemployment rate

15:55 Germany's July seasonally adjusted unemployment rate

17:00 Eurozone's June unemployment rate

19:30 US July challengers Number of layoffs in enterprises

20:00 The initial value of the CPI monthly rate of Germany in July

20:30 The number of people who requested unemployment benefits in the week from the United States to July 26

20:30 The annual rate of the core PCE price index in June

20:30 The monthly rate of personal expenditure in June

20:30 The quarterly rate of the labor cost index in the second quarter

20:30 The monthly rate of the core PCE price index in June

21:45 The Chicago PMI in July

22:30 The week from the United States to July 25

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