#AN012: Early July News and Forex Impact

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1. US Debt and Dollar Depreciation

The US Senate is debating an ambitious $3.3 trillion fiscal package, fuelling concerns about rising debt. The dollar has lost ground against the euro, hitting its lowest level in nearly four years.
Forex Impact: Dollar weakness favors crosses such as EUR/USD and GBP/USD. Possible rate speculation, with prospects of Fed cuts.

2. NATO Summit and Increased Defense Spending

At the NATO summit in The Hague, the commitment is to increase to 5% of GDP by 2035. This strengthens European government bonds and the dollar, in view of a safe-haven and new flows into the USD.
Forex Impact: Support for the USD, increased volatility on crosses linked to the euro and sterling, potential trade on EUR/USD and GBP/USD.

3. Taiwan dollar appreciation

The Taiwan dollar jumped 2.5% as local insurers hedge against dollar decline.
Forex Impact: Dollar depreciation slows; Asian crosses such as USD/SGD and USD/KRW under pressure.

4. Global dollar weakness

Euro bounces above 1.17 and USD/CHF below 0.80 on weak macro data and Fed cut speculation.
Forex Impact: Open to long EUR/USD, short USD/CHF strategies, with potential carry trades.

5. Israel-Iran Ceasefire & Geopolitical Risk

Israel-Iran fighting ends, but tensions remain. Markets are monitoring the fallout on oil and safe assets.
Forex Impact: Possible increase in geopolitical volatility, with USD, JPY, CHF as a hedge; volatility on oil influences crosses that contain commodities (AUD/USD, CAD/USD).

Hi, I'm Andrea Russo, a forex trader, and today I want to talk to you about the impact of the latest global news on currency markets.

🏛️ US debt and fiscal tensions

The 3.3 trillion fiscal package under discussion in the United States has weakened the dollar. This weakness fuels opportunities on EUR/USD and GBP/USD, with potential upside on long positions, but beware of future Fed interventions.

⚔️ NATO towards 5% of GDP for defense

The NATO Summit in The Hague marked a paradigm shift: more defense spending means bond issuance and USD flows as a safe-haven. This supports the greenback, making European crosses volatile.

💱 Forex Asia: the case of the Taiwanese dollar

Yesterday's rise in the Taiwan dollar is a clear sign of protection against USD weakness. Unicorn to watch for those betting on emerging crosses in Asia.

💶 EUR/CHI and euro crosses recovering

EUR/USD rises above 1.17 and USD/CHF falls below 0.80: perfect timing for strategic longs. The market is discounting falling Fed rates, amplifying the momentum on the euro.

🛡️ Geopolitics: fragile truce and geopolitical risk

The truce between Israel and Iran currently limits the impact but does not eliminate the risk: safe haven assets such as USD, JPY and CHF remain under pressure for future eventualities.

🎯 Conclusion and trading opportunities

Long EUR/USD on euro momentum and USD reflux

Monitoring GBP/USD for macro sentiment

Watch out for USD/CAD, AUD/USD for oil shocks

This article was created with the support of our Broker Partner PEPPERSTONE.

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