market outlook

Market Summary and Key Outlook (as of July 29, 2025)

Josh

— 2 min read

Global Financial Condition Highlights

  • Trade tensions eased as the US-Japan deal (15% reciprocal tariffs; $550 bn investment) and a 15% US-EU tariff compromise were finalized, removing major sources of uncertainty.
  • Fed poised to adopt a dovish tone at Wednesday’s FOMC, laying groundwork for a September rate cut; President Trump’s high-profile Fed visit adds a political dimension to Fed independence.
  • Secondary sanctions on Russia loom within two weeks, setting up a bullish backdrop for safe-haven assets medium-term.

Currencies & Forex Markets

  • JPY: Bearish – BoJ’s dovish pivot, political turmoil (PM resignation) and trade deal de-escalation driving Yen weakness.
  • AUD: Neutral to Bearish – Supported by risk-on but facing an imminent RBA rate cut if core CPI prints near 2.2%; short-term caution warranted.
  • AUDJPY: Bullish (macro/technical) – Bull-flag setup and EU deal should lift the pair, though failure to follow through on positive news invites caution.
  • EUR: Bullish – Strengthening as a secondary safe haven; US-EU deal undermines USD, while Europe’s fiscal solidity and ECB pause support the Euro.
  • EURGBP: Bullish – Commodity-led support for GBP is offset by UK stagflation risks; favorable seasonality and technicals make EUR/GBP a cleaner long.
  • EURUSD: Mixed – Immediate USD bounce possible on tariff de-escalation, but longer-term bias is Euro-positive; avoid Euro shorts into the weekend.
  • USD: Bearish – Dovish Fed signals, trade-deal relief and political uncertainty pressuring the dollar across DXY components.
  • USDCHF: Bearish – USD underperformance persists; previous USD/CHF short closed at breakeven but broader dollar weakness remains.

Major Asset & Equity Outlooks

  • Gold (XAU): Bullish medium-to-long term – Expect a shallow pullback toward ~3330–3350 before resuming the uptrend to 3700. Key triggers: Fed’s dovish shift and pending secondary Russia sanctions.
  • Equities (S&P 500 & Risk Assets): Bullish near term – Further gains likely as risk-on sentiment prevails post-trade deals; watch for FOMC cues to gauge sustainability.
  • Crypto: Bullish long term – Small, strategic positions in Solana and Bitcoin retained, aiming for ~500 and ~140k targets respectively.

Summary

  • Global risk sentiment is improving on the back of major trade-deal de-escalations, favoring high-beta currencies and equities.
  • The USD is under pressure ahead of a dovish Fed pivot; safe havens like gold will eventually benefit from Fed cuts and geopolitical sanctions.
  • Overall: Embrace risk-on exposures (EUR crosses, equities) while planning to re-enter gold after its brief consolidation; maintain Yen shorts and monitor Fed/API catalysts.

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