Solid Goold Trading

Monday’s Edition

With Nick Goold

The Japanese yen strengthened significantly at the end of the week following reports of possible currency intervention by Japanese authorities, with speculation that the United States may also have supported the move. The Bank of Japan kept its interest rate at 1.00%, as expected, but said the economy is improving and inflation risks remain. This kept the possibility of another rate hike in September alive.

The Federal Reserve also left interest rates unchanged in a 9–3 vote, saying inflation is still too high and that future rate hikes remain possible if needed. The Bank of England also kept interest rates unchanged while continuing to monitor inflation and economic growth.

U.S. economic data was mostly weaker than expected. Durable Goods Orders, Consumer Confidence, and GDP growth all came in below forecasts, suggesting the economy is slowing. In Japan, the Tokyo Consumer Price Index rose 1.9% year-on-year in July, slightly above the expected 1.8%, showing that inflation remains steady.

Markets This Week

U.S. Stocks

The Dow Jones ended the week higher after a volatile week. Lower WTI crude oil prices early in the week helped lift the market, but stocks fell midweek as investors worried about high AI stock valuations. Buyers returned after the Federal Reserve kept interest rates unchanged. The 10-day moving average is now flat, showing the trend is losing momentum. With uncertainty still high, selling on rallies may remain the better strategy. Resistance levels are at 52,500, 53,000, 53,500 and 54,000. Support is seen at 51,500, 51,000, 50,000, 49,500 and 49,000.

Japanese Stocks

The Nikkei 225 continued to fall, moving closer to the 60,000 level as investors remained concerned about high AI stock valuations. A recovery in SoftBank shares late in the week and the Bank of Japan's decision to keep interest rates unchanged helped the index recover some losses. However, the overall trend remains lower. With a volatile week expected as markets assess the recent sharp rise in the Japanese yen, selling near the 10-day moving average remains the preferred strategy. Resistance is seen at 66,000, 67,000, 68,000, 69,000 and 70,000, while support is at 62,000, 61,000, 60,000 and 59,000.

USD/JPY

The Japanese yen strengthened sharply at the end of last week after reports that the Bank of Japan, and possibly the U.S. Federal Reserve, intervened to support the currency. Earlier in the week, the Bank of Japan kept interest rates unchanged but signaled that another rate hike in September remains possible. Despite the sharp move, many analysts still expect the yen to remain weak over the longer term, as Japan's plans to reduce taxes on food have raised concerns about the country's fiscal position. For short-term traders, the recent volatility could create good buying opportunities. Medium-term traders may also find attractive buying opportunities if they are willing to be patient and accept higher market volatility. Resistance is at 160.00, 161.00, 162.00, 164.00 and 165.00, while support is seen at 157.00, 156.00, 155.00 and 154.00.

Gold

Gold traded sideways last week as comments from major central banks about possible interest rate increases in the coming months limited buying. However, central banks continued to buy below the $4,000 level, helping to support prices. With strong support below and higher interest rates limiting upside, gold is likely to remain range-bound, making range trading the preferred strategy again this week. Resistance is at $4,150, $4,200, $4,300, $4,400 and $4,500, while support is at $4,000, $3,950, $3,900, and $3,800.

Crude Oil

WTI crude oil started the week lower after the United States and Iran resumed negotiations, but a lack of meaningful progress pushed prices back up, with oil closing the week near its highs. The market continues to react to headlines, making price moves difficult to predict. Short-term traders may find opportunities by following momentum, while medium-term traders could look for selling opportunities if prices continue to rally. Resistance is at $90, $95, $100 and $105, while support is at $80.00, $75.00, $67.50, $65, and $60.

Bitcoin

Bitcoin had a quiet week as expectations of higher U.S. interest rates and concerns over high AI stock valuations kept buyers cautious. Resistance around $65,000 remained strong, and the 10-day moving average has turned lower after several failed attempts to break above that level. Selling ahead of the $65,000 resistance level may offer the best trading opportunities this week. Resistance is at $65,000, $75,000, $80,000, $85,000, and $90,000, while support is at $60,000, $55,000 and $50,000.

This Week’s Focus

Monday: Australia S&P Global Manufacturing PMI, Japan S&P Global Manufacturing PMI, E.U. HCOB Eurozone Manufacturing PMI, U.K. S&P Global Manufacturing PMI, U.S. S&P Global Manufacturing PMI and Construction Spending
Tuesday: U.S. Trade Balance and Factory Orders
Wednesday: Japan Monetary Policy Meeting Minutes and S&P Global Services PMI, E.U. HCOB Eurozone Services PMI and PPI, U.K. S&P Global Services PMI, U.S. S&P Global Services PMI
Thursday: Australia Trade Balance, E.U. ECB Economic Bulletin and Retail Sales, U.K. S&P Global Construction PMI
Friday: Japan Household Spending, U.S. Nonfarm Payrolls

An active week is expected as traders focus on the sharp fall in USD/JPY and continue to assess the reported intervention to support the Japanese yen. Stock markets will also be watching whether concerns over high AI-related stock valuations continue to weigh on sentiment. Key economic releases include global Manufacturing PMI data, the Bank of Japan's Monetary Policy Meeting Minutes, and the week's most important event, the U.S. Nonfarm Payrolls report, which could have a major impact on expectations for Federal Reserve policy.