Dear Trader,

Market Overview & Key Events

The week of July 13–17 opens with markets caught between two competing forces: a sharply hawkish Federal Reserve narrative and a rapidly escalating Strait of Hormuz conflict. Both are colliding with an already-nervous equity market still digesting the AI/semiconductor valuation reset that hit European and Asian tech names hard last week.

Geopolitics is currently the dominant driver. Over the weekend, US and Iranian forces exchanged fresh strikes around the Strait of Hormuz, with Iran declaring the strait “closed until further notice” and US CENTCOM denying this while continuing strikes to keep it open. Brent crude has jumped over 4% to test $79, its highest since late June, and tanker traffic through the strait has collapsed to roughly a third of normal levels. This is a live, fast-moving situation — headline risk is elevated every single session this week, and gaps at the Asian/London open are a real possibility.

The single most important scheduled catalyst is Fed Chair Kevin Warsh’s first congressional testimony, delivered across two days: the House Financial Services Committee on Tuesday, July 14 (10:00 AM ET), and the Senate Banking Committee on Wednesday, July 15 (10:00 AM ET). This is his debut semiannual “Humphrey-Hawkins” appearance since taking over in May. Context matters here — June’s FOMC minutes revealed Warsh flipped the dot plot from projecting cuts to projecting hikes, with 9 of 18 officials now penciling in at least one 2026 hike and the median year-end rate projection raised to 3.8%. Markets currently price only ~24% odds of a July hike, but a hawkish tone on Tuesday/Wednesday — especially paired with a firm CPI print — could quickly reprice that higher, which would be USD-supportive and a headwind for both EUR/USD and gold.

Layered directly on top of the testimony is US June CPI, Tuesday July 14 at 8:30 AM ET (15:30 Athens) — released just 90 minutes before Warsh’s House appearance, guaranteeing lawmakers grill him on it in real time. Consensus looks for headline easing (economists flagging the first possible monthly decline since 2020, helped by falling gasoline prices) but a firmer core print driven by services inflation. PPI follows Wednesday, again just ahead of the Senate testimony. Retail sales land Thursday, with industrial production, housing starts, and the preliminary University of Michigan consumer sentiment read rounding out the week on Friday. Several other Fed speakers (Waller Monday, Williams/Cook Wednesday, Jefferson/Logan/Schmid Thursday) add to the noise around the main events.

On the equity side, the AI/semiconductor valuation unwind that began in early July (Samsung’s “good but not good enough” earnings triggering a >10% single-day drop in Korean chipmakers, cascading into Infineon, Siemens Energy, ASML, and Soitec in Europe) remains an active theme for DE40, given the index’s heavy tech/industrial weighting. Whether this proves a contained correction or a deeper repricing is one of the key open questions for the week.

1. Germany 40 (DE40) — Corrective Phase Within a Damaged Uptrend

Technical Landscape

The 4-hour chart shows a textbook blow-off-and-reversal structure. DE40 rallied hard from the ~23,800 area in mid-June to a peak near 25,850 on July 6, then reversed violently — dropping over 900 points in a single session on July 7–8 as the AI-valuation selloff hit European chip and energy-infrastructure names. Since that crash, price has been consolidating in a 24,850–25,150 range for nearly a week, with the 9 EMA (yellow) and 18 EMA (black) both rolling over and now acting as dynamic resistance overhead.

The 1-hour chart confirms the near-term fragility: price broke down again this morning to retest the 24,850 floor before staging a sharp intraday bounce back to 24,921, currently trading just below both EMAs (9 EMA 24,917 / 18 EMA 24,972). There’s no clean bullish crossover yet — this looks like a relief bounce inside a still-bearish short-term structure rather than a confirmed reversal.

Most Likely Bias: Bearish-to-Neutral / Corrective

The sharp rejection from 25,850 and the repeated failure to hold above the MA ribbon favour continued consolidation-to-downside pressure this week. The medium-term uptrend from the June lows isn’t dead, but it needs 24,700–24,850 to hold. A reclaim of 25,150–25,200 with both EMAs turning up would be needed to shift the picture constructive again.

Key Levels to Watch

Resistance - 25,100–25,150 — top of the current consolidation range; where price has repeatedly failed over the last three sessions. - 25,450–25,500 — the last close before the July 7 crash; a significant supply shelf. - 25,800–25,850 — the July 6 all-time-high area; only relevant on a strong risk-on reversal.

Support - 24,850 — today’s session low and the floor of the current range. Losing this on a 4h close is the key bearish trigger. - 24,700 — minor structural shelf from the recovery leg in late June. - 24,300–24,400 — the deeper base from mid-June; the level that would confirm the broader uptrend is genuinely broken.

Trade Ideas

Idea 1 — Bearish Breakdown (Primary Scenario) A confirmed 1h close below 24,850, ideally coinciding with a hawkish Warsh testimony or renewed Hormuz escalation headlines that push global risk sentiment lower. - Entry: Sell on 1h close below 24,850, or a limit sell on a retest of 24,900–24,950 (ribbon resistance) with a bearish rejection candle - Target 1: 24,700 · Target 2: 24,400 - Stop-Loss: Above 25,150 - Rationale: The ribbon is bearishly configured on both timeframes, and the index has yet to reclaim any meaningful resistance. Rising yields into the Warsh testimony are a structural headwind for equity risk premia.

Idea 2 — Bullish Reversal (Alternative Scenario) A confirmed 4h close back above 25,150, likely requiring a dovish surprise from Warsh (leaning into his “AI-driven disinflation” framing) or a soft CPI print that eases rate-hike odds. - Entry: Buy on 4h close above 25,150, or on a pullback to 25,000–25,050 after the break - Target 1: 25,450 · Target 2: 25,800 - Stop-Loss: Below 24,700 - Rationale: The broader trend since mid-June remains structurally intact. A relief rally in AI-linked names combined with a less hawkish Fed tone could quickly reclaim the ribbon.

Idea 3 — Range Strategy (Pre-Testimony) Ahead of Tuesday’s CPI/testimony combo, play the 24,850–25,150 range with reduced size. Fade extremes with tight stops and step aside completely for the two hours surrounding the CPI release and each testimony’s opening remarks.

2. EUR/USD — Bouncing Off Support Within a Broader Downtrend

Technical Landscape

The 4-hour chart tells a clear story of USD strength since early June: EUR/USD has fallen from 1.1660 (June 2) to a low near 1.1320 (June 24–25), and since then has been carving a lower, choppier range roughly between 1.1350 and 1.1460. The pair rallied into a swing high of 1.1460 on July 10, then rolled over again into this morning’s low of 1.1385, before staging a sharp intraday recovery back to 1.1428 — currently trading just above the 9/18 EMA ribbon (1.1420/1.1422) for the first time in several sessions.

The 1-hour chart shows this morning’s action in detail: a clean flush down to 1.1395/1.1385, followed by a strong reclaim through the ribbon on rising volume-like candle structure. Both EMAs are flattening rather than confirming a fresh bullish trend yet.

Most Likely Bias: Neutral-to-Bearish, With Tactical Bounce Risk

The dominant trend since early June is down, driven by the widening rate-divergence story now that Warsh’s Fed has pivoted hawkish. This week’s testimony and CPI are squarely USD catalysts. That said, today’s sharp intraday reclaim of the ribbon shows short-term buyers are active at the 1.1385/1.1395 support shelf. Expect a two-way, headline-driven week: rallies toward 1.1450–1.1460 are more likely to be sold than broken unless CPI surprises meaningfully to the downside or Warsh sounds notably less hawkish than expected.

Key Levels to Watch

Resistance - 1.1450–1.1460 — the July 10 swing high and the level that has capped every bounce for a week. The line in the sand for bulls. - 1.1500 — round-number resistance and a prior support-turned-resistance shelf from late June. - 1.1620–1.1640 — the June high zone; only relevant on a major USD-negative surprise.

Support - 1.1385–1.1395 — this morning’s low and immediate pivot; holding here into CPI matters for the bounce to extend. - 1.1350 — the June 24–25 swing low; a break here re-opens the broader downtrend. - 1.1320 — the deeper structural low; the key level for the medium-term bearish thesis.

Trade Ideas

Idea 1 — Bearish Fade at Resistance (Primary Scenario) Wait for a failed retest of 1.1450–1.1460 following a hawkish Warsh testimony or firm CPI/PPI prints. Look for a 1h bearish rejection candle below the ribbon. - Entry: Sell on confirmation near 1.1440–1.1460 - Target 1: 1.1385 · Target 2: 1.1350 · Extended: 1.1320 - Stop-Loss: Above 1.1500 - Rationale: The dominant trend and the rate-divergence narrative both favour USD strength this week. A hawkish testimony is the highest-probability outcome given June’s dot-plot flip.

Idea 2 — Bullish Reversal (Alternative Scenario) A confirmed 1h close above 1.1460, ideally on a soft CPI surprise or a Warsh testimony that leans into the “AI disinflation” narrative rather than “prices are too high.” - Entry: Buy on 1h close above 1.1460, or a limit entry near 1.1400 with a bullish confirming candle - Target 1: 1.1500 · Target 2: 1.1620 - Stop-Loss: Below 1.1350 - Rationale: A dovish surprise from a chair the market has priced as hawkish would trigger an outsized repricing, similar to the bounce already visible this morning off 1.1385.

Idea 3 — Range Strategy (Pre-CPI/Testimony) Ahead of Tuesday’s CPI and the two-day testimony window, fade the 1.1400–1.1450 range with tight stops (20–25 pips max) and reduced size. Avoid fresh directional positions within 2 hours of CPI, and again around the opening remarks of each testimony session.

3. XAU/USD (Gold) — Caught Between War Premium and a Hawkish Fed

Technical Landscape

Gold’s 4-hour chart shows a volatile, range-bound month: after peaking near 4,600 in early June, the metal dropped sharply to 4,000 by June 11, rebounded to 4,360 (June 17–18), then reversed again down to 3,980 (June 25) before a choppy recovery back toward 4,180 by July 7. Since then, price has rolled over once more, currently sitting at 4,065, below both EMAs on the 4h (9 EMA 4,088 / 18 EMA 4,096).

The 1-hour chart shows this morning’s session pushing to a fresh local low of 4,044 before bouncing modestly to 4,058, still trading beneath a bearishly-configured ribbon (9 EMA 4,069 / 18 EMA 4,081). Notably, gold has failed to catch a strong bid despite the active Hormuz conflict — a sign that the hawkish-Fed / high-real-yields narrative is currently outweighing the safe-haven bid, consistent with the pattern seen after last week’s tanker strikes.

Most Likely Bias: Range-to-Bearish Short-Term, With Elevated Headline Volatility Risk

This is the most binary instrument of the three this week. On one hand, a genuinely hawkish Warsh testimony and a firm core CPI would likely extend the real-yield-driven pressure on gold, similar to last week’s muted-to-negative reaction to the tanker strikes. On the other hand, any material escalation in the Strait of Hormuz conflict — a wider strike, a Chinese or European vessel hit, a full closure that sticks — could override the rates narrative and trigger a sharp safe-haven spike regardless of what the Fed says. Trade this one with smaller size and wider stops than usual.

Key Levels to Watch

Resistance - 4,080–4,090 — the current EMA ribbon; a 4h close above here is the first sign of stabilisation. - 4,120–4,140 — recent swing-high cluster from the past week’s chop. - 4,180–4,200 — the major overhead level from the early-July peak; a decisive break above signals renewed uptrend.

Support - 4,044–4,050 — this morning’s low and immediate pivot. - 3,990–4,000 — psychological round-number support and the June 25/July 1 low zone. - 3,980 — the deeper structural low for the month; a high-probability long zone if reached on a rates-driven flush.

Trade Ideas

Idea 1 — Bearish Continuation (Primary Scenario) A confirmed 4h close below 4,044, likely on a hawkish Warsh testimony or a firm core CPI/PPI combination that pushes real yields higher. - Entry: Sell on 1h close below 4,044, or a retest of 4,060–4,070 as resistance after the break - Target 1: 4,000 · Target 2: 3,980 - Stop-Loss: Above 4,120 - Rationale: Gold’s muted reaction to active tanker strikes over the past week shows the hawkish-Fed / high-real-yield narrative is currently dominant. A testimony that hardens on “prices are too high” extends this pressure directly.

Idea 2 — Bullish Safe-Haven Spike (Alternative Scenario) A sudden escalation in the Strait of Hormuz conflict — a confirmed strike on a major tanker, a widened closure, or any sign of direct confrontation risk beyond current levels — can override the rates narrative on short notice. Confirmation is a sharp 1h impulse candle through 4,090 on above-average range. - Entry: Buy on breakout confirmation above 4,090, or react directly to a confirmed high-impact headline - Target 1: 4,140 · Target 2: 4,200 - Stop-Loss: Below 4,020 - Rationale: Headline risk here is genuinely asymmetric and fast-moving; this trade is reactive by nature rather than one to pre-position heavily for.

Idea 3 — Buy the Dip at Major Support If gold sells off toward 3,980–4,000 on a hawkish testimony/CPI combination, this represents the highest-probability medium-term long entry, especially given the still-unresolved Hormuz situation providing an underlying floor. - Entry: Limit buy at 3,990, or market entry on a confirmed 1h bullish reversal candle - Target 1: 4,090 · Target 2: 4,180 · Extended: 4,200 if the range resolves higher - Stop-Loss: Below 3,940 - Rationale: This zone has acted as structural support multiple times over the past month, and the ongoing geopolitical backdrop keeps a floor under deep pullbacks even in a hawkish-rates environment.

Risk Considerations

Fed Chair Warsh’s Testimony (Tue July 14 House, Wed July 15 Senate): The single biggest scheduled risk of the week. This is Warsh’s first extended public exposure to direct questioning since taking over in May, and June’s minutes already revealed a materially hawkish tilt (dot plot flipped to hikes, 9 of 18 officials projecting at least one 2026 hike). A hardening of that stance is USD/rates-positive and bearish for gold and EUR/USD; a lean into his “AI-driven disinflation” thesis would be read as dovish and could reverse all three trades outlined above. Consider reducing size heading into both 10:00 AM ET sessions.

US CPI (Tue) and PPI (Wed): Both land shortly before their respective testimony sessions, meaning data and commentary risk are effectively stacked on top of each other on both days. A soft CPI would fuel Tuesday’s price action directly and also shape the tone of questioning Warsh faces in real time.

Strait of Hormuz / Iran-US Conflict: This is a live, fast-developing situation with conflicting official statements on whether the strait is actually closed. Any confirmed strike on a major tanker, a widening of hostilities, or conversely a ceasefire signal could move oil and gold sharply within minutes, independent of the scheduled calendar. Monitor newswires continuously, not just around data releases.

AI/Semiconductor Valuation Reset: The DE40 remains directly exposed given its heavy weighting toward chip and industrial-tech names (Infineon, Siemens Energy). Any follow-through selling in US mega-cap tech or fresh negative earnings surprises from the sector (bank earnings also land this week) could pressure the index independent of the macro calendar.

Other Fed Speakers: Waller (Monday), Williams and Cook (Wednesday), Jefferson, Logan and Schmid (Thursday) all add to the noise. Any one of them contradicting or reinforcing Warsh’s tone mid-week could move EUR/USD and gold on short notice.

Summary Outlook

This is a headline-dense, binary-risk week — arguably more so than a typical data week, given the Warsh testimony is stacked directly against active war headlines. Trade smaller than normal size into Tuesday and Wednesday’s 10:00 AM ET sessions, and give the market room to reveal its hand before committing fully. DE40 is the cleanest short candidate while capped below 25,150 and the ribbon. EUR/USD favours selling rallies into 1.1450–1.1460 given the dominant rate-divergence trend, though the sharp bounce off 1.1385 this morning deserves respect. Gold is the highest-conviction range/reactive trade of the three — structurally pressured by the hawkish-Fed narrative, but one confirmed escalation headline away from a sharp reversal higher.

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Risk Disclaimer

This Weekly Market Outlook is for educational and informational purposes only. It does not constitute financial advice, investment recommendation, or trading signal. All scenarios and probabilities are estimates based on technical analysis and are subject to change. Trading leveraged instruments carries substantial risk of loss. Always use appropriate position sizing, stop losses, and risk management. Consult a licensed financial advisor before making investment decisions. Past performance is not indicative of future results.

Stay disciplined. Trade the chart, not the headline.– The FX Hermes Team