Dear Trader,

Market Overview & Key Events

The week of July 20–24 opens with the market still caught in the same tug-of-war that’s defined July: an escalating Iran war that keeps a geopolitical premium under oil and gold, against a US rates picture that refuses to turn decisively dovish even after last week’s soft CPI. Add a live ECB decision, a heavy US earnings slate, and a run of global flash PMIs on Friday, and this is another week where headline risk deserves as much respect as the technical picture.

Geopolitics remains the dominant thread. The Strait of Hormuz conflict is now well into its fifth month with no durable ceasefire in sight — the US and Iran have continued exchanging strikes aimed at infrastructure and military targets, with the region enduring days of back-and-forth attacks in a conflict increasingly focused on control of the strait. US Central Command logged its seventh straight night of strikes into the weekend, and Iran has continued targeting tankers directly. On the US side, a House Republican $95 billion Iran war funding package cleared its first procedural hurdle last week, and US strikes have expanded to bridges inside Iran while an Iranian strike damaged a Kuwaiti desalination plant — a reminder that regional infrastructure, not just shipping, is now in the crossfire. WTI is trading near $82, up roughly 3% on the week, keeping a floor under both inflation expectations and gold’s safe-haven bid.

On the rates side, last week’s US CPI print was genuinely dovish on paper — June CPI fell 0.4% on the month, the largest one-month decline since April 2020, dragging the annual rate down to 3.5%, with core flat and cooling to 2.6% YoY — yet the disinflation didn’t buy back a single rate cut in market pricing, a sign the Fed under Chair Kevin Warsh is still leaning hawkish into year-end. That backdrop carries into this week even though the calendar itself is lighter on the US side.

The US docket is comparatively quiet: Initial Jobless Claims are due Thursday, expected to tick up slightly to 212K from 208K, with Friday bringing preliminary S&P Global Manufacturing and Services PMIs plus New Home Sales. Earnings season is in full swing, however, with a heavy slate of large-cap reporters through the week — keep an eye on how mega-cap tech and industrials trade, given the read-through to European names via DE40’s tech/industrial weighting.

The Eurozone calendar is the busier one this week. German producer inflation lands Monday, followed by Germany’s ZEW survey and the ECB Bank Lending Survey on Tuesday, with German Economic Sentiment expected to improve to 18.0 from 10.5. The main event is Thursday’s ECB decision, where the Main Refinancing Rate is expected to hold at 2.40% and the Deposit Facility Rate at 2.25%, followed by Lagarde’s press conference. Friday brings preliminary French, German and Eurozone PMIs, which will be the week’s clearest read on whether the Eurozone growth picture is stabilising or rolling over further.

Rounding things out, the PBoC announces its rate decision Sunday (expected unchanged at 3.0%), UK inflation and labour data land midweek, and ECB speakers Nagel (Tuesday) and Lane (Friday) are worth monitoring for early hints ahead of Thursday’s decision.

1. GER40 (Germany 40) — Downtrend Deepening, No Sign of a Floor Yet

Technical Landscape

The 4-hour chart shows the corrective phase flagged last week has extended into a proper downtrend. After topping near 25,850 on July 6 and crashing over 900 points into July 8, GER40 spent a week consolidating in the 24,850–25,150 band — but that range has now failed decisively to the downside. Price broke below 24,850 and has continued grinding lower into the 24,760–24,870 zone, with both the 9 EMA (yellow) and 18 EMA (black) sloping down and capping every bounce.

The 1-hour chart tells the more urgent story: a clean sequence of lower highs and lower lows since July 13, punctuated by a sharp flush to a fresh swing low near 24,640–24,680 on July 17, before a modest bounce back toward 24,814–24,850. The index is trading below a bearishly-stacked ribbon, and the bounce so far looks corrective rather than a reversal — there’s no bullish EMA cross yet.

Most Likely Bias: Bearish

The market has now failed at every attempt to reclaim the 25,000–25,150 zone since the July 8 crash. Momentum, structure, and the EMA ribbon are all aligned lower. This doesn’t rule out sharp relief bounces — headline-driven whipsaws are likely given the Iran war backdrop — but the path of least resistance into ECB day and Friday’s PMIs is down. A sustained reclaim of 25,100+ would be needed to shift the picture back to neutral.

Key Levels to Watch

Resistance - 24,860–24,880 — the broken range floor, now acting as the first overhead supply zone. - 25,000 — psychological level and a magnet for any relief rally. - 25,100–25,150 — the top of the prior consolidation range; a close above here would be the first genuine sign of stabilisation.

Support - 24,700 — a minor shelf from Thursday/Friday’s price action. - 24,600–24,640 — this week’s fresh swing low; losing this on a 4h close opens fresh downside. - 24,300–24,400 — the deeper mid-June base; the level that would confirm this is a full trend reversal rather than a correction.

Trade Ideas

Idea 1 — Bearish Continuation (Primary Scenario) Sell rallies into resistance rather than chase the move, given how extended the down-leg already is. - Entry: Sell on a rejection from 24,860–24,900 (retest of broken range/EMA resistance), or on a confirmed 1h close below 24,640 - Target 1: 24,400 · Target 2: 24,300 - Stop-Loss: Above 25,000 - Rationale: The ribbon is bearishly configured on both timeframes, structure is a clean sequence of lower highs, and weak European PMIs or soft earnings read-through from US tech would extend the move directly.

Idea 2 — Bullish Reversal (Alternative Scenario) Requires a genuine catalyst — a dovish-leaning ECB, strong PMIs, or an Iran war de-escalation headline. - Entry: Buy on a confirmed 4h close above 25,150, or a pullback to 25,000–25,050 after the break - Target 1: 25,450 · Target 2: 25,800 - Stop-Loss: Below 24,600 - Rationale: This is a reclaim-the-range trade — it needs the market to reverse the entire week’s structure, so treat it as reactive rather than something to pre-position for heavily.

Idea 3 — Range/Reactive Strategy (ECB Day) Reduce size and step aside for the 30–60 minutes around Thursday’s ECB decision and Lagarde’s press conference; volatility in DE40 tends to spike on any deviation from the expected hold.

2. EUR/USD — Consolidating Below Resistance, Rate-Divergence Story Still Alive

Technical Landscape

The 4-hour chart shows EUR/USD still working through the choppy range that’s dominated since late June: a low near 1.1320 (June 24–25), a recovery attempt that stalled below 1.1480 (July 16), and now consolidation back around 1.1420–1.1440 — essentially sitting on top of the 9/18 EMA ribbon, which has flattened out after weeks of bearish slope.

The 1-hour chart shows the past several sessions chopping in a tighter 1.1395–1.1480 band, with a sharp dip-and-recover sequence into July 14 and another push toward 1.1480 on July 16 that failed to hold. Price is currently pinned almost exactly on the EMA ribbon (9 EMA 1.1438 / 18 EMA 1.1439), which is a classic pre-catalyst compression pattern.

Most Likely Bias: Range-to-Neutral, With a Slight Bearish Lean Into ECB

This is a genuinely two-sided week for EUR/USD. On one hand, last week’s soft US CPI should be euro-supportive; on the other, the market’s failure to price in Fed cuts despite that data shows the rate-divergence story hasn’t gone away. Thursday’s ECB decision is expected to be a straightforward hold, which makes Lagarde’s tone — not the rate itself — the actual catalyst. A cautious, data-dependent Lagarde would likely cap rallies; any hint of ECB discomfort with a strong euro or slowing growth would be a headwind too. Expect compression into Thursday, then a directional resolution.

Key Levels to Watch

Resistance - 1.1460–1.1480 — the July 16 swing high; the line in the sand for bulls this week. - 1.1500 — round-number resistance and a prior support-turned-resistance shelf. - 1.1620–1.1640 — the June high zone; only relevant on a major USD-negative surprise.

Support - 1.1400 — round-number pivot and the base of the current consolidation. - 1.1350 — the late-June swing low; a break re-opens the broader downtrend. - 1.1320 — the deeper structural low for the month.

Trade Ideas

Idea 1 — Range Fade Into ECB (Primary Scenario) Ahead of Thursday, fade extremes of the 1.1400–1.1460 range with tight stops and reduced size. - Entry: Sell near 1.1450–1.1460 on rejection / Buy near 1.1400–1.1410 on a bullish reversal candle - Target: Opposite side of the range - Stop-Loss: 20–25 pips beyond entry - Rationale: With the ECB decision as the week’s key catalyst, pre-positioning directionally into it is lower-probability than trading the established range and stepping aside for the release itself.

Idea 2 — Bearish Breakdown (Post-ECB, USD-Bullish Scenario) Triggered by a dovish-leaning ECB tone or resurgent USD demand tied to Middle East risk-off flows. - Entry: Sell on a confirmed 1h close below 1.1400, or a retest of 1.1430–1.1440 as resistance after the break - Target 1: 1.1350 · Target 2: 1.1320 - Stop-Loss: Above 1.1480 - Rationale: The broader trend since early June is still down, and a cautious ECB alongside any flight-to-dollar dynamic from the Iran conflict would reassert it quickly.

Idea 3 — Bullish Breakout (Post-ECB, EUR-Supportive Scenario) Triggered by strong Eurozone PMIs on Friday or a Lagarde tone read as relatively hawkish/confident. - Entry: Buy on a confirmed 1h close above 1.1480 - Target 1: 1.1500 · Target 2: 1.1620 - Stop-Loss: Below 1.1400 - Rationale: A clean break of the July 16 high would be the first structural shift out of the multi-week range, and soft-CPI-driven USD weakness gives this scenario real legs if the PMI data cooperates.

3. XAU/USD (Gold) — Safe-Haven Bid Reasserting Itself Near Key Support

Technical Landscape

The 4-hour chart shows gold’s rough month continuing: from a June peak near 4,600, down to 4,000 by June 11, a rebound to 4,360, then a steady grind lower through July to a low near 3,960–3,980 this past week. Price has now bounced back to 4,014–4,017, sitting almost exactly on the 9/18 EMA ribbon (9 EMA ~4,003 / 18 EMA ~4,014) — a genuine inflection point rather than a clear trend signal either way.

The 1-hour chart shows the mechanics of that bounce clearly: a sharp flush from ~4,020 down to a fresh low near 3,960 on July 17, followed by an aggressive reclaim back through the EMA ribbon (9 EMA 4,009 / 18 EMA 4,003) into current levels. This is the most constructive short-term structure gold has shown in over a week.

Most Likely Bias: Range-to-Bullish, Safe-Haven Premium Reasserting

Unlike the muted reaction seen a week or two ago, gold is now trading more in line with what an active, escalating war would suggest — Oil is up roughly 3% on the week and gold has reclaimed its EMA ribbon on the back of the same headlines. Gold is described as advancing near $4,015, supported by geopolitical uncertainty and demand for defensive assets, though stronger global activity or inflation data could lift yields and cap the metal’s recovery. With Friday’s PMIs and Thursday’s ECB in play, this remains the most headline-sensitive instrument of the three — trade it with smaller size and wider stops.

Key Levels to Watch

Resistance - 4,050–4,060 — recent swing-high cluster from the past week’s chop. - 4,090–4,100 — the early-week high zone; a close above here confirms the bounce has legs. - 4,180–4,200 — the major overhead level from the early-July peak.

Support - 4,000 — psychological level and the current EMA ribbon zone. - 3,960–3,980 — this week’s fresh low and the June 25 low zone. - 3,900 — the deeper structural level for the month; only relevant on a sharp rates-driven flush.

Trade Ideas

Idea 1 — Bullish Continuation (Primary Scenario) The reclaim of the EMA ribbon plus an active war backdrop favours buying dips over selling strength this week. - Entry: Buy on a pullback to 4,000–4,010 with a bullish confirming candle, or on breakout confirmation above 4,050 - Target 1: 4,090 · Target 2: 4,180 - Stop-Loss: Below 3,960 - Rationale: Safe-haven demand is visibly reasserting itself after weeks of the hawkish-rates narrative dominating; any fresh escalation headline (a major tanker hit, a widened strike) adds asymmetric upside on short notice.

Idea 2 — Bearish Fade at Resistance (Alternative Scenario) If the ECB or Friday’s PMIs surprise on the hawkish/strong side, real yields could reassert pressure on gold quickly. - Entry: Sell on a failed retest of 4,050–4,090 with a 1h bearish rejection candle - Target 1: 4,000 · Target 2: 3,960 - Stop-Loss: Above 4,120 - Rationale: The medium-term trend since the June highs is still technically down, and a strong PMI/hawkish-ECB combination would revive the rates headwind that dominated gold through most of July.

Idea 3 — Reactive Long on Escalation Headlines Treat this as a standing alert rather than a pre-planned entry: any confirmed major escalation (a large tanker hit, a direct strike expanding beyond current targets, a breakdown in the $95B package narrative signaling a longer war) can trigger a sharp impulsive move independent of the technical picture. - Entry: React directly to confirmed high-impact headlines with a market or breakout entry above the pre-headline range high - Target: Scale out into 4,090 and 4,180 - Stop-Loss: Below the pre-headline swing low - Rationale: Headline risk here is genuinely asymmetric; this is about being ready to react, not about pre-positioning size.

Risk Considerations

Strait of Hormuz / Iran War: Now in its fifth month with no ceasefire, active strikes on both sides, and a $95B US funding package moving through Congress. This is the dominant, non-scheduled risk of the week — capable of moving oil and gold sharply within minutes, independent of the calendar. Monitor newswires continuously.

ECB Decision (Thursday): A hold is fully expected, so Lagarde’s tone on inflation, growth, and euro strength is the actual catalyst for EUR/USD and, by extension, GER40 risk appetite.

Friday’s Flash PMIs (Global): French, German, Eurozone, UK, and US preliminary PMIs all land the same day — a genuinely high-volatility session across all three instruments, especially for GER40 given the direct read on German manufacturing.

US Earnings Season: A heavy slate of large-cap reporters this week. Weak guidance from tech/semiconductor-linked names would pressure GER40 given its Infineon/Siemens Energy/ASML-adjacent exposure, echoing the early-July AI-valuation unwind.

Fed Repricing Risk: Despite last week’s soft CPI, the market hasn’t meaningfully repriced Fed cuts — a reminder that USD strength this week could persist even without hawkish headlines, simply from positioning unwind.

Summary Outlook

This is a data-and-decision week layered on top of an active war — treat position sizing accordingly, particularly around Thursday’s ECB decision and Friday’s PMI cluster. GER40 is the cleanest directional trade of the three: the downtrend from the July 6 top has resumed and shows no sign of stabilising below 25,000. EUR/USD is the most genuinely two-sided instrument this week — compress into the range and let the ECB reveal direction rather than pre-positioning. Gold has quietly shifted from range-bound to constructive, with the safe-haven bid finally reasserting itself against the hawkish-rates narrative; dips remain the higher-probability buy while the war stays unresolved.

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