Dear Trader,

The week of July 13–17 opened with the outlook’s central question already framed: would Fed Chair Kevin Warsh’s debut two-day congressional testimony, stacked directly against June CPI on Tuesday and PPI on Wednesday, confirm the hawkish dot-plot tilt from June’s minutes and reprice rate-hike odds higher — or would something else decide the tape instead? The answer, as it so often is lately, was “both, in sequence, and then a third thing entirely.” June CPI landed dramatically softer than expected on Tuesday — headline at 3.5% year-over-year against a 3.8% consensus, core at 2.6% against 2.8%, the first monthly decline since 2020 — and risk assets initially celebrated: stocks, gold, and even bitcoin rallied on the print. But Warsh’s testimony that same afternoon refused to validate the relief, reiterating that the Fed has “no tolerance for persistently elevated inflation” and declining to offer any dovish forward guidance, and the initial move partially unwound. Wednesday’s PPI came in soft as well, pushing the dollar to a one-month low. Then Thursday flipped the script again: retail sales, jobless claims, and the Philadelphia Fed survey all beat expectations, reasserting the “resilient economy, no rush to cut” narrative and lifting the dollar. And on Friday, none of that mattered anymore — a global AI/semiconductor valuation unwind, triggered by nothing worse than “good but not good enough” reactions to strong TSMC and ASML results, sent chip stocks into a rout from Taiwan to Frankfurt and knocked risk sentiment sharply lower into the weekend. DE40 took the week’s most direct hit from that final catalyst, EUR/USD spent the week testing both edges of its range on the data whiplash, and gold delivered the cleanest directional trade on the board. Here is the full accounting.

1. Germany 40 (DE40) — Contained Range Gives Way to a Friday Chip-Sector Shock

Verdict: Win on Idea 1 (Bearish Breakdown) via a late, catalyst-driven trigger; No Confirmed Trigger on Idea 2 (Bullish Reversal) despite two close approaches; Win on Idea 3 (Range Strategy) for four of the week’s five sessions

The Outlook

The bias was bearish-to-neutral/corrective, with DE40 still digesting the violent reversal from its July 6 record high near 25,850 and consolidating in a 24,850–25,150 band. Idea 1 called for selling a confirmed 1-hour close below 24,850, or a limit sell on a retest of 24,900–24,950 resistance, targeting 24,700 then 24,400, with a stop above 25,150. Idea 2 required a confirmed 4-hour close above 25,150, targeting 25,450 then 25,800, with a stop below 24,700. Idea 3 was a reduced-size range fade between 24,850 and 25,150 ahead of the CPI/testimony combo, with a mandate to step aside around the release windows.

What Happened

Monday’s session low at 24,850 — the exact floor the outlook had flagged — held, and the index bounced back into the range, confirming Idea 3’s framework from the opening bell. Tuesday’s soft CPI print triggered the same risk-on impulse that lifted stocks broadly, and DE40 pushed up toward the top of its range and briefly beyond it, tagging the 25,150–25,180 area intraday — testing, but not confirming, Idea 2’s breakout trigger. The same pattern repeated on Wednesday and into Thursday morning as the PPI-driven dollar weakness gave equities another lift: DE40 probed the resistance zone a second time without ever closing a 4-hour candle above 25,150. Thursday’s stronger-than-expected retail sales, jobless claims, and Philly Fed data reversed the mood, and the index closed the session down 0.34% at 24,915, with chip- and industrial-tech names — Infineon (-4.2%), Siemens Energy (-2.3%) — already leading the losses even before the real damage arrived. That came Friday, when a broad AI/semiconductor valuation unwind swept from Asia (Taiwan’s index down more than 6%, its worst day since the “Liberation Day” tariff shock; the Nikkei down over 5%) into Europe, dragging ASML, ASMI, STMicroelectronics, and Infineon all sharply lower regardless of the fact that TSMC and ASML had both just reported strong results and raised guidance. DE40 broke decisively below the 24,850 floor intraday, extending the slide into the mid-24,600s before a partial recovery into the weekend close near 24,814 — a volatile week that ultimately finished only modestly lower on the headline number, but with far larger intraweek swings than that net change suggests.

Trade Performance

Idea 1 (sell below 24,850, targets 24,700/24,400, stop above 25,150) did not trigger until the week’s final session — Monday’s dip to 24,850 held rather than closing below it, and the index spent most of the week inside or above the range. Friday’s chip-driven breakdown finally delivered the confirmed move, and it did so forcefully: the slide into the mid-24,600s cleared Target 1 (24,700) comfortably and pushed within a few hundred points of Target 2 (24,400) before the index stabilized off its lows into the close. A clean win, though a trader waiting for the textbook trigger only got one session to work with.

Idea 2 (buy above 25,150, targets 25,450/25,800, stop below 24,700) came close twice — the Tuesday CPI spike and the Wednesday/Thursday PPI-fueled push both tagged the 25,150–25,180 zone intraday — but neither produced the confirmed 4-hour close above resistance that the setup required. Each approach was sold into rather than broken through, and a trader who had jumped the gun on either wick would have been caught by Thursday’s reversal and then Friday’s rout, nowhere near the 25,450 target. Correctly, the trade never triggered.

Idea 3 (range fade 24,850–25,150, reduced size, step aside around CPI/testimony) was the week’s most reliable read for four straight sessions — Monday through Thursday all respected the flagged boundaries, even through two resistance tests — before Friday’s external shock closed the range for good.

The DE40 story this week is a variation on a now-familiar theme: the range held admirably through the exact scheduled catalysts (CPI, PPI, testimony) the outlook was built around, and it was an unscheduled catalyst — a “great earnings, sell anyway” AI-valuation unwind with no domestic trigger at all — that finally broke it. Idea 1 existed for precisely this kind of directional resolution, even though the specific spark wasn’t one anybody had on the calendar Monday morning.

2. EUR/USD — Two Resistance Spikes, Two Fades, and a Friday Flight to the Dollar

Verdict: Partial Win on Idea 1 (Bearish Fade at Resistance); No Trigger on Idea 2 (Bullish Reversal); Win on Idea 3 (Range Strategy) for the second week running

The Outlook

The bias was neutral-to-bearish with tactical bounce risk, the pair still inside its broader downtrend from early June but showing signs of buyers defending the 1.1385–1.1395 shelf. Idea 1 called for selling a confirmed rejection near 1.1440–1.1460, targeting 1.1385 then 1.1350, with an extended target at 1.1320 and a stop above 1.1500. Idea 2 required a confirmed 1-hour close above 1.1460, targeting 1.1500 then 1.1620, with a stop below 1.1350. Idea 3 was a tight, reduced-size range fade between 1.1400 and 1.1450, with instructions to avoid fresh positions within two hours of CPI or either testimony session’s opening remarks.

What Happened

Monday’s session opened with a flush to 1.1385 — the exact support shelf the outlook had marked — followed by a sharp intraday reclaim back above 1.1420, setting the tone for a choppy, headline-reactive week. Tuesday’s soft CPI print triggered the day’s biggest move: the pair spiked hard, trading as high as roughly 1.1450–1.1460 and briefly threatening Idea 2’s breakout trigger, before Warsh’s uncompromising testimony tone pulled it back down, and the pair closed the session modestly lower near 1.1405 — a spike-and-fade that rewarded neither breakout buyers nor breakdown sellers cleanly. Wednesday’s soft PPI, which pushed the broader dollar index to a one-month low, gave the pair a second run at the top of its range, again testing without confirming a sustained close above 1.1460. Thursday’s stronger retail sales, jobless claims, and Philly Fed data reasserted dollar strength and pulled the pair back toward the middle of its range. Friday then delivered the week’s cleanest directional move for the wrong reason as far as the euro was concerned: the global AI-selloff triggered a genuine flight-to-dollar bid — the classic “sell risk, buy the reserve currency” reflex — pressuring EUR/USD lower into the close. The pair finished the week near 1.1438, a handful of pips below the 1.1450–1.1460 resistance shelf that had capped every rally attempt, and comfortably above the 1.1385–1.1400 support that had held on both tests.

Trade Performance

Idea 1 (sell 1.1440–1.1460, targets 1.1385/1.1350/1.1320, stop above 1.1500) triggered on the fade from Tuesday’s post-CPI spike and again near the Wednesday high, and Target 1 at 1.1385 was reachable on both the early-week retracement and Friday’s dollar-strength move. Target 2 at 1.1350 and the extended 1.1320 were never seriously threatened — the pair kept finding buyers well above the deeper support zone — leaving this a partial win: the first target banked cleanly, the deeper ones left on the table.

Idea 2 (buy above 1.1460, targets 1.1500/1.1620, stop below 1.1350) was tested twice, on Tuesday’s CPI spike and the Wednesday PPI follow-through, but the confirmed 1-hour close above 1.1460 never printed either time — both approaches were sold into within the same session. The setup correctly stayed on the sidelines, sparing a trader from Friday’s dollar-strength reversal.

Idea 3 (range fade 1.1400–1.1450) was, for the second consecutive week, the standout read on this pair. The band held through two separate data-driven spikes above its ceiling and a Friday press toward its floor, with neither edge giving way on a confirmed basis — a near-identical outcome to the July 6–10 week, and further evidence that EUR/USD’s current market structure rewards fading extremes over chasing scheduled-event breakouts.

This week is a useful companion to the DE40 story once again: two very different scheduled-catalyst outcomes on the same Tuesday-Wednesday-Thursday data cluster, but a shared conclusion — the range framework, not the directional breakout calls, did the heavy lifting for a pair caught between a softening inflation print and a Fed chair unwilling to confirm it meant anything.

3. XAU/USD (Gold) — A Safe-Haven Spike That Faded, and a Data-Driven Breakdown That Didn’t

Verdict: Win on Idea 1 (Bearish Continuation) — the week’s cleanest directional trade on the board; Loss on Idea 2 (Bullish Safe-Haven Spike), which triggered and then reversed; Win (Open) on Idea 3 (Buy the Dip), filled during Thursday’s flush and recovering into the weekend

The Outlook

The bias was range-to-bearish short-term with elevated headline volatility risk — gold sitting below a bearishly-configured EMA ribbon near 4,065, caught between real-yield pressure from the hawkish-Fed narrative and the ever-present possibility of a Hormuz-driven safe-haven spike. Idea 1 called for selling a confirmed 4-hour close below 4,044, targeting 4,000 then 3,980, with a stop above 4,120. Idea 2 required a sharp breakout above 4,090 on above-average range, reactive to either data or a confirmed escalation headline, targeting 4,140 then 4,200, with a stop below 4,020. Idea 3 was a limit buy at 3,990 (zone 3,980–4,000) on a confirmed reversal, targeting 4,090, then 4,180, then 4,200, with a stop below 3,940.

What Happened

Monday’s session low at 4,044 held the line the outlook had flagged, and gold spent the early week testing lower still. Tuesday’s soft CPI print triggered exactly the kind of sharp impulse Idea 2 was built for — gold, alongside stocks and bitcoin, rallied on the cooler inflation read, clearing 4,090 and pushing toward the 4,100–4,130 area intraday. But the rally didn’t hold: Warsh’s refusal to soften his tone during the afternoon testimony capped the move, and by Wednesday’s Asian session gold had round-tripped almost the entire Tuesday gain, back down near 4,030 — a “cool CPI, hawkish Warsh” reversal that several desks flagged in real time. Wednesday’s soft PPI print offered another brief lift, but it was Thursday’s data cluster — in-line retail sales, a surprisingly strong jobless-claims number, and a four-and-a-half-year high in the Philly Fed survey — that did the real damage, driving a swift dollar rally and pushing real-yield expectations higher. Gold broke through both of Idea 1’s targets in the same move, extending the flush into the high-3,900s/low-4,000s and briefly slicing through Idea 3’s 3,980–4,000 buy zone before stabilizing. Friday brought no relief despite the Hormuz conflict remaining fully active in the background: the global AI-selloff drove a genuine safe-haven bid into the dollar itself rather than into gold, echoing the pattern from the prior week’s tanker-strike episode, where the hawkish-rates narrative continued to outmuscle gold’s traditional crisis premium. The metal recovered off its lows into the weekend, closing near 4,017.

Trade Performance

Idea 1 (sell below 4,044, targets 4,000/3,980, stop above 4,120) was the standout setup of the week. The trigger came on Thursday’s data-driven dollar strength, and the decline extended cleanly through both Target 1 (4,000) and Target 2 (3,980) into the high-3,900s before stabilizing — a full, textbook win, and the cleanest directional trade across all three instruments this week.

Idea 2 (buy the breakout above 4,090, targets 4,140/4,200, stop below 4,020) triggered on Tuesday’s post-CPI spike exactly as designed, but the move proved to be a data-driven pop rather than a genuine escalation-fueled breakout, and it faded hard once Warsh’s testimony failed to reinforce it. By Thursday’s flush, price had fallen well below the 4,020 stop, converting an early-week win on paper into a clean loser — a useful reminder that this idea was built specifically for confirmed geopolitical headlines, not for scheduled-data pops that a hawkish Fed chair can talk back down within hours.

Idea 3 (limit buy 3,980–4,000/3,990, targets 4,090/4,180/4,200, stop below 3,940) was filled during Thursday’s flush into the zone, and price recovered into the weekend close near 4,017 — comfortably above the entry and nowhere near the 3,940 stop, though Target 1 at 4,090 remains unreached heading into the new week. An open, currently-profitable position rather than a fully resolved trade, but one that did exactly what a structural dip-buy is supposed to do: get filled at a level the broader thesis said would hold, and it did.

Gold this week is close to a mirror image of the DE40 story: a scheduled-data spike (Idea 2) that looked like the highest-conviction trade on the board for about eighteen hours and then reversed completely, while the bearish continuation trade built for a hawkish-data outcome (Idea 1) delivered in full once the actual hawkish data — Thursday’s retail sales and claims beat — finally arrived.

Weekly Summary & Lessons Learned

The week of July 13–17 was framed around one of the densest scheduled-catalyst stretches of the year — Fed Chair Warsh’s debut congressional testimony, layered directly on top of CPI and PPI — and it delivered on that promise for exactly two and a half sessions before an entirely uncalendared shock took over. The CPI/testimony combination on Tuesday produced a textbook “good news, no confirmation” pattern: a materially soft inflation print triggered immediate risk-on moves across stocks, gold, and even bitcoin, only for Warsh’s refusal to validate the relief with any dovish signal to claw much of it back within the same session. Wednesday’s soft PPI extended the dollar-weakness theme briefly. Thursday flipped the script entirely, with a trio of stronger-than-expected releases — retail sales, jobless claims, and the Philly Fed survey — reasserting the “resilient economy” narrative that had been the market’s working assumption since June’s hawkish dot-plot flip. And then Friday arrived with no domestic data of consequence at all, and a global AI/semiconductor valuation unwind — sparked by nothing worse than “not quite good enough” reactions to genuinely strong TSMC and ASML results — became the dominant story across every instrument on our board.

DE40 (OR GER40) delivered the week’s cleanest lesson in patience: the range held through every scheduled catalyst the outlook was built around, with two separate tests of the 25,150 resistance line both failing to confirm, before an unscheduled Friday shock finally broke the floor and delivered Idea 1’s trigger in the war’s final hours. The lesson isn’t that the range call was wrong — it was right for four of five sessions — but that a heavy-tech index like DE40 carries exposure to catalysts well outside the macro calendar, and Idea 1’s hard trigger price meant the framework still had an answer ready when that catalyst arrived from a completely different direction than expected.

EUR/USD repeated its performance from two weeks prior almost to the letter: a range that absorbed two separate data-driven spikes toward its ceiling and a Friday press toward its floor, closing the week almost exactly where the outlook’s range boundaries said it should. The pair that “should” have been most exposed to the CPI/testimony combination once again proved the calmest of the three by week’s end, even though the intraweek volatility around Tuesday’s CPI spike was real and tradable for anyone using the contingency framework rather than chasing the initial move.

XAU/USD produced the week’s most instructive pairing of a winner and a loser in the same instrument. Idea 2’s safe-haven-spike setup triggered exactly as designed on Tuesday’s CPI surprise — and then reversed completely once it became clear the move was data-driven rather than headline-driven, a distinction the setup’s own rationale had flagged in advance. Idea 1’s bearish-continuation setup, by contrast, waited for the actual hawkish catalyst — Thursday’s data trio — and delivered in full once it arrived. The two outcomes together are a clean illustration of why this outlook explicitly separated “reactive to a real escalation” (Idea 2) from “triggered by hawkish data” (Idea 1): conflating the two would have meant holding a spike-driven long straight into the very data release that reversed it.

The overarching lesson of July 13–17 is that a week can be exactly as data-dense as advertised and still be decided by something that wasn’t on the calendar at all. The Warsh testimony, CPI, and PPI produced real, tradable moves — but the sharpest, cleanest directional resolution of the week, in DE40 specifically, came from an AI-valuation unwind that had nothing to do with the Federal Reserve. As with the tanker-strike episode two weeks earlier, having a contingency scenario with a specific trigger price — rather than a vague “watch for headline risk” caveat — meant the framework still had a plan ready when the actual catalyst showed up uninvited.

Our full outlook for the week ahead will be published before Monday’s open, with markets now digesting whether the AI/semiconductor selloff has further to run into next week’s Alphabet, Tesla, and Intel earnings, whether DE40 can stabilize above its broken 24,850 floor, and whether gold’s failure to catch a safe-haven bid on Friday marks a genuine shift in its relationship with risk-off sentiment or just one data-dominated week.

– The FX Hermes TeamIf you find the content useful:

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