Dear Trader,

The week of July 20–24 opened with the outlook’s central tension already framed: a GER40 downtrend with no confirmed floor, a EUR/USD range compressing into Thursday’s ECB decision, and a gold market that had just reclaimed its EMA ribbon on safe-haven flows out of an escalating Iran war. The calendar delivered almost exactly what was advertised — the ECB held as expected, Friday’s flash PMIs beat across the board, and the Strait of Hormuz conflict kept grinding into a second week without a ceasefire — and yet all three instruments still managed to surprise. The ECB’s hold came with a tone hawkish enough to rattle European equities on the day itself. Thursday’s US jobless claims print landed dramatically stronger than forecast, reviving hawkish Fed repricing just as gold’s safe-haven rally was cresting. And Friday turned into a genuine risk-on session, with SAP’s earnings beat and a broad PMI surprise driving GER40’s sharpest single-day recovery in weeks. GER40 whipsawed hard without ever confirming a clean directional break, EUR/USD finally resolved its multi-week range to the downside, and gold delivered the week’s most complete round-trip — a strong bullish continuation that gave back most of its gains once the US data turned hawkish again. Here is the full accounting.

1. Germany 40 (GER40) — A Volatile Round-Trip That Never Confirmed Either Trigger

Verdict: No Clean Trigger on Idea 1 (Bearish Continuation), Stopped on the Friday Reversal; No Confirmed Trigger on Idea 2 (Bullish Reversal), Despite Coming Within a Whisker; Idea 3 (ECB-Day Caution) Was the Week’s Best Call

The Outlook

The bias was bearish, with GER40 having failed decisively below the prior week’s 24,850–25,150 range and grinding into a fresh downtrend. Idea 1 called for selling a rejection from 24,860–24,900, or a confirmed 1-hour close below 24,640, targeting 24,400 then 24,300, with a stop above 25,000. Idea 2 required a confirmed 4-hour close above 25,150, or a pullback to 25,000–25,050 after the break, targeting 25,450 then 25,800, with a stop below 24,600. Idea 3 flagged Thursday’s ECB decision specifically, calling for reduced size and a step-aside around the announcement and Lagarde’s press conference.

What Happened

Monday and Tuesday extended the downtrend the outlook had flagged, with the index sliding into the low-24,800s and briefly touching sub-24,800 levels — a fresh, near one-month low, and the general area where Idea 1’s rejection trigger lived. Wednesday brought a modest bounce as technology and utilities names found buyers, lifting the index roughly 0.65% on the session, but it stopped well short of threatening the 25,150 resistance zone. Thursday’s ECB decision was the week’s pivotal moment for reasons that had nothing to do with the rate itself: the hold was fully priced in, but Lagarde’s press conference leaned more hawkish than expected, repeatedly flagging energy-driven inflation risk and leaving the door open to a September hike — a tone European equities read as a headwind rather than relief. GER40 sold off sharply into the announcement and through the close, finishing the session down over 1.5% at roughly 24,763, comfortably inside the outlook’s downside zone but still short of a confirmed close below 24,640. Then Friday flipped the script entirely: SAP’s blowout earnings — shares surged double digits on strong cloud and AI-platform demand — combined with a much stronger than expected flash PMI print (Germany’s manufacturing reading jumped well above consensus, with the broader Eurozone composite returning to growth) and a pullback in oil prices on reports that Pakistan was working to revive US-Iran talks. GER40 tore higher by more than 1.3% on the day, closing the week near 25,099 — a gain of roughly 1.1% on the week despite having traded at a one-month low just 48 hours earlier.

Trade Performance

Idea 1 (sell rejection 24,860–24,900 or confirmed close below 24,640, targets 24,400/24,300, stop above 25,000) found a workable entry zone through Monday and Tuesday’s drift into the low-24,800s, and Thursday’s ECB-driven selloff to 24,763 kept the position in modest profit — but at no point did the index confirm a 1-hour close below the 24,640 trigger, and neither target was ever within reach. Friday’s SAP-and-PMI reversal then tore straight through the 25,000 stop on its way to 25,099, converting a modestly profitable short into a losing trade. A useful reminder that a rejection-zone entry without a confirmed breakdown leaves a trade exposed to exactly the kind of unscheduled, earnings-driven reversal that hit on Friday.

Idea 2 (buy confirmed close above 25,150, targets 25,450/25,800, stop below 24,600) never triggered — Friday’s rally was forceful, but the 25,099 close fell just short of the 25,150 confirmation level, echoing last week’s pattern of GER40 testing a key level without quite confirming it. A trader who jumped the gun on Friday’s intraday strength would have been holding a position without the setup’s own risk framework behind it; the setup itself, correctly, stayed on the sidelines for a second straight week.

Idea 3 (reduce size, step aside around Thursday’s ECB decision) was unambiguously the week’s best-executed idea. The instruction to specifically respect Thursday’s release window would have kept a trader out of, or at minimum sized down for, the sharpest single-session move of the week — a 1.5%+ drop driven entirely by Lagarde’s tone rather than the headline rate decision itself.

GER40’s story this week is a lesson in the cost of imprecise triggers on a headline-driven instrument. The bias was right — the index did trade meaningfully lower into Thursday — but Idea 1’s rejection-zone entry, without the harder confirmation of a close below 24,640, left the trade without a clean exit plan for a reversal that arrived from a completely different direction (an earnings beat and a PMI surprise, not anything on the geopolitical or rates calendar). Idea 2 remains the more disciplined framework precisely because it demands the market do the work of confirming a real structural shift before committing capital.

2. EUR/USD — The Range Finally Breaks, and the Dollar Wins the Week

Verdict: Win on Idea 1 (Range Fade) for Three of Five Sessions; Win on Idea 2 (Bearish Breakdown), the Standout Trade of the Week; No Trigger on Idea 3 (Bullish Breakout), Correctly Avoided

The Outlook

The bias was range-to-neutral with a slight bearish lean into Thursday’s ECB decision, with the pair consolidating around 1.1420–1.1440 after stalling below the July 16 high near 1.1480. Idea 1 called for fading the extremes of a 1.1400–1.1460 range ahead of the ECB, with tight stops and reduced size. Idea 2 required a confirmed 1-hour close below 1.1400, or a retest of 1.1430–1.1440 as resistance after the break, targeting 1.1350 then 1.1320, with a stop above 1.1480. Idea 3 needed a confirmed close above 1.1480, targeting 1.1500 then 1.1620, on a EUR-supportive PMI surprise or a hawkish-leaning Lagarde.

What Happened

Monday through Wednesday played out almost exactly as the range-fade framework anticipated: the pair chopped inside the 1.1400–1.1460 band, spiking briefly toward 1.1434–1.1440 as Thursday’s ECB decision approached without ever threatening either boundary decisively. Thursday’s announcement itself was the pivot. The ECB’s hold was fully expected, but Lagarde’s press conference — flagging energy-driven inflation risk and a live possibility of a September hike — initially gave the euro a brief lift, only for the tone to be overwhelmed within hours by a dramatically stronger US data set: jobless claims collapsed to roughly 187,000 against a forecast near 212,000, reviving hawkish Fed repricing just as decisively as Lagarde’s own hawkish lean was doing for the ECB, and the dollar side of the ledger won comfortably. The pair broke below 1.1400 on the session and kept sliding, closing Thursday near 1.1392 and continuing lower into Friday. Friday’s flash PMIs were genuinely EUR-supportive — Eurozone business activity returned to growth, with Germany leading — but a comparably strong US flash PMI print (the fastest pace of US business activity in eight months) and the prospect of the Fed itself turning less dovish at next week’s meeting kept the dollar bid throughout the session. EUR/USD closed the week near 1.1377, extending losses into the weekend session toward the 1.1370s — comfortably through both the 1.1400 pivot and the 1.1385 support shelf that had held for weeks, and within striking distance of the deeper 1.1350 target.

Trade Performance

Idea 1 (range fade 1.1400–1.1460) was the correct read for three straight sessions, absorbing the pre-ECB compression exactly as designed and rewarding fades of both the Tuesday/Wednesday probes toward 1.1440 and the tests lower toward 1.1400 — right up until Thursday’s break finally closed the range for good.

Idea 2 (sell below 1.1400, targets 1.1350/1.1320, stop above 1.1480) delivered the cleanest, highest-conviction result across all three instruments this week. The confirmed break below 1.1400 came on Thursday exactly as the setup anticipated, and the slide extended through Friday and into the weekend session, closing within a handful of pips of Target 1 (1.1350) and putting the deeper 1.1320 target in play for the new week. A trader who waited for the confirmed close, rather than pre-positioning into the ECB event, got a full session and a half to work a clean, low-drama trend trade — a textbook execution of “let the range resolve, then follow the break.”

Idea 3 (buy above 1.1480 on a EUR-supportive PMI or hawkish Lagarde) never came close to triggering. Friday’s PMI beat was, on its own terms, exactly the kind of surprise the setup was built for — but the same session’s even stronger US PMI, layered on top of Thursday’s jobless-claims shock, made this a dollar week rather than a euro week. The setup’s own logic — that this was a reactive trade contingent on genuine EUR-specific strength winning out — held up: it never triggered, and a trader who tried to anticipate it based on the Eurozone PMI headline alone would have been fighting the tape all Friday.

EUR/USD this week is the mirror image of the GER40 story: a range that resolved cleanly in the direction the technical picture had already been leaning, with the fundamental catalyst (a jobless-claims shock plus a hawkish Fed repricing) reinforcing rather than reversing the setup. Idea 2 existed for precisely this kind of post-ECB resolution, and it delivered in full.

3. XAU/USD (Gold) — A Clean Bullish Run That Gave Most of It Back

Verdict: Win on Idea 1 (Bullish Continuation) — the week’s most complete directional trade before the reversal; No Clean Trigger on Idea 2 (Bearish Fade at Resistance), Bypassed Entirely by the Move; Win on Idea 3 (Reactive Long on Escalation), Triggered by Midweek Tanker Headlines

The Outlook

The bias was range-to-bullish, with gold having reclaimed its EMA ribbon near 4,014–4,017 on reasserting safe-haven demand. Idea 1 called for buying a pullback to 4,000–4,010, or breakout confirmation above 4,050, targeting 4,090 then 4,180, with a stop below 3,960. Idea 2 called for selling a failed retest of 4,050–4,090 with a bearish rejection candle, targeting 4,000 then 3,960, with a stop above 4,120, contingent on a hawkish ECB or strong PMI reasserting the real-yield headwind. Idea 3 was a standing alert to react to any confirmed major escalation headline with a breakout-style entry, targeting 4,090 and 4,180.

What Happened

Monday and Tuesday saw gold hold the 4,000–4,020 zone the outlook had flagged as the key inflection point, before the week’s dominant theme took hold from Wednesday onward: an active, worsening Iran war. The US carried out its twelfth and then thirteenth consecutive night of strikes on Iran through the week, and Iran-backed Houthi forces were reported to have targeted Saudi oil tankers directly — a genuine escalation headline that pushed oil toward $100 a barrel and sent gold surging through both 4,050 and the 4,090 target in the same impulsive move. The rally extended into Wednesday and Thursday, with gold stretching above 4,100 and printing an intraweek high in the 4,150–4,160 area — within reach of, though not conclusively confirming, the 4,180 target. The reversal came from the same place EUR/USD’s did: Thursday’s dramatically stronger jobless-claims print (187,000 against a forecast near 212,000) revived hawkish Fed repricing and lifted real yields, and gold rolled over hard, slicing back through 4,130, 4,090, and the EMA ribbon zone in a single session. Friday’s session stabilized the slide rather than extending it — the metal held above 4,000 psychological support throughout, recovering modestly to close the week near 4,052–4,057, still a positive week on a net basis despite giving back the bulk of the midweek spike.

Trade Performance

Idea 1 (buy the 4,000–4,010 pullback or breakout above 4,050, targets 4,090/4,180, stop below 3,960) was the standout setup of the week. The breakout trigger came early, the move cleared Target 1 (4,090) with room to spare, and price pushed within a few dozen dollars of Target 2 (4,180) before the Thursday reversal took hold — a full win on the first target and a near-miss on the second, banked well ahead of the stop ever coming into question.

Idea 2 (sell a failed retest of 4,050–4,090, targets 4,000/3,960, stop above 4,120) never found its intended trigger. The setup was built for a scenario where gold approached that zone from below and got rejected; instead, the escalation-driven rally blew straight through 4,050–4,090 without pausing, on its way to the 4,150s. By the time gold fell back into that zone on Thursday’s reversal, it was already collapsing through it rather than failing a retest from above — a different mechanism entirely, and correctly not one the setup was designed to chase. A trader waiting for the textbook rejection candle at 4,050–4,090 sat out both the rally and the reversal, which given how sharp each leg was, was the safer outcome.

Idea 3 (reactive long on confirmed escalation headlines, scaling out into 4,090/4,180) triggered cleanly on the midweek tanker-attack and continued-strikes headlines, riding the same impulsive move that carried Idea 1 to its targets. This is the second time in three weeks this instrument’s “standing alert” framework has paid off on a genuine, unscheduled escalation headline rather than a scheduled data point — a pattern worth keeping front of mind while the Hormuz conflict remains unresolved.

Gold this week is the cleanest illustration yet of the tension this outlook flagged explicitly: a real, active war providing genuine safe-haven tailwind, running directly into a US labor market that keeps refusing to hand the Fed an excuse to turn dovish. Both forces showed up in full this week, in sequence, and the setups built specifically to separate “reactive to a real escalation” (Idea 3) from “vulnerable to a hawkish-data reversal” (the stop levels underpinning Idea 1) did their job — the trade that won, won decisively, and the risk framework kept the reversal from turning a good week into a bad one.

Weekly Summary & Lessons Learned

The week of July 20–24 was framed around a single scheduled catalyst — Thursday’s ECB decision — and it delivered, but not in the way the calendar alone would have suggested. Lagarde’s hold came with a hawkish enough tone to hit European equities and briefly lift the euro, only for a dramatically strong US jobless-claims print released the same day to overwhelm both moves within hours, reviving hawkish Fed repricing and putting the dollar back in the driver’s seat for the rest of the week. Friday then added its own twist: a broad, better-than-expected flash PMI cluster across Germany, the Eurozone, and the US, combined with a blowout SAP earnings beat, drove one of GER40’s sharpest single-day rallies of the month — even as the Iran war ground into a second straight week of nightly US strikes and a direct Houthi attack on Saudi tankers.

GER40 produced the week’s most frustrating result of the three: the bearish bias was directionally correct through Thursday, but Idea 1’s rejection-zone entry lacked the confirmation to survive Friday’s earnings-and-PMI reversal, while Idea 2’s bullish trigger came agonizingly close without confirming. The lesson isn’t that the framework was wrong on direction — it’s that on a heavy-earnings week, a hard confirmation level matters more than ever, and Idea 3’s explicit ECB-day caution was, once again, the single most reliable read on the board.

EUR/USD delivered the week’s cleanest result. The range held through the pre-ECB compression exactly as mapped, and once Thursday’s confirmed break lower arrived — reinforced rather than reversed by Friday’s PMI data, because the US number simply outmuscled the Eurozone one — Idea 2 captured a full, low-drama trend move with nothing more exotic than “wait for the confirmed close, then follow it.”

XAU/USD produced the week’s most complete round-trip: a genuine escalation-driven rally that cleared its first target with room to spare, followed by a hawkish-data-driven reversal that gave back much of the move without threatening the stop. The instrument continues to reward separating headline-driven upside (Idea 3) from data-driven downside risk (the stop levels under Idea 1) rather than treating the two as a single directional bet — a distinction that mattered twice this week alone.

The overarching lesson of July 20–24 is that a single confirmed catalyst — Thursday’s ECB decision — can still be entirely eclipsed by a data point that wasn’t the week’s marquee event on paper. Jobless claims, not the ECB or the Iran war, ended up doing the most work in reshaping all three instruments’ second-half price action. As with prior weeks, the setups with a hard confirmation trigger navigated that shift far better than the ones relying on a rejection zone alone.

Our full outlook for the week ahead will be published before Monday’s open, with markets now digesting next Wednesday’s Fed decision — where hold odds have slipped sharply over the past week — alongside whether GER40 can finally confirm a break of 25,150, whether EUR/USD’s breakdown has room to extend toward 1.1320, and whether gold’s failure to hold its midweek highs marks a genuine capping of the safe-haven premium or just one hawkish-data-dominated session.

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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