EUR/USD

The EUR/USD pair shows mixed trading dynamics, consolidating near 1.1220 and the all-time highs of February 2022, updated at the end of last week. Data released last week showed a sharp slowdown in consumer inflation, pushing the dollar to new multi-month lows as market participants bolstered confidence that the Fed's monetary tightening cycle is about to end. Annual inflation fell from 4.0% to 3.0%, which was quite close to market forecasts of a decline to 3.1%. At the moment, about 63.0% of analysts expect only one additional interest rate hike from the regulator, which is likely to take place during the July meeting. After that, the policy of the US Fed is likely to remain unchanged for a long time, and at the beginning of next year, a return to the cycle of reducing the cost of borrowing is not ruled out. In turn, the European Central Bank (ECB) still intends to further tighten monetary conditions and does not generate signals for a possible adjustment of the interest rate. The focus of the market this week will be the June statistics on inflation in the euro area, which will appear on Wednesday, July 19. Forecasts assume that the Consumer Price Index in the region will remain at 0.3% MoM and 5.5% YoY, while the Core CPI is expected to be at 0.3% and 5.4%, respectively.

GBP/USD

The GBP/USD pair is trading slightly lower, building on the weak corrective momentum that was formed late last week when it managed to pull back from its April 2022 all-time highs. The instrument is testing 1.3085 for a breakdown, waiting for new drivers to appear on the market. The main factor in the growth of the US currency last week was evidence of a slowdown in inflation, which may lead to an early end to the cycle of raising the interest rate of the US Federal Reserve. In June, the Consumer Price Index fell from 4.0% to 3.0%, which was below market forecasts at 3.1% and very close to the regulator's target range of 2.0-3.0%. At the same time, investors expect another adjustment of the rate by 25 basis points next week, which is likely to allow the Fed to take a break in the fight against inflation. On Wednesday, the UK will publish June statistics on the Consumer Price Index, which, as forecasts suggest, will fall from 8.7% to 8.2% in annual terms and from 0.7% to 0.4% in monthly terms, while the Core CPI is expected to remain unchanged at the level of 7.1% YoY. Inflation in the country significantly exceeds the target levels of the Bank of England, which is in favor of further tightening of monetary policy.

NZD/USD

The NZD/USD pair shows moderate decline, testing the level of 0.6350 for a breakdown. The instrument is developing a "bearish" momentum that was formed on Friday, July 14, when it was holding near the all-time highs of February 3. Trading participants are developing a technical correction after a sharp weakening of the US currency against the backdrop of new evidence of the imminent completion of the US Federal Reserve's tightening monetary policy cycle. Last week, June inflation statistics were released, reflecting a sharp slowdown in the annual growth rate of the Consumer Price Index from 4.0% to 3.0%, ahead of forecasts of 3.1%, while the Core CPI fell from 5.3% to 4.8% in annual terms and accelerated by 0.2% after -0.4% in monthly terms. At the same time, it should be noted that the market is still confident that the regulator will raise the interest rate by another 25 basis points during the July meeting. The development of downward dynamics for the instrument is facilitated by macroeconomic statistics from China, where a slowdown in the economy has been observed recently. Gross Domestic Product (GDP) in the second quarter decreased from 2.2% to 0.8%, which, however, turned out to be better than analysts' forecasts at the level of 0.5%, and in annual terms, the growth rate of the indicator accelerated from 4.5% up to 6.3% with preliminary estimates of 7.3%. The volume of Industrial Production in June increased from 3.5% to 4.4%, contrary to forecasts of a decline to 2.7%. In turn, data from New Zealand reflected a decline in the Services PMI from Business NZ in June from 53.3 points to 50.1 points.

USD/JPY

The USD/JPY pair shows mixed dynamics, consolidating near 138.60. The instrument is trying to develop the upward momentum of July 14; however, there are not enough drivers for further growth at the moment. The positions of the American currency are still under pressure due to the approaching completion of the cycle of tightening monetary policy by the US Federal Reserve. Most analysts (about 63.0%) expect only one interest rate hike this year, which will probably take place in July. After that, it can be expected that the regulator will take a break and look for the right moment to start the reverse process of launching a cycle of monetary easing. The pressure on the yen, in turn, is exerted by macroeconomic statistics from Japan, which does not allow the country's central bank to abandon the policy of negative rates. In particular, published on Friday, July 14, May data reflected a decline in Industrial Production by 2.2% after -1.6% in the previous month, while analysts expected the same dynamics to remain at the level of -1.6%, and in the annual in terms the indicator decreased from 4.7% to 4.2%. Capacity Utilization was -6.3% after 3.0% a month earlier, while experts expected only -2.5%.

XAU/USD

The XAU/USD pair is developing a corrective impetus formed at the end of last week and is actively testing 1950.00 for a breakdown. The current decline is due to technical factors, while the instrument continues to be supported by expectations of the completion of the monetary policy tightening cycle by the US Federal Reserve. At the moment, about 63.0% of analysts are counting on only one interest rate hike before the end of the year, which may take place next week, after which the regulator is likely to take a wait-and-see attitude. At the same time, the European Central Bank (ECB) or the Bank of England may come to the fore. The latter is forced to increase the cost of borrowing due to high inflation, but there are risks aggravating the situation with a recession in the national economy. In addition, further tightening of monetary conditions may have a negative impact on the country's banking sector, which has not shown problems before, unlike the European and American ones. The focus of investors today will be the monthly report from the Bundesank, as well as the Manufacturing PMI of the Federal Reserve Bank (FRB) of New York. Forecasts suggest a sharp slowdown of the indicator from 6.6 points to 0.0 points, which may put moderate pressure on the position of the US currency.