Insights 
VT 
The market’s rally isn’t built on earnings. It’s not even built on strength. It’s built on the idea that Jerome Powell will soon have no choice but to step aside—figuratively now, and perhaps literally soon. Markets are pricing in policy shifts before they happen, as political pressure mounts and the Fed walks a tightrope between inflation control and fiscal reality.
At the centre of this is an intensifying clash between President Donald Trump and current Fed Chair Jerome Powell. Though Powell’s term is not set to expire until May 2026, reports suggest Trump is preparing to announce a successor as early as this September or October.
While the Federal Reserve’s legal independence was recently reaffirmed by the Supreme Court, the market implications of such a move are profound. An early announcement would strip Powell of perceived authority and shift market focus to the policy outlook of a new, more politically aligned Chair.
Trump’s pressure campaign is underpinned by one core objective: aggressive rate cuts. He argues that a 2 to 3 percentage point drop in interest rates could save the US government as much as $900 billion annually in debt servicing costs. With Treasury Secretary Scott Bessent recently extending the government’s cash management strategy to July 24 in order to avoid breaching the debt ceiling, Trump’s fiscal logic is gaining traction. Interest payments are on track to exceed $950 billion annually—a record figure that could crowd out discretionary spending and further strain government finances.
Despite this, Powell is holding a cautious line. In recent testimony before Congress, he reiterated the Fed’s “wait-and-see” posture. He acknowledged that if inflation continues to ease, rate cuts could arrive “sooner rather than later,” but stressed there is “no rush” to move prematurely.
The Fed continues to forecast a potential inflation uptick in the second half of 2025, largely driven by tariff-related pressures, and Powell remains wary of cutting rates into a still-resilient labour market.
A Trim Off the Top
Yet markets appear increasingly sceptical of the Fed’s messaging. According to the CME FedWatch Tool, there is a 91.5% probability of a rate cut at the 17 September FOMC meeting, with a second cut likely before the year ends. Traders are assigning just a 19.1% chance of action at the 30 July meeting, which aligns with the Fed’s more cautious timeline—but even that gap between rhetoric and pricing is growing. Trump’s influence is a key factor in this divergence, as markets begin preparing for a policy landscape shaped more by political strategy than central bank conservatism.
The effects are already visible in the currency markets. Bloomberg’s Dollar Index has declined more than 8% year-to-date, with losses accelerating as speculation over Powell’s replacement began circulating more widely. Should the White House announce a successor aligned with Trump’s preferred policy approach, the dollar could face further pressure—particularly if macroeconomic data begins to soften.
Equities continue to reflect a different reality. The S&P 500’s ascent is driven more by expectations of monetary easing than earnings growth.
As M2 money supply edges higher and borrowing costs appear set to decline, investors are moving into rate-sensitive assets and pricing in a liquidity-driven expansion. It is a rally fuelled by forward-looking optimism, but one built on assumptions rather than confirmed policy changes.
Key Movements of the Week
While policy speculation continues to shape the broader narrative, we turn now to what the charts reveal. From currencies to commodities, this week’s price movements tell a story of cautious optimism, uneven conviction, and a market that’s moving ahead of the data.
The US Dollar Index (USDX) is currently testing support at 96.50, a level traders are monitoring closely. A consolidation toward 97.70 could offer short-term bearish setups if price action confirms at that upper band. However, should the dollar extend its weakness, 95.40 will be the next level to watch. The dollar’s direction is no longer being driven solely by inflation data or Fed guidance—it is increasingly tied to political pressure and perceived institutional stability.
In EUR/USD, the pair is struggling to break above resistance at 1.1770. A pause or pullback here would be natural, but if price consolidates, the 1.1605 zone becomes critical for bullish continuation patterns. Traders appear hesitant to overcommit, likely waiting for confirmation that the ECB’s easing path is not outpacing the Fed’s.
GBP/USD faced resistance at 1.3790 this week. Price action suggests a potential pullback, and if the pair consolidates downward, 1.3605 could become a viable entry for medium-term bulls. With Bank of England commentary due next week, sterling may remain directionless until fresh forward guidance is provided.
For USD/JPY, the market is split. If it drifts lower, 143.10 is the area where buyers may step in. But should it rise first, bears will be watching 145.20 and 145.75 for rejection signals. Yen strength—once a safe-haven story—is now increasingly being traded as a relative policy differential play, especially in light of Japan’s early easing cycle.
USD/CHF remains on the backfoot. Any bounce toward 0.8050 or 0.8110 is likely to face bearish pressure, provided the dollar remains weak and the Swiss National Bank continues its slow approach to loosening.
In the commodity-linked pairs, AUD/USD and NZD/USD are both setting up potential bullish trades if price consolidates near 0.6490 and 0.6455 for AUD, and 0.6005 or even as deep as 0.5730 for NZD. Sentiment remains tied to Chinese demand and broader commodity flows, but the FX reaction is more measured than enthusiastic.
USD/CAD made a run higher, breaching the 1.3754 swing high before pulling back. Sellers remain present but weak. Should price revisit 1.3810 and consolidate, that area may offer a bearish setup, particularly if oil prices stay elevated or Canadian employment data remains firm.
Turning to crude oil, price has approached the upper range with resistance at 71.80 and 73.40. Consolidation near these levels could attract sellers, but on the downside, 63.35 and 61.00 remain long-term support levels to monitor. Oil has been stuck between fundamental headwinds and seasonal demand optimism.
Gold, currently consolidating, is eyeing the 3,330 level for potential bearish setups. If price weakens, the next support sits around 3,220 or as deep as 3,175. In an environment of rising political uncertainty and softening dollar, gold is well-positioned for volatility, but not necessarily directional clarity—yet.
The S&P 500 continued its rally, climbing higher into thin air. As price advances, traders are watching 6,200, 6,400, and 6,630 as inflection points. The rally is liquidity-driven and front-running rate cuts, but the technicals remain extended. A pullback is increasingly likely if upcoming labour market data misses to the upside and dampens dovish hopes.
Bitcoin broke to a new swing high after consolidating. It now eyes 109,650 as the next key level, with 111,300 seen as the line in the sand for determining further upside. Crypto markets have benefited from the dollar’s softness and broader appetite for decentralised stores of value—but they remain vulnerable to Fed communications that surprise on the hawkish side.
Natural Gas (NG) skipped consolidation entirely and surged toward 3.65. Momentum remains strong. If the rally continues, 3.75 is the next resistance level to watch, with 4.046 being the breakout high that may act as a longer-term barrier.
The Nasdaq is riding the same bullish wave as the S&P, breaking higher and targeting 22,600, then 23,330, with a stretch toward 24,600 if tech continues to lead. While semiconductors and AI-linked stocks are propelling the move, breadth still lags.
Silver dropped from the 36.70 resistance zone and slid below 35.85. A consolidation near 36.45 may offer a bearish continuation setup. The precious metals complex is still in a wait-and-see mode, tracking inflation expectations and real yields.
Among equities, UNH is consolidating and trading well below its intrinsic value of $570, currently hovering around $275–$324.41. From a trading perspective, a break above $324.41 could offer bullish potential. From an investment angle, the stock remains undervalued, with tranche buying advisable.
Novo Nordisk (NVO) is trading around 67.80. Like UNH, its market value remains far below its estimated intrinsic value of $150, and long-term investors may look to accumulate gradually at these levels.
Ethereum is also climbing, with $2,580 highlighted as a critical area. A breakout beyond that could trigger the next wave of bullish interest, though like Bitcoin, ETH remains tethered to the broader macro narrative of rate shifts and risk appetite.
Key Events of the Week
This week’s calendar offers a tight cluster of high-impact events, concentrated around central bank commentary and labour market data, each carrying the potential to recalibrate expectations around rate cuts, both in the US and abroad.
The action begins Tuesday, 1 July, with Bank of England Governor Andrew Bailey and Bank of Japan Governor Kazuo Ueda both scheduled to speak. With the yen recently under pressure and sterling showing resistance near key levels, traders will be listening closely for any hint of policy recalibration. Ueda’s tone, in particular, will be watched for signs of discomfort with persistent yen weakness—a scenario that could alter near-term FX dynamics in Asia-Pacific pairs.
Later that day, all eyes will turn to Federal Reserve Chair Jerome Powell, whose remarks are expected to reiterate the central bank’s “data-dependent” approach. Market pricing remains heavily tilted toward a September cut, but the tone Powell strikes could widen or narrow that window sharply.
Also on Tuesday, the latest JOLTS job openings report is due. Consensus stands at 7.45 million, up modestly from 7.39 million previously. While hardly a blockbuster release on its own, in the current environment of heightened sensitivity to labour data, a softer reading could reinforce the case for earlier rate relief. Conversely, a surprise beat may embolden Powell’s caution and press pause on the bond market’s easing bias.
Thursday, 4 July, delivers a more concentrated cluster of labour data, including CPI (m/m) for Switzerland, as well as the US unemployment rate and non-farm employment change. Expectations here are subdued: the US unemployment rate is forecast to tick up to 4.3% (from 4.2%), and NFP is expected at 120,000 (down from 139,000). If both figures come in weaker than expected, the July FOMC meeting could return to the spotlight as a live event. But Powell has made it clear that one poor print won’t drive policy.
It would take meaningful, sustained deterioration to warrant a July move, and as such, this week’s data may shape tone more than trigger action.
