The US dollar rallies to a two-month high as the US EU trade deal’s unfavourable terms hit the Euro and German DAX. US stocks continue their ascent while Asia-Pacific markets decline.
Nasdaq 100 outperformed, USDJPY rally stalled at key resistance
Monday, 29 July’s biggest mover in the global markets was the FX market, where the US dollar rallied to almost a two-month high as market participants digested Sunday’s US-EU trade deal, which initially triggered an intraday spike of 0.3% in the euro against the US dollar at the start of Monday, 28 July’s Asian session.
Thereafter, the euro’s initial gains were wiped out, and it ended yesterday’s US session with a loss of -1.30%, its steepest daily decline since 12 May 2025, making it the worst-performing major currency against the greenback (the US Dollar Index recorded a daily gain of 1% yesterday and a July-to-date monthly return of 2%, its best monthly performance so far since the start of 2025).
The bearish reversal of the euro was triggered by unfavourable terms of the US-EU trade deal, as deemed by several EU politicians and Germany’s industry leaders. The EU will have a 15% tariff on most of its exports to the US, while the bloc’s average tariff rate on US goods will drop to below 1%. In addition, the EU would purchase US$750 billion of US energy products and invest US$600 billion more in the US.
A lopsided deal that is likely to favour the US more than the EU, and industry officials in Germany have warned that the deal leaves the auto industry exposed and will make companies in Europe less competitive. The German DAX was the worst performer among the key European benchmark stock indices, where it shed -1% yesterday.
On the flip side, the US stock market continued to bask in a bullish limelight led by artificial intelligence (AI) juggernaut Nvidia, which staged an intraday rally of 1.9% on Monday, 28 July, to notch another fresh record high. The technology-heavy Nasdaq 100 benefited and outperformed with a gain of 0.4% to hit another all-time closing high of 23,356 yesterday.,
In today’s Asian session, the S&P 500 and Nasdaq 100 E-mini futures continued to extend their gains with intraday rallies of 0.1% and 0.2%, respectively, at the time of writing.
On the contrary, most of the Asia Pacific stock markets recorded intraday losses due to a firmer US dollar. Hong Kong’s Hang Seng Index shed -1% to hit a five-day low despite an impending 90-day extension of a trade truce between the US and China after the 12 August deadline expires.
Japan’s Nikkei 225 extended its losses for the third consecutive session as it dropped by 1% to 40,590, but it is fast approaching its 20-day moving average, which is acting as an intermediate support at around 40,130.
Over in the FX market today, yesterday’s US dollar strength is taking a breather as the Japanese yen, the best-performing major currency so far against the greenback, recorded an intraday gain of 0.2%. Interestingly, the recent three days of the up move seen in the USD/JPY (printed an intraday high of 148.71 at this time of writing) have led it to hover just below a key medium-term pivotal resistance zone of 149.00/149.60 that has created a ceiling for the bulls since 12 May 2025.
A lackluster intraday movement in the US dollar has allowed Gold (XAU/USD) to snap its four consecutive sessions of losses to record an intraday gain of 0.1% after a test of its key medium-term pivotal support at US$3,300.
Our YouTube video above contains the latest intraday technical analysis on the latest intraday technical analysis on US Wall Street 30, US Nas 100, US SPX 500, Hong Kong 33, Japan 225, Germany 30, EUR/USD, GBP/USD, AUD/USD, USD/JPY, Gold (XAU/USD), and West Texas Oil.
