Dollar Rally Extends as Trade Optimism Rises; Gold Retreats Amid Risk Appetite

Key Takeaways:

*Dollar Index holds firm near key resistance at 98.75 as trade optimism supports bullish sentiment.

*Gold prices dip to test support amid rising risk appetite, but technical indicators suggest possible short-term rebound.

*Market focus shifts to upcoming US data: Core PCE, Nonfarm Payrolls, and July FOMC meeting.

Market Summary:

TheThe US Dollar Index extended gains on renewed optimism surrounding global trade developments. Recent negotiations between the United States and key economies—including the EU, Japan, and several emerging markets—have led to positive preliminary agreements, boosting sentiment and potentially supporting the US economy amid concerns over its growing fiscal deficit. The easing of trade tensions may help alleviate pressure on the U.S. debt outlook in the short term.

As investors rotate into riskier assets, gold prices have retreated sharply. The shift away from safe-haven assets comes as the barrage of upbeat trade headlines reduces fears of a global economic slowdown. However, market volatility remains elevated, with investors still cautious ahead of key macroeconomic catalysts.

Attention is now turning to upcoming high-impact US economic data, particularly the Core PCE Price Index and Nonfarm Payrolls report later this week. These releases could further influence the Fed’s policy outlook. While consensus expects the Federal Reserve to hold rates steady in July, political pressure from the Trump administration has reignited speculation over potential rate cuts. As a result, markets will closely monitor Fed communications and economic indicators to assess the trajectory of monetary policy.

Technical Analysis

DXY, H4:

The Dollar Index remains in a strong uptrend and is currently testing a key resistance zone at 98.75. A confirmed breakout above this level would likely pave the way for a rally toward the next resistance at 99.25. 

However, technical signals suggest caution: the MACD is showing signs of weakening bullish momentum, while the RSI has entered overbought territory at 73. 

A failure to breach 98.75 convincingly could result in a short-term pullback, potentially forming a double-top pattern. Initial support is seen at 98.25, with stronger support at 97.80.

Resistance Levels: 98.75, 99.25
Support Levels: 98.25, 97.80

XAUUSD, H4:

Gold prices continue to trade under pressure but are currently stabilizing near the 3295.00 support zone. MACD momentum is turning less bearish, and RSI has rebounded sharply from oversold territory, forming a bullish crossover—suggesting a potential short-term rebound or range-bound consolidation. 

Traders should watch for price action between the 3295.00 support and 3340.00 resistance. A breakout on either side would determine the next directional move, especially as key market catalysts loom this week.

Resistance Levels: 3340.00, 3385.00

Support Levels: 3295.00, 3265.00