Supply And Demand Weekly Forex Forecast including Gold and S&P 500

Hi, my name is Leon Ro, currency trader and trading coach at trading180.com and welcome to this week's supply and demand forex, gold and S&P fundamental and technical analysis for the week ahead starting the 26th of July. I hope you all had a great trading week. And getting into the week ahead and this is from trading economics and they say that the conflict between the US and Iran will remain in the spotlight as signs that talks could restart weighed against repeated strikes and naval blockades against vessels crossing maritime choke points lifting energy prices and global inflation. Meanwhile, the Federal Reserve will set its July policy decision. This coincides with Q2 GDP data and the income and outlays report. Other US data include CB consumer confidence, the trade balance and employment costs. Similarly, the Bank of England will set its bank rate and the Euro zone will set is set to release GDP and inflation data. A busy uh week in Asia will be headlined by the Bank of Japan's rate decision while statistical authorities share industrial production, retail sales and unemployment. So uh a few of the major central banks making announcements uh this week. Um so it should be some market moving news and um so getting into overall risk sentiment and looking at uh various markets which uh is really important when you're even when you're trading forex to understand where investors uh are really kind of focused whether they're focused on a risk on environment which is uh where traders will be more focused on getting a a return on their investment yield returns or rate differentials and carry trades uh or whether it's more of a risk off environment where you have um more of a a investors are more focused on protecting their assets, right? Safe haven plates and money will flow into and out of certain currencies based on whether uh there's more risk on or risk off. And at the moment looking at the VIX volatility index uh and 20 is seen as a bit of a line in the sand when it comes to risk on and risk off above 20 and the higher it moves the VIX moves above 20 is seen as a more of a risk off environment and more of a risk on environment is below the 20. we can see uh that there's volatility is increasing and has been increasing when we look at maybe the last uh month even the last uh 5 days or so we see we did have on the Thursday volatility picked up and now we're heading uh kind of back towards that now uh the main uh thing on this uh the reasons why is you can see the front pages of Bloomberg Huffy's claims Saudi attack as US ends run of Iran strikes and uh it's basically the Middle East conflicts uh conflict and you have [snorts] it says here Trump sees as Iran war spirals a new with no end in sight. So um there is uh you know these uh this this conflict and it says here Trump is looking to exact a toll on Iran with the US continuing daily strikes and president threatening even more intense retaliation for Iranian attacks. So um you know this uh volatility index the VIX is kind of uh justified. We're seeing that again also reflected in uh the S&P. The S&P normally um increases uh rises with more of a risk on environment and if you got more of a risk off environment you would have um money coming out of uh risk uh on assets. So, uh, where where is the you got, uh, the VIX kind of increasing? Now, you've got a bit of a pullback going on on the, uh, S&P. Also affecting the S&P is interest rates and interest rates, uh, remaining higher for longer. Um, and potentially the the fact that there could be hikes from the Fed and other central banks uh, does put a bit of a strain on the S&P. The S&P especially does really well in a low interest rate uh environment. Um and then we have uh gold. Gold um I mean look at this like gold over the last month uh we did reach these kind of monthly highs uh from uh on on Wednesday but gold really should be more in a sell side although it is seen as a risk uh off asset and a hedge against inflation. uh in terms of um risk off assets uh gold doesn't return a yield whereas the dollar and uh bonds uh government bonds treasury yields uh do pres um um uh uh investors can get a yield off that right and they do get a yield and so uh money will flow out of gold and into uh yielding assets um risk off yielding assets right rather than gold that's not to say you know uh you know investors are going to come out of gold but uh the pressure is on gold especially with uh the dollar looking to uh be a a buy as well. So you know gold if if if the dollar is really more of a buy then of course gold has been likely to be a sell. Yields are really reflecting uh interest rate expectations and inflation as well. And you can see again bond yields also bonds seen as a bit of a risk uh riskoff play. Um so you can see really um uh bond yields moving higher as in as bond traders are pricing in uh interest rate uh holds or at least hikes and oil. I've included oil this week and for the foreseeable future and keeping an eye on oil prices because of course higher oil prices will lead to global inflation. Inflation you know rising uh globally across across the board. Uh therefore um uh most central banks, it's not just the the Federal Reserve looking to high rates, but as you'll see uh several other central banks will also be looking to high rates to kind of combat inflation. So um [clears throat] overall, I would say we're in that um risk uh heading towards that riskoff environment, but of course anything can change. Um you know, a ceasefire would mean uh oil prices coming down and maybe inflation being temporary. Therefore, um, central banks may not necessarily hike as much and, uh, that actually might be a decent, uh, decent for the S&P 500 as well. That could move to the upside, uh, as Treasury yields maybe move to the downside, uh, as well. So, um, so looking at the, uh, uh, just interest rates and looking at interest rate probability at the moment, then we have the Fed, ECB, uh, Bank of England, the Bank of Japan. It does look like over the last week or so, we've had really a bit of an increase in the probability of a hike for from the Fed um and the ECB in September um you know is is pretty much um around 70%. The Bank of England at the moment is priced in at 9.7% so more holds and the Bank of Japan actually it does look like um a very small percentage uh that their probability that there could be a cut although um uh this week I think there's probably more risk of there being um a bit more hawkish the bankage man being a bit more hawkish but looking at the uh the dollar index and this is the equally weighted dollar index so last week I was saying that the dollar is likely a buy. Um could be a bit of a buy or a sell, but I was looking for more buys on that. So um uh we seeing obviously uh the news um carry and uh the uh the dollar higher uh again more riskoff environment and it says here dollar rises and intensifying Iran war lifts rate hike bets and again rate hikes driven by inflation. Right? So it says here the dollar jumped as intensifying conflict in the Middle East sparked concerns over energy supply disruptions fueling expectations that interest rates will stay higher for longer. And um it says here Bloomberg dollar spot index rose silver 3% poised for the best week in a month as oil prices topped $100 a barrel increasing the likelihood of the Federal Reserve raising interest rates. Traders now fully priced a rate hike in September with some seeing the central bank increasing rates as early as next week and the dollar advanced against nearly as the dollar um advanced nearly against all of its major peers. And again, you know, that kind of coincides with the screenshot, right? So, there's a there's an increase in the potential for a rate hike um coming into next week's meeting uh July the 29th. And again that uh we also see uh the dollar it says dollar wraps up its best week in a month as haven demand rises. So it says here the dollar finished it best week in a month as investors return to the traditional haven amid heightened geopolitical tensions. Speculative traders are the most bullish on the dollar since 2015. As the Federal Reserve uh is to decide on interest rates next week. Sentiment on the dollar has been growing more bullish with speculative traders holding some $43.3 billion positions in positions that stood to benefit from a stronger US currency as of July the 21st. So um you know this uh the move is is backed up by um speculative traders as well. Uh the the risk to really the dollar uh would be um if the Fed come in a little bit more dovish right this week. So their announcement if they if their statement is more on a dovish side then the dollar could end up uh selling off of course as well maybe with some data that maybe supports lower inflation but ultimately I see uh the dollar moving uh higher in order to be a buyer though uh I'd have to wait for a bit more of a pullback to look for a buy right so um if I'm looking to establish any kind of new dollar positions I'm in the uh the dollar pound And well, [clears throat] just the that's the only dollar trade I'm in. But um uh but at the moment, if I need to establish any new dollar positions, I'm going to have to wait for a bit more of a pullback or prices to move higher, then pull back to maybe create a demand zone before then uh you know uh getting establishing a new a new position. But either way, where price is at now, I'm not going to establish a new dollar position unless I get um a bit of a discount. So the dollar really should be on the buy side. Uh again, but a sellside risk would be if um uh inflation comes in lower. If for example there's a bit of a ceasefire um there's some news coming in of a ceasefire in the Middle East and oil starts to come down, then of course the dollar actually could be a little bit on the sell side. So uh watch out for that. But as things stand, the dollar should be on the buy side. Uh the euro. So, um I got long on the euro this week on the well actually from last week the euro pound. I spoke about the entry on that and uh I got in on the uh euro CAD as well which I'll talk about uh towards the end of the video and um the the euro did move to the upside this week which I anticipated it would. Uh we kind of sold off a little bit on the Friday. Um the news this week for uh from the uh ECB was that they are ready to raise interest rates in September. So it says here European Central Bank officials are prepared to raise borrowing costs in September unless the Euro zone inflation outlook improves marketkedly. Another quarter point increase is likely needed to contain consumer price pressures. So inflation based on current information and data particularly in the Middle East conflict and its economic fallout. uh the situation can change quickly especially if there's progress towards a peace deal or a more severe economic downturn materializes according to people familiar with the situation. So at the moment they are willing to hike rates but if there is again a piece in the Middle East um or there's economic data that shows that the economy is maybe contracting or slowing down uh quite severely then of course uh rate hikes are likely off the table. But again looking at the rate probability at the moment it does look like uh September the 10th the market is pricing in the 70% chance uh 71% chance of a rate hike. Um so that should keep the euro supported right in terms of any pullbacks to the downside should be I think buying opportunities for the euro also as well any upside potential I think the euro could be a buy or a sell. So you could look for sells uh as well um uh if uh you know the uh the index does move a little higher. Right? So that's really where um I'm looking at uh buyers or sells with the euro. Um the yen. Now, the yen I would look for um uh long-term or medium to long-term sells, but I think in the very short term this week, if if you're looking to buy the yen, um now would probably be the time to look to buy the yen. Um reason being is because um you have this story, but the second story really more so, which is that Japan's inflation picks up keeping BOJ on path for rate hikes. And so it says here, Japan's key inflation gauge picked up for the first time in three months, keeping the Bank of Japan on course for another interest rate hike this year. The consumer price index in excluding fresh food rose 1.6% in June from a year earlier with the acceleration driven by energy costs and other components including durable goods and medical treatment fees. And it says here, the weaker yen is likely to keep up with pressure on prices with the currency falling towards 164 yen per dollar overnight and increasing import costs for economy, an economy heavily reliant on overseas energy and food supplies. So, you know, the the uh inflation has been a little bit on the high side anyway uh for Japan. But what really would be the catalyst for a buy for the yen is this. So it says here the yen slide bolsters appeal of hawish uh bank of Japan hedges. So it says a growing number of banks are advising traders to prepare for a hawkish bank of Japan due to the yen plunging to a four decade low. Concerns over the nation's fiscal outlook, elevated oil prices, and the widening US uh US Japan yield gap are putting pressure on the yen, which could propel the Bank of Japan officials to accelerate interest rate hikes. And central bank policy makers are widely expected to hold rates steady at the next week's policy meeting, but some economists expect the central bank to lift rates again in the coming months. So um there is uh talk that the Bank of Japan could hike rates a little sooner, not necessarily at the next meeting, but maybe the meeting after that, which if that is the case, um the yen is likely to be or could likely be supported, right? So we could be at these lows, kind of broken past lows to be fair. But um I think this could be a decent opportunity to look for actually uh buys. So um if prices start to come back inside this area, you can look for potential buys and then in in hope of a hish uh yen or bank of Japan and maybe even some intervention um as well at the same time and then I think there's going to be a move to the upside. Now will that move be sustained to the upside? I don't think so. I think we probably maybe see a maybe a large move to the upside, bit of a large move, but anything will be capped. Anything that comes probably around this area here, possibly up to these highs, right? Somewhere around here, I think is likely to be capped. This was the last time we had intervention right here and then we had prices move to the downside. So, I think prices may end up coming somewhere around here. It could even pop up even above that, right? It could even come up to this area here. But either way, I do think that the upside is likely to be limited and then um look um there could be the potential for a uh a sell. But in the short term, I think this week if you are looking for buyers on the yen, this this would be the week to do it. Uh cuz you need bit a bit of a catalyst um for the uh for the yen. Uh and then we've got the pound. Now the pound, I was short on the pound from last week. I thought this would be um a level where prices would end up you know selling off of was saying over the last uh uh week or so that this looked like a bit of a stop hunt which it turned out to be right stop hunt there and then prices move to the downside. Now I do think that the pound can actually be a bit of a buy this week uh depending on what you're buying it against. Um uh the pound though does have its challenges. It says here that the pound rally fizzles um of course last week as Burnham keeps UK fiscal plans unclear. So the the pound's rally is at risk from the new government's uh unclear fiscal plans and potential for fewer interest rate hikes. Support for the pound could dissolve after the summer with some experts seeing it weakening to $132 in 3 months and to 0.865 against the euro. So fiscical risks are an ongoing concern in the UK with investors scrutinizing how the government spending plans will be funded and potentially causing risks for the pound and guilt. So um it says here um you know uh it says support for the pound could dissolve after the summer. So we're in still the midst of summer at the moment. So, uh, when looking at the, uh, the pound, we could see, I think we may see a little bit of support going into, you know, October, but once we start to get to the budget in September, October times, I think we could see a bit more downside. But, uh, one of the things that is supporting the pound is, um, we did see the UK economy boosted by World Cup and sunshine PMI show. So the World Cup station and scorching weather helped Britain's private sector bounce back in July with S&P global purchasing managers index jumping to a three-month high of 52.1. Um the uh survey signaled building momentum at the start of the third quarter after the UK economy slowed over the spring and with a sharp rise in energy prices caused by the Iran war. Hospitality companies saw demand boosted by good weather, the FIFA World Cup and more domestic holidays. But Middle East worries and a fresh round of tariffs could threaten the rebound. So this may be temporary. So but I think in the short term Oh sorry, one sec. In the short term, we could end up, you know, moving to the upside. I don't I wouldn't expect prices to really kind of move, you know, and uh and break to new highs, but I do think that there could be a potential uh bounce, a little bit of a bounce this week. But as we head into the the the the late summer, I think for me my bias would still remain to the downside. So any moves even up to these highs would be seen as for me anyway as shorting opportunities. Um especially if uh Andy Bernham's policies are seen as um not ne what the bond market don't like his policies, right? Which is there's always a a decent chance of that. So, uh, the pound I think this week going into the week, we could see a move up. Even if it moves down first, we could see a move to the upside. I think it might be a little bit of a buy. Um, but any moves to the upside are likely to be capped. So, um, for me, just a bit of a recap, the pound, so the dollar should be really on the buy side, although I wouldn't necessarily buy now. Uh, the euro can be a buy and a sell. I think buy on a on a on a pullback as well. Uh the yen can be a uh a bit of a a buy this week. Um if the there is a hish um bank of Japan and also the pound can be a bit of a buy. Right. So at the moment it's it's a bit of a rare event where you have a strong bias for pretty much um all uh currencies. There are some currencies obviously I don't I don't necessarily cover in this uh weekend video. I do trade them though um with with the private members in the Discord area and that would be uh maybe something like the Swiss Frank and the Canadian dollar would be more on the sell side, right? So, um, if I'm looking to buy, um, any of these currency pairs, I'd probably buy the dollar against all of them, um, which I am in the, uh, in the pound dollar short. Um, and I would probably buy the pound, sorry, the dollar over the euro, um, and the dollar over the yen. That would be the strongest buy. But um and in terms of the weakest buy would still be the yen, but the yen um again would be more driven by um you know any kind of news announcement this week. So it's a more of a chancier um uh buy a low probability buy on on the yen. So, still a sell um if it pulls back overall, but just this week I would look for potential uh buys and uh maybe a catalyst to maybe catch a bit of a move to the upside if the Bank of Japan are hawkish. Uh so, when we're looking at the pairs, um the pairs we would see um I think for me the any pullbacks into um a supply zone would be uh would be the path for these resistance. I wouldn't necessarily look for any anything in here. I'd rather look for prices up at these highs and actually a bit of a stop hunt before going short on that unless uh we see maybe some more some lower lows. And if we see lower lows, then I would probably wait for maybe a bit of a pullback up into this zone. But we'd have to see lower lows first being made before attempting to look for any kind of uh short trades in there. uh dollar yen and uh dollar yen the higher we go is the more we're likely to head into kind of intervention. Um I think longterm the or longer term medium to longer term the dollar should still be the buy but um there is really no setup on this uh on this trade to go short. You're kind of shorting into thin air as there's no real kind of reference to the left uh of any levels that I would look to uh trade. So, I'm going to skip this trade anyway. And um in terms of uh trying to short, but if you are looking for a long trade and there is some sort of intervention, the last time we had intervention was on the 30th. So, we had at least a about maybe a 5 600 pit move. Yeah. So, about a 560 pit move. So, if that does happen, I would assume that prices may come down into this the bottom of this demand zone here somewhere around here. And then if prices do come down into here and there is some sort of intervention along with a hish bank of Japan, but I would still look for buys overall. But in the short term this week, we could see a bit of a move. Um the pound dollar. I'll get into this a bit later, but I think although the pound could be seen as a bit of a buy this week, I wouldn't necessarily do it against the uh the dollar unless of course there is um maybe some sort of um deescalation. But overall, I think the path for this resistance should still be to the downside. So any pullbacks up into a zone say even around here be I'll be looking for uh short trades. Um the Euro pound again got in long around here. Was talking about this last week that being 8% of the weekly zone managed to actually work out. But if you are looking for a trade I um I would probably look for more of a buy than a sell. I think there's uh scope for the euro to outperform the um the pound in the medium term. In the short term, this is going to be a more of a difficult trade. Um but I think any pullback should be uh buying opportunities. Uh the euroyen, I think this week is going to be a difficult trade for any kind of yen trades or yen pairs. Uh although this does look really nice for a uh bit of a stop hunt as it's closed back inside. Not significantly enough maybe to trigger that being a a stop hunt. But if you are looking for shorts and buying the yen uh getting trying to get in uh um early then that would be a trade. If not then I would probably wait for prices to move up into this area here before looking for a short trade if you're looking to anticipate any kind of yen strength. And uh similar with the uh with the pound, I think if you're looking for a sell trade and buying the uh yen based on uh hawish Bank of Japan, then you would have to look for a pull back up into this area here. And then as we get closer to the um the Bank of uh Japan interest rate decision, uh maybe the day before, maybe a couple days before, maybe look for some sort of short trade and see if um you know you can be in the trade before there is uh maybe some hawkishness. If there is going to be hawkishness, of course. Uh the metals uh for me the metals continue to be on the sell side as long as the dollar is a buy um which I think it is uh the you know gold and silver are likely to continue to struggle right so any pullbacks up into any zones on uh on gold or silver right should really be uh selling opportunities unless of course uh this week we get a deescalation and or inflation data starts to come in lower oil starts to come down a bit again like I said silver just like gold at the moment should be more on the sell side. So any fresh area of supply I think that's going to be nice for a cell. Uh the S&P will be struggle struggle a little bit as well uh with high inflation uh higher interest rates higher bond yields will always weigh on the S&P. So we could see a bit more downside before we see any upside. Uh, I think the upside for the S&P will really be determined upon um what happens in the Middle East and uh and inflation and central bank rates. As a rule of thumb, when central banks are hiking rates, normally the S&P um won't necessarily uh do too well, right, uh historically. So, um and that's really the environment that we're in. So, we may see again a bit of a auction, a bit of a ranging market, sideways moving market like this, right? Prices may be contained between this this high here, the all-time high and this low around the 7230s. And so, we could see that, but any buyers would be you'd have to anticipate that the uh coast is clear when it comes to any kind of inflation threat. you know, oil moving to the downside, inflation moving to the downside, which means that the Fed would be less likely to hike rates and um if that is the case, then the S&P is likely to continue grinding higher. Uh so, looking at uh the uh trades and the trade updates. So, last week um I went over this, last week's uh video, I went over this and this was a stop hunt. This was the uh entry, right? So stop hunt happened here. Entered here at the um 134 1.347s around that area there. Um only managed to get in on one position unfortunately. So my entry was around here. Um didn't pull back enough to enter into you know three or four or five positions. So once I hit the uh one to one, I took off uh about 80% off of that that one position and then I managed to kind of just trail it down uh down a bit now. So I've taken 80% profit off. I'm only in 20% on on one position. I've canled these other positions. So um if prices do come back up to these highs here again and revisit these highs, I'll just look for a new entry and I'll start to trail my stop down as well. I think I've traded it down to around maybe around here. Maybe it's close to closer to break even. So um I can't necessarily lose um this trade anyway. So that's really where I am um on the uh pound dollar as an update. And if you want to see uh the entries uh or the analysis from, you know, go to last week's video, I got the Euro pound and same thing uh was saying last week um that I was going to get long in this. managed to get in long around here on the Thursday, last week, Thursday, and um prices went to the upside, but just didn't pull back enough for me to get involved in um you know, multiple positions. But then when prices came up to here again, took 80% profit off, I got a 20% um position on. So, I'll look to actually um move this uh trail this actually up to around the 80.88 uh cent area as there is a a bank who is um quite hawkish on this, quite bullish on the um on the Euro pound and their targets are at 88 cents. So I will look to start now to trail my stop uh higher on the uh Euro pound and then the new trade I entered into this week was the Euro CAD. So I thought the CAD might be on the weaker side before it started being affected by oil. Um there was uh prices came down into this uh demand zone here and then um on the lower time frame uh managed to enter uh right here and uh managed to get a one to one uh uh target again if I only really entered into one position. Although prices did spike down here for some strange reason on my broker I wasn't filled on this. So unfortunately I only got in on one position and so again when prices came up to that one to one position um target then I just took off 80% off that had 20% um there and then was starting to trail my stop up a little bit and then this uh on the Thursday as prices you know came shooting down this uh stopped me out. So um you know uh this was a profitable trade anyway. Uh won 80% of the position lost uh less than 20% maybe about 15 or 10% or something like that. So overall profitable trade. Um and I and I think this week I may look to re-enter into this trade. Um but let's see uh let's see what happens with uh with the Canadian dollar. But that's really been the week so far. a profitable week with the pound dollar, the euro pound, and the euro CAD. Anyways guys, um take care. I hope you all have a great trading week and uh I'll see you next