On Thursday (July 11), the US dollar index fell to 104.98. After gold hit $2,386 overnight, it fell back to $2,372. Bitcoin faced uncertainty from the sell-off by the former largest crypto exchange Mt.Gox and the German government, and the price of the currency spit out gains and was reported at $57,000. Israel launched a new round of attacks and ordered civilians to leave Gaza City. Fed Governor Cook supported a soft landing, and the pricing for a September rate cut rose to 80%.
Israel attacks Gaza City, orders all civilians to evacuate
Israeli forces attacked the headquarters of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) in Gaza City and ordered all Palestinian civilians to leave the city. A day earlier, Israel also attacked a school housing displaced civilians in Khan Yunis, killing at least 27 people and injuring 53.
Civil defense spokesman Mahmoud Basar said that after the Israeli army withdrew from the Shujaiya area of Gaza City, the area suffered "massive" damage to infrastructure and residential buildings.
Israeli troops shot and killed a 14-year-old Palestinian boy in the village of Deir Abu Mishar in the occupied West Bank, leaving the boy bleeding on the ground for 15 to 20 minutes, dying.
The United Nations Office for the Coordination of Humanitarian Affairs (OCHA) said that more than 550 Palestinians have been killed in the occupied West Bank since October 7, 2023.
Hezbollah leader Hassan Nasrallah said that if a ceasefire agreement is reached, Hezbollah will accept Hamas' decision on Gaza ceasefire negotiations and will stop cross-border attacks on Israel.
Fed's dovish signal surprises Cook: Data consistent with soft landing
Cook said that while soft landings after high inflation are rare, she predicts a soft landing for the United States because inflation will cool with little damage to the labor market.
"My base case forecast is that inflation will continue to move towards target over time without any further significant rise in unemployment," Cook said in a speech to a conference of Australian economists in Adelaide on Thursday.
The theme of Cook's speech was the synchronization of inflation rates and central bank response measures in global economies after the epidemic. She said that there were many reasons for the rising inflation rates in many countries, such as supply chain chaos and global food and energy supply disruptions.
The comments came after two days of testimony by Fed Chairman Jerome Powell on Capitol Hill, where he said policymakers were waiting for more data to confirm they were on track for a sustained period toward their 2% inflation target. Traders are pricing in a slightly higher than 70% chance of a 25 basis point rate cut in September.
He also stressed that high inflation is not the only risk facing the central bank, and said the policy committee is now more focused on the labor market given that recent data has cooled. To curb inflation, the U.S. central bank has kept its benchmark lending rate at a more than 20-year high of 5.25%-5.5% for nearly a year.
Powell's testimony is not new, CPI becomes the focus of the market
The highlight of Wednesday was Powell’s speech to the House Financial Services Committee. However, his testimony in the House did not bring anything significant or new to the table.
Powell expressed the need to keep a close eye on the labor market, noting clear weakness in the sector. He hinted that inflation may be heading toward lower levels, but also mentioned that he is cautiously optimistic about maintaining the 2% target. He also mentioned that he does not have a specific inflation number to decide on future rate cuts.
There is still much to look forward to on Thursday’s Consumer Price Index (CPI). Forecasts show headline inflation falling 2% year-on-year to 3.1%, while core inflation is expected to remain stable at 3.4% year-on-year.
The Chicago Mercantile Exchange's (CME) Fed Watch tool shows that the probability of a rate cut in July is less than 10%, while the probability of a rate cut in September is hovering around 80%.
US Dollar Technical Analysis
FXStreet analyst Patricio Martín said that from a technical point of view, the US dollar index appears to have fallen into negative territory, with both the relative strength index (RSI) and the moving average convergence divergence (MACD) showing negative values. Nevertheless, despite a small correction on Wednesday, the US dollar index has managed to stay above the 100-day simple moving average (SMA), thus mitigating the impact of the decline.
Subsequent supports at 104.50 and 104.30 also continue to act as solid barriers to prevent further declines. On the other hand, to resume momentum, buyers must reclaim the 105.50 level and retest the 106.00 threshold.
Bitcoin Technical Analysis
CoinTelegraph pointed out that Bitcoin bears tried to resume Bitcoin's downtrend, but bulls bought at a low point. According to Farside Investor data, more than $650 million has flowed into U.S. Bitcoin spot ETFs since July 5, indicating strong demand at lower levels.
However, the selling pressure is unlikely to end soon. According to Arkham Intelligence data, the German government wallet appears to be preparing to sell another 6,000 bitcoins. 禁qun加威；362014583 In addition, the market will pay close attention to the extent of selling by creditors of the collapsed cryptocurrency exchange Mt. Gox after receiving repayments.
Uncertainty about the amount of new Bitcoin supply has hit market sentiment, with the Crypto Fear and Greed Index falling to 27, the lowest level since January 23, according to Glassnode data.
Bitcoin’s rebound suggests that the bulls are firmly defending the $56,552–$53,485 support zone, with buyers pushing the price above the 20-day exponential moving average at $60,217 on Wednesday.
If the price turns down sharply from the 20-day EMA, it will suggest that the sentiment remains negative and traders are selling on rallies. The bears will then try to sink Bitcoin below the support area. If they succeed, the pair could drop to the psychological support of $50,000.
The first sign of strength would be a breakout and close above the 20-day EMA, which would pave the way for a possible rise to the 50-day simple moving average at $64,970. Such a move would indicate that the range-bound action between $53,485 and $73,777 is likely to continue for a while.
