In This Issue

• FX Recap — A week of round trips, then a new catalyst

• EUR/USD — Held the flagged level, still consolidating below the 20-day

• USD/JPY — Round-tripped the payrolls move, unchanged on net

• Gold — Bounce stalled at resistance, headwinds reasserted

• BTC — Resistance held, rejection as flagged

• Week Ahead — CPI, Warsh testimony, and the Hormuz question

FX Recap

Last week's letter was about levels — this week is largely about whether those levels held. A weaker-than-expected June nonfarm payrolls report triggered a broad dollar selloff, with EUR/USD rallying from 1.1375 to 1.1473 and USD/JPY dropping 1.4% to a low of 160.49. Both moves proved short-lived: EUR/USD spent the following week consolidating, and USD/JPY fully recovered within days, essentially unchanged from where it stood a week earlier.

Then the weekend delivered a new catalyst entirely. Renewed U.S.-Iran strikes and Iran's claim that the Strait of Hormuz is closed "until further notice" (disputed by CENTCOM) put a fresh bid under the dollar and sent crude sharply higher. Gold's relief rally, which had cleared resistance, reversed hard. Bitcoin's bounce failed exactly where the technicals flagged it might. Attention now turns to this week's U.S. CPI print and Fed Chair Warsh's first congressional testimony — both landing squarely in the middle of an already volatile geopolitical backdrop.

EUR/USD

I'd flagged a significant downside level on a closing basis, and it held — EUR/USD found support there before bouncing to 1.1473. Since then, the pair still hasn't managed a daily close above the 20-day moving average, and has spent the past week consolidating below it. The Iran-driven dollar bid has pushed EUR/USD back down to 1.1400, testing the lower end of that consolidation range without yet breaking it.

The technical picture remains straightforward: until EUR/USD can close back above the 20-day moving average, this stays a downtrend with corrective bounces rather than the start of something more. Watch for whether support holds here, or whether the dollar's renewed bid finally pushes the pair through the bottom of the range.

Resistance
- 1.1428 — 20-day moving average (watch on closing basis)
- 1.1525 — 38.2% Fibonacci retracement (April high to June low)
- 1.1587 — Confluence of the 50% Fibonacci retracement and 50-day
moving average

Support
- 1.1382 — 61.8% Fibonacci retracement (June 24 low to July 2 high)
- 1.1340 — Key Fibonacci support highlighted in last week's letter
- 1.1307 — Lower Bollinger Band

USD/JPY

USD/JPY sold off 1.4% on the payrolls miss to a low of 160.49, but was right back up to pre-payroll levels within days. Net result: USD/JPY is essentially unchanged from where it stood a week ago, having round-tripped the entire move — a reminder that the structural rate differential continues to dominate over incoming data surprises.

The pair remains within striking distance of its recent 40-year high, with intervention risk still the primary wildcard at these levels. Fed Chair Warsh's testimony this week is the next scheduled catalyst that could move the rate-differential side of this equation.

Resistance
- 162.84 — Recent high

Support
- 160.11 — 50-day moving average
- 159.37 — 100-day moving average
- 157.22 — 200-day moving average

Gold

I'd highlighted the potential for a bounce off the lows, while also flagging significant overhead confluence and resistance — which proved to create strong headwinds. Gold rallied to a high of 4,202, clearing the 20-day moving average pivot, before the rally stalled and those headwinds reasserted themselves. Gold has since reversed sharply, trading down to 4,009.

With momentum now in neutral territory rather than oversold, there's little cushion left — gold can easily make new lows from here if the current selling pressure continues. The death cross (50-day moving average below the 200-day) remains intact, and until gold can reclaim the 20-day moving average, the path of least resistance still points lower.

BTC

I'd flagged the resistance zone between $65,335 and $67,316 — confluence of the upper Bollinger Band, 50-day moving average, and the 38.2% Fibonacci retracement — as the key area to watch, consistent with the pattern that's held since breaking $100K: bounces off new lows retracing to roughly the 38.2% Fib before rolling over into another new low.

That's exactly what's played out. Bitcoin rallied into the zone, testing resistance at 64,670 twice, and failed both times. Consistent with the pattern all year, this looks like another rejection at the first key Fibonacci level rather than a break of the broader downtrend.

Beyond this zone, 70,274 (50% Fib) and 73,232 (61.8% Fib) remain the next levels up, though it's common in established downtrends for bounces to stall at the first key Fib rather than reaching these.

Week Ahead

This week brings both U.S. CPI data and Fed Chair Warsh's first congressional testimony — a combination that could move markets sharply given how much of the current dollar strength and rate-hike pricing depends on the inflation and policy outlook. Beyond that, the Iran/Hormuz situation remains the wildcard across every asset in this letter — oil, gold, the dollar, and risk assets broadly are all trading off headlines out of the Gulf as much as off technicals right now. Watch for the OPEC monthly report and any updates on Strait of Hormuz shipping traffic, which remains sharply reduced from pre-conflict levels.

Market Notes

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Next Tuesday: Weekly market update. — Mark

Meridian Compass is brought to you by Mark Schaefer, a portfolio manager specializing in systematic global macro and FX strategies, with experience across institutional trading platforms, major banks, and hedge funds.

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