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- The Week in FX and Crypto: July 7, 2026
The Week in FX and Crypto: July 7, 2026
Institutional Market Structure, Distilled Weekly.
mark schaefer
July 07, 2026
In This Issue
FX Recap — Dollar rally stalls after weak payrolls
EUR/USD — Bounce reaches key moving average resistance
USD/JPY — 40-year highs, but risk/reward deteriorates
Gold — Relief rally meets major resistance
Crude — War gap filled as reversal emerges
BTC — Rally approaching key resistance
Week Ahead — Fed minutes and key technical tests
FX Recap
Last week began with the U.S. dollar extending its recent advance as markets continued to price in a more hawkish Federal Reserve following June's FOMC meeting. Higher U.S. Treasury yields, resilient economic data, and persistent inflation expectations continued to support the greenback, while widening interest-rate differentials kept pressure on lower-yielding currencies. The Japanese yen remained the weakest of the major currencies, with USD/JPY reaching a new 40-year high above 162.80 as traders once again tested Japan's tolerance for intervention.
The tone shifted on Thursday following a weaker-than-expected June U.S. employment report. Slower payroll growth prompted investors to scale back expectations for another near-term Fed rate hike, sending Treasury yields lower and triggering broad-based dollar selling. EUR/USD and GBP/USD recovered from recent lows, while the yen staged a sharp rally amid speculation that Japanese authorities may have stepped into the market. Although no intervention has been confirmed, the move reinforced just how sensitive USD/JPY has become at these elevated levels.
By Monday morning, much of that post-payroll volatility had settled. The dollar stabilized but remained below last week's highs as markets reassessed the balance between a still-hawkish Federal Reserve and signs that the U.S. labor market may be beginning to cool. Attention has now shifted toward this week's FOMC minutes for further insight into the Fed's policy outlook, while USD/JPY remains firmly in focus as traders continue to test the Bank of Japan's resolve. Meanwhile, falling crude oil prices—driven by easing geopolitical supply concerns and OPEC+ plans to increase production—have helped reduce inflation expectations and removed some of the urgency behind additional Fed tightening.
EUR/USD
Last week I highlighted the 1.1340 area as a key technical support zone. That level held, and EUR/USD rallied to 1.1473 following the weaker-than-expected U.S. employment report before running directly into resistance at the declining 20-day moving average.
While momentum has now recovered from oversold territory and is becoming more balanced, the technical picture remains cautious. The 20-day moving average continues to trend lower, and EUR/USD has yet to record a daily close above it in more than two weeks. Until that changes, the recent recovery should still be viewed as a corrective bounce within the broader downtrend.
A sustained close above the 20-day moving average would improve the near-term outlook and expose the next upside target at 1.1525, the 38.2% Fibonacci retracement of the decline from the April high to the June low. Above there, 1.1587 marks an important confluence of the 50% Fibonacci retracement and the 50-day moving average.
Resistance
1.1464 — 20-day moving average
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 traded to a fresh 40-year high of 162.84 on July 1 before reversing sharply following the weaker-than-expected U.S. employment report. The pair fell approximately 1.3% to 160.64 before quickly recovering, printing a bullish reversal the following day and moving back above 162.00.
There was market speculation that the Bank of Japan was involved in the selloff. While that cannot be ruled out, the magnitude of the decline was relatively modest. Previous episodes of official intervention have produced significantly larger moves, making it difficult to conclude that intervention was the primary driver.
From a trading perspective, the risk/reward remains unattractive. Establishing new long positions carries the risk of sudden intervention by the Bank of Japan, potentially coordinated with U.S. authorities, which could trigger a sharp multi-percent decline in a matter of hours. Conversely, initiating short positions is largely a bet on the timing of intervention rather than a technical or fundamental view. Consistent with that assessment, my primary trading model has remained sidelined on long USD/JPY signals for several months.
Technically, USD/JPY continues to respect its rising 20-day moving average. The pair has not recorded a daily close below that average since May 13 and managed to close back above it following last week's selloff, reinforcing its importance as the first key support level.
Below there, 159.74 represents an important area of technical confluence between the lower Bollinger Band and the 50-day moving average. The 200-day moving average, currently at 156.87, remains the key longer-term support level.
Gold
Last week I highlighted Gold's bullish momentum divergence and the likelihood of a relief rally from the 3959 support area. That played out, with Gold rallying to the key pivot level at the 20-day moving average of 4,165.23. The end of last week also marked Gold's first daily close above its 20-day moving average since mid-May.
Momentum has now worked out of oversold territory and is approaching neutral. With price now trading around the 20-day moving average, the next move will likely be determined by how Gold responds to the overhead resistance levels.
The broader technical picture still points to significant headwinds. The 50-day moving average crossed below the 200-day moving average ("death cross") on June 26, while the upper Bollinger Band (4,348.29), the 50-day moving average (4,392.15), and the 200-day moving average (4,485.57) form a significant cluster of resistance. Further recovery will likely run into selling pressure in this area.
Crude (Cont. Contract)
Last week I highlighted the importance of the war gap at 67.83. That gap has now been completely filled, with crude trading down to 67.04 before printing a bullish reversal day with a lower low and a higher close than the previous session.
Momentum remains deeply oversold, making the reversal day an important level to watch. The low of 67.04 should now act as the key pivot on a closing basis. Holding above that level would increase the likelihood that a short-term low is in place.
If the bounce gains traction, the 200-day moving average at 74.31 will be the first major resistance level, followed by the 20-day moving average at 76.34. A close back above those levels would suggest the recent decline has largely run its course and improve the longer-term technical outlook.
BTC
Bitcoin is approaching overbought territory at 64,063 and is beginning to run into an important cluster of technical resistance. The upper Bollinger Band comes in at 65,483, followed by the 50-day moving average at 66,249. Above that, 67,316 marks the 38.2% Fibonacci retracement of the decline from the May high to the July low.
This is typically where countertrend rallies begin to stall within a strong trend. With several key technical levels overhead, watch for signs of a reversal if Bitcoin fails at any of these resistance levels. A failure to close above 67,316 would increase the likelihood that the recent rally is complete and could open the door for an extension lower.
Week Ahead
The focus this week will be on the FOMC meeting minutes for any additional insight into the Fed's outlook following June's meeting. Beyond that, traders will continue to watch incoming U.S. economic data for signs that the labor market is beginning to cool after last week's weaker employment report. In FX, USD/JPY remains the market to watch as it continues to trade near 40-year highs and intervention risk lingers. With several markets approaching important technical levels, price action around those areas should provide a clearer indication of whether recent moves are beginning to reverse or simply pause within the existing trends.
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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