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- The week in FX: July 29, 2025
The week in FX: July 29, 2025
Real-World FX Analysis
mark schaefer
July 29, 2025
In This Issue:
Recent key levels delivered 720 points - how they played out
USD Trend Analysis: Reading corrective vs reversal signals
Institutional Framework: Trend resumption recognition
Key Levels to Watch This Week
Recent analysis flagged levels that delivered 720 points of market reactions:
GBP/USD 1.3365/70: Support level → 223 point bounce
EUR/AUD 1.7765: Channel support → 119 point bounce
GBP/AUD 2.0490: Channel support → 256 point bounce
USD Index: Reversal zone → 122 point decline to 96.86
Note: These measure market reactions from flagged levels, not trading results. Implementation varies by individual approach.
Analysis as of week ending July 25, 2025
USD INDEX
USD: Reading Market Structure
The USD reversal played out exactly as flagged, -122 points to 96.86 before finding support and reversing Thursday.
While markets continue evolving, this example demonstrates how to identify inflection points in real-time.
Key Drivers Supporting The Analysis:
Policy uncertainty: Trade tensions weighing on USD sentiment
Positioning dynamics: Speculative shorts remain elevated despite recent USD strength
Safe-haven dynamics: Alternative currencies gaining appeal
Fed expectations: Policy uncertainty supporting USD weakness
Trend Recognition
How do you distinguish between corrections and actual reversals? Last week's USD setup was a perfect example.
The previous USD rally showed classic corrective characteristics: limited fundamental support, positioning divergences, and technical exhaustion signals. When these factors align, the higher probability lies with trend continuation rather than reversal.
🎯 Trend Strength Analysis
1. Structural Context: Is the counter-move within or breaking the primary trend structure?
2. Fundamental Alignment: Do the core drivers support continuation vs reversal?
3. Positioning Evidence: Have positions changed significantly during the counter-move?
4. Technical Confluence: Multiple timeframes and indicators confirming direction
The USD example demonstrated all four factors pointing toward resumption: structural downtrend intact, policy uncertainty continuing, positioning divergences evident, and technical signals showing exhaustion rather than reversal.
The Edge:
Focus on what the market is telling you through structure and positioning.
Key Levels to Watch This Week
USD Index 98.66: Key resistance - close above would challenge trend resumption, downside objective the yearly low at 96.00 then 91.64, the 61.8% Fibonacci of February 2018 low to September 2022 high.
EUR/AUD 1.7870/75: Broke below the channel support. This will be the pivot level to watch for resistance now.
GBP/AUD: Trading near channel support with momentum divergence - watch for bullish signals on any new lows
GBP/USD 1.3365/70: Potential triple bottom if retested, momentum not confirming recent selloff - watch for bullish divergence
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Meridian Compass is brought to you by Mark Schaefer, Series 3 registered quantitative portfolio manager with 30+ years managing institutional FX and futures strategies at major hedge funds and banks.
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