Date: 31.07.2026
Market Sentiment
Risk appetite has improved sharply after upbeat technology earnings revived confidence in AI-related investment, driving a powerful rebound across Asian equities. The move is tempered by fragile energy-market conditions, with oil easing as shipping flows improve but remaining elevated after a volatile month. In currencies, the yen is again under pressure after the Bank of Japan held rates steady, while the dollar remains sensitive to inflation and rate expectations. Traders are balancing the equity rebound against renewed geopolitical risk, still-high energy costs, and the prospect of policy divergence among major central banks.
Previous Session Recap
US equities recovered strongly into the close as technology shares led a broad rebound, while Treasury yields stayed firm. The dollar held near recent highs against major peers. Crude benchmarks retreated as additional tanker traffic eased immediate supply concerns, though both remain substantially higher for the month. Gold and silver softened as the dollar regained some traction, while the yen failed to sustain its intervention-driven recovery.
Top Overnight Global Forex Headlines
- The Bank of Japan kept its policy rate at 1.00%, leaving USD/JPY near 160.70.
- KOSPI surged almost 18% as chipmakers led a powerful regional technology rebound.
- Taiwan and Japan equities also rallied, strengthening the broader Asia risk tone.
- WTI and Brent declined as shipping flows improved, though geopolitical risk remains elevated.
- Gold slipped below recent highs as investors assessed the dollar and rate outlook.
Forex Focus of the Day
USD/JPY is the central FX market to watch. The Bank of Japan’s unchanged decision has renewed pressure on the yen despite recent intervention efforts. Traders will focus on whether policymakers signal a faster response to inflation and currency weakness. A sustained move above 161.00 could revive intervention concerns, while a break below nearby support would suggest renewed demand for the yen after an exceptionally volatile week.
Key Economic Events
| Time, UTC | Event | Currency | Impact |
|---|---|---|---|
| 06:30 | Bank of Japan press conference | JPY | High |
| 09:00 | Euro area inflation data | EUR | High |
| 12:30 | Canada GDP | CAD | High |
| 12:30 | US income, spending and inflation data | USD | High |
| 14:00 | US consumer sentiment | USD | Medium |
Major Forex Currency Outlooks
| Pair | Price | Bias | Main Driver |
|---|---|---|---|
| EUR/USD | 1.1474 | Neutral | Dollar reaction to US inflation data |
| GBP/USD | 1.3445 | Neutral-bullish | Firm rate expectations, broad risk tone |
| USD/JPY | 160.67 | Bullish | BOJ hold and intervention risk |
| USD/CAD | 1.4106 | Neutral | Oil pullback versus Canada GDP |
| AUD/USD | 0.6975 | Bullish | Asia technology rebound |
| NZD/USD | 0.6452 | Neutral-bullish | Improved risk appetite |
| EUR/JPY | 186.98 | Bullish | Diverging ECB and BOJ policy expectations |
| USD/NOK | 9.9210 | Neutral | Softer crude prices cap NOK support |
Energy & Commodities Watch
| Instrument | Price | Bias | Main Driver |
|---|---|---|---|
| USOIL, WTI Crude Oil | 82.45 | Neutral-bullish | Improved flows versus supply-risk premium |
| UKOIL, Brent Crude Oil | 86.03 | Neutral-bullish | Elevated geopolitical and freight risk |
| NGAS, Natural Gas | 2.771 | Neutral-bullish | Storage and LNG supply sensitivity |
| XAU/USD, Gold | 4,075.35 | Neutral | Dollar firmness versus safe-haven demand |
| XAG/USD, Silver | 58.12 | Neutral-bullish | Technology sentiment and precious-metals demand |
Indices & Large-Cap Stocks Watch
| Instrument | Price | Bias | Main Driver |
|---|---|---|---|
| KOSPI | 6,695.45 | Bullish but volatile | Record chipmaker-led rebound |
| JPN225, Nikkei 225 | 64,362 | Bullish | AI earnings optimism and weaker yen |
Key Market Technical Zones
| Instrument | Support | Resistance | Key Condition |
|---|---|---|---|
| EUR/USD | 1.1430 | 1.1515 | Hold above 1.1430 |
| GBP/USD | 1.3380 | 1.3500 | Break above 1.3500 |
| USD/JPY | 159.80 | 161.00 | Intervention-sensitive above 161 |
| USD/CAD | 1.4050 | 1.4160 | GDP-driven break |
| AUD/USD | 0.6920 | 0.7020 | Risk tone confirmation |
| NZD/USD | 0.6400 | 0.6500 | Hold above 0.6400 |
| EUR/JPY | 185.80 | 188.00 | Yen volatility remains decisive |
| USD/NOK | 9.8500 | 10.0000 | Oil direction guides |
| USOIL, WTI Crude Oil | 80.50 | 84.50 | Hold above 80.50 |
| UKOIL, Brent Crude Oil | 84.00 | 88.00 | Reclaim 88 for upside |
| NGAS, Natural Gas | 2.700 | 2.840 | Storage response |
| XAU/USD, Gold | 4,000 | 4,120 | Dollar-sensitive range |
| XAG/USD, Silver | 56.80 | 59.50 | Breakout above 59.50 |
| KOSPI | 6,100 | 6,800 | Volatility remains extreme |
| JPN225, Nikkei 225 | 62,500 | 65,000 | Close above 65,000 |
Trader’s Takeaway
The main risk is that the technology-led equity rebound collides with renewed policy and geopolitical uncertainty. USD/JPY remains the most important currency signal after the Bank of Japan decision, while US inflation data can quickly reshape dollar and yield expectations. Watch whether KOSPI and JPN225 can retain their gains, whether crude holds key support, and whether USD/JPY remains contained below 161.00.
About LMFX
LMFX is a trusted global brokerage providing access to Forex, commodities, indices, and precious metals. Known for its fast execution and competitive spreads, LMFX offers the MT4 trading platform, flexible account types, and a variety of funding options. With dedicated customer support and a focus on transparency and reliability, LMFX serves traders at all experience levels worldwide.
Disclaimer
This content is for informational and educational purposes only and does not constitute financial advice or investment recommendation. Trading leveraged products such as Forex and CFDs involves risk and may not be suitable for all traders. Past performance does not guarantee future results. Seek independent advice if necessary. Please read LMFX’s full ‘Risk Disclosure Statement’. Always trade responsibly.
