EURUSD & GOLD

adjust symbl names before usuing

Nice use of DXY alongside XAUUSD.
I find that gold becomes much clearer when analyzed as a relationship between two markets rather than as a single instrument.
Sometimes the move is really a gold story.
Sometimes it's a dollar story.
The challenge is figuring out which side is actually driving the equation.

What will the USD do if the FED does not raise the federal funds rate next week?
Attention to the statements of the FED chairman about what he says he will do in the second half of the year:
- intention to increase the rate (USD will appreciate slightly);
- intention to decrease the rate (USD will weaken).

The chart shows that the market sees an increase in the interest fund rate (US2y rate, US2y > Interest fund rate).

What will the USD do if the FED does not raise the federal funds rate next week?
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If the Federal Reserve decides not to raise the federal funds rate next week, the U.S. Dollar (USD) is highly likely to weaken against major global currencies in the short term. [1]
When the Fed holds rates steady while the market expects a hike, it signals a more "dovish" monetary policy. This reduces the yield advantage of holding dollar-denominated assets, causing investors to shift capital to currencies with higher returns. [2, 3]
Immediate Market Impact on the USD

1. Downward pressure: Foreign exchange traders will likely sell off USD, causing it to drop against the Euro (EUR), Japanese Yen (JPY), and British Pound (GBP). [4, 5]
2. Yield drop: U.S. Treasury yields will fall, making the dollar less attractive to international yield-seeking investors. [6]
3. Commodity surge: A weaker dollar typically pushes up the prices of commodities priced in USD, such as gold and crude oil. [7, 8, 9]
4. Equity rally: Stock markets generally react positively to unchanged or lower rates, which can divert capital away from the safe-haven dollar into riskier assets. [10, 11, 12]

3 Key Factors That Could Change This Outcome
While the initial textbook reaction is a weaker dollar, the final outcome depends heavily on these variables:

1. Market Expectations: If the market has already 100% priced in a "pause" or no rate hike, the actual announcement might cause very little movement, or even a brief "sell the rumor, buy the fact" USD rally.
2. The Fed's Press Conference: If Federal Reserve Chairman Jerome Powell states that the pause is temporary and hints at aggressive rate hikes in the following months, the USD could actually strengthen. [13]
3. Global Central Bank Policies: Currency values are relative. If the European Central Bank (ECB) or the Bank of England (BoE) are cutting rates or pausing aggressively at the same time, the USD might remain strong by comparison. [14]

Historical Context
Historically, when the Fed hits the peak of its tightening cycle and stops raising rates, the U.S. Dollar Index (DXY) tends to enter a multi-month cooling period, provided global economic growth outside the U.S. remains stable.