Weekly Preview: ISM Services, FOMC Minutes Delta Airlines & Pepsi Earnings

The EUR/USD pair remains confined to a narrow range below the 1.1450 level during Monday's Asian trading session, as investors balance geopolitical risks against evolving expectations for monetary policy. Although the pair continues to trade close to its highest level in nearly two weeks, gains remain limited by cautious market sentiment.

Concerns over the Strait of Hormuz continue to support demand for the US Dollar. While the United States and Iran have reached a fragile interim understanding, uncertainty persists as Tehran seeks greater control over the strategically important shipping route.

However, the Dollar's gains remain restrained after last week's weaker-than-expected US labor market data reinforced expectations that the Federal Reserve may adopt a more cautious policy stance.  The softer employment data, combined with easing inflation pressures following the recent decline in crude oil prices, has prompted markets to scale back expectations for future Fed tightening. Investors now anticipate anywhere between no rate hikes and a single increase in 2026, compared with expectations of two hikes only a short time ago. A broadly positive tone across global equity markets has also limited safe-haven demand, preventing the US Dollar from extending its advance.

On the Euro side, softer inflation readings across the Eurozone have encouraged markets to temper expectations for additional European Central Bank rate hikes, limiting bullish momentum for the single currency.

Attention now turns to Monday's economic calendar, which includes German Factory Orders, Eurozone Sentix Investor Confidence, Producer Price Index (PPI), and Retail Sales data. Later in the day, traders will focus on the US ISM Services PMI report and comments from several Federal Open Market Committee (FOMC) officials for fresh clues on the Federal Reserve's policy outlook, which could drive the next move in EUR/USD.

Gold prices eased during Monday’s Asian session after briefly climbing above the $4,200 level, a fresh two-week high. The retreat appears to interrupt a three-day winning streak as renewed demand for the US Dollar limits further gains in the precious metal.

Reports that Iran may introduce new service fees for vessels using the strait have helped maintain a geopolitical risk premium, encouraging some safe-haven flows into the greenback and weighing on Gold.

Still, the downside for bullion appears limited. Investors have scaled back expectations for additional Federal Reserve rate hikes following weaker-than-expected US employment data released last week. Softer labor market conditions, combined with easing inflation pressures amid lower crude oil prices, have reinforced the view that the Fed may adopt a more patient policy stance. As a result, markets are becoming less convinced that interest rates will remain higher for longer, which reduces support for the Dollar and helps underpin non-yielding assets such as Gold.

Another important source of support remains central bank demand. Recent findings from the World Gold Council showed that monetary authorities are increasingly using Gold as a hedge against inflation, financial instability, and geopolitical risks..

Looking ahead, traders will focus on the US ISM Services PMI and comments from several Federal Open Market Committee (FOMC) officials later in the North American session. These events could influence Dollar sentiment and provide fresh direction for Gold prices.

Oil prices edged lower during Monday's Asian session after OPEC+ agreed to raise production targets again from August, while improving crude exports through the Strait of Hormuz added to expectations of increased global supply. Market participants remain cautious as uncertainty surrounding the Strait of Hormuz continues to dominate sentiment.

On the supply side, the Organization of the Petroleum Exporting Countries and its allies (OPEC+), including Russia, agreed on Sunday to increase collective production targets by 188,000 barrels per day from August, following similar quota increases introduced for June and July.

Despite the announcement, analysts noted that the additional output may have only a limited near-term impact. Production from several Gulf producers—including Saudi Arabia, Kuwait, and Iraq—has yet to fully recover after the recent conflict involving Iran temporarily disrupted tanker traffic through the Strait of Hormuz.

Recent data restoring exports. A Reuters survey showed OPEC crude output rose by approximately 3.3 million barrels per day in June to 19.43 million barrels per day, rebounding from its lowest level in more than two decades. Gulf oil exports also increased by more than 3 million barrels per day from May, surpassing 10 million barrels per day, although shipments remain roughly 40% below pre-conflict levels.

Meanwhile, Russia continues to add to global supply. Crude exports from the country's western ports reached a record high in June and are expected to remain elevated in July, as drone attacks on Russian refineries have reduced domestic processing capacity and prompted Moscow to redirect more crude to international markets.

Overall, the combination of higher OPEC+ production targets, recovering Gulf exports, and strong Russian shipments has reinforced expectations of improving supply, placing modest downward pressure on oil prices despite ongoing geopolitical risks in the Middle East.

US stock index futures traded modestly higher during Monday's Asian session, extending gains after a positive, holiday-shortened trading week. Investors are reassessing the outlook for artificial intelligence-related stocks while looking ahead to the release of the Federal Reserve's June meeting minutes for fresh policy guidance.

Wall Street closed higher last week despite volatile trading conditions. The US 30 climbed around 2% to a record closing high, marking its fourth consecutive weekly gain. The US 500 and the US Tech 100 also advanced nearly 2%, reflecting continued resilience in US equities.

Investor focus has increasingly shifted toward the sustainability of the artificial intelligence-driven rally. Recent weakness in semiconductor stocks has prompted concerns that valuations across parts of the AI supply chain may have become stretched. At the same time, sentiment remains constructive toward software developers and platform companies expected to benefit from the broader adoption of AI technologies.

Attention this week will be firmly on the minutes from the Federal Reserve's June policy meeting, scheduled for release on Wednesday. Investors will scrutinize the report for additional clues on the central bank's interest rate outlook after recent economic data pointed to a cooling labor market.

The corporate earnings season also begins this week, with PepsiCo and Delta Air Lines among the first major companies set to release quarterly results. Their reports will offer an early indication of corporate performance and consumer demand during the second quarter.

Market participants will also be watching whether major technology companies can regain market leadership following recent sector rotation. Apple has attracted renewed buying interest on optimism surrounding its upcoming iPhone lineup, while continued weakness in AI-focused chipmakers has raised questions about whether the technology sector can sustain its strong performance for the remainder of the year.