Fed Holds Rates, Dollar Rises, Euro and Pound Slide (31.07.2025)

The U.S. dollar extended its strength after the Federal Reserve kept interest rates unchanged and signaled no immediate plans to ease, pressuring major currencies and precious metals. The euro fell to its lowest level since mid-June, while the British pound dropped toward a 2.5-month low. 

The Japanese yen rebounded as the Bank of Japan held rates steady but struck a cautious tone. Gold recovered from a four-week low amid renewed tariff announcements from the U.S., whereas silver slid near a three-week low as markets reassessed Fed policy direction.

Yen Climbs Above 149 After BOJ Pause

The Japanese yen climbed above 149 per dollar on Thursday, recovering from earlier losses after the Bank of Japan left interest rates unchanged, as anticipated. This marked the fourth consecutive pause following January’s hike to 0.5%. The BOJ struck a cautious note, pointing to temporary weakness in inflation linked to slower growth and persistent downside risks, particularly from global trade uncertainties. The yen had hit a near four-month low on Wednesday after the Fed kept rates steady and avoided offering clear guidance on future cuts, which supported the dollar.

The pair is seeing resistance at 149.30, with support at 148.50.

Gold Rebounds as Trade Tensions Return

Gold climbed above $3,290 per ounce on Thursday, rebounding from a four-week low as investors assessed recent U.S. trade actions and the Federal Reserve’s latest policy signals. President Trump introduced new tariffs, including a 15% levy on South Korean goods and 25% on imports from India, while ending exemptions for low-value shipments. The Fed left rates unchanged, and Chair Powell stated it is too soon to consider cuts. Market expectations now price in 35 basis points of easing by year-end. Strong U.S. GDP and employment figures influenced sentiment, with focus shifting to PCE inflation and July’s jobs data.

Gold is testing resistance at $3,320, with support at $3,275.

Sterling Slips as Fed Cut Hopes Fade

The British pound (GBP/USD) hovered near a 2.5-month low around $1.3250, pressured by a stronger dollar and fading hopes for Fed rate cuts. Sterling was set for a nearly 3.5% monthly drop amid confidence in U.S. economic strength and Powell’s cautious tone. Softer UK data and global trade uncertainty further weighed on the pound.

The pair faces resistance at 1.3270, with initial support at 1.3140.

Silver Slips Below $37.5 as Fed Stays Put

Silver dipped below $37.5 per ounce on Thursday, nearing a three-week low after the Fed held rates at 4.25%-4.5% in a 9-2 vote. Dissenters Bowman and Waller pushed for cuts amid easing inflation and a softening job market, marking the first dual dissent since 1993. While the outcome was expected, attention shifts to a possible September cut. Trump repeated calls for deeper cuts, even as Q2 GDP beat forecasts with 3% growth.

Silver faces resistance at $37.40, with support at $36.75.