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Market participants digest the PMI and await the Fed and ECB meetings. No relevant dates are due during the Asian session. Later in the day, the German IFO survey is due, followed by US housing data.

Here’s what you need to know on Tuesday, July 4:

US stocks rose despite weaker PMI. The market expects rate hikes from the Federal Reserve (Fed) and the European Central Bank (ECB). this week but he hoped it would mark the end of the tightening cycle. The Dow Jones added 0.52% and the Nasdaq rose 0.19%. Microsoft and Alphabet will report earnings on Tuesday. US data due on Tuesday includes CB consumer confidence and the Case-Shiller home price index.

U.S. Treasury yields rose to their highest level in two weeks ahead of the Fed meeting, supporting the U.S. dollar. The DXY rose for fourth consecutive dayending around 103.40, the highest level since July 12.

EUR/USD it resumed its bearish correction and fell to 1.1060, hitting a 12-day low. Eurozone PMI data showed that recession risks are intensifying in the region. The German IFO survey is due to take place on Tuesday. The European Central Bank (ECB) is expected to raise its key interest rates by 25 basis points on Thursday.

Nomura analysts:

The July PMIs suggested that economic activity is generally weak across the eurozone. Manufacturing PMI fell even deeper into contractionary territory. While this is dovish news for the ECB, hawkish members are likely to focus on service sector price data, which suggests inflation may be settling at a persistently higher level.

GBP/USD it fell for the seventh day in a row and finished slightly above 1.2800 for the first time in a month, but below the 20-day simple moving average (SMA). The UK also reported weak July PMIs, which continue to reduce tightening expectations from the Bank of England. Still, a rate hike is expected in August, but the odds of a 50 basis point hike have diminished.

USD/JPY ended flat around 141.50 after a rebound during the US session, supported by higher US Treasury yields. The Bank of Japan is expected to keep monetary policy unchanged on Friday; however, reports suggest it will raise its inflation forecasts.

AUD/USD bounced off the 20-day SMA and is trading slightly higher around 0.6735. The pair still maintains a bearish tone, but offered signs of stabilization underpinned by risk appetite and hopes for Chinese stimulus. On Wednesday, Australia will announce inflation.

NZD/USD rose after falling for seven consecutive trading days, but failed to hold above 0.6200. Kiwis outperformed; however, the pair still faces bearish pressure and remains below the 20-day SMA.

USD/CAD it lost more than 50 pips to fall below 1.3200, helped by higher oil prices. Oil prices rose more than 2%, with WTI hitting its highest level since mid-April above $79.00.

Gold slumped amid higher returns and fell towards the $1,950 zone silver lost more than 1% and broke below $24.50.

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