The GBP/USD pair edges lower to around 1.3535 during Wednesday’s early Asian session, with the British Pound coming under pressure after weaker-than-expected UK labor market figures. Market participants are now turning their attention to the UK’s Consumer Price Index (CPI) report, due later in the day, for fresh clues on the inflation outlook and the Bank of England’s policy path.
On the daily timeframe, GBP/USD continues to exhibit a constructive bullish outlook, trading above both the 100-day Simple Moving Average (SMA) and the Bollinger Bands’ 20-day midpoint, reinforcing the strength of the prevailing uptrend. The 14-day Relative Strength Index (RSI) stands at 60.8, remaining in positive territory without reaching overbought levels, indicating that upside momentum could persist in the near term.
From a technical perspective, the pair faces immediate resistance near the upper Bollinger Band at 1.3615, a level that may limit further advances. On the downside, initial support is located around the Bollinger middle band at 1.3450, followed by the 100-day SMA at 1.3420. Additional support is seen near the lower Bollinger Band at 1.3285. Holding above this key support cluster would keep the broader bullish structure intact and favor buying on pullbacks rather than signaling a trend reversal.
Fundamental Analysis
UK labour market data released by the Office for National Statistics showed that the unemployment rate held at 4.9% in the three months to June, slightly above the 4.8% market forecast. Meanwhile, average earnings including bonuses slowed to 4.1% from 4.4% previously, pointing to easing wage pressures and potentially reducing the likelihood of a Bank of England (BoE) rate hike later this year.
Markets currently price in one BoE rate increase by year-end, which would take the benchmark rate from 3.75% to 4.0%. ING economist James Smith noted that persistent weakness in private-sector hiring and wage growth means the threshold for a 2026 rate hike remains relatively high unless energy prices experience a severe and sustained surge.
Meanwhile, expectations for a September Federal Reserve rate hike have also declined, offering some support to GBP/USD by limiting further US Dollar gains. Markets now see around a 35% probability of a Fed rate hike in September, down from 47% a month earlier, according to the CME FedWatch Tool.
Scotiabank strategists noted that Sterling has weakened only modestly, broadly tracking declines among its major European peers. Although the latest UK employment figures were disappointing, the data has so far failed to create a significant downside divergence for the Pound.
EUR/USD Strengthens Above 1.1550 as Bullish Outlook Holds
The EUR/USD pair extends gains to trade near 1.1585 during early European hours on Wednesday. The Euro strengthens against the US Dollar after Germany’s ZEW Economic Sentiment survey exceeded market expectations. Investors now await a speech from European Central Bank (ECB) President Christine Lagarde later in the day for fresh clues on the ECB’s monetary policy outlook.
On the daily chart, EUR/USD maintains a bullish near-term outlook, with the pair trading above the 100-day moving average (MA) and the Bollinger middle band. This technical setup points to a positive underlying trend following the rebound from support near the lower Bollinger band at 1.1364. The 14-day Relative Strength Index (RSI) stands at 63.8, indicating that buyers remain in control while momentum is approaching overbought levels without reaching them decisively.
On the upside, the August 17 high at 1.1614 represents the first key resistance level. A sustained move above this area could expose the Bollinger upper band near 1.1650, where the pair may encounter stronger selling pressure.
On the downside, initial support lies at the 100-day MA around 1.1570, followed by the Bollinger middle band at 1.1505. If selling pressure intensifies, EUR/USD could retreat toward the lower Bollinger band near 1.1365, with this level remaining important for maintaining the broader bullish trend.
Fundamental Analysis
Data released Tuesday showed that Germany’s ZEW Economic Sentiment Index rose to 34.2 in August from 26.3 previously, beating market expectations of 30.0. The ZEW Current Situation Index also improved significantly to -61.1 from -77.6 in July, coming in above the forecast of -68.8 and providing additional support for the Euro.
Markets are increasingly pricing in further ECB rate hikes. According to the ECB Watch Tool, traders see a 90%–94% probability of a 25-basis-point rate increase to 2.50% at the ECB’s next policy meeting on September 9.
US Dollar remains supported despite weaker Fed hike expectations
MUFG analysts noted that the recent shift in US Dollar sentiment, following last week’s economic data that reduced expectations for further Fed rate hikes, has not resulted in significant unwinding of long-Dollar positions. The US Dollar Index (DXY) continues to hold above its 200-day moving average at 99.185, suggesting that the softer Fed policy outlook has yet to trigger a major Dollar sell-off.
Gold rebounds as softer USD and fading Fed hike bets lift XAU/USD
Gold recovers from a fresh weekly low as renewed US Dollar weakness provides support.
Softer US economic data and easing inflation reduce expectations for a September Fed rate hike.
XAU/USD remains capped by the 100-day SMA, with the $4,386–$4,455 zone acting as key resistance.
Gold (XAU/USD) rebounds on Friday after slipping to a fresh weekly low of $4,311 earlier in the session. The precious metal trades near $4,381 at the time of writing, supported by a weaker US Dollar and declining expectations of an imminent Federal Reserve interest rate hike. However, Gold remains below Thursday’s two-month peak of $4,449.
Fresh US economic data reinforced concerns that economic momentum is slowing. Retail Sales dropped 0.6% month-over-month in July, significantly below expectations for a 0.1% rise and reversing June’s 0.2% increase.
The disappointing spending data comes after this week’s CPI and PPI reports pointed to gradually easing inflationary pressures. However, preliminary University of Michigan figures showed that one-year inflation expectations rose slightly to 4.3% in August from 4.2%, while the five-year expectation remained unchanged at 3.3%.
The weaker economic data has pushed short-term Treasury yields lower and pressured the US Dollar as markets scale back expectations for a September Fed rate hike. The US Dollar Index (DXY) is trading around 99.50, down approximately 0.45% on the day.
According to the CME FedWatch Tool, markets are now assigning roughly a 71% probability that the Fed will leave interest rates unchanged next month.
This environment remains broadly supportive for non-yielding Gold in the near term, although the inflation outlook remains uncertain. Inflation is still above the Fed’s 2% target, while energy-related price pressures have yet to fully ease amid continued uncertainty surrounding the reopening of the Strait of Hormuz.
TD Securities noted that CTA net-long positioning in Gold is becoming increasingly established alongside renewed discretionary buying. The bank expects the precious metal to remain well supported at elevated levels if the Fed stays on hold amid weaker economic data, even with higher energy prices.
Technical analysis: XAU/USD faces resistance at the 100-day SMA
XAU/USD remains close to recent highs but has yet to achieve a convincing break above the 100-day Simple Moving Average (SMA) at $4,386. Gold continues to trade comfortably above the 20-day SMA, which coincides with the Bollinger middle band around $4,173.
The daily RSI is near 62, while the MACD remains in positive territory, indicating that bullish momentum is still intact and could support another attempt to break higher.
On the upside, the $4,386–$4,455 area represents a significant resistance zone, defined by the 100-day SMA and the upper Bollinger Band. A sustained move above this region could reinforce the bullish outlook and open the door to further gains.
On the downside, initial support lies around $4,173 at the Bollinger middle band, followed by the psychological $4,000 level. A deeper correction could expose the lower Bollinger Band near $3,891.
Forex Today
The US Dollar starts Tuesday under pressure, with the US Dollar Index (DXY) hovering near two-month lows and remaining below the 100.00 threshold. A string of weaker-than-expected US data covering employment, inflation and retail sales has reduced expectations for a Federal Reserve rate hike next month.
Meanwhile, geopolitical tensions in the Middle East are supporting commodities. A senior Iranian official said Tehran is adopting a “fully offensive” posture and warned that tensions around the Strait of Hormuz could escalate if diplomatic efforts fail. The comments pushed Crude Oil more than 2% higher and provided additional support for Gold.
US Dollar performance today
The US Dollar is broadly weaker against most major currencies, with the largest declines seen against the Australian Dollar, New Zealand Dollar and Swiss Franc. The Greenback is strongest against the Japanese Yen, while its performance against the Canadian Dollar remains broadly unchanged.
EUR/USD holds near 1.1580 after pulling back from a two-month high around 1.1614, with Dollar weakness continuing to underpin the pair.
GBP/USD remains firm around the mid-1.3500s, close to three-month highs as traders await Tuesday’s UK labor market data.
USD/JPY trades around 159.00 after markets largely looked past weaker-than-expected Japanese second-quarter GDP data.
AUD/USD remains near the lower 0.7100s and leads the major currencies despite softer Chinese Industrial Production and Retail Sales figures released over the weekend.
Gold extends its recovery above $4,400 as a weaker US Dollar and heightened Middle East tensions boost demand for the precious metal.
WTI Crude Oil climbs toward $84.00 per barrel as renewed Iranian threats increase the geopolitical risk premium in energy markets.
Key economic events ahead
Tuesday’s Asian session begins with Australia’s Westpac Consumer Confidence report. Attention then shifts to the UK labor market report, with the Bank of England particularly focused on Average Earnings and the ILO Unemployment Rate.
Later, Germany and the Eurozone will release ZEW economic sentiment data, while European Central Bank Executive Board member Philip Lane is scheduled to speak.
The US session features Building Permits, Housing Starts, Industrial Production and Pending Home Sales, providing further clues about the health of the US economy. New Zealand’s second-quarter Producer Price Index will round out the day’s major releases.
AUD Advances as Fading Fed Hike Bets Weigh on US Dollar
AUD/USD advances for a third straight session as weaker Fed rate-hike expectations continue to weigh on the US Dollar.
Rising US-Iran tensions, following Trump’s stance on the expiring agreement and the naval blockade, add to broader geopolitical uncertainty.
Traders turn their attention to Australia’s August consumer confidence and Q2 Wage Price Index data for fresh clues on the RBA’s policy path.
AUD/USD extends its upward momentum for a third consecutive day, trading near 0.7110 during Tuesday’s Asian session. The pair remains supported as the US Dollar struggles amid diminishing expectations for additional Federal Reserve rate hikes.
The unexpected drop in US Nonfarm Payrolls in July, together with relatively soft consumer inflation data released last week, has reduced expectations for a rate increase at the Fed’s next meeting. CME FedWatch Tool data now shows a 35% probability of a hike, down from 47% one month ago.
Geopolitical developments between the US and Iran are also influencing market sentiment. On Monday, US President Donald Trump said he was not interested in extending the expiring agreement with Iran, pointing to the naval blockade of Iranian ports as a sign of US leverage. Trump also reiterated his proposal to place the strategically important waterway under full US control.
Iranian Foreign Ministry spokesman Esmail Baghaei, meanwhile, said a deal remains out of reach because of security concerns and what he described as the “obstructionist behavior of destructive elements.” He called on Washington to remove the blockade before further negotiations could take place.
In Australia, attention is shifting toward upcoming economic indicators that could offer fresh insight into the domestic policy outlook. The August Westpac Consumer Confidence Index is due first, followed by the Q2 Wage Price Index. Australian wages are expected to increase 0.8% quarter-on-quarter, matching the pace recorded in the previous quarter.
Australia wage data unlikely to alter RBA expectations
Brown Brothers Harriman strategists expect the upcoming Australian labor-market figures to have a limited impact on expectations for Reserve Bank of Australia policy. BBH expects Q2 wage growth to remain at 0.8% q/q for a third consecutive quarter, while annual growth is forecast to ease to 3.2% from 3.3% in Q1.
This combination is unlikely to significantly change the current market view that the RBA will keep interest rates unchanged. As a result, the upcoming data present only limited potential for a meaningful repricing of RBA rate expectations.
RBA futures point to limited tightening
RBA cash-rate futures currently imply around a 60% probability of one final 25-basis-point rate increase by year-end, which would take the cash rate to 4.60%. However, BBH believes the risks are tilted toward the RBA maintaining its restrictive stance for longer rather than delivering another near-term hike.
With monetary policy already considered somewhat restrictive, markets may be pricing in a greater chance of additional tightening than is ultimately likely.
Technical Analysis: AUD/USD maintains a bullish bias above key EMAs
AUD/USD is trading around 0.7110 and retains a constructive technical outlook as the pair remains above both the nine-period and 50-period Exponential Moving Averages. The shorter-term EMA is positioned above the longer-term measure, reinforcing the pair’s positive near-term trend.
The 14-day Relative Strength Index stands at 65.84, approaching overbought territory. This indicates strong bullish momentum but also suggests that the recent advance may be becoming stretched.
Initial support is located around the nine-period EMA at 0.7074, followed by the 50-period EMA near 0.7028. Holding above these levels would keep the broader near-term bias tilted to the upside. However, with RSI elevated, further gains from current levels could increasingly give way to consolidation rather than a sustained straight-line rally.
EUR/USD pauses as oil-fueled inflation risks lend support to the US Dollar.
EUR/USD holds steady near 1.1580 after retreating slightly from a two-month high.
Higher oil prices revive inflation concerns and could strengthen expectations for another Fed rate hike, supporting the US Dollar.
Growing expectations of a final 25-basis-point ECB rate increase in September continue to underpin the Euro.
EUR/USD remains largely unchanged around the 1.1575–1.1580 area during Tuesday’s Asian session, stabilizing after Monday’s modest decline from a two-month peak. However, a slight recovery in the US Dollar suggests caution before assuming the pair will resume its recent advance from the 1.1350 region, the July monthly low.
Last week’s softer US inflation figures and weaker consumer spending data reduced expectations for an imminent Federal Reserve rate increase, pushing the US Dollar Index to its lowest level since June 16 on Monday. However, the recent rise in crude oil prices has brought inflation concerns back into focus and could encourage the Fed to maintain a more hawkish policy stance. Persistent geopolitical risks are also supporting safe-haven demand for the Greenback, potentially limiting EUR/USD gains.
Tensions surrounding the Middle East remain a key market driver. US President Donald Trump said Washington does not intend to extend its Memorandum of Understanding with Iran, which expired on Monday. Trump also reiterated his proposal to place the strategically important Strait of Hormuz under US control and issued further warnings regarding Oman. The ongoing US-Iran standoff has pushed crude oil prices to a two-week high, increasing inflation risks and reinforcing expectations for at least one additional Fed rate hike before year-end.
Markets will therefore focus closely on Wednesday’s FOMC Minutes for fresh clues about the Federal Reserve’s future policy direction. The minutes could influence near-term USD movements and provide the next major catalyst for EUR/USD.
Meanwhile, expectations that the European Central Bank could deliver one final 25-basis-point rate increase at its September meeting continue to offer support to the Euro. This outlook could help limit the downside risk for EUR/USD in the near term.
Technical Analysis: EUR/USD faces key resistance near 1.1600
EUR/USD is trading just below the 50.0% Fibonacci retracement of the April–June decline, making this level an important near-term resistance zone. A sustained break above this barrier could strengthen the bullish outlook and open the way toward the 200-day Simple Moving Average near 1.1630, followed by the 61.8% Fibonacci retracement around 1.1647.
On the downside, initial support is located at the 38.2% Fibonacci retracement near 1.1522. A break below this level could expose the 23.6% retracement at 1.1445, while the broader structural support remains around the 1.1320 cycle low.
The DJIA falls nearly 260 points, slipping below the 53,500 mark and touching the mid-53,400 region.
The 30-year US Treasury yield climbs above 5.31%, reaching its highest level in nearly two decades.
Crude Oil jumps around 3% as the 60-day US-Iran negotiation framework expires.
The Dow Jones Industrial Average (DJIA) lost nearly 260 points on Monday, slipping below 53,500 and extending its decline for a second straight session. The index reached its intraday high at the opening bell before weakening throughout the day, with selling pressure intensifying late in the session as long-term US Treasury yields climbed to their highest levels since 2007.
US-Iran standoff fuels Oil rally
Market sentiment deteriorated after the expiration of the 60-day negotiating framework aimed at resolving tensions surrounding the Strait of Hormuz, with no replacement agreement announced. Iranian officials warned that Tehran could adopt a more aggressive stance if diplomatic efforts fail, while the Revolutionary Guard reiterated that maritime traffic remains subject to Iranian approval until its conditions are met.
The uncertainty boosted energy markets, with West Texas Intermediate (WTI) crude rising above $83.00 per barrel and Brent crude advancing beyond $88.00, each gaining roughly 3% on the day.
Refiners benefit while the Dow misses out
The surge in energy prices has continued to support US refining companies. Shares of major refiners such as Valero, Marathon Petroleum, and Phillips 66 remain near record highs, benefiting from elevated refining margins and constrained global fuel supplies.
However, the DJIA has limited exposure to this theme. Chevron is the index’s only energy constituent, leaving the benchmark less positioned to capitalize on the strong performance seen across the refining sector.
Treasury yields signal inflation concerns
The bond market remained a key driver of sentiment. The 30-year US Treasury yield climbed above 5.31%, its highest level in 19 years, while the benchmark 10-year yield rose beyond 4.72%. Even shorter-dated yields edged higher, indicating that investors are increasingly concerned about inflation rather than slowing economic growth.
Higher energy costs, particularly elevated diesel prices, are viewed as a potential source of future inflationary pressure, raising concerns about transportation and production costs across the economy.
Focus shifts to Fed minutes and key US data
Investors will now turn their attention to the release of the Federal Open Market Committee (FOMC) minutes on Wednesday for additional clues regarding the Fed’s policy outlook. Upcoming data on housing activity, industrial production, jobless claims, and business activity surveys will also help shape expectations for interest rates in the coming weeks.
The DJIA maintains a bearish near-term outlook after breaking below the 53,500 region. Immediate resistance is located near 53,500, followed by 53,800 and 53,900. Additional upside barriers emerge around 54,100 and the record high near 54,750.
On the downside, initial support is seen around 53,400, followed by 53,200 and the psychological 53,000 level. A deeper correction could expose the 50-day EMA near 52,400.
Momentum indicators continue to favor sellers, with the daily Stochastic RSI remaining elevated while the index forms lower highs and lower lows. A daily close back above 53,800 would be required to invalidate the current bearish bias.
The US economic calendar is packed with key data this week, with investors closely watching the release of the Federal Reserve’s July meeting minutes and July industrial production figures.
Last week delivered mixed inflation signals. Core CPI inflation eased to 2.5% year over year in July, marking its lowest level since March 2021. However, producer prices rose more sharply, with PPI increasing 4.4%. The July 28–29 FOMC minutes, due Wednesday, could offer insight into how Fed officials viewed inflation and monetary policy before receiving these latest readings.
Other important US releases include weekly jobless claims, regional business surveys, and Friday’s preliminary PMI figures. Earnings activity is relatively light, with Walmart and Alibaba among the notable companies scheduled to report quarterly results.
FOMC Meeting Minutes
The July FOMC minutes may highlight differences among policymakers regarding the economic and inflation outlook. Expectations for the Fed’s next policy moves have shifted following the latest CPI and PPI data, with markets now pricing in roughly a one-in-three chance of a September rate hike, down from more than 50% previously.
Jobless Claims
Initial unemployment claims rose to 209,000 in the week through August 7, moving above the 200,000 threshold for the first time in several weeks. Nevertheless, the four-week average remained near 199,000, indicating that labor-market conditions are still relatively tight. Continuing claims also declined, suggesting layoffs remain limited.
Business Activity Surveys
Recent surveys from the New York and Philadelphia Federal Reserve districts showed a notable improvement in business activity during July. Investors will look to the August surveys for confirmation that the recovery in regional manufacturing and business conditions is continuing.
Industrial Production
July industrial production is another major focus. Manufacturing hours worked increased slightly during the month, potentially pointing to a modest rise in factory output.
June industrial production had increased only 1.1% year over year, significantly weaker than the 4.8% annualized growth in real GDP goods during the second quarter. The persistent gap between these two measures has been evident for years, with GDP-related goods activity generally expanding faster than industrial production.
Key Global Economic Data
International markets will also have plenty to digest. Japan’s preliminary second-quarter GDP figures and China’s retail sales and industrial production data are due Monday. Canada will release inflation data, while the UK and euro area will publish additional inflation figures later in the week.
Global government bond yields have risen considerably this year. Ten-year yields are approaching 5% in Australia and the UK, while US yields are around 4.7%. Germany and Japan remain lower, at roughly 3.2% and 2.9%, respectively.
The upcoming economic releases could therefore provide important clues about whether the global bond-market repricing has further to go. Markets are also increasingly focused on the possibility of policy-rate increases from the Bank of Japan and European Central Bank in September.
The S&P 500 remains resilient, with subdued volatility and easing inflation helping to sustain investor confidence.
The Jackson Hole symposium and oil prices could significantly influence expectations for the Fed’s September policy decision.
A renewed rise in oil prices remains the biggest threat to equities and the current low-volatility environment.
S&P 500 Remains Resilient, but Oil Could Threaten the Calm
S&P 500 futures were largely unchanged on Friday after the index reached another record high in the previous session. Recent inflation data also failed to disturb the unusually calm summer trading environment, keeping market volatility at relatively low levels.
This subdued backdrop could persist over the coming weeks as investors await clearer signals about the Federal Reserve’s next moves. While Fed policy remains a key focus, the energy market may pose a greater near-term risk. A renewed surge in oil prices could revive inflation concerns and challenge the market’s increasingly dovish expectations.
Jackson Hole Could Shape the Fed Outlook
Investors remain uncertain about the message the Federal Reserve will deliver at the Jackson Hole symposium later this month. Any shift in policymakers’ tone could have a significant impact on expectations ahead of the September FOMC meeting.
Recent inflation figures offered little reason for markets to significantly adjust their outlook. Consumer inflation was broadly in line with expectations, while producer prices came in slightly below forecasts.
Treasury yields moved modestly lower following the data, although they remain relatively elevated. More importantly, the figures showed limited evidence of a broad acceleration in inflation, allowing markets to raise expectations that the Fed will keep rates unchanged in September.
Markets are currently pricing in about a 40% chance of a 25-basis-point rate hike next month, down from roughly 55% a week earlier.
Limited Catalysts Before September
Only one additional inflation report and one employment report are scheduled before the September FOMC meeting, while the broader US economic calendar remains relatively light.
Investors will focus on July retail sales and the University of Michigan’s consumer sentiment surveys. However, given the current low-volatility environment, these releases would likely need to significantly exceed or miss expectations to trigger a substantial market reaction.
For now, markets appear more focused on the broader outlook for Fed policy and inflation than on modest fluctuations in individual economic indicators.
Oil Prices Remain the Biggest Risk
Although attention surrounding Middle East developments has faded somewhat, the underlying risks remain. Uncertainty surrounding US-Iran negotiations and disruptions around the Strait of Hormuz could continue to influence crude prices and the global inflation outlook.
US Treasury Secretary Scott Bessent has also indicated that Washington plans to pursue unprecedented measures against Iran as part of its maximum-pressure strategy, adding further uncertainty to the geopolitical backdrop.
Inflation Risks Are Still Present
The recent stability across financial markets should not be interpreted as the complete disappearance of inflation risks. Oil prices climbed roughly 20% in July, and sustained gains could begin feeding into inflation data in the months ahead.
As a result, crude oil has become an increasingly important variable for financial markets. If oil prices remain contained, the current low-volatility environment could continue. However, another sharp increase in energy prices could push inflation expectations higher and force investors to reconsider the increasingly dovish outlook for the Federal Reserve.
US equities continue to show remarkable resilience, with S&P 500 futures near record highs and volatility close to summer lows. This combination could leave the market particularly vulnerable to a fresh shock from the energy market.
From a technical perspective, former resistance levels should now be monitored as potential support. The first key level is around 7,794, followed by 7,725. A break below these levels could open the way toward 7,648, while longer-term support is located near 7,500 if a deeper correction develops.
WTI edges higher above $81.50 as markets assess the US-Iran impasse
WTI edges higher to around $81.60 during Monday’s Asian trading session.
Iranian officials urged the US to “accept the reality of defeat.”
Market participants remain focused on escalating tensions in Lebanon and potential risks to the Strait of Hormuz.
WTI crude oil trades near $81.60 during Monday’s Asian session, with prices remaining volatile as efforts to reopen the Strait of Hormuz remain at an impasse.
Geopolitical tensions continue to support oil prices. According to Bloomberg, Lebanon experienced its deadliest day of fighting in months on Sunday after Israeli strikes targeted Iran-backed Hezbollah positions. Meanwhile, Iranian Deputy Foreign Minister Kazem Gharibabadi urged US President Donald Trump to “accept the reality of defeat” after Trump suggested he could soon declare the Strait of Hormuz a “territory of the United States.”
Iranian Foreign Minister Abbas Araghchi stated that no negotiations are currently underway between Tehran and Washington, emphasizing that the US must meet Iran’s conditions before shipping can resume through the strategic waterway. At the same time, Russia is reportedly grappling with fuel shortages as Ukrainian attacks on oil refineries continue.
Investors are also looking ahead to the American Petroleum Institute (API) weekly crude oil inventory report due on Tuesday. A larger-than-expected inventory draw could signal stronger demand and provide additional support for oil prices, while a bigger-than-forecast build may point to weaker consumption or oversupply, weighing on WTI.
Oil demand outlook weakens as IEA and OPEC cut forecasts
Commerzbank highlighted that both the International Energy Agency (IEA) and OPEC have adopted a more cautious stance on oil demand. The bank noted that both organizations lowered their 2026 demand growth forecasts by 200,000 barrels per day. The IEA now projects demand growth of 1.6 million barrels per day, while OPEC expects a more modest increase of 580,000 barrels per day, reflecting a significant difference in their views on global consumption trends.
On the supply side, Commerzbank pointed out that oil production from countries outside the OPEC+ alliance is expected to increase by 690,000 barrels per day, according to the IEA, potentially adding to supply and easing market tightness in the months ahead.
Technical Analysis: WTI remains range-bound with a mildly positive bias
On the daily timeframe, WTI crude oil maintains a neutral-to-slightly bullish outlook. Prices are holding above the Bollinger Band midline, indicating underlying support, though upside momentum remains constrained below the 100-day Simple Moving Average (SMA) at around $86.40. This setup suggests the market is consolidating within a broader corrective trend. Meanwhile, the Relative Strength Index (RSI) near 53 reflects balanced momentum, offering little evidence of a strong directional breakout.
Looking higher, the 100-day SMA at $86.40 serves as the first key resistance level. A sustained move above this barrier could pave the way toward the upper Bollinger Band near $90.10, which marks the next significant upside target.
On the downside, immediate support lies around $81.60, where the 20-day SMA converges with the Bollinger midpoint. A decisive break below this zone could expose the lower Bollinger Band near $73.10, an area where stronger buying interest may re-emerge and help stabilize prices.
Canadian Dollar strengthens as softer US Dollar and firmer Oil prices provide support
USD/CAD weakens after a series of softer-than-expected US economic reports prompted traders to scale back expectations for additional Fed rate hikes.
US Retail Sales declined by 0.6% in July, reinforcing market views that the Federal Reserve may take a less aggressive policy stance.
Rising geopolitical tensions in the Middle East and fresh US sanctions on Iran supported crude oil prices over the weekend, benefiting the Canadian Dollar.
USD/CAD remains under pressure for a third straight session, hovering near 1.3870 during Monday’s Asian trading hours as the US Dollar weakens on softer US economic data and fading expectations for further Federal Reserve tightening.
Data released by the US Census Bureau on Friday showed Retail Sales fell 0.6% month-over-month in July after increasing 0.2% in June, missing forecasts for a 0.1% gain. On a yearly basis, Retail Sales growth slowed to 5.0% from 6.8% previously.
A string of weaker US indicators, including CPI, PPI, and Retail Sales, has prompted investors to reassess the Fed’s policy outlook. According to the CME FedWatch Tool, markets now see a 33.1% probability of a rate hike next month, down from 44% a week earlier.
The Canadian Dollar continues to find support from stronger crude oil prices, weighing further on USD/CAD. WTI crude extends its advance for a second consecutive day and trades near $81.80 per barrel. Oil prices remain underpinned by escalating Middle East tensions, with investors concerned about potential supply disruptions following fresh Israeli strikes in Lebanon over the weekend that reportedly killed 11 people, including a senior Hezbollah commander.
Oil supply concerns intensify
Analysts at Commerzbank warn that production disruptions across the Gulf region are tightening the global oil market. The bank estimates supply losses could reach 4.3 million barrels per day, creating a substantial shortfall and leaving the market significantly undersupplied this year. Referring to the latest IEA projections, Commerzbank noted that the third-quarter supply deficit is now expected to reach 1.8 million barrels per day, roughly 1 million barrels per day higher than previously anticipated.
Meanwhile, geopolitical uncertainty remains elevated as US President Donald Trump prepares additional sanctions on Iran to increase pressure on Tehran. Investors are also closely monitoring the expiration of the temporary US-Iran ceasefire agreement later on Monday, while negotiations aimed at resolving the conflict and reopening the Strait of Hormuz continue to show little progress.
Bitcoin (BTC) is trading near $62,900 on Friday, having lost more than 3% this week, though recent price action suggests the decline may be easing.
US spot Bitcoin ETFs saw net outflows of $332.08 million through Thursday, reflecting a more cautious stance among institutional investors.
Ongoing tensions in the Strait of Hormuz continue to lift Oil prices and sustain a geopolitical risk premium, boosting demand for the US Dollar and limiting Bitcoin’s upside potential.
Bitcoin (BTC) is trading near $62,900 on Friday, down more than 3% for the week as cautious institutional participation and ongoing geopolitical risks continue to pressure sentiment. Although the cryptocurrency is showing signs of stabilization, elevated Oil prices and escalating tensions in the Strait of Hormuz are limiting risk appetite and keeping the near-term outlook for BTC subdued.
Middle East tensions continue to cap Bitcoin’s upside
Geopolitical uncertainty surrounding the US-Iran conflict remained a key market theme this week, constraining demand for risk-sensitive assets such as Bitcoin. On Thursday, US Treasury Secretary Scott Bessent warned that Washington is preparing unprecedented economic measures against Iran, signaling that additional announcements could be unveiled in the coming days.
Meanwhile, Iranian officials maintained a defiant stance. Mohammad Reza Naqdi, a senior adviser to the Islamic Revolutionary Guard Corps (IRGC), stated that Tehran’s objective is to make any confrontation so costly that future US administrations would hesitate before considering military action.
The standoff has also intensified around the Strait of Hormuz. President Donald Trump reiterated that the United States maintains complete control over the critical shipping route, while Iran insisted the strait would remain closed until its demands are satisfied. At the same time, Iran-backed Houthi forces in Yemen increased attacks on vessels operating in the Red Sea and Bab el-Mandeb Strait and claimed responsibility for a drone strike targeting a Saudi Aramco refinery, heightening fears of a wider regional conflict.
The combination of these developments has amplified uncertainty surrounding global energy supplies, sustaining a geopolitical risk premium in Oil markets. Higher energy prices and safe-haven demand have supported the US Dollar, weakened broader risk sentiment, and continued to act as a headwind for Bitcoin.
Institutional demand remains subdued
Institutional flows have provided little support for Bitcoin this week. According to SoSoValue data, US spot Bitcoin ETFs recorded cumulative net outflows of roughly $332 million through Thursday, highlighting a cautious approach among large investors. If Friday’s data also shows withdrawals, BTC could end the week with net ETF outflows, reflecting softer institutional demand and a more defensive market stance.
Cooling US inflation offers support, but Oil-driven risks persist
Recent US economic releases pointed to moderating inflationary pressures, potentially giving the Federal Reserve (Fed) greater flexibility to keep interest rates unchanged. While such a backdrop would normally favor risk assets, Bitcoin has struggled to capitalize on the softer macroeconomic data.
The latest figures showed that US headline Consumer Price Index (CPI) inflation eased to 3.4% year-over-year in July, down from 3.5% previously and in line with expectations. Core CPI, which excludes food and energy, increased by 0.2% month-over-month and 2.5% annually, matching forecasts. Meanwhile, Producer Price Index (PPI) data released on Thursday came in weaker than expected, with monthly prices unchanged and annual producer inflation slowing to 4.7% from 5.5%.
Together with last week’s softer-than-expected Nonfarm Payrolls report, the data strengthens the case for the Fed to leave rates unchanged at its September meeting. A less aggressive monetary policy outlook generally benefits risk-oriented assets such as Bitcoin by reducing pressure from elevated borrowing costs and bond yields.
Comments from Fed officials, however, continue to send mixed signals. Chicago Fed President Austan Goolsbee suggested that recent inflation pressures are largely tied to temporary factors such as tariffs and energy costs, supporting a patient policy approach. In contrast, Cleveland Fed President Beth Hammack argued that inflation remains too high and that additional tightening may still be necessary to ensure price stability.
Market expectations have shifted accordingly. Fed funds futures now imply a little over a 65% chance of a rate hike before year-end, down sharply from nearly 85% a week ago. Although easing rate-hike expectations could provide a tailwind for Bitcoin, ongoing geopolitical tensions and elevated Oil prices continue to bolster demand for the US Dollar, limiting the cryptocurrency’s upside potential in the near term.
What could shape Bitcoin’s performance in the second half of August?
According to Simon-Peter Massabni, Head of Business Development at XS.com, Bitcoin is currently in a phase of rebuilding momentum rather than entering a fresh bearish trend. The cryptocurrency has been trading within a volatile $63,000–$65,000 range, repeatedly struggling to secure a decisive breakout above the $65,000 mark.
Despite headwinds from rising bond yields and broader market uncertainty, Massabni believes Bitcoin’s ability to hold relatively steady suggests that buyers have not exited the market. Instead, investors appear to be waiting for a stronger catalyst before increasing exposure.
Addressing Bitcoin’s muted response to softer US inflation data, he noted that much of the positive inflation outlook had already been priced in by the market. Since the latest inflation figures largely met expectations, they failed to deliver the surprise needed to spark a new wave of buying. Investors are now focusing less on inflation itself and more on whether the data will lead to a more accommodative Federal Reserve policy and improved liquidity conditions.
Looking ahead, Massabni maintains a cautiously optimistic outlook. His base-case scenario sees Bitcoin ending August near $70,000, with a potential trading range between $68,000 and $72,000. However, he expects the path higher to remain volatile, requiring BTC to reclaim the $67,000 level to reinforce bullish momentum. A sustained move below the $61,000–$62,000 region, meanwhile, could delay or invalidate this constructive outlook.
Bitcoin technical outlook: Stabilization signals are beginning to appear
Bitcoin was trading around $62,900 on Friday after a modest rebound in recent sessions. Since mid-July, BTC has largely moved sideways between the 78.6% Fibonacci retracement level at $65,520 and the 200-week Simple Moving Average (SMA) near $64,000, reflecting a prolonged consolidation phase.
A weekly close above $65,520 could strengthen the recovery outlook and open the door for a move toward the 61.8% Fibonacci retracement level around $78,490. Technical indicators on the weekly chart are showing early signs of improvement. The Relative Strength Index (RSI) has been trending higher, reaching 38, while the bullish MACD crossover formed in mid-July remains intact, suggesting that downside momentum may be fading.
On the other hand, failure to hold above the 200-week SMA could trigger renewed selling pressure, potentially exposing the ascending trendline support near $60,000.
From a daily-chart perspective, Bitcoin remains in a broadly corrective structure. The cryptocurrency continues to trade below key Exponential Moving Averages (EMAs) and has been confined to a $62,300–$66,500 range since mid-July.
Momentum indicators still favor caution. The daily RSI sits at 41, while the MACD histogram remains slightly negative, indicating that sellers retain a modest near-term advantage despite signs of stabilization.
Key support is located at $62,300. A decisive break below this level could accelerate losses toward the July 1 yearly low of $57,800. On the upside, initial resistance is seen at the 50-day EMA near $64,458, followed by the 100-day EMA around $66,589, which aligns closely with horizontal resistance near $66,500. Until BTC regains these levels on a sustained basis, rallies may continue to face selling pressure, keeping the broader recovery attempt in check.
Gold advances toward $4,395 in early Asian trading on Monday.
Weaker-than-expected US Retail Sales data reduced expectations for further Fed rate hikes, supporting bullion.
Geopolitical tensions remained elevated after Iranian officials told President Trump to “accept the reality of defeat” and ruled out resuming talks with the United States.
Gold prices (XAU/USD) advanced to around $4,395 during Monday’s Asian session, extending recent gains as softer US inflation readings continued to reduce expectations of additional Federal Reserve tightening.
Fresh data from the US Census Bureau showed Retail Sales fell 0.6% month-over-month in July, reversing June’s 0.2% increase and missing market forecasts for a 0.1% rise. On an annual basis, sales growth slowed to 5.0% from a revised 6.8% previously, signaling weaker consumer demand.
The disappointing retail figures reinforced last week’s CPI and PPI reports, which pointed to easing inflation pressures. As a result, the US Dollar came under pressure, providing support for gold, which is priced in USD.
According to the CME FedWatch Tool, markets currently assign roughly a 33% probability of a Fed rate hike in September. Expectations for lower borrowing costs tend to favor gold by reducing the opportunity cost of holding a non-interest-bearing asset.
However, ongoing geopolitical tensions in the Middle East may influence market sentiment. Iran’s Deputy Foreign Minister Kazem Gharibabadi criticized Washington after President Donald Trump suggested the Strait of Hormuz could soon become a “territory of the United States.” Meanwhile, Iranian Foreign Minister Abbas Araghchi stated that no negotiations are underway between Tehran and Washington, emphasizing that US acceptance of Iran’s conditions would be required before shipping operations through the strategic waterway could resume.
Despite near-term volatility, Commerzbank analysts maintain a constructive outlook for gold. They believe the metal retains further upside potential if the Fed refrains from additional rate increases, although they caution that gains are unlikely to occur in a straight line, citing recent price swings. The bank also highlighted renewed inflows into gold-backed ETFs as a supportive factor that strengthens the medium-term bullish case for the precious metal.
Technical Analysis: Gold maintains a bullish bias above key support levels
Gold (XAU/USD) continues to trade with a positive undertone on the daily chart, holding above its 100-day Simple Moving Average (SMA) and remaining well supported by the 20-day Bollinger Band midpoint. As long as these technical foundations remain intact, the broader near-term outlook favors further upside.
Momentum indicators also support the constructive view. The 14-day Relative Strength Index (RSI) stands at 64.09, indicating bullish momentum while still remaining below overbought territory, leaving room for additional gains before buyers become overstretched.
On the upside, the first significant resistance is located near the upper Bollinger Band around $4,480, a level that could attract selling interest following recent price advances. On the downside, immediate support is seen at the 100-day SMA near $4,385.85. A deeper pullback could target the Bollinger midpoint around $4,195, while a decisive break below that zone may open the door toward the lower Bollinger Band support near $3,905.
Silver Price Outlook: XAG/USD Bulls Eye Sustained Break Above $66.00 Following 100-Day EMA Clearance
Silver extends its advance on Monday as persistent US Dollar weakness continues to support demand for the precious metal.
The broader technical picture remains positive, with momentum indicators favoring further upside in the near term.
However, a decisive breakout above the 100-day EMA is required to confirm the bullish outlook and open the door for additional gains.
Silver (XAG/USD) builds on Friday’s rebound from the mid-$63.00 area and continues to attract buyers at the start of the week. The metal is trading above $65.00, gaining roughly 1.5% on the day, although it remains capped below the critical 100-day Exponential Moving Average (EMA).
The US Dollar stays under pressure as investors further reduce expectations for additional Federal Reserve rate hikes following softer inflation data and weak consumer spending figures in the United States. The weaker greenback is helping support demand for dollar-denominated commodities, including silver, reinforcing the potential for additional upside.
From a technical standpoint, XAG/USD has been consolidating within a relatively narrow range over the past week. This price action appears to represent a bullish pause following the strong recovery from July’s year-to-date low and the breakout above the 23.6% Fibonacci retracement of the May–July decline.
Technical indicators continue to favor buyers. The Relative Strength Index (RSI) remains near 61, while the Moving Average Convergence Divergence (MACD) stays in positive territory, signaling that bullish momentum remains intact. However, silver must decisively clear the 100-day EMA resistance around $66.33 to strengthen the near-term bullish outlook.
A successful break above this level could expose the 38.2% Fibonacci retracement near $67.93, with further gains potentially targeting the midpoint retracement resistance around $72.02. On the downside, immediate support is located near the 23.6% Fibonacci level at $62.87. A move below this area could shift focus toward the lower boundary of the broader trading range around $54.70.
Post-CPI summer trading conditions continue to suppress FX volatility, keeping EUR/USD largely range-bound. However, our models indicate that the pair is becoming somewhat undervalued in the short term, reinforcing our moderately bullish outlook for the weeks ahead. Meanwhile, developments in the Gulf remain a secondary driver for currencies, with their impact more evident in relative-value trades than in major USD pairs.
USD: Watching for a Shift in Fed Rhetoric
The post-CPI midsummer environment is naturally weighing on FX volatility, and this subdued backdrop could persist for at least the next couple of weeks. Despite this, we continue to favour some downside for the US dollar, as we believe markets remain overly confident about the prospect of further Federal Reserve tightening.
For now, Fed officials’ comments represent the clearest potential catalyst for a meaningful market move. There remains considerable uncertainty over the tone that could emerge from the Jackson Hole Symposium later this month, particularly after the latest CPI report pointed somewhat toward a dovish interpretation without providing a conclusive signal.
Recent comments have offered mixed signals. Beth Hammack, who supported a rate hike, continued to argue in favour of tighter policy, while Tom Barkin expressed some reservations about the need for additional increases, despite not being viewed as a dovish FOMC member. A further softening in rhetoric from more centrist policymakers could strengthen expectations for a less hawkish Fed.
Today’s US economic calendar features July retail sales, forecast to rise just 0.1% month-on-month, alongside the University of Michigan surveys. With both releases considered relatively secondary, they would likely need to significantly exceed or miss expectations to generate a substantial dollar move.
Meanwhile, market attention toward Middle East headlines appears to be fading. US-Iran talks remain stuck, while Brent crude prices declined yesterday, offering some support to global bond markets. The threshold for oil prices to re-establish a strong direct influence on the dollar remains relatively high. Instead, Gulf developments may continue to have a greater impact on G10 relative-value pairs such as NOK/SEK and AUD/NZD, which remain more closely linked to the energy narrative.
EUR: Increasingly Undervalued
Our models estimate EUR/USD’s short-term fair value at around 1.1600–1.1650, largely reflecting an approximately 10bp narrowing in two-year swap rate differentials. These rate spreads continue to have a considerably stronger influence on the pair than other underlying factors.
This supports our constructive view on EUR/USD, although we do not expect a sustained move above 1.1600 in the coming days unless Fed communication turns notably more dovish. For now, EUR/USD bulls may instead focus on the strengthening technical support around 1.1500.
In the eurozone, the second estimate of second-quarter GDP is due today. Markets are not expecting any meaningful revision to the preliminary 0.4% quarter-on-quarter growth figure.
JPY: BoJ Expectations Yet to Support the Yen
Despite significant moves in Japanese money markets this week, the yen has struggled to maintain upward momentum. The key development is the possibility that the Japanese government may become more accepting of a faster Bank of Japan tightening cycle.
Previously, markets assumed that a growth-focused government would limit the BoJ to roughly one rate hike every six months. The latest signals suggest Tokyo is placing greater emphasis on the exchange rate and wants to ensure that any potential joint intervention with the US to support the yen — the first such operation since 1998 — is effective.
Markets are now pricing roughly a 75% probability of a 25bp BoJ rate hike in September. As a result, two-year US-Japan swap differentials have narrowed by nearly 40bp since mid-July, a development that would normally put downward pressure on USD/JPY.
The pair’s resilience may instead reflect benign market conditions that continue to favour yen-funded carry trades. Nevertheless, the risks surrounding yen funding are clearly increasing. If the Fed leaves rates unchanged in September as expected, USD/JPY could potentially fall back below 158. In the meantime, traders seeking to express outright yen strength may increasingly turn to short CHF/JPY positions.
The total crypto market capitalization has remained largely unchanged, hovering around its $2.19 trillion “centre of gravity” for a third consecutive day. It has traded within a narrow $2.18 trillion–$2.20 trillion range, extending the broader sideways trend that has persisted since early June.
Prolonged periods of consolidation often encourage traders to tighten stop-loss levels and increase leverage as they become increasingly confident that the market will remain range-bound. This can sometimes set the stage for a final capitulation move, in which prices are pushed sharply lower before a recovery begins.
At the same time, large trading volumes frequently emerge toward the end of extended consolidation phases as long-term investors gradually build positions around their market expectations. In the current environment, some investors may be positioning ahead of potential cryptocurrency legislation expected later this autumn after Congress returns from recess. While the medium-term outlook remains constructive, the possibility of another sharp correction over the coming weeks should not be dismissed.
Bitcoin has struggled to move decisively away from support, hovering near $64,000 for a third consecutive day. The cryptocurrency was trading slightly below this level on Thursday morning but remained above its 50-day moving average.
Interestingly, the current price area is close to the highs recorded during Bitcoin’s 2021 bull market. A similar pattern emerged three years ago, when Bitcoin’s decline eventually found a floor around $20,000—roughly matching the peak of the previous bull market in late 2017.
This historical pattern strengthens the possibility that the current decline is approaching exhaustion, particularly as bearish momentum weakens and Bitcoin moves closer to its 200-week moving average. While short-term speculators may still be waiting for a more attractive entry point, long-term investors appear to be steadily accumulating around current levels. The relative stability of Bitcoin despite significant volatility across other markets provides further evidence of this underlying demand.
At the end of 2022, Bitcoin briefly traded almost 25% below $20,000 before staging a strong recovery, effectively providing investors with a significant “discount.” A similar scenario could occur this time, although relying on another deep pullback would be risky.
Bitcoin’s extended downtrend may have reached a “point of exhaustion,” according to Fairlead Strategies, as selling pressure has eased. However, fading bearish momentum does not necessarily mean that an immediate reversal is imminent.
Twenty One Capital posted a $413.5 million net loss in Q2, largely reflecting the decline in the value of Bitcoin held on its balance sheet. The company is the second-largest publicly traded corporate holder of Bitcoin, with 43,514 BTC valued at approximately $2.8 billion.
Strategy CEO Phong Le said the company plans to resume Bitcoin purchases by the end of the year. He noted that its buying activity has been roughly 25 times greater than its selling, with Strategy purchasing approximately 175,000 BTC since January while selling around 7,000 BTC. Le described Strategy as the “JPMorgan of the digital economy.”
Bitcoin miners continue to face weak fee revenue. Glassnode reports that transaction fees remain close to 10-year lows, while July was reportedly the least profitable month for miners in almost three years. Fees have represented less than 1% of miners’ total revenue over the past year.
Crypto spot trading activity also weakened in July. According to Wu Blockchain, spot volumes across crypto exchanges dropped 21.7% from June, falling below the $500 billion threshold for the first time in three years. Futures activity, meanwhile, was approximately seven times larger than spot trading.
On August 12, a routing failure at infrastructure provider TeraSwitch temporarily took validators representing 28.8% of Solana’s staked tokens offline. The figure came close to the 33.34% threshold at which the network would have stopped finalising transactions.
Meanwhile, two heavily leveraged Bitcoin short positions worth more than $210 million combined were opened on Hyperliquid using 40x leverage. Their liquidation levels are reportedly around $64,100 and $64,600, respectively.
In a separate development, one of Hong Kong’s early crypto millionaires, who began investing in cryptocurrencies in 2013, was found dead in Paraguay. Chainalysis reported 46 attacks targeting cryptocurrency holders during the first half of the year, resulting in losses exceeding $30 million.
Tanker traffic through the Strait of Hormuz declined further this week, with just five vessels crossing on Wednesday and nine on Thursday, below the monthly average of 12, according to Kpler data cited by Reuters.
On Thursday, five tankers entered the waterway while four departed, with most vessels using the Iranian side of the strait. By comparison, traffic through the Bab el-Mandeb Strait in the Red Sea remained relatively active, with Kpler recording 19 commodity carriers passing through on Thursday. Reuters noted that the figures only include vessels with their transponders switched on.
The decline in Hormuz traffic comes as tensions between the United States and Iran continue to escalate. Washington has warned that its naval blockade of Iran could remain in place indefinitely and that additional sanctions may be imposed to further pressure the Iranian economy. U.S. Defense Secretary Pete Hegseth said the Navy could sustain the blockade by rotating vessels and indicated that further measures could be announced in the coming week.
Despite the increasingly prolonged standoff, oil prices have not fully reflected the potential supply risks. Traders have instead focused on a sharp increase in U.S. commercial crude inventories, which reportedly rose by more than 17.4 million barrels last week.
However, global oil inventories are continuing to decline, even as countries release crude from strategic reserves. Meanwhile, China, whose historically low oil imports in May and June helped limit pressure on prices, has started increasing its crude purchases again.
Analysts warn that if the deadlock over U.S.-Iran negotiations and control of the Strait of Hormuz continues for several more weeks, the physical oil market could reach a critical tipping point. At that stage, tightening supplies could trigger actual shortages and send oil prices sharply higher.
The US Dollar (USD) remains under pressure against major currencies on Friday, although it has managed to limit its decline as investors reassess the Federal Reserve’s (Fed) monetary policy outlook and monitor ongoing developments in the Middle East. In Europe, markets are awaiting second-quarter Gross Domestic Product (GDP) data, while later in the US session, attention will turn to July Retail Sales and the University of Michigan’s preliminary Consumer Sentiment Index.
US economic data released Thursday showed that annual Producer Price Index (PPI) inflation eased to 4.7% in July from 5.5% in June, coming in below the 4.9% market forecast. Meanwhile, the CME FedWatch Tool shows that markets are now pricing roughly a 33% probability of a 25-basis-point Fed rate hike in September, down from around 50% a week earlier. Against this backdrop, the US Dollar Index remains below the 100.00 level during Friday’s European session.
Fed hawkishness remains as August inflation approaches
Commerzbank analysts believe upcoming US economic data will play a crucial role in determining the Fed’s next policy steps, particularly the August inflation figures due shortly before the next Fed meeting. They also pointed to Cleveland Fed President Beth Hammack’s continued hawkish stance. Hammack argues that inflation is unlikely to decline on its own and that the Fed needs to support its rhetoric with concrete action. She has also suggested that a single rate hike would not be sufficient, highlighting that some policymakers remain focused on combating inflation despite recent signs of easing price pressures.
Meanwhile, US Treasury Secretary Scott Bessent said Thursday that Washington plans to introduce measures against Iran that would be unprecedented, while US Defense Secretary Pete Hegseth stated that the US could maintain its blockade of Iran indefinitely. Oil prices reacted higher early Friday, with crude gaining around 1% to trade near $81.30.
Reuters reported Friday, citing three sources familiar with the matter, that the Bank of Japan (BoJ) could raise interest rates as early as September and may accelerate its tightening pace thereafter from its current pattern of roughly two hikes per year. USD/JPY moved lower during the European morning, trading below 159.30.
Yen reaction remains limited despite BoJ tightening expectations
OCBC analysts noted that the Japanese Yen’s response has remained relatively muted despite growing expectations for another BoJ rate increase. If the central bank hikes rates again in September, it would represent its third increase within nine months and the fastest pace of monetary tightening since the collapse of Japan’s asset bubble in 1989. However, OCBC cautioned that uncertainty remains over the government’s willingness to support further rate increases beyond September or October, leaving investors unsure about the ultimate pace of Japan’s policy normalisation.
Gold remains pressured by Middle East uncertainty
Despite the changing expectations surrounding a September Fed rate move, uncertainty over the Middle East continues to limit Gold’s upside potential. After ending Thursday in negative territory, Gold (XAU/USD) remains under pressure on Friday, trading below $4,350 during the European session and down around 0.5% on the day.
EUR/USD recovered after dipping toward 1.1500 on Thursday and finished the session almost unchanged. The pair extended its recovery slightly on Friday, trading just below 1.1550. The Eurozone economy is expected to have expanded at an annualized rate of 1% in the second quarter.
GBP/USD also moved higher early Friday, fluctuating around 1.3500 after recording modest declines over the previous two sessions.
Gold extends its decline for a second straight day on Friday.
Easing expectations for a Fed rate hike may help cushion further downside in the non-yielding precious metal.
Ongoing geopolitical tensions could support the safe-haven US Dollar, potentially limiting gains in bullion.
Gold (XAU/USD) edges higher from around $4,300 heading into the European session on Friday, but remains in negative territory for a second consecutive day. The precious metal is attempting to stabilize after pulling back from $4,450, its highest level since June 5, reached the previous day. However, a mixed fundamental backdrop suggests caution before assuming the correction will extend.
US inflation data has strengthened expectations that the Federal Reserve may remain patient with interest rates. The US Producer Price Index (PPI) was flat in July, missing expectations for a 0.2% increase, while annual PPI inflation eased sharply to 4.7% from 5.5% in June and came in below the 4.9% forecast. Combined with Wednesday’s softer Consumer Price Index (CPI), the data points to moderating inflation and has kept the US Dollar under pressure, providing some support for non-yielding Gold.
Market expectations for Fed policy have shifted noticeably. The probability of a September rate hike has fallen to around 40%, compared with 72% at the end of July, while futures now price just over a 65% chance of a rate hike by year-end, down from nearly 85% a week earlier. Recent comments from Fed officials have also highlighted divisions over the appropriate policy path. Chicago Fed President Austan Goolsbee emphasized patience, arguing that recent price increases may be temporary, while Cleveland Fed President Beth Hammack maintained that inflation remains too high and could require additional rate increases.
Geopolitical tensions, however, could provide support for the safe-haven US Dollar and limit Gold’s upside. US officials have issued strong warnings toward Iran, while Tehran has vowed to make any potential conflict costly. Rising tensions around the Strait of Hormuz are adding to the war-risk premium, with the US claiming control over the strategic waterway and Iran threatening to keep it closed until its demands are met. Meanwhile, Iran-backed Houthis have intensified attacks on vessels in the Red Sea and Bab el-Mandeb Strait, raising concerns about a broader regional conflict.
Against this backdrop, Gold’s downside appears relatively limited, but the mixed fundamental picture makes aggressive directional bets risky. XAU/USD has so far stalled its broader monthly advance from around the psychological $4,000 level. Traders will now focus on upcoming US Retail Sales and the preliminary University of Michigan Consumer Sentiment data for fresh clues on the economic and monetary-policy outlook.
Gold remains above the 200-period Exponential Moving Average (EMA) on the 4-hour chart, while a cluster of Fibonacci support levels suggests that the broader bullish trend remains intact despite the recent correction. However, momentum has weakened. The MACD is trading below both zero and its signal line, while the Relative Strength Index (RSI) has slipped to around 42, indicating that buying pressure is losing strength.
On the downside, the first key support is the 38.2% Fibonacci retracement at $4,285, based on the latest move higher from the August swing low. A break below this level could expose the 50.0% retracement near $4,234, followed by the 61.8% level around $4,184. The 200-period EMA also provides additional support in this area.
On the upside, immediate resistance stands at the 23.6% Fibonacci retracement near $4,347. Beyond that, Gold faces a major barrier around the $4,448.40 cycle high. A sustained break above this level would reinforce the bullish outlook and potentially open the door to further gains.
Dow Jones futures remain subdued as investors await the release of key US July Retail Sales data.
Weaker-than-expected PPI figures reduced expectations for a September Fed rate hike to 34.8%.
The S&P 500 hit a fresh record high, while major US indexes ended Thursday with strong gains.
Dow Jones futures remain broadly unchanged around 53,910 during European trading on Friday, while S&P 500 futures hover near 7,820 and Nasdaq 100 futures edge down 0.09% to around 30,160.
US stock futures are trading in a narrow range as investors await July Retail Sales data, which could provide fresh clues about the Federal Reserve’s next policy move. Cooling inflation has weighed on expectations for a September rate hike, with the CME FedWatch Tool now showing a 32.4% probability, down from 40.6% after the latest inflation figures.
The shift follows weaker-than-expected US producer inflation. The Bureau of Labor Statistics reported that headline PPI was unchanged in July, below expectations for a 0.2% increase and following a revised 0.1% decline in June. Core PPI rose 0.2%, slightly below the 0.3% forecast. On a yearly basis, headline PPI increased 4.7%, while core PPI climbed 4.2%.
The softer inflation backdrop has added to the bullish momentum from Thursday, when major US indexes posted strong gains. The S&P 500 advanced 0.65% to a fresh record high, while the Nasdaq Composite gained 0.81%, putting both indexes on track for a third straight weekly advance. The Dow Jones Industrial Average added 70 points but remains set for a weekly decline.
Market rally broadens beyond mega-cap technology
Deutsche Bank strategists noted that the latest equity rally was supported by a recovery in the Magnificent 7, which gained 1.20%, alongside broader strength across technology stocks. The Nasdaq rose 0.81%, while the Philadelphia Semiconductor Index advanced 0.46%.
More importantly, the equal-weighted S&P 500 gained 0.74% and also reached a new record high, suggesting that the market’s gains are broadening beyond the largest technology companies and spreading across a wider range of stocks.
Bitcoin edged lower on Wednesday, slipping 0.2% to $63,487, as easing expectations for a Federal Reserve rate hike failed to offset lingering market concerns. Investor sentiment was weighed down by fading hopes for a U.S.-Iran agreement to reopen the Strait of Hormuz, as well as continued pressure from recent selling activity by Strategy, the largest corporate holder of Bitcoin.
July Inflation Data Meets Expectations
Markets closely monitored the July Consumer Price Index (CPI) report for clues on the Fed’s next policy move. The data followed a weaker-than-expected U.S. jobs report that had already prompted traders to reassess the likelihood of additional rate increases.
According to the Bureau of Labor Statistics, headline CPI rose 0.1% month-over-month in July after falling 0.4% in June, while annual inflation eased to 3.4% from 3.5%. Core CPI, which excludes food and energy prices, increased 0.2% on a monthly basis and slowed to 2.5% year-over-year from 2.6%. All figures matched market forecasts.
Attention now shifts to the Producer Price Index (PPI) report, which could provide further insight into inflation trends. While CPI and PPI remain important indicators, the Federal Reserve primarily focuses on the Personal Consumption Expenditures (PCE) Price Index when assessing inflation pressures.
Fed Rate Expectations Shift
The inflation data reinforced the view that policymakers may have room to keep interest rates unchanged rather than raise them further. Following the CPI release, CME FedWatch data showed the probability of the Federal Open Market Committee (FOMC) leaving rates unchanged in September rising to 62%, up from 54% previously.
JPMorgan economists Michael Feroli and Harry Downie estimated that core PCE likely increased 0.22% in July, which would keep the annual reading unchanged at 3.3%. However, they noted that the estimate could be revised after the release of July’s PPI figures.
The analysts added that the latest inflation report was unlikely to significantly strengthen either the hawkish or dovish camp within the Fed, leaving policymakers dependent on upcoming employment and inflation data. JPMorgan continues to expect a rate increase in December, although the possibility of an earlier move remains elevated.
Geopolitical Tensions Keep Markets on Edge
Beyond monetary policy, investors remained focused on developments in the Middle East. Hopes for a deal to reopen the Strait of Hormuz weakened as both the United States and Iran maintained firm positions regarding control of the strategic shipping route.
Former President Donald Trump stated that the United States had “total control” over the strait, while Iranian officials reiterated demands that Washington end hostilities and release frozen assets before any reopening could occur.
The uncertain outlook contributed to renewed volatility in energy markets. Brent crude briefly approached the $90-per-barrel mark as traders assessed supply risks linked to disruptions in the region. Additional concerns emerged after reported attacks on commercial shipping routes near the Bab el-Mandeb Strait and the Gulf of Oman.
Altcoins Mostly Decline
The broader cryptocurrency market largely mirrored Bitcoin’s cautious performance. Ethereum gained 0.2% to trade near $1,881, while XRP fell 1.1%.
Elsewhere, Solana and BNB each slipped around 0.3%, while Cardano dropped 2.1%. Among meme-based cryptocurrencies, Dogecoin lost 1.8% and the TRUMP token declined 3.2%.
Overall, softer inflation data and reduced expectations for near-term Fed tightening provided limited support to digital assets, with geopolitical uncertainty and broader market caution continuing to cap upside momentum.
Silver prices remain range-bound near $65.40 as investors await the release of US Producer Price Index (PPI) figures.
Softer-than-expected US inflation readings for July have prompted markets to scale back expectations of a more hawkish Federal Reserve.
Both headline and core Consumer Price Index (CPI) measures in the United States eased in line with forecasts.
Silver (XAG/USD) traded within a narrow range around $65.40 during Thursday’s Asian session, with investors awaiting fresh direction from upcoming US economic data. While price action remained subdued, easing inflationary pressures in the United States have continued to support the metal’s broader outlook.
Data released by the US Bureau of Labor Statistics on Wednesday showed that headline Consumer Price Index (CPI) inflation slowed to 3.4% year-over-year in July from 3.5% in June. Core CPI, which excludes food and energy prices, also eased to 2.5% from 2.6%, matching market expectations.
The softer inflation readings have reinforced expectations that the Federal Reserve may refrain from raising interest rates further in the near term. According to CME FedWatch data, the probability of the Fed leaving rates unchanged at its September meeting has climbed to nearly 60%, compared with just 30.4% a month earlier.
A less aggressive monetary policy outlook tends to benefit non-yielding assets such as Silver, as lower interest rate expectations reduce the opportunity cost of holding precious metals.
Market participants now turn their attention to the US Producer Price Index (PPI) report for July, scheduled for release at 12:30 GMT, which could provide additional clues about the inflation trend and the Fed’s policy path.
Silver continues to consolidate around $65.40 while maintaining a positive technical structure above the 20-day Exponential Moving Average (EMA) at $61.66. Holding above this key short-term trend indicator suggests that buying interest remains intact despite the recent pause in upward momentum.
The 14-day Relative Strength Index (RSI) stands at 61.17, remaining in bullish territory while still below overbought levels, indicating there is room for further gains if buying pressure strengthens.
On the downside, the 20-day EMA at $61.66 serves as immediate support and remains the key level to watch. A decisive break below this area could trigger a deeper correction. On the upside, a breakout above the current consolidation zone and resistance at $66.59 could pave the way for a move toward the June 16 peak near $71.19.
Gold fails to hold gains after climbing to its highest level since June 5 during the Asian session.
Persistent inflation concerns linked to volatile oil prices continue to support expectations of further Fed rate hikes.
Escalating geopolitical tensions boost demand for the US dollar, adding pressure on gold and triggering an intraday retreat.
Gold (XAU/USD) gave back its earlier gains on Thursday, retreating from an intraday high near $4,450—the strongest level since June 5 reached during the Asian session—and falling back below the $4,400 mark. Initial support from softer US inflation data faded as investors refocused on the risk that rising energy prices could reignite inflation, reinforcing expectations that the Federal Reserve may still need to tighten policy further. The prospect of higher interest rates prompted some profit-taking in the non-yielding precious metal.
Data released on Wednesday showed US inflation cooled in July, with headline Consumer Price Index (CPI) growth easing to 3.4% year-over-year from 3.5%, in line with forecasts. Core CPI, which excludes food and energy, also met expectations, rising 0.2% on the month and 2.5% annually. Combined with last week’s weaker-than-expected Nonfarm Payrolls report, the figures strengthened the case for the Fed to keep rates unchanged in September, offering temporary support to gold prices.
However, concerns over future inflation remain elevated due to ongoing volatility in energy markets. Tensions between the United States and Iran continue to threaten oil supplies, with Washington and Tehran maintaining opposing positions over the Strait of Hormuz. At the same time, Iran-backed Houthi forces have intensified attacks on shipping routes in the Red Sea and Bab el-Mandeb Strait, increasing geopolitical risks and helping sustain higher crude oil prices.
The resulting inflation concerns have kept expectations for additional Fed tightening alive. Market pricing continues to suggest a strong likelihood of at least one further rate increase in 2026. These expectations have supported a rebound in the US dollar from post-CPI lows, creating headwinds for gold and contributing to Thursday’s pullback. Even so, analysts note that a sustained move below $4,400 would be needed to confirm a deeper corrective decline.
Attention now turns to upcoming US economic data, including the Producer Price Index (PPI) and weekly Initial Jobless Claims figures. Comments from Federal Open Market Committee (FOMC) officials will also be closely monitored for clues on the future path of monetary policy. Meanwhile, developments in the Middle East are likely to remain a key driver of market sentiment and short-term volatility in gold prices.
Gold remains biased to the upside after closing above the 100-day Simple Moving Average (SMA) and breaking through the 50% Fibonacci retracement of the April–June decline. Bullish momentum is further supported by an elevated Moving Average Convergence Divergence (MACD) indicator, signaling that buyers continue to maintain control. Meanwhile, the Relative Strength Index (RSI) stands at 67.44, just below overbought territory, suggesting the rally remains intact although momentum may be approaching stretched levels.
A sustained move above the recent swing high could open the door for a test of the 200-day SMA near $4,502. Beyond that, resistance is located at the 61.8% Fibonacci retracement level of $4,525.18. A decisive break above this zone may pave the way for further gains toward $4,683, followed by the next major upside target around $4,885.
On the downside, initial support is seen at the 100-day SMA near $4,387. Additional support levels are positioned at the 38.2% Fibonacci retracement around $4,302 and the 23.6% retracement at $4,164.38. Should selling pressure intensify, a more substantial support base emerges near $3,941.47.
S&P 500 at Record Highs With a Low VIX: What History Suggests
A record close for the S&P 500 accompanied by subdued volatility has historically been associated more with a durable bull market than with the kind of investor complacency that typically precedes a major downturn.
Key Takeaways
The S&P 500 ended Friday at a fresh all-time high while the VIX closed below 15, an unusually low level of expected market volatility.
Historically, the combination of record equity prices and a low VIX has tended to signal a stable bullish environment rather than an imminent market reversal.
Among the previous 40 occurrences of this setup, none were followed by a 10% or greater closing drawdown during the next 13 weeks, compared with roughly 14% of typical market periods.
While a weaker-than-expected U.S. jobs report might normally weigh on sentiment, it instead helped fuel optimism that supported another record close for the benchmark index.
Although the S&P 500 has already logged 27 all-time highs this year, Friday’s advance stood out because it occurred alongside exceptionally low implied volatility. After removing overlapping occurrences and counting only the first signal within a four-week period, this combination has appeared just 40 times since the VIX was introduced in 1990.
Historical data from those episodes offers an interesting perspective. Near-term gains following the signal were generally a bit lower than average, but returns over longer horizons tended to be stronger. More importantly, downside risk was consistently reduced, with average drawdowns significantly smaller across all measured timeframes.
The findings suggest that markets reaching new highs while volatility remains muted have historically reflected confidence and stability rather than excessive complacency. Notably, none of the prior 40 instances resulted in a 10% correction within the subsequent 13 weeks, whereas such declines occurred in about 14% of ordinary periods.
Although no single indicator guarantees future performance, this historical pattern adds to the broader collection of constructive market signals. Taken together, the evidence suggests the current bull market may still have room to extend, and that a low VIX should not automatically be interpreted as a warning sign of an imminent downturn.
According to the daily chart, the S&P 500 remains firmly entrenched within a bullish channel that has guided price action for roughly 17 months. The index continues to trade comfortably inside this upward trend structure, leaving scope for an advance toward the 8,000 area before facing significant technical resistance.
The recent breakout above a three-month consolidation phase strengthens the bullish case, suggesting momentum remains in favor of further gains. As long as the index holds above the former record high around 7,620 and the rising 50-day EMA near 7,500, the path of least resistance appears to remain higher.
On the downside, a decisive move below these support levels would increase the risk that the breakout has failed. Such a development could trigger a deeper pullback, potentially exposing the lower boundary of the ascending channel, which currently sits near the 7,000 mark.
Silver Imports Collapse as India’s Currency Defense Measures Cripple Demand
Last October, India imported more than 1,500 tonnes of silver. By May, that figure had plunged below 50 tonnes—not because demand disappeared, but because government policy effectively shut the market down.
The catalyst was a surge in oil prices and mounting pressure on the Indian rupee. As authorities moved to stabilize the currency, precious metals became a target. Higher import duties and tighter licensing requirements made silver significantly more expensive and harder to bring into the country, causing activity in the world’s largest silver-consuming market to slow dramatically. The timing is particularly noteworthy now because the oil prices that triggered these measures have recently reversed course.
Silver is currently trading near $62.17 per ounce, having gained nearly 6% over the past two days, while gold sits around $4,268 per ounce, its highest level in seven weeks. The rally has been fueled by easing geopolitical tensions after Iran and Oman advanced discussions on a framework for shipping through the Strait of Hormuz. As a result, oil prices have fallen roughly 10% over the past week to three-week lows, while markets have reduced the probability of a September rate hike to 55% from 67%. Lower energy costs, softer inflation expectations, and a more accommodative interest-rate outlook have all supported precious metals.
The Numbers Behind the Collapse
India imported just 46.8 tonnes of silver in May 2026, compared with 534.3 tonnes in May 2025. Industry participants reported that June imports were even lower. The decline represents a staggering 91% year-over-year drop and marks the weakest monthly import level since July 2023.
The contrast with late 2025 is striking. During the period when silver borrowing costs in London surged to record highs, India was importing more than 1,500 tonnes per month. Those elevated borrowing costs reflected tight physical supply, as traders who sold silver forward scrambled to secure metal. India was a key source of demand during that squeeze, making its subsequent disappearance from the market particularly significant.
To put the impact into perspective, the approximately 487 tonnes of silver India did not import in May equates to roughly 15.7 million ounces. According to forecasts from Metals Focus and the Silver Institute, the global silver market is expected to record a deficit of 46.3 million ounces in 2026. In other words, a single month of reduced Indian imports accounts for roughly one-third of the projected annual global shortfall.
Why It Happened—And Why Silver Wasn’t the Real Target
The underlying issue was not silver demand but India’s external balance. During the Iran conflict, crude oil prices climbed toward $118 per barrel in April. As a major energy importer, India felt the impact immediately. Oil imports jumped 53% in a single month, while the country’s merchandise trade deficit widened 37.3% to $28.38 billion. At the same time, the rupee weakened sharply, falling around 7% during 2026 and touching a record low near 96 per U.S. dollar.
Precious metals compounded the problem. Gold and silver imports reached $102.5 billion during the 2025–26 fiscal year, a 26.7% increase from the previous year. Their share of India’s total import bill rose to 14% from 11.8%, while silver imports alone hit a record $12 billion, totaling 7,335 tonnes.
In response, the government moved aggressively. On May 13, import duties on gold and silver were increased to 15% from 6%, shortly after Prime Minister Narendra Modi urged citizens to avoid buying bullion for a year. Authorities then introduced a licensing regime, restricting most forms of silver imports in mid-May and extending controls to silver grain and powder in June. Many banks remain unable to import precious metals because they have yet to receive the required permits.
The result has been a near standstill in silver imports. The sharp decline was not driven by a collapse in consumer interest but by deliberate policy measures aimed at reducing pressure on the rupee. Silver became collateral damage in India’s broader effort to defend its currency and manage its trade balance.
What the Situation Looks Like Inside India
Conditions in India’s domestic silver market paint a very different picture from the apparent weakness in import data. By early July, dealers were charging premiums of as much as $6.50 per ounce above official domestic prices, according to Reuters. Just two months earlier, buyers were receiving discounts of up to $5.50 per ounce. The shift highlights a market that has moved rapidly from oversupply to scarcity.
The premium is particularly significant because official domestic prices already incorporate both the 15% import duty and the 3% sales tax. Any additional premium reflects genuine supply tightness rather than taxation. In other words, buyers are paying extra simply because physical silver has become difficult to obtain.
Several buffers that initially eased the shortage have now largely been exhausted. Outflows from Indian silver exchange-traded funds released metal into the market and temporarily helped satisfy demand, but dealers indicate that those supplies have since been absorbed. As a result, consumers and traders have increasingly turned to Hindustan Zinc, India’s largest silver producer, despite its limited capacity to replace lost imports on a national scale.
The nature of India’s silver demand is also important. Record imports during the previous fiscal year were driven primarily by investment demand rather than jewelry consumption. Investors sought silver as a hedge against economic uncertainty, making this a category of demand that can return rapidly once restrictions are lifted.
Implications for Silver Investors
There are three major takeaways for investors.
The first is that the near-term impact is arguably bearish for silver prices. The disappearance of roughly 15.7 million ounces of Indian buying in a single month reduces pressure on global supply. If import restrictions remain in place through the key restocking period ahead of India’s October and November festival season, the global silver deficit could end up smaller than the currently projected 46.3 million ounces for 2026. From that perspective, India’s absence temporarily eases the strain on the physical market.
The second point is more constructive. Demand curtailed by regulation is generally postponed rather than permanently eliminated. India’s affinity for silver has not changed, nor have the cultural and investment drivers that support long-term consumption. What has changed is government policy. Should those restrictions be relaxed, demand could return quickly.
Data from Metals Focus and the Silver Institute underscore the scale of that potential rebound. Physical silver investment in India climbed 33% to 79.2 million ounces in 2025, while exchange-traded products attracted another 68.3 million ounces. Combined investment demand reached a record 147.6 million ounces. That substantial pool of buyers remains sidelined rather than absent.
The third and most important factor to monitor is oil. The restrictions were introduced when crude prices approached $118 per barrel, creating intense pressure on India’s trade balance and currency. Today, oil trades in the $70 range. If prices remain at these lower levels, the pressure on the rupee should continue to ease, helping narrow the trade deficit and weakening the rationale for maintaining punitive import duties on bullion. The very conditions that prompted the restrictions are now moving in the opposite direction.
Investors should pay particular attention to domestic Indian premiums. Any meaningful easing of import controls is likely to appear first through declining shortages and changing premiums before becoming visible in official import statistics.
One additional observation deserves caution. London’s silver market has appeared considerably more stable in recent months. According to Metals Focus and the Silver Institute, only 17% of London’s silver inventories remained unallocated to exchange-traded funds by the end of September 2025, compared with nearly 35% at the end of 2024, and available inventories have since improved. India’s retreat from the market may be one factor behind that stabilization, though it is not the only explanation. Softer solar-sector demand, ETF outflows, and increased recycling have likely contributed as well.
What can be stated with confidence is that the buyer that played a central role in the previous supply squeeze has largely been removed from the market by government policy rather than by changing fundamentals. Because those policies can be reversed, the situation remains fluid.
Over the longer term, the investment case for silver continues to rest on a structural supply deficit that has persisted for six consecutive years and has repeatedly been bridged by drawing down above-ground inventories. India’s absence may alter the timing of that supply-demand equation, but it does not fundamentally change it.
Ethereum traded around $1,874 on Tuesday, down 2.8% over the past 24 hours after fluctuating between roughly $1,867 and $1,929. The key development was its rejection near $1,929 and the subsequent drop below the $1,900 level, undoing a four-day effort to establish that zone as support. Ethereum’s market capitalization currently stands near $228 billion, with approximately 120.5 million ETH in circulation.
The decline appeared to be driven primarily by broader market caution ahead of Wednesday’s U.S. inflation report rather than any Ethereum-specific weakness. Bitcoin also slipped below $64,000 during the period, while liquidations of leveraged positions added pressure across the crypto market. However, Ethereum continues to stand out because of a growing disconnect between its underlying fundamentals and price performance.
Staking participation reached a record 41.41 million ETH on August 4, representing nearly 34% of the circulating supply. With almost one-third of all ether locked in staking, alongside declining exchange balances and increasing corporate treasury accumulation, supply-side indicators continue to point toward tightening availability.
Despite these scarcity dynamics, Ethereum remains 62.2% below its 2025 all-time high of approximately $4,953 and only about 12.5% above its recent low of $1,666. By comparison, Bitcoin is down roughly 49% from its peak, leaving Ethereum underperforming by around 13 percentage points. This disparity suggests that supply constraints alone have not been sufficient to drive a stronger recovery.
Institutional demand, however, has been improving. Spot Ethereum ETFs attracted $244 million in net inflows last week—the strongest weekly intake since April 2026. On August 7 alone, the products recorded $49.6 million in inflows, marking a fourth straight day of positive demand. Since launch, cumulative net inflows into spot ETH ETFs have reached approximately $11.65 billion, while total net assets have climbed to $10.74 billion, equivalent to about 4.65% of Ethereum’s market value.
From a technical perspective, Ethereum remains at a critical juncture. The immediate pivot level is $1,890.41, with resistance located at $1,911.97, $1,950.63, and $1,972.19. Key support levels sit at $1,851.74, $1,830.18, and $1,791.52. Momentum remains moderately positive, with the daily RSI at 55.47. Meanwhile, the 20-day EMA near $1,868 and the 50-day EMA around $1,850 are separated by less than $18, highlighting the narrow margin supporting current prices.
The next major catalyst arrives with Wednesday’s U.S. CPI report. Economists expect headline inflation to rise 3.4% year-over-year and core inflation to come in at 2.5%. The outcome could determine whether Ethereum breaks above nearby resistance or slips below its tightly packed support structure.
Break Below $1,900 Resets Ethereum’s Near-Term Technical Outlook
Ethereum’s four-day effort to transform the $1,900 level from resistance into support has come to an end, and the nature of the breakdown may be more significant than the level itself.
During Tuesday’s session, ETH climbed to $1,929 before reversing sharply to $1,867, marking a swing of roughly $62, or 3.3%. The session high coincided with a cluster of major technical barriers, including the $1,927 resistance zone and the 100-day exponential moving average near $1,924. With several key reference points concentrated within a narrow range, the rejection reinforced the strength of that resistance area.
More importantly, the subsequent decline sliced through $1,900 with little resistance, suggesting the level had not yet developed meaningful buyer support despite holding for several sessions. Short-lived support zones often lack the depth needed to absorb selling pressure, making them vulnerable when momentum shifts.
At current levels around $1,874, Ethereum remains below the daily pivot point at $1,890.41 while staying above initial support at $1,851.74. This creates a relatively narrow trading corridor of roughly $39, or just over 2% of price, meaning a decisive move could emerge quickly.
Should ETH fall below $1,851.74, attention would shift to support levels at $1,830.18 and $1,791.52. The $1,840 region, which previously helped spark a rebound and coincided with improving ETF inflows, remains an important intermediate area. A sustained break beneath $1,830 could expose the market to a deeper decline toward $1,791, where stronger structural support resides.
On the upside, resistance levels are positioned at $1,911.97, $1,950.63, and $1,972.19. The $1,930 area remains the key hurdle. A successful break and hold above that threshold would likely revive bullish momentum and increase the probability of a move toward the broader $1,950–$2,000 zone, where a more meaningful breakout could develop.
From a broader perspective, Ethereum’s projected weekly trading range spans approximately $1,850 to $1,975, representing a 6.8% spread. With spot prices currently near $1,874, ETH remains in the lower portion of that range—a position it has occupied for much of the past three weeks, reflecting continued caution among market participants despite improving long-term supply dynamics.
Compressed EMA Structure Signals a Potential Volatility Breakout
Ethereum’s moving averages have converged into an unusually tight formation, a condition that often precedes a significant expansion in volatility.
The 20-day exponential moving average currently sits near $1,868, the 50-day EMA around $1,850, and the 100-day EMA near $1,924. The gap between the 20-day and 50-day averages is just $17.60—less than 1% of ETH’s price—while the distance between the 50-day and 100-day averages is approximately $74, or about 4%.
With Ethereum trading around $1,874, the asset remains above both the 20-day and 50-day EMAs but below the 100-day EMA. This configuration typically reflects a short-term recovery occurring within a broader medium-term downtrend. Similar setups have recently appeared in both Bitcoin and gold before notable directional moves emerged.
The narrow separation between the 20-day and 50-day EMAs is particularly important because it provides little technical support beneath current prices. A decline of roughly 1% would push ETH below both averages simultaneously, potentially accelerating selling pressure. When moving averages become tightly clustered, markets often experience sharp directional breaks rather than gradual trend shifts.
Simple moving averages reinforce a similar outlook. The 50-day SMA is projected to remain near current price levels in the coming weeks, while the 200-day SMA continues to trend lower. Rather than requiring a strong rally to reconnect with the long-term trend indicator, Ethereum may simply meet a declining 200-day average over time if prices remain range-bound.
That downward-sloping 200-day SMA remains one of the market’s most important structural features. As it gradually descends, it reduces the distance ETH must travel to challenge long-term resistance, increasing the likelihood of a decisive trend resolution in the months ahead.
Across timeframes, the technical picture remains mixed. Four-hour and daily charts continue to show improving momentum, with shorter-term moving averages rising beneath price. However, the weekly trend remains less constructive, as longer-term averages still sit above the market and point lower. In essence, Ethereum is recovering, but it has not yet fully repaired the broader bearish structure established earlier in the cycle.
Neutral RSI Leaves the Market Waiting for a Catalyst
Ethereum’s daily Relative Strength Index stands at 55.47, placing it comfortably above the neutral 50 level but well below the overbought threshold near 70.
This reading offers little directional guidance and instead reflects a market in consolidation mode ahead of a major macroeconomic event. Momentum indicators often flatten before high-impact data releases as traders reduce directional exposure while awaiting new information.
Compared with the capitulation conditions seen earlier this year, current market dynamics appear far healthier. During the February 2026 selloff, ETH experienced its steepest monthly decline of the cycle, ETF outflows intensified, and RSI readings plunged into deeply oversold territory. Those conditions ultimately helped establish the recovery low near $1,666.
Today’s environment is markedly different. Ethereum is trading near the lower end of its recent range, yet momentum remains neutral rather than oversold. This suggests that selling pressure has eased, but it does not necessarily indicate that buyers have regained control.
That distinction is particularly relevant ahead of the upcoming U.S. CPI release. If inflation exceeds expectations, Ethereum could face renewed downside pressure without the cushion of oversold technical conditions. Conversely, a softer inflation reading could ignite a rally from a neutral momentum base, leaving ample room for RSI to climb before signaling an overheated market.
Recent price action also reflects subdued volatility. Ethereum’s 24-hour range of approximately $62 is relatively modest by historical standards, indicating that traders are largely waiting for a catalyst before committing to a new directional move. Meanwhile, derivatives positioning suggests that recent selling was driven more by the unwinding of existing long positions than by aggressive new short activity.
For now, the daily pivot at $1,890.41 remains the key reference point. A move above that level would reinforce the case for consolidation and recovery toward higher resistance zones. A sustained break below it, however, would strengthen the argument that the market is entering a new phase of distribution and downside risk.
Record Staking Levels Highlight Ethereum’s Growing Supply Scarcity
Ethereum’s on-chain fundamentals continue to present one of the most striking contrasts in the digital asset market. While the price remains more than 60% below its all-time high, network participation and supply lockup metrics have never been stronger.
As of August 4, a record 41.41 million ETH was staked on the network, representing 33.98% of the circulating supply. Notably, this milestone was reached during a prolonged bear-market drawdown, indicating that validators continued to commit capital despite significant price weakness rather than withdrawing from the network.
At the same time, staking yields have moved in the opposite direction. The seven-day staking annual percentage rate has fallen to 2.66%, down from a peak above 5% in mid-2023. Because Ethereum’s staking rewards decline as participation increases, the surge in staked ETH has directly contributed to lower returns.
This creates an increasingly challenging investment equation. With the Federal Reserve’s policy rate sitting between 3.50% and 3.75% and the U.S. 10-year Treasury yield near 4.7%, staked ETH currently offers a lower yield than traditional fixed-income alternatives while exposing investors to cryptocurrency price volatility, validator risks, and liquidity constraints.
Yet participation continues to rise. In March, approximately 37 million ETH—around 31% of supply—was staked. Five months later, another 4.4 million ETH has entered the validator set despite further yield compression. The trend suggests that participants are prioritizing long-term network exposure over short-term income generation.
The resulting supply structure is becoming increasingly restrictive. With roughly one-third of all ETH staked, declining exchange balances, and growing corporate treasury allocations, a substantial portion of circulating supply is effectively removed from active trading. As a result, more than half of Ethereum’s available supply is held in long-term structures that rarely participate in day-to-day market activity.
This tightening supply profile remains one of the strongest long-term bullish arguments for Ethereum. However, recent price action demonstrates that supply scarcity alone is insufficient to drive appreciation without a corresponding increase in demand.
Validator Growth Suggests a Shift Toward Institutional Participation
Beyond the headline staking figures, validator activity offers additional insight into changing market dynamics.
After declining to roughly 880,000 active validators during the first half of 2026, the validator count has recently rebounded to approximately 893,000. The increase of around 13,000 validators is particularly noteworthy because it occurred while staking yields remained near multi-year lows.
This suggests that the new participants entering the network may differ significantly from those who exited. Operators willing to accept yields near 2.66% are likely either more cost-efficient, more focused on long-term asset ownership, or less dependent on staking returns as a primary source of revenue. These characteristics are generally more consistent with institutional participants than with smaller retail operators.
From a market-structure perspective, this shift is significant. Institutional validators are typically less sensitive to short-term yield fluctuations and more likely to hold assets for strategic purposes, such as treasury management, custodial services, or investment product mandates. As a result, the portion of ETH locked in staking becomes increasingly “sticky” and less responsive to market volatility.
One factor supporting this trend is the growing integration of staking into institutional investment products. The introduction of staking-enabled spot Ethereum funds has allowed professional investors to gain ETH exposure while also earning network rewards, making staking more attractive within regulated investment frameworks.
If institutional participation continues to expand, Ethereum’s supply available for trading could tighten even further. However, the trend also introduces new considerations. A validator ecosystem increasingly concentrated among large operators may raise concerns around governance influence, network centralization, and potential bottlenecks during periods of elevated withdrawal activity.
Overall, the combination of record staking participation, rising validator counts, and shrinking liquid supply points to a structurally tightening Ethereum market. The key question remains whether demand can eventually catch up to these increasingly restrictive supply dynamics.
The demand side of the Ethereum market has shown clear signs of improvement, supported by a meaningful recovery in spot ETF flows.
Spot Ethereum ETFs attracted $244 million in net inflows last week, marking their strongest weekly performance since April 2026. Momentum also improved on a daily basis, with the sector recording four consecutive sessions of positive flows. On August 7 alone, net inflows reached $49.6 million, led primarily by BlackRock’s ETF, which accounted for more than three-quarters of the day’s total, while Fidelity’s product also contributed notable demand.
Total net assets held by spot Ethereum ETFs have now risen to approximately $10.74 billion, representing about 4.65% of Ethereum’s total market capitalization. Meanwhile, cumulative assets under management across the broader ETF ecosystem have expanded to roughly $13.7 billion, reflecting growing institutional participation.
July marked an important turning point. The ETF sector generated more than $365 million in net inflows during the month, reversing the outflow trend that dominated much of the first half of 2026. This shift suggests that regulated investors have become increasingly willing to accumulate Ethereum exposure following months of weak sentiment and price declines.
The recent inflows largely coincided with Ethereum’s rebound from the $1,840 area and appeared to support expectations that the market could break decisively above the $1,900 resistance zone. However, Tuesday’s rejection near $1,929 and subsequent drop back below $1,900 indicate that selling pressure at those levels outweighed the ETF-driven demand, at least in the short term.
It is important to distinguish between daily flow data and broader trends. Individual sessions can be volatile and often provide limited insight into institutional conviction. For example, the ETF complex experienced net outflows at the end of July before quickly shifting back into accumulation mode. What matters more is the emergence of sustained multi-day inflow streaks.
By that measure, the latest data is encouraging. Four straight sessions of positive flows combined with a $244 million weekly inflow represent the strongest period of institutional accumulation since April. Notably, these purchases occurred while Ethereum traded between roughly $1,840 and $1,930, suggesting that investors were willing to add exposure despite ongoing uncertainty around the broader market outlook.
Positive Flows Matter, but Scale Remains a Constraint
While ETF demand has improved, its overall scale remains relatively modest compared with the size of the Ethereum market.
A weekly inflow of $244 million represents only about 0.11% of Ethereum’s $228 billion market capitalization. Although this is a meaningful amount of capital, it is not yet large enough to single-handedly drive a sustained trend reversal.
Interestingly, Ethereum’s ETF inflows have recently been proportionally larger than those seen in Bitcoin products relative to market size. This means that each dollar entering Ethereum ETFs can have a greater impact on price dynamics. However, because the total amount of capital involved remains smaller, the support provided by these flows is still limited compared with broader market forces.
Historical precedent also highlights the importance of persistence. Earlier in 2026, Ethereum experienced a much stronger institutional demand wave, including a lengthy inflow streak and a surge in daily purchases driven by enthusiasm surrounding staking-enabled investment products. While that episode initially boosted sentiment, inflows eventually cooled and failed to sustain upward momentum.
The current recovery in ETF demand is therefore a constructive development rather than definitive proof of a lasting trend change. To materially alter Ethereum’s market structure, the recent inflow streak will likely need to continue and broaden into a longer period of sustained institutional accumulation.
For now, ETF data suggests that demand is improving and that professional investors are gradually returning to the market. Whether that demand becomes strong enough to overcome key resistance levels and support a larger recovery remains one of the central questions for Ethereum in the months ahead.
Silver advances toward $65.40 as investors await the release of July US CPI figures.
Economists forecast annual headline and core inflation to increase by 3.4% and 2.5%, respectively.
Crude oil prices remain elevated amid a significant decline in shipping activity through the Strait of Hormuz.
Silver (XAG/USD) climbed about 1.1% to trade near $65.40 during Wednesday’s Asian session, supported by investor caution ahead of the release of the US Consumer Price Index (CPI) report for July at 12:30 GMT.
Market forecasts suggest that annual US headline inflation eased to 3.4% from 3.5% in June. Core CPI, which excludes food and energy prices, is also expected to slow to 2.5% year-over-year from 2.6% previously. On a monthly basis, headline CPI is projected to rise 0.1%, while core inflation is anticipated to increase 0.2%.
The inflation figures are expected to provide fresh insight into the Federal Reserve’s policy path. In the Fed’s most recent policy statement, Chair Kevin Warsh highlighted persistent upside inflation risks and reiterated the central bank’s commitment to returning inflation to its 2% objective.
However, silver’s gains could be restrained by the continued surge in oil prices, driven by supply concerns linked to escalating tensions in the Middle East.
Data from Kpler showed that vessel traffic through the Strait of Hormuz—an essential route for nearly one-fifth of global energy shipments—fell to only six ships on August 10, compared with an average of around 11 over the previous ten days. The figure remains dramatically below pre-conflict levels of roughly 130–140 vessels per day, according to Reuters.
Separately, CME Group announced on Tuesday that it will introduce 24-hour trading for its 100-ounce silver futures contract starting in September, following strong demand for its recently launched 1-ounce gold futures contract, Reuters reported.
On the daily timeframe, XAG/USD is trading around $65.53, maintaining its upward momentum above the 20-day Exponential Moving Average (EMA) near $61.28, a signal that the short-term bullish trend remains intact.
The metal has continued to move higher after breaking out of its previous consolidation range. Meanwhile, the 14-day Relative Strength Index (RSI) stands at 61.21, indicating positive momentum while remaining below overbought territory, suggesting there is still room for further gains.
From a technical perspective, initial support is located at the 20-day EMA around $61.28. This level serves as a key foundation for the current recovery and could attract buying interest if prices retreat. On the upside, a decisive break above the August 10 peak at $66.59 may open the door for a rally toward the June 17 high of $71.56.
Dollar steadies as traders await pivotal U.S. inflation reports
The U.S. dollar traded largely unchanged on Tuesday as investors avoided major currency bets ahead of closely watched inflation data that could influence expectations for Federal Reserve policy. Meanwhile, oil prices edged higher after an Iranian official stated that the Strait of Hormuz would remain closed until Washington met Tehran’s conditions.
By 16:31 ET (20:31 GMT), the U.S. Dollar Index, which measures the greenback against a basket of six major currencies, was holding near 99.82.
Focus shifts to CPI and PPI releases
Market attention is firmly centered on the July Consumer Price Index (CPI) and Producer Price Index (PPI) reports due on Wednesday and Thursday. The inflation readings follow a weaker-than-expected U.S. employment report released last Friday, which prompted investors to reassess the outlook for future Federal Reserve interest-rate moves.
Analysts expect both headline and core CPI to show monthly increases after June’s subdued readings, while annual inflation measures are forecast to ease slightly compared with the previous month.
According to José Torres, Senior Economist at Interactive Brokers, core inflation could fall to its lowest level in more than five years if it comes in below expectations at 2.4%, highlighting how broader disinflation trends are being overshadowed by geopolitical risks.
Torres also noted that headline inflation is projected to remain notably higher than core inflation due to elevated food and energy costs. He argued that a lasting resolution to tensions in the Middle East could further accelerate the decline in overall inflationary pressures.
Torres added that a resolution to the ongoing geopolitical conflict could swiftly eliminate concerns about additional interest-rate hikes. In his view, inflation would move much closer to the Federal Reserve’s 2% target by the end of the year, shifting policymakers’ attention toward protecting the labor market from further weakening rather than combating price pressures.
Oil jumps as Iran ties Hormuz reopening to U.S. concessions
In the Middle East, oil prices climbed nearly 2% on Tuesday after surging around 5% in the previous session, as uncertainty surrounding the Strait of Hormuz continued to support energy markets.
Investors have been closely monitoring developments since U.S. officials, including President Donald Trump, repeatedly suggested that discussions over reopening the strategic waterway were underway. Iran, however, has denied engaging in direct negotiations with Washington, stating that its talks have been conducted exclusively through Oman.
Conflicting statements from both sides have added to market uncertainty. While U.S. officials have maintained that the strait remains open to commercial shipping, Iranian authorities have argued that it is effectively closed. The absence of a clear breakthrough toward a peace agreement has contributed to recent gains in oil prices.
Iran and Oman are reportedly working on a framework for managing the strait, with Qatari officials indicating that negotiations have reached an advanced and sensitive stage. At the same time, reports have suggested that Washington and Tehran may be edging closer to a potential arrangement, with Oman and Pakistan continuing to play key mediating roles.
Tehran has insisted that any reopening of the Strait of Hormuz depends on Washington fulfilling commitments outlined in a previously negotiated interim peace framework, including lifting sanctions, ending naval restrictions, and providing compensation for war-related damage. The U.S. has responded with demands of its own, underscoring the ongoing deadlock.
Iranian officials reiterated that the waterway would remain closed until the country’s conditions are met, signaling that tensions remain far from resolved.
Shipping activity through the strait has also slowed markedly. Data from maritime analytics firm Kpler showed vessel crossings declining sharply over the weekend, highlighting the disruption to one of the world’s most important energy transit routes.
Yen retreats while Australian dollar gains after RBA decision
The Japanese yen weakened modestly against the U.S. dollar, surrendering additional gains made following last month’s major currency intervention. USD/JPY rose 0.1% to 159.31, moving closer to the psychologically important 160 threshold.
Meanwhile, the Australian dollar edged 0.1% higher to $0.7059 after the Reserve Bank of Australia left its benchmark interest rate unchanged at 4.35%, in line with market expectations.
The RBA noted that disruptions to global oil supplies are adding to inflationary pressures and that higher fuel costs appear to be filtering through to a broader range of goods and services. As a result, policymakers expect inflation to remain elevated for an extended period.
The central bank acknowledged that tighter financial conditions and slowing economic activity are helping to moderate demand. However, it emphasized that inflation remains well above target and is not expected to return to the midpoint of its target range until late 2027, with risks still skewed to the upside.
U.S. stock futures were largely unchanged on Tuesday night following a second consecutive day of losses on Wall Street, as investors remained cautious ahead of key inflation data that could provide insight into the Federal Reserve’s future interest-rate decisions.
S&P 500 futures edged up 0.1% to 7,752.0, while Nasdaq 100 futures gained 0.1% to 29,665.0. Dow Jones futures were little changed at 53,868.0.
Investors Focus on CPI Report for Fed Policy Signals
During Tuesday’s regular trading session, the S&P 500 slipped 0.3%, the Nasdaq Composite lost 0.6%, and the Dow Jones Industrial Average declined 0.3%.
Market participants are now looking toward Wednesday’s U.S. Consumer Price Index (CPI) release, which is expected to play a key role in shaping expectations for upcoming Federal Reserve policy decisions.
Analysts forecast that headline inflation increased 0.1% in July after a 0.4% decline in June. On an annual basis, CPI is projected to ease slightly to 3.4% from 3.5% previously.
Core inflation, which excludes volatile food and energy prices, is expected to rise 0.2% month-over-month.
The inflation report carries added significance after recent weakness in the U.S. labor market dampened expectations of a Fed rate hike in September. However, stronger-than-anticipated inflation data could prompt investors to reassess the likelihood of tighter monetary policy.
With major U.S. equity indexes still trading near record levels, markets remain highly sensitive to any signs that inflationary pressures are proving more persistent than policymakers had hoped.
Oil Advances Further as Hormuz Uncertainty Continues to Weigh on Markets
Geopolitical tensions remained a key concern for investors as negotiations between the United States and Iran over reopening the Strait of Hormuz encountered additional setbacks. Tehran reportedly sought major concessions, including access to frozen Iranian funds and a reduction of U.S. involvement in regional conflicts, while President Donald Trump insisted that Iran should provide compensation for damages linked to the crisis.
The ongoing uncertainty surrounding one of the world’s most important energy transit routes continued to support crude prices. Brent oil climbed for a sixth consecutive session on Wednesday, recovering toward the $90-per-barrel mark as traders assessed the risks to global supply flows.
Concerns were further amplified by new security incidents in regional shipping lanes. Houthi forces claimed responsibility for an attack on commercial vessels in the Bab el-Mandeb Strait that resulted in multiple fatalities, including cargo ship crew members and Yemeni rescue personnel. Separately, the U.S. Navy reportedly disabled a Panama-flagged ship near the Gulf of Oman, adding to fears that maritime disruptions could persist and delay any near-term easing of tensions.
Bitcoin dropped under the $65,000 mark on Monday, retreating as higher oil prices dampened investor appetite for risk. Market sentiment was also affected by another Bitcoin sale from major corporate holder Strategy.
The leading cryptocurrency was down 1.6%, trading at $64,147.9 as of 17:00 ET (21:00 GMT).
Traders focus on U.S. inflation data for Federal Reserve signals
Bitcoin and the broader crypto market gained support on Friday after U.S. employment data revealed the first monthly decline in nonfarm payrolls since February, driven largely by losses in local government education jobs. Payroll figures for May and June were also revised down by a combined 103,000 positions.
The labor report added uncertainty to the Federal Reserve’s policy outlook. While the broader job market continues to show resilience, inflation concerns remain elevated due to volatile oil prices linked to the conflict involving Iran. Some Fed officials also indicated a preference for tighter monetary policy during the central bank’s July meeting.
Following the data release, traders reduced expectations for a September interest-rate increase. Higher borrowing costs typically reduce demand for risk-sensitive assets, including cryptocurrencies.
Investors are now turning their attention to a series of key U.S. inflation reports this week for further guidance on the Fed’s next moves. The July Consumer Price Index (CPI) is due on Wednesday, followed by the Producer Price Index (PPI) on Thursday, while July retail sales data will be released on Friday.
Oil surge and Hormuz tensions weigh on crypto sentiment
Oil prices jumped nearly 5% on Monday after Iran rejected direct negotiations with the United States and reiterated that a full reopening of the Strait of Hormuz would depend on Washington meeting a series of demands. Concerns over global energy supplies intensified further following attacks by Iran-backed Houthi forces on Saudi energy facilities, prompting investors to seek safety in the U.S. dollar.
Crude prices had fallen the previous week on optimism surrounding potential U.S.-Iran talks. However, those losses narrowed as Tehran repeatedly denied claims of ongoing negotiations and reports emerged that a proposed Hormuz management framework could restrict access for U.S., Israeli, and other vessels deemed hostile.
Iranian state media reported that a parliamentary committee had approved the framework, including the proposed restrictions. Foreign Ministry spokesman Esmaeil Baqaei said Iran and Oman were still working on a joint statement governing the strait, adding that the plan would establish monitoring mechanisms for vessel traffic and involve compensation arrangements.
Tehran also reaffirmed that direct talks with Washington remain off the table, citing alleged breaches of the temporary peace agreement reached in June. Iranian officials maintained that lifting sanctions, ending the U.S. naval presence, and compensation for wartime damages are prerequisites for fully reopening the strategic waterway.
U.S. President Donald Trump responded by stating that Iran’s compensation demands would be met with U.S. claims for damages as well, adding that his negotiating team had been instructed to include the issue in any future discussions.
Strategy trims Bitcoin holdings
Separately, Strategy disclosed in a filing with the U.S. Securities and Exchange Commission that it sold 1,690 Bitcoin between August 3 and August 9 for approximately $108.6 million, at an average price of $64,262 per coin.
Following the sale, the company’s Bitcoin holdings declined to 840,447 BTC, currently worth about $54.7 billion. Strategy’s average acquisition cost remains around $75,385 per Bitcoin, representing a total investment of roughly $63.4 billion, including related expenses.
The transaction came shortly after the company raised $653.1 million through the sale of more than 6.5 million shares of MSTR stock. Strategy said the proceeds were used to repurchase over 1.15 million shares of its STRC preferred stock and strengthen its cash position, which stood at $4.65 billion as of August 9.
Altcoins track Bitcoin lower
The broader cryptocurrency market also traded in negative territory on Monday, with most major altcoins posting losses alongside Bitcoin.
Ethereum declined 2.4% to $1,877.78.
XRP dropped 2.3% to $1.0189.
Solana lost 1.3%.
Cardano fell 2.6%.
Dogecoin slipped 1%.
The pullback across digital assets reflected a combination of risk-off sentiment driven by geopolitical uncertainty, rising energy prices, and investor caution ahead of key U.S. inflation data later this week.
WTI could extend its gains as President Trump’s latest compensation demands on Tehran reduce expectations for a near-term peace deal.
Washington is reportedly leaning toward tougher economic sanctions rather than military intervention to pressure Iran into reopening the Strait of Hormuz.
Negotiations between Oman and Iran over restoring access to the key shipping corridor remain at a standstill while both sides await progress on a broader agreement with the US.
WTI crude oil extends its rally after surging more than 6.5% in the previous session, trading near $81.40 during Tuesday’s Asian session. Oil prices remain supported as uncertainty deepens over prospects for a US-Iran agreement aimed at ending hostilities and reopening the strategically important Strait of Hormuz.
Workers manage crude oil barrels near a pipe discharging oily wastewater at an extraction site.
Expectations for a quick resolution have faded after US President Donald Trump unveiled a new set of demands for Tehran, including compensation for victims of regional conflicts. The announcement followed Iran’s insistence on receiving reparations as part of any agreement to end the war, raising concerns that supply disruptions could persist for longer than previously anticipated.
Instead of pursuing additional military action to reopen the crucial shipping corridor, the US administration appears to favor escalating economic sanctions on Iran. At the same time, talks between Iran and Oman regarding the reopening of the Strait of Hormuz remain deadlocked, with Tehran linking progress to the achievement of a broader peace deal with Washington.
Additional support for crude prices comes from growing skepticism over a near-term diplomatic breakthrough. Analysts at TD Securities noted that a resolution to tensions surrounding the Strait of Hormuz remains difficult to achieve, describing a potential “Hormuz deal” as still out of reach. The bank added that persistent geopolitical risks and the threat of disruptions at major energy transit routes continue to provide a favorable backdrop for oil prices and trend-following market participants.
Gold extends its advance for a third consecutive session, reaching its highest level in more than two months on Tuesday.
Easing expectations of further Federal Reserve rate hikes continue to support demand for the non-yielding precious metal.
Investors may remain cautious ahead of new geopolitical developments and the release of the latest US inflation data.
Gold (XAU/USD) continued its upward momentum for a third straight session on Tuesday, marking gains in five of the past six trading days and reaching its highest level since early June above the $4,400 threshold during Asian trading. The rally has been supported by last Friday’s weaker-than-expected US employment data, which signaled a softening labor market and reduced expectations that the Federal Reserve will tighten monetary policy further, boosting demand for the non-yielding precious metal.
Despite the advance, concerns over inflation remain in focus as oil prices stay volatile amid the ongoing Iran conflict. These inflation risks have prevented markets from fully dismissing the possibility of additional Fed rate hikes, helping the US Dollar maintain recent gains and limiting Gold’s upside potential. Adding to geopolitical uncertainty, US President Donald Trump rejected Iran’s request for compensation related to war damages and instead blamed Tehran for casualties across the region.
Tensions in the Middle East remain elevated after Iran ruled out renewed negotiations with Trump until after his term ends in January 2029, reducing hopes for a near-term resolution and the reopening of the Strait of Hormuz. At the same time, disruptions in the Bab el-Mandeb Strait caused by Houthi naval actions continue to constrain shipping activity, contributing to a sharp rise in crude oil prices and reigniting inflation concerns. Markets still anticipate at least one Federal Reserve rate increase in 2026.
These factors continue to support higher US Treasury yields and provide underlying strength to the US Dollar, suggesting caution for traders expecting Gold’s rally to extend aggressively in the short term. Market participants are also likely to focus on upcoming US inflation data, with the Consumer Price Index due Wednesday and the Producer Price Index scheduled for Thursday. The reports could offer important clues about the Fed’s policy outlook and shape the next move in both the Dollar and Gold markets.
A decisive intraday move above both the 100-day Simple Moving Average (SMA) and the 50% Fibonacci retracement of the April–June decline indicates that bullish momentum remains intact. This strengthens the case for a continued advance toward the 200-day SMA around $4,498, with further upside targets at the 61.8% Fibonacci retracement near $4,515 and the 78.6% retracement level around $4,669.
On the downside, initial support is located at the 50% retracement level near $4,406, followed closely by the 100-day SMA around $4,389. A deeper pullback could expose the 38.2% Fibonacci retracement at roughly $4,297, while stronger support emerges near the 23.6% retracement around $4,162. Beyond that, the major downside reference remains the cycle low near $3,945.
Financial history is filled with spectacular collapses caused by the same dangerous combination: excessive leverage, concentrated directional bets, and positions that become difficult to exit during stress. When markets move against highly leveraged investors, margin calls often arrive long before assets can be sold at reasonable prices.
One notable example occurred in early 2021 when the family office Archegos Capital Management accumulated roughly $100 billion in market exposure while backed by only about $20 billion in equity. A stock offering by ViacomCBS sparked a sharp decline in its shares, triggering margin calls from prime brokers. After Archegos failed to meet those demands, banks rushed to unload billions of dollars of stock, accelerating the collapse.
The firm’s entire equity base was wiped out within days. Among the hardest-hit institutions was Credit Suisse, which suffered losses exceeding $5.5 billion. The damage contributed to the bank’s eventual downfall and rescue by UBS.
A similar story unfolded in 1998 with Long-Term Capital Management (LTCM). The hedge fund amassed more than $125 billion in assets and roughly $1.25 trillion in derivative exposure while operating with only $4.7 billion in equity, implying leverage exceeding 25-to-1.
Founded by renowned trader John Meriwether alongside Nobel laureates Myron Scholes and Robert Merton, LTCM pursued fixed-income arbitrage strategies designed to profit from tiny pricing inefficiencies. Those trades relied heavily on borrowed money.
The strategy unraveled after Russia defaulted on its domestic debt in August 1998. Investors fled to safety, liquidity evaporated, and market relationships that LTCM depended upon broke down. With fears of systemic financial contagion spreading, the Federal Reserve Bank of New York coordinated a $3.65 billion private-sector rescue involving 14 major financial institutions to unwind the fund’s positions in an orderly manner.
A decade later, the world endured the Global Financial Crisis, driven in large part by excessive leverage embedded throughout the subprime mortgage market. That era inspired films such as Margin Call and The Big Short, both illustrating how leverage can transform manageable losses into systemic threats.
More recently, attention shifted to the reported collapse of Situational Awareness LP, a hedge fund that reportedly employed leverage of around 400%. The fund suffered a dramatic drawdown that triggered widespread margin calls and forced the liquidation of much of its portfolio.
The fund, managed by former OpenAI researcher Leopold Aschenbrenner, had reportedly grown rapidly before suffering losses estimated at roughly 67%. Its strategy often involved highly leveraged pair trades, such as buying AI infrastructure and hardware stocks while shorting established software companies. That approach failed when AI-related holdings plunged while short positions simultaneously rallied, inflicting losses on both sides of the trade.
As losses mounted, major prime brokers demanded additional collateral. To avoid a disorderly liquidation, Citadel stepped in and acquired a large portion of the fund’s public-equity portfolio through a block transaction, reducing immediate market disruption.
The episode reflects a broader trend: leverage increased substantially during the technology and AI-driven rally. FINRA margin debt recently climbed to record nominal levels, estimated between $1.25 trillion and $1.28 trillion.
Whether that represents excessive risk depends on the benchmark used. Relative to total stock-market capitalization, margin debt stands near 1.8%–1.9%, broadly consistent with historical norms. This suggests borrowing has risen largely alongside equity values rather than dramatically outpacing them.
However, when compared with U.S. GDP, margin debt is significantly elevated at roughly 4.1%, well above long-term averages. That indicates investors are assuming greater financial risk relative to the size of the underlying economy.
Institutional investors have generally diversified into market-neutral, quantitative, and lower-beta strategies to reduce directional exposure. Meanwhile, retail traders and momentum-focused investors remain heavily concentrated in leveraged ETFs, options, and high-growth technology stocks.
Although leverage relative to market capitalization does not appear extreme, the sheer amount of debt in the system leaves markets vulnerable to sudden shocks. Large debt balances reduce the market’s tolerance for mistakes. A disappointing earnings report or interest-rate shock can trigger margin calls, forced selling, and a self-reinforcing cycle of declining prices.
To manage these risks, prime brokers have strengthened their risk controls. Many now rely on continuous intraday monitoring rather than end-of-day assessments, allowing them to identify leverage problems in real time.
Risk managers are also adjusting margin requirements more aggressively for volatile, crowded, or illiquid positions. Lenders increasingly evaluate a fund’s total leverage across multiple broker relationships, making it harder to conceal excessive borrowing by spreading trades across different institutions.
Global interconnectedness adds another layer of vulnerability. A rapid deleveraging event in Asia can quickly affect U.S. equities and fixed-income markets through funding channels, Treasury holdings, and cross-border risk models.
Because there is no global authority capable of halting trading across all markets simultaneously, systemic selling pressure can simply migrate from one region to another. Stopping the panic in one market does not necessarily eliminate the underlying risk—it may merely shift it elsewhere.
Although markets recovered quickly following the recent turmoil, aided by strong AI-related earnings results, the U.S. remains exposed to potential spillover effects from highly leveraged global markets.
By acquiring Situational Awareness’s concentrated equity positions off-market, Citadel helped prevent a disorderly fire sale and reduced the risk of a chain reaction among other funds holding similar positions, illustrating how quickly leverage can transform isolated losses into broader market concerns.
How Parents Can Support Their Adult Children Financially Without Undermining Retirement
The Beatles may have sung that money can’t buy love, but for many young adults today, money can make a significant difference. People in their 20s and 30s are facing a challenging financial environment marked by AI-driven job market disruptions, high rents, elevated living costs, and housing prices that remain out of reach for many first-time buyers. With median home prices approaching $400,000, even a standard 20% down payment can feel impossible to accumulate.
As a result, many parents are confronted with a difficult question: Should they provide financial assistance, or should they encourage their children to navigate these challenges independently?
A Generational Perspective
Many Baby Boomers inherited a conservative financial mindset from parents who lived through the Great Depression. Core principles such as living frugally, paying off debt, investing cautiously, and preserving principal shaped their approach to wealth.
However, for parents who ultimately intend to leave assets to their children, the real consideration may be whether financial support is more valuable today than as a future inheritance. Assistance provided now could help adult children purchase a home, launch a business, pursue further education, or start a family—milestones that may otherwise be delayed due to financial pressures.
When It’s More About Parenting Than Money
For families with substantial liquid wealth, the decision often becomes less about financial capacity and more about personal philosophy. By adulthood, children have generally developed their attitudes toward work and responsibility. If they are making genuine efforts but struggling against broader economic realities, financial support can serve as a catalyst for opportunity rather than a simple handout.
Ways Parents Can Help Without Jeopardizing Retirement
Parents do not need vast wealth to provide meaningful assistance. With careful planning, support can be structured in ways that minimize the impact on retirement security.
Use Appreciated Investments Strategically: Gifting assets with long-term capital gains can provide children with access to funds while preserving the parent’s recurring investment income.
Optimize Social Security Planning: Parents may choose to allocate part of their Social Security income to help children financially, whether by claiming benefits earlier or by delaying benefits to increase future payouts.
Offer Family Loans: Parents can lend money directly to their children using IRS-compliant interest rates, potentially providing more favorable borrowing terms than traditional lenders while keeping interest payments within the family.
Key Takeaway
Supporting adult children financially does not have to come at the expense of retirement stability. For parents with the means to help, even modest assistance can have a meaningful impact on their children’s lives. In many cases, providing support when it is most needed may create more value than leaving a larger inheritance years down the road.
Cloudflare — Automated internet traffic has now surpassed human-generated traffic, and the company positioned at the center of that shift is seeing renewed growth momentum.
Optical infrastructure emerges as the next bottleneck — Companies across the optics ecosystem delivered record results amid tightening supply conditions and the possibility of new import restrictions.
SpaceX — The company posted a standout first-quarter performance while the expiration of a long-standing share lockup removed a major overhang for investors.
Much of the AI conversation typically revolves around the model layer—who has the most advanced models and whether those models can be monetized effectively.
This week, however, markets focused on a different question: who profits from the infrastructure surrounding AI?
Several companies reported results from distinct layers of the AI ecosystem: the internet edge, the physical networking layer, and the frontier of computing. Their earnings represented more than strong quarterly numbers—they highlighted structural shifts taking place across the stack.
Cloudflare underscored a milestone that may permanently reshape internet traffic dynamics.
Optics providers posted record performances while supply constraints increasingly resemble the memory shortages seen in previous technology cycles.
SpaceX released its inaugural earnings report just as concerns surrounding restricted share liquidity began to fade.
The underlying message remains consistent: follow the capital flows. This week, investment attention gravitated toward the network edge, optical connectivity, and low-Earth orbit infrastructure rather than the AI models themselves.
1. Cloudflare: The Infrastructure Behind the Agentic Internet
For the first time, automated and AI-driven traffic on the internet has surpassed traffic generated by humans, and Cloudflare believes this new category could expand another 1,000-fold in the years ahead.
The significance of that milestone extends beyond simple traffic statistics. It signals a transition from an internet centered on people browsing, searching, and clicking to one increasingly powered by AI agents that communicate, make decisions, conduct transactions, and perform tasks autonomously. Cloudflare is strategically positioned at the center of this transformation.
The trend is already showing up in the company’s financial results. Revenue growth accelerated to roughly 36% year-over-year, reaching $696 million, well above Wall Street expectations of around 30% and notably stronger than the low-20% growth rates seen in recent quarters. Other key metrics were equally impressive: remaining performance obligations increased 38%, the company added a record 282 large customers, and net revenue retention improved to 120%, up 600 basis points from a year earlier. Management also lifted full-year revenue guidance to approximately $2.87 billion, helping drive the stock about 16% higher.
Perhaps the most important takeaway was the changing composition of network traffic. AI and machine-to-machine activity now represent more than half of all traffic moving through Cloudflare’s infrastructure, and management expects this segment to grow dramatically from current levels. A company originally designed to sit between users and the internet is increasingly becoming the intermediary between AI agents and the internet itself.
A key beneficiary of this shift is Cloudflare Workers, the company’s edge-computing platform that allows developers to build and deploy applications across Cloudflare’s global network. As AI agents generate ever-larger volumes of requests, infrastructure capable of processing workloads close to end users—or other machines—becomes increasingly valuable.
Developer adoption continues to reinforce that thesis. Nearly 2 million developers joined the platform during the quarter, pushing the total beyond 7.4 million. Workers has become Cloudflare’s fastest-growing product suite, while new monetization opportunities are emerging through services such as paid AI-agent traffic and Cloudflare Pay, a payment framework designed to support the high-volume microtransactions expected in an agent-driven economy.
The takeaway: Cloudflare is evolving beyond its roots as a cybersecurity and application-services provider to become a critical infrastructure layer for the emerging agent-driven internet. In effect, the company is positioning itself as a digital toll collector for AI-powered activity—a software counterpart to the hardware infrastructure companies benefiting from the AI boom. More importantly, its latest results provide some of the strongest evidence so far that the rise of the agentic internet is beginning to translate into meaningful revenue growth.
2. Optics Emerges as the Next AI Infrastructure Bottleneck
If memory chips were the standout infrastructure investment theme over the past year, optical networking technology is increasingly looking like the next major opportunity heading toward 2027. This week strengthened that view through both strong earnings results and a potential regulatory catalyst.
Record Demand Meets Tight Supply
The clearest signal came from Applied Optoelectronics, which reported record quarterly revenue of $191.9 million, up 86% year-over-year, while returning to profitability. Data center demand was the primary growth driver, rising 140% to $107.7 million, with 800G optical transceivers more than doubling sequentially and becoming the largest contributor to sales.
Management projected next-quarter revenue of $255–290 million and expects approximately $1.1 billion in revenue for the full year. More notably, executives indicated that customer orders already extend into mid-2027, with future growth constrained not by demand but by manufacturing capacity and component availability.
That distinction is critical. The challenge facing the industry is no longer generating demand—it is supplying enough hardware to meet it.
The broader ecosystem tells a similar story. Arista Networks raised guidance for the third time this year, while Astera Labs delivered another record quarter with revenue growth exceeding 100%. Together, these results suggest that investors are increasingly rewarding the infrastructure that connects AI systems, rather than focusing solely on the processors powering them.
A Regulatory Catalyst
The investment thesis received an additional boost from reports that U.S. regulators are considering restrictions on Chinese-made optical transceivers used in data centers.
These devices play a vital role in AI infrastructure by converting electrical signals into optical signals and vice versa, enabling high-speed communication between servers, networking equipment, and AI clusters. Chinese manufacturers currently hold a significant share of the global market, meaning any restrictions could redirect demand toward Western suppliers.
Markets immediately focused on potential beneficiaries such as Lumentum and Coherent. However, the larger story may not be market-share gains but supply constraints.
Replacing a substantial portion of global optical-transceiver production is not something that can happen quickly. Manufacturing capacity takes years to expand, and many critical components—including high-performance indium-phosphide lasers—still depend heavily on supply chains linked to China.]
Why the Memory Comparison Matters
The current setup closely resembles the memory industry during previous cycles:
Demand is growing rapidly and remains relatively insensitive to price.
Supply expansion requires significant time and capital.
Capacity constraints create pricing power for suppliers.
Margin expansion often appears only after shortages become apparent.
In that sense, optics may be following the same playbook that previously drove outsized gains in memory-related businesses. Rather than a temporary demand surge, the sector appears to be facing a structural supply bottleneck that could support stronger pricing and profitability across the value chain for years to come.
The key takeaway is that AI spending is increasingly flowing into the networking and connectivity layers that link computing resources together. As AI clusters grow larger and more complex, optical infrastructure is becoming just as critical as the processors at the center of those systems.
3. SpaceX: A Major Technical Overhang Begins to Clear
SpaceX delivered its first earnings report as a publicly traded company, and the underlying business performance was exceptionally strong.
Revenue surged 92% year-over-year to $7.8 billion, while adjusted EBITDA climbed 191% to $3.5 billion. The company’s net loss narrowed significantly to $541 million, compared with more than $1 billion a year earlier.
Growth Across Connectivity and Compute
The primary growth engine remains Starlink, which generated $4.3 billion in revenue, up 66% from the prior year. The satellite internet business added a record 1.7 million net subscribers during the quarter, bringing its total user base to roughly 12 million.
However, the fastest-growing segment is AI infrastructure. Revenue from SpaceX’s AI and compute operations more than tripled to $2.6 billion, achieved positive EBITDA, and entered the third quarter with approximately $6.7 billion in contracted capacity commitments from customers including major AI developers.
Management reaffirmed an aggressive growth outlook, targeting a $100 billion annualized revenue run rate by year-end and accelerating its timeline toward a $1 trillion revenue objective, now expected by 2030.
During the earnings call, Elon Musk outlined an ambitious AI roadmap, including a commitment to build future AI infrastructure exclusively on Nvidia technology and plans to expand computing capacity beyond 2 gigawatts by the end of this year, potentially approaching 10 gigawatts by late 2027. The company also unveiled StarMind AI-1, an orbital computing platform designed to bring data-center-scale AI processing into space.
Heavy Investment Raises Familiar Questions
The main concern for investors was capital spending. SpaceX reported approximately $18.4 billion in capital expenditures, largely directed toward AI infrastructure expansion. The spending weighed on sentiment and pushed shares lower immediately after earnings.
Yet this concern mirrors a broader debate playing out across the technology sector. The question is not whether demand exists, but whether companies are investing too aggressively ahead of future returns. From an infrastructure perspective, that remains more of a challenge for buyers than suppliers.
The Bigger Story: The Lockup Expiration
The more important development this week was technical rather than operational.
On August 6, a substantial portion of previously restricted SpaceX shares became eligible for trading as the company’s IPO lockup period began to expire. Approximately 911 million shares entered the market, increasing the potential trading float by more than 40% and effectively more than doubling the freely tradable share count.
Many investors had been waiting for this event before establishing positions, expecting the surge in available shares to pressure the stock.
Instead, the opposite occurred.
Despite the anticipated increase in supply, shares rose roughly 6% on the day the lockup expiration took effect. When a widely anticipated supply event arrives and the stock advances rather than declines, it often signals that the market has already absorbed the concern.
For investors who missed the IPO, the lockup expiration may represent a technical reset rather than a fundamental threat.
Key Investment Takeaways
Three separate earnings reports highlighted a common theme: the biggest beneficiaries of AI may not always be the model developers themselves, but the infrastructure layers surrounding them.
Cloudflare is emerging as a key platform for the growing agentic internet, monetizing the shift from human-driven traffic to machine-driven activity.
Optical networking infrastructure remains one of the most compelling opportunities, supported by strong demand, constrained supply, and potential regulatory tailwinds.
SpaceX continues to expand across launch services, satellite connectivity, and AI compute, while the lockup expiration appears to be reducing a major technical obstacle for the stock.
The market remains focused on whether AI spending has peaked. The evidence from this week’s results suggests the opposite: capital continues to flow into the infrastructure that enables AI—across network edges, optical connectivity, and low-Earth-orbit platforms—creating opportunities well beyond the model layer itself.
The US Dollar remains supported by strong safe-haven inflows as uncertainty persists over the reopening of the Strait of Hormuz.
A larger-than-expected decline of 23,000 jobs in July, coupled with downward revisions to previous payroll figures, points to a softening US labor market and reduces expectations for further Federal Reserve tightening.
According to the CME FedWatch Tool, the probability of a September Fed rate increase has fallen to 46%, compared with 67% previously.
The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, edged higher to around 99.70 during Monday’s Asian session, recovering after posting slight losses in the previous trading day.
Demand for the US Dollar remains supported by a cautious market mood as geopolitical risks stay elevated. The conflict between the United States and Iran has entered a sensitive diplomatic stage, while ongoing military activity and uncertainty surrounding the Strait of Hormuz continue to drive investors toward safe-haven assets. Although Iran indicated that Oman-mediated talks on managing the waterway are progressing, traders remain reluctant to abandon defensive positions, helping the Dollar retain its strength.
Meanwhile, softer US labor market data has reduced expectations for additional Federal Reserve tightening in the near term. July’s Nonfarm Payrolls report showed an unexpected decline of 23,000 jobs, while June’s payroll growth was revised down sharply to 20,000 from 57,000, reinforcing signs of a cooling employment environment.
Market expectations for a September rate hike have consequently weakened. Data from the CME FedWatch Tool shows traders now assign roughly a 46% chance of a 25-basis-point increase next month, compared with 67% a week ago. Attention is now shifting toward upcoming US inflation releases for further guidance on the Fed’s policy path.
Bond Market Reaction
Analysts at TD Securities noted that Treasury yields moved lower and the yield curve steepened following the disappointing payroll figures, even as the unemployment rate eased to 4.1%. The weaker employment data helped alleviate concerns that the labor market was reaccelerating, leading investors to scale back expectations for future rate increases. As a result, pricing for September tightening was reduced by around 3 basis points.
Barkin Signals Balanced but Cautious Outlook
Richmond Fed President Thomas Barkin struck a somewhat more cautious tone, emphasizing that current labor market conditions reflect a “low-hire, low-fire” environment. His remarks suggest employment remains weak but stable rather than deteriorating sharply, reducing the urgency for further policy tightening.
At the same time, Barkin highlighted the resilience of corporate earnings, noting that company profits remain strong and continue to grow. This could limit the scope for a more dovish Fed stance if labor market softness does not spread more broadly across the economy.
The FXS Fed Sentiment Index declined by 1.68 points to 137.01, indicating a moderation in perceived hawkishness. Nevertheless, the index remains well above the neutral 100 level, suggesting that overall Fed communication continues to lean toward maintaining a relatively restrictive monetary policy stance.
Bitcoin hovered above $65,000 on Monday, remaining slightly above its 50-day Exponential Moving Average (EMA) at $64,702.
The Bank of Japan signaled that further interest rate hikes could be on the table, according to the summary of opinions from its July policy meeting.
Pump.fun and CurveDAO led the crypto market gains over the past 24 hours, emerging as the strongest performers among major digital assets.
Crypto Market Overview: Bitcoin Holds Firm as BoJ Signals Potential Tightening
The broader cryptocurrency market remained stable on Monday, with Bitcoin (BTC) trading around $65,000 and holding above its 50-day Exponential Moving Average (EMA) at $64,702. Despite growing expectations of tighter monetary policy in Japan after the Bank of Japan’s latest policy discussion summary, market sentiment across digital assets stayed constructive. Among the strongest performers over the past 24 hours were Pump.fun (PUMP) and Curve DAO (CRV), both extending recent gains.
Bank of Japan Hints at Additional Rate Hikes
The Bank of Japan released the summary of opinions from its July policy meeting, revealing a more hawkish tone among policymakers. Four of the nine board members supported further rate increases, while three adopted a neutral stance and two remained dovish. The discussion comes as the Japanese Yen continues to trade near multi-decade lows against the US Dollar, increasing pressure on policymakers to normalize monetary policy more aggressively.
Bitcoin Technical Outlook
Bitcoin traded near $65,200 on Monday, maintaining support above its 50-day EMA at $64,702. However, the leading cryptocurrency remains below the 100-day EMA at $66,905 and the 200-day EMA at $72,686, suggesting that the broader trend has yet to fully turn bullish.
Technical indicators show improving momentum. The MACD has generated a bullish crossover above its signal line, while the Relative Strength Index (RSI) sits around 55, indicating moderate buying strength.
If buyers remain in control, the next key resistance levels are the 100-day EMA at $66,905 and the 200-day EMA near $72,686. A sustained breakout above these barriers could strengthen the bullish outlook. On the downside, the 50-day EMA at $64,702 remains the first important support level, with a daily close below it potentially triggering a deeper pullback.
PUMP Extends Breakout Rally
Pump.fun (PUMP) continued its upward trajectory on Monday after gaining roughly 11% on Sunday. The token remains in a bullish structure after breaking out of a falling wedge formation and is currently trading close to a six-month high.
Momentum indicators continue to favor the bulls. The RSI has climbed to 72, entering overbought territory, while the MACD remains firmly positive with expanding bullish histogram bars.
Should the rally continue, the next upside target is the December 2025 peak at $0.003399. Key support lies near $0.00251, corresponding to the reclaimed high from May 9.
CRV Targets Higher Levels
Curve DAO (CRV) advanced for a third consecutive session, approaching the $0.24 mark. The token remains above both its 50-day EMA at $0.2135 and 100-day EMA at $0.2214, supporting the near-term bullish outlook. Nevertheless, the 200-day EMA at $0.2683 continues to act as a major resistance level and keeps the longer-term trend cautious.
CRV is also trading above the 50% Fibonacci retracement level at $0.2232, calculated from the decline between $0.2931 and $0.1700. Immediate resistance is located near the 78.6% Fibonacci retracement at $0.2608, which aligns closely with the 200-day EMA. A breakout above this zone could open the door for a move toward $0.2931.
On the downside, the $0.2232 retracement level is reinforced by the 100-day EMA at $0.2214 and the 50-day EMA at $0.2135, creating a strong support area for the token.
Gold started the week on a weaker footing as escalating tensions in the Middle East boosted demand for the safe-haven U.S. dollar. Rising oil prices added to inflation concerns and reinforced expectations that the Federal Reserve could keep interest rates elevated, weighing on the non-yielding precious metal. Investors are now turning their attention to upcoming U.S. inflation data for further clues on the Fed’s policy outlook and the next direction for gold prices.
Gold (XAU/USD) opened the new week on a weaker note, pulling back from its highest level since June 17 reached after Friday’s softer-than-expected U.S. Nonfarm Payrolls report. The labor market data showed the U.S. economy unexpectedly shed 23,000 jobs in July, while June payroll growth was revised down to 20,000 from 57,000. The figures pointed to a cooling labor market, reducing expectations for additional Federal Reserve rate hikes and initially pressuring the U.S. dollar while supporting gold.
However, that boost proved temporary as renewed uncertainty surrounding the Middle East and the reopening of the Strait of Hormuz revived demand for the safe-haven dollar. Iran maintained that a full reopening of the strategic shipping route would require the end of U.S. naval restrictions, the removal of sanctions, and compensation for war-related losses. Tehran also rejected direct negotiations with Washington, arguing that the U.S. had breached the interim peace agreement reached in June. These developments have kept geopolitical risks elevated, helping the dollar recover and limiting gold’s upside.
At the same time, ongoing tensions between the U.S. and Iran have continued to support crude oil prices. Higher energy costs have raised concerns that inflation could reaccelerate, potentially prompting major central banks to maintain a more hawkish policy stance. Market pricing reflected by CME FedWatch data still suggests investors see a meaningful possibility of another Fed rate increase before year-end. Expectations of higher borrowing costs and elevated U.S. Treasury yields have strengthened the dollar and created additional headwinds for gold. Investors are now awaiting this week’s U.S. inflation reports for fresh signals on the Fed’s next policy move and the direction of bullion prices.
Technical Analysis
Gold’s breakout above the 38.2% Fibonacci retracement level of the April-to-June decline on Friday remains a positive signal for bulls. This key support area is located just above the $4,300 level, making it an important zone to watch. A sustained move below this threshold could trigger additional selling pressure and expose the precious metal to deeper losses.
Despite the recent rebound, caution is still warranted. XAU/USD continues to trade beneath both the 50% Fibonacci retracement level and the closely watched 200-day Simple Moving Average (SMA), indicating that the broader bearish structure has not been fully reversed. As a result, while momentum has improved in the near term, confirmation of a stronger upward trend may require a decisive break above these key technical barriers.
Yen struggles to hold intervention gains as dollar hovers near six-week lows
Currency markets traded cautiously on Thursday, with the Japanese yen giving up part of its recent intervention-driven rally and the U.S. dollar remaining close to a six-week low. Investor sentiment was restrained by uncertainty surrounding a proposed U.S.-Iran agreement and anticipation ahead of key U.S. payrolls data.
The yen was little changed at 157.71 per dollar in early trading after posting losses in the previous two sessions. Although it has retreated from Monday’s peak of 155.20, reached following suspected intervention, the currency remains well above last month’s multi-decade low near 164 per dollar.
Elsewhere, major currencies showed limited movement. The euro held steady at $1.1557, while sterling traded flat at $1.3469. The Australian and New Zealand dollars were also largely unchanged at $0.7056 and $0.5885, respectively.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, was steady at 99.65, lingering near its weakest level in six weeks as traders awaited fresh catalysts.
Market participants continued to monitor developments in the Middle East after reports emerged of a proposed agreement involving Iran and Oman aimed at resolving the U.S.-Iran conflict. According to Reuters, the proposal could grant Tehran authority over inbound shipping traffic through the Strait of Hormuz.
Washington has yet to comment officially on the reported plan. While President Donald Trump recently suggested an agreement to reopen the strategic waterway was close, U.S. officials have consistently maintained that they would not support any arrangement giving Iran control over access to the critical energy shipping route.
Oil markets reacted modestly, with Brent crude futures slipping 0.5% to $79.08 per barrel, hovering near levels seen following the interim peace accord between the United States and Iran in June.
Markets adopt wait-and-see approach as central banks and payrolls take center stage
Investors remained cautious, with markets largely in a holding pattern as traders assessed geopolitical developments and awaited fresh economic signals. According to Ray Attrill, Head of FX Strategy at National Australia Bank, the recent calm in oil markets has removed one of the key drivers that had been influencing asset prices in recent weeks.
Attrill noted that market participants are closely watching whether a U.S.-Iran agreement materializes, with uncertainty over the outcome keeping trading activity subdued.
BOJ minutes strengthen case for further tightening
Attention also turned to Japan after minutes from the Bank of Japan’s June policy meeting revealed policymakers discussed rising inflation risks that could warrant additional interest-rate increases, even as they lifted borrowing costs to their highest level in 31 years.
The discussion underscores growing concern within the BOJ about broader price pressures and reinforces expectations that another rate hike could come as early as September.
Although the yen surged as much as 5% against the dollar following intervention efforts by Tokyo and coordinated measures with Washington, the currency has struggled to maintain those gains.
A recent Reuters survey highlighted skepticism over the effectiveness of intervention alone, with nearly 95% of respondents saying currency market operations would not provide a lasting solution to yen weakness. Most respondents argued that further BOJ rate hikes would be necessary to support the currency over the longer term.
U.S. payrolls report expected to shape Fed outlook
Investors are now focused on Friday’s U.S. nonfarm payrolls report for further guidance on the Federal Reserve’s policy trajectory.
Recent data showed the U.S. services sector remained resilient in July despite rising input costs, though employment growth within the sector slowed. Economists surveyed by Reuters expect the upcoming report to show payrolls increased by 80,000 jobs in July, following a gain of 57,000 in June, while the unemployment rate is projected to remain unchanged at 4.2%.
Adding to market uncertainty, Federal Reserve Governor Lisa Cook indicated on Wednesday that she remains open to the possibility of additional rate hikes if inflation proves persistently elevated, signaling that policymakers are not yet ruling out further tightening despite signs of moderating labor-market momentum.
The U.S. dollar weakened on Wednesday, falling to its lowest level in seven weeks as optimism grew over potential progress toward a peace agreement between Washington and Tehran. At the same time, the Japanese yen fluctuated but remained significantly stronger than the four-decade low reached before last week’s historic currency intervention.
By 13:58 ET (17:58 GMT), the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, had slipped 0.2% to 99.68, marking its weakest level since June 16.
Yen Holds Near 157 as Traders Await BoJ Meeting Minutes
The Japanese yen continued to attract attention in currency markets. The USD/JPY pair edged lower to 157.69, reflecting modest yen strength against the dollar.
Earlier this week, U.S. Treasury Secretary Scott Bessent confirmed that Washington had joined Japan in purchasing yen, marking the first coordinated intervention between the two countries since 2011. It was also the first direct U.S. effort to support the yen since 1998. Speaking to CNBC on Tuesday, Bessent said the move was aimed at preventing excessive yen weakness from creating broader instability across Asian financial markets.
Bessent emphasized that a stable yen is crucial given Japan’s trade volumes, economic scale, and role in global savings markets. He added that the U.S. was pleased to support Japan’s efforts to strengthen its currency and promote regional financial stability.
Before the recent currency intervention, the Japanese yen had weakened to a four-decade low of 164 against the U.S. dollar. A weaker yen increases costs for Japan’s import-dependent economy. To stabilize the currency, Japanese authorities typically sell U.S. Treasury holdings—Japan remains the largest foreign owner of U.S. government debt—to obtain the funds needed to purchase yen.
Deutsche Bank strategist Jim Reid noted that the bank’s foreign exchange team believes a faster pace of interest-rate increases by the Bank of Japan (BoJ) will be required to support a more durable recovery in the yen.
Minutes from the BoJ’s latest policy meeting, released on Wednesday, indicated that policymakers expect Japan’s economic growth to slow while inflation could accelerate as a result of higher energy prices linked to tensions in the Middle East.
According to Reid, the June meeting minutes showed that several BoJ board members anticipate a meaningful pickup in consumer inflation during the second half of the fiscal year, while two of the eight policymakers argued for a quicker pace of monetary tightening.
Reid also highlighted that Japan’s latest wage figures are likely to reinforce expectations for additional BoJ rate hikes, keeping pressure on policymakers to continue normalizing monetary policy.
Dollar slips as economic data points to a cooling but resilient U.S. economy
The U.S. dollar weakened as investors assessed a fresh batch of economic data that painted a mixed picture of the labor market and broader economic activity.
According to ADP, U.S. private-sector employment increased by 44,000 jobs in July, falling short of expectations for 68,000 and slowing from June’s gain of 95,000. The report reinforced signs of softer labor market momentum following Tuesday’s weaker-than-expected job openings data and comes ahead of Friday’s closely watched nonfarm payrolls release.
Despite recent softness in labor indicators, the overall employment backdrop remains relatively resilient. This has helped support the Federal Reserve’s recent emphasis on containing inflation, even as rising oil-price volatility linked to the ongoing Middle East conflict complicates the inflation outlook and fuels debate among policymakers over the future path of interest rates.
Meanwhile, the Institute for Supply Management (ISM) reported that activity in the U.S. services sector improved slightly in July, with the Services PMI rising to 54.1 from 54.0 in June. Although the reading missed expectations of 54.5, it remained firmly in expansion territory. The report also showed that the prices-paid index accelerated from the previous month and stayed above 70 for the fourth time in the past five months, highlighting persistent inflationary pressures within the services sector.
Bill Adams, Chief U.S. Economist at Fifth Third Commercial Bank, noted that while July job growth appeared softer, broader labor market data still point to solid demand for workers. He highlighted that job openings over the past three months reached their highest levels since January 2025, while both hiring and voluntary quits increased in the latest June data.
Looking ahead, Adams expects the Bureau of Labor Statistics to report a gain of around 90,000 jobs in July. He also forecasts the unemployment rate to remain unchanged at 4.2%, with labor force participation edging up to 61.6% from June’s post-pandemic low of 61.5%.
Optimism grows over a potential Strait of Hormuz agreement
Investor sentiment was supported by growing expectations that a deal to reopen the strategically important Strait of Hormuz could be reached in the near term.
Several U.S. officials, including President Donald Trump, suggested that negotiations were making meaningful progress. Speaking to reporters on Tuesday, Trump indicated that developments could become clearer within the next 48 hours, expressing confidence that both sides were moving closer to an agreement.
Trump also noted that significant progress had been achieved in recent discussions, adding that the parties involved were eager to continue negotiations and would be wise to pursue a resolution.
Meanwhile, Iran’s Foreign Ministry confirmed that talks with Oman regarding the strait were continuing. Spokesperson Esmaeil Baqaei stated that a joint declaration was in its final stages of review and drafting, provided external parties did not interfere with the process. He reiterated Tehran’s position that the disruption to shipping through the waterway resulted from U.S. military actions in the region.
Indian rupee strengthens after RBI leaves rates unchanged
The Indian rupee also gained ground against the U.S. dollar, with USD/INR falling 0.4% to 95.028 after the Reserve Bank of India unanimously decided to keep its benchmark repo rate unchanged at 5.25% and maintained its neutral monetary policy stance.
The central bank cited ongoing global uncertainties and elevated food-price inflation as reasons for its cautious approach. At the same time, the RBI raised its forecast for India’s 2027 economic growth to 6.7%, while noting that lower global crude oil prices were helping ease external economic pressures.
Optimism surrounding a potential US-Iran agreement has weighed on oil prices, helping ease concerns about inflation.
US equities have climbed to fresh record highs, but the still-weak correlation between BTC and the S&P 500 has limited Bitcoin’s upside momentum.
Continued net inflows into spot Bitcoin ETFs are providing additional support for the cryptocurrency.
Technical outlook: Bitcoin maintains a constructive bias while holding above key support levels, with traders watching for a breakout that could trigger the next leg higher.
Bitcoin remains comfortably above the $64,000 mark, supported by growing optimism over potential U.S.-Iran peace talks and renewed inflows into spot Bitcoin ETFs. Despite these tailwinds, BTC has gained only about 0.7% over the past 24 hours, lagging the broader rally in risk assets.
Market sentiment improved as hopes increased that the U.S. and Iran could reach an agreement to reopen the Strait of Hormuz. Oil prices have fallen for a third consecutive session and are down roughly 10% this week. U.S. Treasury Secretary Scott Bessent indicated that an agreement to restore shipping through the strategic waterway could be reached within days.
The decline in oil prices has helped ease inflation concerns, pushing Treasury yields lower. If the trend persists, investors may further reduce expectations for a more hawkish Federal Reserve stance.
Markets are currently assigning a 59% probability to a Fed rate hike in September, down from 65% a day earlier. The shift in rate expectations has also weighed on the U.S. dollar, creating a more favorable backdrop for Bitcoin and other risk-sensitive assets.
Meanwhile, optimism surrounding a potential Middle East agreement and renewed enthusiasm for AI-related investments have driven U.S. equities to fresh highs, with both the S&P 500 and Dow Jones reaching record levels.
Bitcoin, however, has not mirrored the strength seen in stocks. A relatively weak 30-day correlation between BTC and the S&P 500 helps explain the divergence, suggesting that broader risk-on sentiment alone may not be enough to fuel a major breakout. Instead, Bitcoin may require a crypto-specific catalyst to generate stronger upside momentum.
Institutional Demand Continues to Support Bitcoin
Institutional interest in Bitcoin is showing encouraging signs. Data from SoSoValue revealed that spot Bitcoin ETFs attracted $211.5 million in net inflows on Tuesday, following another strong session that saw $170.1 million in net inflows the day before.
If ETF demand remains robust and Bitcoin begins to strengthen its positive correlation with equity markets, these flows could provide additional support for higher prices. On the other hand, if institutional participation fails to accelerate meaningfully, BTC may continue to underperform despite the broader rally across risk assets.
Looking ahead, market focus is shifting toward upcoming U.S. economic data. Investors will closely monitor the ISM Services PMI release, followed by Friday’s nonfarm payrolls report, both of which could offer important clues about the Federal Reserve’s next move on interest rates and influence Bitcoin’s near-term direction.
Bitcoin has pushed back above the $64,000 level, but the broader technical picture remains slightly bearish. The price continues to trade below the 50-day EMA near $64,600, as well as the 100-day and 200-day EMAs, indicating that the recent advance may still be a corrective rebound within a larger downtrend. Meanwhile, the RSI remains near neutral territory, highlighting a lack of strong bullish or bearish momentum.
On the downside, failure to regain the 50-day EMA could trigger a retest of support around $62,500, which marks both the weekly low and the mid-July trough. A move below this level would bring the psychologically important $60,000 threshold into focus, followed by the 2026 low near $57,700. A break beneath $57,700 would confirm a lower low, increasing the risk of a deeper decline toward $55,000 and potentially $50,000, levels not seen since 2024.
For the bullish outlook to strengthen, Bitcoin must first reclaim the 50-day EMA at $64,600 and then break above the July peak near $67,000. Such a move would establish a higher high and could pave the way for a test of the 200-day EMA, currently located around $72,500.
WTI crude has experienced a significant pullback, sliding from above $92 a barrel in late July to below $76. Despite the sharp retreat, the futures curve has yet to signal a complete bearish reversal, as strong backwardation persists, indicating that supply-related risks are still being priced into the market.
At the same time, US market fundamentals remain uneven rather than outright weak. Conflicting trends in demand and inventory data continue to paint a mixed picture, limiting conviction behind a sustained bearish outlook.
For now, the most probable outcome is continued volatility within a $77–$88 trading range. A lasting improvement in shipping conditions and smoother supply flows could drag WTI toward the $68–$75 zone. On the other hand, fresh disruptions to global energy transport routes or supply chains could revive bullish sentiment and drive prices back toward the $92–$105 range.
American benchmark crude prices have dropped sharply as renewed optimism over a potential US-Iran agreement reduced geopolitical risk premiums. However, a strongly backwardated futures curve, tight inventories at Cushing, and subdued speculative positioning suggest the recent sell-off may be overextended.
WTI has weakened after Washington paused additional military action and discussions on shipping security resumed. Even so, both physical and derivatives markets continue to signal supply tightness, leaving the market exposed to another sharp rebound.
WTI’s decline looks more like a correction than a full normalization
WTI fell below $76 per barrel on Tuesday, marking a nearly 20% decline from its late-July peak above $92. The move followed repeated swings in sentiment driven by reports of progress and setbacks in negotiations involving the US and Iran.
While the retreat reflects a reduction in geopolitical risk premiums, it does not necessarily indicate that the underlying supply disruptions have been resolved. Markets have repeatedly priced in expectations of a settlement, only to see tensions, attacks, or shipping restrictions re-emerge.
Until tanker movements, insurance availability, and export flows improve consistently over an extended period, political statements alone are unlikely to confirm a lasting normalization.
The futures curve suggests caution toward the sell-off
The WTI futures curve remained deeply backwardated in late July. The front-month contract traded at $85.27, compared with $82.25 for the second-month contract and $70.41 for the twelfth-month contract. This left the M1–M2 spread at $3.02 per barrel and the M1–M12 spread close to $15.
Such pronounced backwardation indicates that buyers continue to pay a significant premium for immediate supply relative to oil delivered further into the future. Although part of that premium reflects geopolitical uncertainty, the curve’s shape does not align with expectations of an imminent supply surplus. It also provides positive roll yield for long positions, which could help prevent bearish momentum from becoming entrenched.
As a result, the curve points to a two-track outlook: near-term prices remain highly sensitive to developments in US-Iran relations, while longer-dated contracts are already pricing in a gradual return to more normal market conditions.
EIA data suggest limited inventory cushions rather than a true supply shortage
According to the latest EIA report, US commercial crude inventories increased by 2 million barrels to 411.7 million barrels in the week ending July 17. Despite the build, stockpiles remained about 6% below the five-year seasonal average. Meanwhile, inventories at Cushing, Oklahoma, declined by 674,000 barrels to 19.4 million barrels, leaving them more than 10 million barrels below the five-year norm.
Refined product inventories also remained relatively tight. Gasoline stocks were 7% below their five-year average, while distillate inventories were 10% below average, even after registering weekly increases. Refinery utilization stayed elevated at 96.1%, and total petroleum demand rebounded by just over 1 million barrels per day from the previous week.
The data do not present a uniformly bullish picture, as crude oil, gasoline, and distillate inventories all posted gains during the reporting period. However, inventory buffers remain thin in absolute terms, particularly at Cushing. As a result, any renewed supply disruption could have a more immediate impact on prompt crude prices than it would in a market with more comfortable stock levels.
US shale production is responding slowly, not flooding the market
US crude output fell by 63,000 barrels per day to 13.798 million barrels per day in the week ending July 17. Meanwhile, Baker Hughes reported 450 active oil rigs on July 24, down two from the previous week but still up ten from a month earlier and 38 above the same period in 2025.
The signal from shale activity remains mixed. Drilling has not deteriorated significantly, yet the latest decline in production does not point to an imminent surge in supply capable of offsetting a renewed disruption in Gulf energy flows. Moreover, changes in rig activity typically influence production with a considerable lag, making rig counts more relevant to the medium-term outlook than to short-term supply risks.
CFTC positioning indicates potential for another sharp market move
Data from the Commodity Futures Trading Commission (CFTC) showed that non-commercial net long positions in WTI increased by nearly 38,500 contracts to roughly 120,100 contracts in the week ending July 28. The recovery was driven largely by short covering, with speculative short positions falling by about 33,600 contracts, while long positions increased by only around 4,800 contracts.
Despite the rebound, speculative positioning remains relatively light by historical standards. Net long exposure sits near the 11th percentile of the past three years, while overall speculative exposure, at roughly 6.5%, is around the 13th percentile. In other words, traders are no longer heavily positioned for a major collapse in prices, but bullish positioning is far from crowded.
This leaves room for significant volatility in either direction. A credible and lasting peace agreement could spark another wave of selling, while a renewed breakdown in negotiations could trigger both fresh short covering and new long buying, potentially accelerating any upside move in WTI prices.
WTI outlook: $77–$88 remains the most plausible near-term trading range
Current market conditions support a range-bound outlook rather than a firm directional target. Geopolitical developments continue to dominate short-term price action, with headlines surrounding US-Iran negotiations capable of moving front-month WTI contracts by several dollars before changes in inventories or production data have a meaningful impact.
At the same time, the structure of the futures curve argues against interpreting every positive diplomatic development as evidence of a lasting supply surplus. Deep backwardation continues to signal tight near-term market conditions and ongoing concerns about physical availability.
As a result, the most credible base-case scenario remains a trading range between $77 and $88 per barrel. A sustained improvement in shipping security, export flows, and regional stability could eventually push prices lower toward the $68–$75 area. However, until such normalization is clearly reflected in physical market indicators, downside potential may remain limited.
Conversely, any renewed escalation in geopolitical tensions, shipping disruptions, or supply-chain interruptions could quickly revive the risk premium, potentially triggering a sharp rebound in WTI as traders reprice near-term supply risks. The combination of tight inventories, pronounced backwardation, and relatively light speculative positioning means the market remains vulnerable to significant upside volatility despite the recent correction.
Bottom line
WTI prices around $80 per barrel no longer reflect the extreme risk premium that dominated the market during the most recent geopolitical escalation. However, market conditions are still far from fully normalized. Deep backwardation in the futures curve, low inventory levels at Cushing, and relatively light speculative positioning all indicate that downside moves driven by positive peace developments may be more gradual than any upside reaction triggered by renewed supply disruptions.
For the time being, the most likely scenario remains a volatile trading range between $77 and $88 per barrel. A sustained move below that band would likely require clear and verifiable evidence that Gulf shipping routes, insurance conditions, and export flows have returned to normal. Conversely, a breakout above the range would become increasingly probable if negotiations break down and physical supply conditions deteriorate once again.
In short, while geopolitical risk premiums have eased, the underlying market structure continues to reflect supply tightness, leaving WTI vulnerable to sharp upward repricing should disruptions re-emerge.
Second-quarter earnings season continues to deliver strong results, with 71% of S&P 500 companies having reported so far. Revenues are exceeding analyst expectations by 3.8% on average, while earnings are outperforming forecasts by 7.3%. Revenue beats have been recorded by 77% of companies, while 83% have surpassed earnings estimates. Notably, this marks the twelfth consecutive quarter in which earnings growth has outpaced revenue growth, highlighting ongoing profit margin expansion.
The outlook for August appears increasingly constructive. A combination of exhausted mean-reversion trading strategies, the collapse of the Situational Awareness hedge fund, and aggressive short-selling activity that fueled negative market narratives has left the market deeply oversold and potentially primed for a strong rebound. Adding to the bullish case, FactSet projects S&P 500 second-quarter earnings growth of 47.4%.
Looking ahead, the Atlanta Fed’s GDP Now model currently estimates third-quarter annualized GDP growth at 5.9%, exceeding the 5% pace forecast earlier this year. However, investors should note that the Atlanta Fed’s estimates often begin at elevated levels before being revised lower as additional economic data becomes available. Second-quarter GDP growth faced pressure from heavy technology imports from Asia, a trend likely to persist as AI-related demand continues to accelerate.
Economic activity also appears to be gaining momentum. The Institute for Supply Management (ISM) reported that its manufacturing index climbed to 55.6% in July from 53.3% in June, marking the seventh consecutive monthly increase and the strongest reading since May 2022. New orders improved to 56.7%, production jumped sharply to 58.5%, and order backlogs rose to 55%. Broad-based strength was evident, with 15 of the 16 manufacturing industries surveyed reporting expansion during the month.
On the labor front, ADP reported that private-sector employers added just 44,000 jobs in July, falling short of the 65,000 jobs economists had expected. The weakest areas included leisure and hospitality, which shed 11,000 jobs, and trade, transportation, and utilities, which lost 8,000 positions. While seasonal factors may have weighed on the report, the softer-than-expected data has prompted economists to lower expectations for the upcoming nonfarm payrolls release.
Gold prices extended gains for a fourth consecutive session on Thursday, reaching a seven-week high as growing optimism over a potential agreement to reopen the Strait of Hormuz pressured oil prices, the U.S. dollar, and Treasury yields.
At 22:20 ET (02:20 GMT), XAU/USD climbed 1.1% to $4,293.94 per ounce after hitting an intraday peak of $4,304.15, while Gold Futures advanced 1.1% to $4,353.12. Silver (XAG/USD) rose 0.5% to $62.39, and Platinum (XPT/USD) gained 2.3% to $1,774.68.
Hormuz deal hopes lift gold as Fed tightening expectations soften
Gold attracted fresh buying interest after reports indicated that a diplomatic breakthrough in the Middle East may be approaching, fueling hopes that disruptions to global energy supplies could ease and helping to alleviate inflation concerns.
According to Reuters, a proposed arrangement involving Iran and Oman aimed at ending the five-month standoff between Tehran and Washington would grant Iran oversight of vessels entering the Gulf through the Strait of Hormuz. The prospect of such a deal weighed on oil prices.
The decline in energy prices has led investors to scale back expectations for additional Federal Reserve rate increases. Markets currently assign about a 55% chance of a September rate hike, down from 67% just two days earlier.
Meanwhile, benchmark U.S. Treasury yields edged lower and the U.S. Dollar Index (DXY) remained under pressure, improving the appeal of dollar-denominated gold for international investors and providing further support for bullion prices.
Payrolls report in focus as next key market driver
Despite gold’s recent advance, investors are closely watching upcoming U.S. labor market data for fresh signals on the Federal Reserve’s interest-rate outlook.
The latest ADP National Employment Report showed that private-sector job growth slowed in July, shifting market attention to Friday’s highly anticipated nonfarm payrolls (NFP) report for a clearer assessment of labor market strength.
Analysts at ANZ noted that gold’s rally gained traction as expectations for a reopening of the Strait of Hormuz helped ease inflation concerns, reducing the likelihood of further Fed tightening.
They also highlighted that bullion’s gains accelerated after prices broke above an important technical resistance level. However, Federal Reserve Governor Lisa Cook reiterated that policymakers remain prepared to raise interest rates if inflation does not continue to moderate, emphasizing that the Fed cannot afford to wait until inflation fully returns to its 2% target before taking action if necessary.
Silver advanced as lower oil prices followed a partial agreement on the Strait of Hormuz, helping to ease inflationary pressures. Softer-than-expected US ADP private employment data further boosted precious metals, reinforcing expectations of a more accommodative interest-rate outlook. Meanwhile, a positive 14-day RSI and a supportive Fed Sentiment Index continued to indicate solid and sustained bullish momentum for silver.
Silver (XAG/USD) extended its rally for a fourth straight session, trading near $62.20 per troy ounce during Thursday’s Asian session. The precious metal continued to benefit from improving market sentiment after an agreement to partially restore shipping through the Strait of Hormuz helped drive oil prices lower, easing concerns about inflationary pressures and the future path of interest rates.
The development follows a deal between Iran and Oman to establish a temporary maritime corridor through the key energy route, raising expectations for stronger Middle Eastern oil exports. A joint statement outlining the arrangement is reportedly nearing completion. Although the shipping channel is expected to remain operational for two to four months, Iranian officials emphasized that the measure should not be viewed as a full reopening of the Strait of Hormuz.
Oil market structure points to speculation-driven moves
Analysts at TD Securities argue that recent swings in oil prices appear to be driven more by speculative positioning than by any meaningful change in supply-demand fundamentals. They note that oil timespreads have remained relatively strong, indicating that traders reacting to headlines are largely behind the recent volatility rather than a loosening of physical market conditions. According to the firm, robust timespreads continue to signal a fundamentally tight crude market despite heightened geopolitical risks and speculative trading activity.
At the same time, weaker US labor market data added another layer of support for precious metals. ADP data released Wednesday showed private-sector employment increased by only 44,000 jobs in July, down sharply from 98,000 in June and below expectations of 70,000. Investors are now turning their attention to upcoming US labor indicators, including Thursday’s Initial Jobless Claims and Friday’s Nonfarm Payrolls report, for further clues on the economic outlook and Federal Reserve policy direction.
Fed’s Cook highlights inflation risks while leaving door open for future rate hikes
Federal Reserve Governor Lisa Cook delivered remarks that carried a moderately hawkish tone, earning a score of 7.2/10 on the FXS Speechtracker, slightly above the historical average of 6.5/10. Her comments acknowledged the resilience of the US economy and labor market but emphasized that inflation risks remain a greater concern than employment weakness. Cook reiterated the Fed’s commitment to restoring price stability while stressing that additional rate hikes would only be considered if progress on disinflation stalls.
The speech was generally supportive of the US Dollar and reflected a cautious stance toward risk-sensitive assets. However, it stopped short of signaling any immediate tightening measures, leaving policymakers data-dependent.
Meanwhile, the FXS Fed Sentiment Index slipped 1.93 points to 140.92, suggesting a modest reduction in perceived hawkishness after the speech. Even so, the index remains comfortably above the neutral 100 level, indicating that overall Fed communication continues to lean firmly toward a restrictive policy stance despite the slight easing in tightening expectations.
Silver (XAG/USD) trades near $62.20 and continues to display a constructive near-term outlook. The metal remains above its nine-day Exponential Moving Average (EMA) at $59.76, reflecting ongoing bullish momentum, although the 50-day EMA at $62.69 continues to act as immediate resistance. The 14-day Relative Strength Index (RSI) stands at 56.81, reinforcing the view that buying pressure remains intact without entering overbought territory.
A decisive daily close above the 50-day EMA at $62.69 could strengthen bullish momentum and pave the way for a move toward the next major resistance zones at $90.03 and $96.62, although those targets remain considerably higher than current market levels. On the downside, initial support is located at the nine-day EMA of $59.76, followed by a stronger support area around $55.63. Overall, the technical backdrop remains tilted to the upside as long as Silver holds above its short-term moving average.
Gold surges to a seven-week high as a weaker US Dollar and easing Fed rate hike expectations boost demand for the precious metal. The metal briefly tested the $4,300 mark early Thursday after reclaiming its 50-day moving average above $4,160, while bullish momentum indicators suggest the rally could extend further. Optimism surrounding the reopening of the Strait of Hormuz has pressured the US Dollar, providing additional support for gold prices.
Gold extended its strong breakout on Thursday, briefly testing the $4,300 level for the first time in seven weeks as a weaker US Dollar and easing Federal Reserve rate hike expectations fueled demand for the precious metal. Optimism surrounding a potential reopening of the Strait of Hormuz after Iran signaled progress on a commercial shipping framework helped keep oil prices near three-week lows, reducing inflation concerns and prompting markets to scale back the probability of a September Fed rate increase to about 55%.
Additional pressure on the US Dollar came from softer US economic data, including weaker-than-expected ADP private payrolls and a miss in the ISM Services PMI. Meanwhile, comments from San Francisco Fed President Mary Daly reinforced expectations that policymakers may keep rates steady while remaining data-dependent.
Despite a modest decline in perceived Fed hawkishness, investors continue to monitor geopolitical risks in the Middle East, including renewed tensions involving Israel, Hezbollah, and the Iran-backed Houthis. Any disruption to hopes of reopening the Strait of Hormuz could trigger a pullback in gold prices toward the $4,150 support area. For now, however, bullish technical signals remain intact, suggesting further upside potential as markets await Friday’s US Nonfarm Payrolls report.
Gold Technical Outlook: Bulls Retain Control as Momentum Strengthens
Gold (XAU/USD) traded around $4,274.80 on the daily chart, maintaining a constructive technical outlook after breaking higher this week. The metal continues to trade comfortably above its 21-day SMA at $4,078 and 50-day SMA at $4,157, reinforcing the near-term bullish trend. However, the 100-day SMA near $4,394 and 200-day SMA around $4,493 remain key resistance barriers that could limit gains in the medium term.
Momentum indicators also favor the upside. The 14-day Relative Strength Index (RSI) stands at 61.94, signaling solid buying interest while remaining below extreme overbought levels, suggesting there is still room for further appreciation.
On the upside, gold faces immediate resistance near the 100-day SMA at $4,394, followed by the 200-day SMA at $4,493. A decisive break above these levels could pave the way for a broader bullish extension. On the downside, initial support is located around $4,275, followed by the 50-day SMA at $4,157 and the 21-day SMA at $4,078. A deeper correction could bring prices back toward the rising trendline support originating near $3,951, where buyers are likely to re-enter the market.
Positioning Data Signals Growing Bullish Conviction
Adding to the positive outlook, analysts at TD Securities highlighted that easing macroeconomic headwinds and optimism surrounding a potential US-Iran agreement have provided fresh support for precious metals. The bank noted that macro discretionary funds have more than doubled their gold exposure since June and have consistently bought dips, helping defend the $4,000 level.
TD Securities also observed that strengthening momentum has begun attracting systematic and trend-following investors, forcing Commodity Trading Advisors (CTAs) to increase long positions and amplifying the rally. This shift in market positioning suggests that improving sentiment and technical strength are working together to support further upside in gold ahead of key US economic data releases.
Bitcoin traded sideways even as equities pushed to fresh record highs, underscoring its lack of correlation with the broader rally across global markets.
Despite stocks climbing to new highs, Bitcoin remained largely range-bound, highlighting its divergence from the strength seen in traditional financial markets.
Bitcoin showed little movement while global equities extended their gains, reflecting a continued disconnect from wider market optimism.
Bitcoin (BTC) traded in a narrow range as equities continued to climb and gold pulled back, indicating a market caught between fading institutional participation and mounting signs that selling pressure may be running out, according to a Glassnode report released Wednesday.
The report noted that Bitcoin’s muted price action contrasted sharply with the broader financial landscape, where major stock indexes pushed to fresh record highs while other asset classes remained active.
“Virtually every major asset has moved—except Bitcoin,” Glassnode observed, highlighting the cryptocurrency’s growing disconnect from the momentum driving global markets.
Bitcoin Shrugs Off Coldcard Wallet Theft
The report analyzed how the market reacted to the compromise of several self-custodied Coldcard hardware wallets. Although the incident sparked a surge in on-chain activity, it had virtually no effect on Bitcoin’s price.
In the three days following the theft, the volume of Bitcoin that had been inactive for at least a year surged to roughly 119,000 BTC—about 200 times the amount stolen—as users transferred funds to new wallets as a precautionary measure.
Despite the heightened activity, only around 10% of those coins were sent to exchanges, while the pace of new wallet creation normalized within days. Meanwhile, the amount of Bitcoin held in wallets less than one month old continued to increase, suggesting investors were relocating assets into new cold-storage addresses rather than preparing to sell.
According to Glassnode, the largest forced movement of long-dormant Bitcoin during the current market cycle generated virtually no selling pressure and failed to trigger any meaningful price reaction.
Bitcoin Shows Bottoming Signals but Demand Remains Weak
The report also highlighted that Bitcoin is beginning to exhibit traits commonly associated with market bottoms, though the current setup differs from previous cycles. Instead of being driven by panic selling, the signals are emerging from an extended period of market stagnation.
Historically, major bottoms have been accompanied by steep declines and sharp spikes in volatility. In contrast, the current cycle has seen profitability gradually erode during months of sideways price action, while volatility has remained exceptionally subdued.
Glassnode noted that its Seller Exhaustion Constant has dropped to the lowest level of the current cycle, entering a zone that has historically coincided with market bottoms. However, the metric remains roughly one-third above the levels recorded during prior bear-market troughs, suggesting that while seller fatigue is increasing, conditions have not yet fully matched those seen at previous cycle lows.
Institutional Demand Still Missing as a Key Catalyst
Glassnode also pointed to persistent weakness in institutional participation, noting that major sources of demand have provided little support for Bitcoin in recent months. According to the report, US spot Bitcoin ETFs and corporate treasury buyers have not generated enough buying pressure to sustain the market’s recovery.
June saw approximately 65,800 BTC in net outflows from spot Bitcoin ETFs—the largest monthly withdrawal on record—while purchases by corporate treasuries failed to fully offset those redemptions.
As Glassnode noted, any eventual market bottom may need to develop without the steady institutional buying that underpinned Bitcoin’s performance over the past two years, at least until that demand returns.
Despite the lack of strong buying interest, options markets remain remarkably subdued. Implied volatility for bullish price moves has fallen to an all-time low, while downside volatility remains near typical levels, suggesting traders are assigning relatively low probabilities to both significant rallies and sharp declines.
Historically, periods of extremely compressed volatility have often preceded major breakouts. However, Glassnode cautioned that the current market environment lacks the robust demand backdrop that supported previous recoveries, making a sustained rebound less certain.
At the time of writing, Bitcoin was trading around $64,900, up roughly 1% over the previous 24 hours.
The Japanese Yen retreats against the US Dollar as traders question the sustainability of the currency’s recent rally.
The Yen’s earlier gains were largely supported by coordinated intervention from Japanese and US authorities.
Market participants are now turning their attention to the US ADP Employment Change report and July’s Nonfarm Payrolls (NFP) data for fresh clues on the Federal Reserve’s policy outlook.
The Japanese Yen (JPY) surrenders its earlier gains and trades little changed near 157.70 against the US Dollar (USD) during Wednesday’s European session. The USD/JPY pair rebounds as confidence in the Yen’s recent rally begins to fade, prompting investors to question whether the currency can sustain its strength.
The Yen had outperformed in recent sessions after coordinated intervention by the United States (US) and Japan aimed at curbing what Japan’s Ministry of Finance (MoF) described as “excessive volatility and disorderly movements” in the currency market.
However, many analysts argue that the Yen’s recovery is likely to be temporary unless it is supported by stronger underlying economic fundamentals.
Analysts say intervention offers only temporary relief
Strategists at MUFG believe official intervention will remain relatively limited in scale, noting that while coordinated action between the US and Japan could provide near-term support for the Yen, it is unlikely to reverse the broader weakening trend on its own. They argue that lasting appreciation will require a meaningful shift in economic fundamentals, rather than relying solely on market intervention.
TD Securities shares a similar assessment, describing the latest intervention as an effort by Japanese authorities to buy time while fiscal policies work to boost demand for Yen-denominated assets. The firm suggests the strategy also depends on a weaker US Dollar, potentially driven by softer US economic data or another bearish catalyst. However, TD warns that unless the Bank of Japan (BoJ) accelerates its tightening cycle with a series of rate hikes toward 2%, the longer-term outlook still favors a renewed rise in USD/JPY. The brokerage highlights the wide interest rate gap, with Japan’s one-year, one-year overnight index swap (OIS) rate near 1.9% compared with 4.1% in the US.
Meanwhile, the US Dollar edges slightly lower as traders await the release of the US ADP Employment Change report for July at 12:15 GMT.
Economists at Deutsche Bank forecast private-sector payrolls to increase by 65,000, improving from June’s reading of 49,000.
The ADP report is expected to influence expectations for the Federal Reserve’s (Fed) policy path ahead of Friday’s closely watched US Nonfarm Payrolls (NFP) report for July, which could provide fresh guidance on the outlook for interest rates.
Dow Jones futures edged higher after reports of a temporary US-Iran agreement fueled optimism across financial markets. US stocks ended Tuesday in positive territory, with the Dow Jones Industrial Average rising 1.71% and the Nasdaq 100 surging 2.59%. Investors are now turning their attention to upcoming earnings reports from Eli Lilly, AppLovin, Walt Disney, Uber, and SanDisk.
US stock futures traded modestly higher during Wednesday’s European session, with Dow Jones futures rising 0.23% to around 54,390. S&P 500 futures added 0.34% to roughly 7,790, while Nasdaq 100 futures edged up 0.14% to near 29,900. Investors are now focused on another busy day of corporate earnings, with major reports expected from Walt Disney, Uber, and SanDisk, which may influence market direction.
Investor sentiment improved after reports suggested progress toward an interim agreement involving the United States, Iran, and Oman to reopen the Strait of Hormuz. Axios reported that US officials are targeting an announcement as early as Wednesday, with the proposed 60-day arrangement designed to restore navigation through the strategic waterway, which carries nearly one-fifth of global energy shipments. The temporary framework could be extended if negotiations continue to advance.
The upbeat geopolitical developments followed a strong rally on Wall Street in the previous session. The Dow Jones Industrial Average and S&P 500 gained 1.71% and 1.79%, respectively, both finishing at fresh record highs. The Nasdaq Composite outperformed with a 2.59% advance, supported by stronger-than-expected corporate earnings and optimism that a Hormuz agreement is close.
Meanwhile, AI-related stocks continued their recovery, led by semiconductor companies. Deutsche Bank noted that the Philadelphia Semiconductor Index climbed 6.55% on Tuesday—its strongest daily performance since March—bringing its cumulative gain since last Wednesday to 16.58%, marking the index’s largest four-day rally since 2020. The bank said the sharp rebound in chip stocks signals renewed strength in the AI sector after its recent pullback.
Gold (XAU/USD) builds on the previous day’s momentum, extending its rally for a second consecutive session to reach a near two-week high around $4,141 during Wednesday’s Asian trading.
Fundamental Analysis
Optimism over a diplomatic breakthrough in the five-month US-Iran conflict continues to support market sentiment, despite lingering uncertainty. US Treasury Secretary Scott Bessent said Washington could finalize an agreement with Tehran as early as Wednesday to reopen the Strait of Hormuz and ease tensions. Separately, Axios reported, citing sources, that the US, Iran, and Oman are close to reaching an interim deal to restore access to the key shipping route. Meanwhile, OPEC+’s decision to raise oil production starting in September has eased supply concerns, sending crude prices to their lowest level since June 13. Softer oil prices have reduced inflation fears and weakened expectations for aggressive Federal Reserve tightening, weighing on the US Dollar while boosting demand for non-yielding Gold.
Even so, markets continue to expect the Fed could still raise interest rates before year-end as the US labor market shows signs of resilience. Tuesday’s JOLTS report revealed job openings slipped slightly to 7.36 million but remained above year-ago levels, indicating underlying labor market strength. Additionally, Kansas City Fed President Jeff Schmid and Philadelphia Fed President Anna Paulson reiterated support for keeping monetary policy restrictive to contain inflation. Their comments may limit further downside in the US Dollar ahead of Friday’s closely watched Nonfarm Payrolls (NFP) report.
Before then, investors will focus on Wednesday’s US economic releases, including the ADP private employment report and the ISM Services PMI, for fresh clues on the economy and the Fed’s policy path. At the same time, any new developments surrounding the Middle East conflict could influence both the US Dollar and Gold. Overall, the current fundamental backdrop continues to favor Gold, leaving XAU/USD well-positioned for additional near-term gains.
Technical Analysis
From a technical standpoint, Gold’s decisive move above the 200-period Exponential Moving Average (EMA) on the four-hour chart reinforces the bullish outlook. Momentum indicators continue to favor buyers, with the Relative Strength Index (RSI) holding near 65, reflecting solid upside momentum, while the Moving Average Convergence Divergence (MACD) histogram remains in positive territory, suggesting bullish control remains intact in the near term.
That said, the rally may begin to encounter resistance above the $4,130 region, as increasingly stretched momentum indicators could limit further upside if buying pressure starts to ease. On the downside, initial support is located around the 200-period EMA near $4,115. A sustained break below this level could trigger a deeper pullback toward the daily low around $4,065, followed by the $4,043–$4,042 support zone, the $4,020 level, and ultimately the key psychological threshold at $4,000.
Crypto Regulation Could Enter a New Era as the CLARITY Act Faces a Crucial Senate Decision
The rules governing the crypto industry could be rewritten within days. The CLARITY Act, a more than 600-page bill designed to define which US regulators oversee different types of digital assets, is approaching a critical Senate deadline on August 7. As investors wait for clarity, Bitcoin continues to trade within a narrow range amid uncertainty. Here’s a straightforward breakdown of what the legislation proposes and what it could mean for crypto holders.
The CLARITY Act represents one of the most ambitious crypto market-structure proposals in US history and is now approaching a decisive stage.
The Senate is expected to remain in session only through August 7, yet no official floor vote had been scheduled as of August 3. This leaves lawmakers with only a limited window to determine the bill’s future. The House passed its version in July 2025 with bipartisan backing, while a consolidated Senate draft was introduced in late July.
However, the path to approval remains challenging. The bill needs 60 votes to overcome a potential filibuster, while Republicans control approximately 53 Senate seats, making support from Democratic lawmakers critical.
Current prediction markets estimate only about a 26% probability that the legislation becomes law in 2026. If the Senate window closes without action, the next meaningful opportunity may not arrive until after the midterm elections, potentially extending regulatory uncertainty for the crypto market for another year or longer.
What the CLARITY Act Actually Changes
At its heart, the CLARITY Act attempts to answer the biggest unresolved question in crypto for the past decade: which regulator is responsible for overseeing which digital assets?
For years, the SEC has argued that most tokens should be treated as unregistered securities, while the CFTC has maintained that many cryptocurrencies function more like commodities but lacked the authority to regulate spot markets. This uncertainty left crypto projects unsure about compliance requirements, exchanges unclear about which assets they could list, and investors uncertain about regulatory protections.
The bill aims to resolve this confusion through several key provisions:
Clear division of authority between the SEC and CFTC
The legislation creates a defined framework for determining regulatory responsibility. If a token’s value relies heavily on the efforts of a central organization or development team, it would be classified as a security under SEC oversight. If a blockchain network becomes sufficiently decentralized, the asset could be designated as a “digital commodity” regulated by the CFTC, which would receive expanded authority over spot crypto markets.
A “maturity” pathway for tokens
The bill introduces a framework allowing tokens to transition from securities into digital commodities as networks become more decentralized. Initially, tokens are treated as securities while founders maintain significant control. Once governance becomes distributed — such as no single entity controlling a disproportionate share of tokens or decision-making power — the asset can potentially “graduate” into a digital commodity.
This creates a clearer compliance roadmap: centralized projects fall under SEC rules, while decentralized networks move toward CFTC oversight.
Crypto exchanges face stricter regulatory standards
Digital commodity trading platforms would be required to register with the CFTC and follow standards similar to traditional financial institutions, including capital requirements, risk management procedures, and market monitoring systems.
In exchange, compliant platforms would gain greater legal certainty and the ability to serve US customers without constant concern over sudden regulatory action.
Greater protection for customer assets
The bill addresses one of the biggest lessons from previous crypto exchange failures: customer funds being misused by platforms.
Under the proposed rules, customer assets must be held by qualified custodians. Platforms would need explicit user approval before using assets for activities such as staking. If an exchange becomes insolvent, properly custodied customer assets would remain the property of users rather than becoming part of the company’s bankruptcy estate.
Token fundraising gets clearer rules — with more transparency
Crypto projects would receive a more straightforward path to raising capital, but they would also face stronger disclosure obligations.
Instead of relying only on marketing materials or investor presentations, projects would need to provide ongoing information about:
Token utility and functionality
Team token ownership
Insider selling activity
Potential software and security risks
Token economics and distribution structure
Protection for self-custody and blockchain developers
The legislation protects individuals’ ability to hold digital assets in personal wallets. It also clarifies that simply developing open-source blockchain software or operating a node does not automatically make someone a regulated financial intermediary.
This removes a major area of uncertainty that has affected developers for years.
DeFi regulation focuses on actual control, not labels
The bill evaluates decentralized finance projects based on one key question: who controls the system?
Protocols powered by immutable, open-source code with no centralized control would receive greater legal protection. However, projects claiming to be decentralized while retaining administrative control — such as the ability to freeze funds or modify rules — could still be treated as centralized financial platforms and face full compliance requirements.
Stronger anti-money-laundering and consumer protections
The legislation also expands safeguards against illicit finance. The updated version includes more than 16 provisions covering areas such as:
Anti-money-laundering requirements
Know-your-customer (KYC) procedures
Transaction monitoring
Restrictions on stablecoin platforms paying fixed deposit-like returns
However, legitimate yield mechanisms linked to real economic activity, such as staking rewards, would remain permitted.
What the CLARITY Act Could Mean for the Crypto Market
Bitcoin appears to be one of the clearest beneficiaries of the proposed framework. Since it operates without a central controlling entity, it naturally fits the definition of a digital commodity. In addition, stronger asset-segregation requirements could lower counterparty risks for investors who hold crypto through centralized platforms.
Large blockchain networks with widespread adoption and decentralized governance, including Ethereum and Solana, are also positioned favorably. Their potential classification as digital commodities could remove regulatory uncertainty and make them more attractive to institutional investors that have previously stayed on the sidelines.
However, newer blockchain projects with concentrated ownership structures may face a longer path. Until they achieve greater decentralization, they would likely remain under SEC oversight, increasing compliance costs and creating additional challenges for exchange listings.
Altcoins face a market-wide selection process
Smaller cryptocurrency projects could experience a significant divide. Projects that embrace transparency and meet disclosure requirements may gain a clearer route into US markets, while tokens with limited transparency, centralized control, or concentrated ownership could struggle to secure listings on major exchanges.
The result is likely to be a more selective market rather than a broad benefit for all cryptocurrencies.
Stablecoins move closer to regulated financial products
Stablecoins would increasingly resemble regulated payment infrastructure under the proposed rules. Key requirements could include:
Full reserve backing
Regular financial attestations
Clear redemption rights for users
Restrictions on passive yield programs may force platforms to redesign stablecoin offerings. However, returns generated through genuine economic activities — such as staking or liquidity provision — would likely remain allowed.
Exchanges and brokers face higher compliance demands
Crypto trading platforms would experience some of the biggest operational changes. They would need to meet requirements related to:
Regulatory registration
Customer asset segregation
Market surveillance systems
Risk management procedures
While implementation could increase costs, exchanges would gain something the industry has long sought: a clearer legal framework and the ability to operate with greater certainty.
Potential Winners Under the CLARITY Act
The market is already reacting to the possibility of regulatory change. Bitcoin has been trading within a narrow range around $62,000–$64,000 as investors await the Senate’s decision. A clear outcome — either approval or failure — could become a catalyst for the next major market direction.
However, the broader significance extends beyond a single legislative vote. Current crypto regulations rely heavily on agency interpretations and enforcement approaches, which can change under different administrations. A federal law would provide a more permanent foundation.
The key developments to monitor are a potential Senate vote schedule or a cloture motion before August 7. Regardless of the immediate outcome, the regulatory framework outlined in the CLARITY Act could become the blueprint that shapes how the crypto market evolves going forward.
Wall Street started the new month on a strong note as improving geopolitical conditions and a steep decline in crude oil prices boosted investor sentiment. The S&P 500 gained 1.5%, closing near its all-time high, while the Nasdaq advanced 2.1%, driven by strength in major technology stocks. Semiconductor stocks also recovered, with the PHLX Semiconductor (SOX) Index rising slightly above 1% after recent volatility. The CBOE Volatility Index (VIX) fell, signaling reduced demand for protection against market declines as investors shifted toward risk assets. Lower Treasury yields further supported the rally, easing inflation concerns and providing additional support for growth-oriented companies.
Technology and communication services led market gains, with the “Magnificent Seven” once again driving momentum. Amazon (NASDAQ:AMZN) surged back above a $3 trillion market capitalization, while Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) gained as optimism surrounding artificial intelligence returned. Nvidia (NASDAQ:NVDA) climbed nearly 3%, helping stabilize the semiconductor sector ahead of upcoming earnings from AMD (NASDAQ:AMD) and other chipmakers. Beyond technology, airlines and fuel-dependent industries benefited from cheaper oil, while energy stocks weakened as crude prices dropped sharply. Overall, the market rally reflected renewed confidence rather than excessive optimism, with investors remaining focused on corporate earnings, inflation trends, and future Federal Reserve policy decisions.
The projected total return for the Global Market Index (GMI) continued its upward trend in July, marking another month of improved expectations. However, the long-term outlook remains below the index’s actual performance over the past decade, although the difference has gradually narrowed.
GMI is a market-capitalization-weighted portfolio that combines major asset classes (excluding cash) through ETF-based proxies. The current projection is calculated as the average of three underlying valuation models.
The latest forecast estimates an annualized return of 8.0%, slightly higher than last month’s projection. Despite the recent improvement, the expected return remains below the benchmark’s trailing 10-year annualized performance, which has been around 9.6%, though the gap has continued to shrink.
Similar to recent updates, many components within GMI are still expected to deliver lower returns than their historical results over the previous decade. The largest gap remains in U.S. equities, where models suggest future performance may moderate compared with the strong returns seen historically, while still remaining positive.
Overall, GMI’s long-term return outlook has improved but remains more conservative than its recent history, with projected annual returns of 8.0% compared with 9.6% over the past 10 years through July.
The Global Market Index (GMI) serves as a theoretical benchmark representing an “optimal” portfolio designed for the average investor with an unlimited investment horizon. While real-world investors face practical constraints, GMI provides a useful foundation for developing and adjusting asset allocation strategies based on individual goals, expectations, risk tolerance, and investment preferences. Historical data indicates that this passive benchmark has delivered competitive results compared with many active asset-allocation approaches, particularly after considering risk exposure, transaction costs, and taxes.
However, the forecasts presented should be viewed with caution, as some or even all projections may differ from actual future outcomes. GMI’s overall forecast is generally expected to be more reliable than predictions for individual asset classes because combining multiple market forecasts can help reduce the impact of errors and volatility over time.
These projections can also be used as a reference point for refining investment expectations. Investors may enhance the estimates by incorporating additional models, assumptions, and factors not included in the current framework. Portfolio strategies should ultimately be tailored to each investor’s specific circumstances, including risk capacity, investment horizon, and financial objectives.
To provide historical context, GMI’s performance can be evaluated through its rolling 10-year annualized returns. Compared with U.S. stock and bond ETFs, the benchmark has maintained strong long-term results. As of the latest update, GMI delivered a 9.6% annualized return over the past decade, slightly lower than the previous month but still reflecting strong historical performance.
The forecasts for the Global Market Index (GMI) are generated using three different models: Building Block (BB), Equilibrium (EQ), and Adjusted Equilibrium (ADJ). Each approach uses a different methodology to estimate future expected returns.
Building Block (BB) Model: The Building Block model estimates future returns based on historical performance. It analyzes data from January 1998 onward, calculates each asset class’s historical risk premium, converts it into an annualized return estimate, and then adds an expected risk-free rate. The risk-free rate is based on the latest yield of the 10-year Treasury Inflation-Protected Security (TIPS), which represents the market’s estimate of a safe, inflation-adjusted return.
Equilibrium (EQ) Model: The Equilibrium model estimates expected returns by focusing on risk rather than directly forecasting returns. Since risk metrics are generally considered more predictable than future returns, the model uses three key inputs:
The expected market price of risk, measured by the Sharpe ratio (the relationship between risk premium and volatility).
The expected volatility of each asset class within GMI.
The expected correlation between each asset class and the overall GMI portfolio.
This approach first calculates expected risk premiums and then adds the risk-free rate to determine projected total returns.
Adjusted Equilibrium (ADJ) Model: The ADJ model follows the same framework as the Equilibrium model but incorporates short-term momentum and long-term mean-reversion factors. Forecasts are adjusted based on current asset prices compared with their 12-month and 60-month moving averages.
When prices are significantly above their recent averages, expected returns are reduced.
When prices are below their historical averages, expected returns are increased.
This adjustment reflects the idea that overvalued assets may experience weaker future returns, while undervalued assets may have stronger potential.
Average (Avg): The average forecast represents the simple mean of the three models (BB, EQ, and ADJ) for each asset class. This combined estimate is used as GMI’s overall expected return projection.
10-Year Return (10yr Ret): This metric shows the actual annualized total return achieved by each asset class over the previous 10 years up to the current reporting period, providing historical context for comparison.
Spread: The spread measures the difference between the average forecast and the historical 10-year return. A negative spread indicates that future expected returns are below recent historical performance, while a positive spread suggests expectations are higher than past results.
GBP/USD edged lower to around 1.3425 during the early Asian session on Tuesday as investors favored the safe-haven US Dollar amid ongoing uncertainty surrounding US-Iran relations.
US President Donald Trump maintained that discussions with Iran are currently taking place, while Iranian officials rejected the claim and stated that no negotiations are underway, adding to geopolitical uncertainty.
Meanwhile, the US Dollar received additional support after the ISM Manufacturing PMI rose to 55.6 in July, beating market expectations and signaling stronger-than-anticipated expansion in the manufacturing sector.
GBP/USD Slides Toward 1.3425 as Safe-Haven Dollar Gains on US-Iran Uncertainty
The GBP/USD pair weakened to around 1.3425 during Tuesday’s early Asian trading session, with the US Dollar attracting safe-haven demand amid persistent uncertainty surrounding potential US-Iran negotiations.
US President Donald Trump stated on Monday that discussions with Iran remain active, describing the situation as Tehran’s “last chance” to reach an agreement. He also indicated that negotiations could begin within the next few days with the aim of reopening the Strait of Hormuz and addressing US concerns over Iran’s nuclear activities.
However, Iranian officials rejected Trump’s claims. Foreign Ministry spokesperson Esmaeil Baghaei said that no talks with Washington are currently underway and emphasized that Iran is focused on negotiations with Oman regarding the Strait of Hormuz.
The Greenback also drew support from stronger-than-expected US economic data. The Institute for Supply Management (ISM) reported that the Manufacturing PMI climbed to 55.6 in July from 53.3 in June, surpassing market forecasts of 54.0 and signaling continued strength in the manufacturing sector.
Market participants are now turning their attention to the US July employment report due later this week, which could provide fresh clues about the outlook for the Federal Reserve and the US Dollar.
Meanwhile, sterling remains under pressure despite a relatively hawkish vote split at the Bank of England’s latest policy meeting. The BoE left interest rates unchanged at 3.75% in a 6-3 decision, with three policymakers favoring a rate increase. Nevertheless, Governor Andrew Bailey struck a cautious tone, arguing that the disinflation process remains on track and dampening expectations of an aggressive tightening cycle. Investors currently anticipate only one additional BoE rate hike before year-end.
Analysts at Rabobank noted that speculative bearish positions against the Pound increased ahead of the BoE meeting. While the Monetary Policy Committee delivered a more hawkish voting outcome than expected, Bailey’s dovish remarks limited support for sterling, leaving overall sentiment toward the currency subdued.
Silver remains supported as renewed US-Iran discussions regarding the Strait of Hormuz help alleviate concerns over disruptions to global oil supplies.
President Trump described his latest proposal for negotiations as Iran’s “last opportunity” after calling off a planned large-scale military strike against the country.
Financial markets are currently pricing in roughly a 65% probability that the Federal Reserve will raise interest rates by 25 basis points at its September meeting.
Silver prices (XAG/USD) continued to advance for a second consecutive session on Tuesday, hovering near $58.70 per troy ounce during Asian trading hours. The precious metal remains supported as investors seek non-yielding assets amid ongoing geopolitical uncertainties and evolving economic conditions.
Market participants are closely watching developments surrounding US-Iran negotiations for clues about a possible reopening of the Strait of Hormuz, while also assessing the outlook for future Federal Reserve policy decisions.
Geopolitical tensions remain elevated after US President Donald Trump described his latest proposal for talks as Iran’s “last chance,” following his decision to cancel a planned large-scale military operation. Trump indicated that formal discussions could begin soon, focusing on securing navigation through the Strait of Hormuz and addressing longstanding concerns over Iran’s nuclear activities.
Iranian officials swiftly rejected the proposal. General Mohsen Rezaei, an adviser to Iran’s Supreme Leader, stated that Tehran would not allow the creation of a second corridor through the Strait and warned that any foreign naval or military presence introduced for that purpose would face direct retaliation.
Meanwhile, investors continue to adjust their expectations after the Federal Reserve left interest rates unchanged in July. According to CME FedWatch data, financial markets currently assign roughly a 65% probability to a 25-basis-point rate increase at the Fed’s September meeting.
Williams Maintains a Cautiously Hawkish Tone
Federal Reserve Bank of New York President John Williams delivered a moderately hawkish message, earning a 6.0/10 score on the FXS Speechtracker, slightly above its historical average of 5.8. His comments reflected confidence that current policy settings are appropriately positioned to guide inflation back toward the Fed’s 2% target.
Williams reiterated the central bank’s readiness to respond if inflation deviates from its desired path, while expressing optimism that price pressures will continue to moderate and that inflationary effects stemming from the Middle East conflict will gradually fade. His remarks suggested a patient but vigilant approach rather than signaling a push for aggressive tightening.
He also emphasized that market expectations provide useful input for policymakers but do not dictate policy decisions. In addition, Williams downplayed concerns that rising investment in artificial intelligence poses a threat to financial stability.
Despite the slightly hawkish tone, the FXS Fed Sentiment Index declined by 1.47 points to 146.76. While the reading remains firmly above the neutral 100 level, the drop suggests investors viewed Williams’ remarks as largely consistent with the Fed’s existing policy outlook rather than a signal of a more aggressive tightening cycle.
Gold prices drift lower toward the $4,050 level during Tuesday’s early Asian trading session. Market sentiment remains cautious after US President Donald Trump described upcoming Washington–Tehran negotiations as Iran’s “last chance” to reach an agreement. Investors are also turning their attention to the US July employment report, scheduled for release later on Friday, which could provide fresh direction for the precious metal.
Gold Slips Toward $4,050 as US–Iran Talks Remain Uncertain
Gold prices (XAU/USD) edged lower to around $4,050 during Tuesday’s early Asian session, retreating modestly from recent highs after the United States paused planned military action against Iran. Market participants are closely watching developments surrounding potential US–Iran negotiations for fresh direction.
According to Bloomberg, US President Donald Trump described the latest diplomatic proposal as Iran’s “last chance” after canceling what he claimed would have been a major strike on the country. Trump said discussions could begin within days, aiming to reopen the Strait of Hormuz and address Washington’s concerns over Iran’s nuclear program.
However, Iran denied that direct negotiations with the US are underway, although officials indicated that talks with Oman to improve shipping traffic through the strategically important waterway are progressing.
Despite growing hopes for a diplomatic breakthrough, uncertainty in the Middle East remains elevated. Any renewed escalation between Washington and Tehran could lift crude oil prices and reinforce expectations that central banks will keep interest rates higher for longer. While gold is traditionally viewed as a hedge against inflation and geopolitical risk, higher interest rates tend to reduce its appeal because the metal does not generate yield.
Meanwhile, the Federal Reserve left its benchmark interest rate unchanged at 3.50%–3.75% during last week’s policy meeting. Fed Chair Kevin Warsh reiterated the central bank’s commitment to bringing inflation under control, keeping the possibility of additional tightening on the table.
Investors are now focused on Friday’s US employment report, which could provide important clues about the Fed’s next policy moves. Analysts at Commerzbank note that expectations for further US rate hikes continue to limit gold’s upside potential, arguing that persistent speculation about tighter monetary policy is likely to discourage investors from aggressively extending the precious metal’s recent rally.
Gold has undergone a sharp correction over the past six months after reaching an exceptionally overheated peak during its strongest cyclical bull market on record. While the pullback damaged technical indicators and weakened investor sentiment, the price action has gradually formed a large falling-wedge pattern—a chart formation that often signals a bullish breakout.
By late January, gold had surged nearly 196% in less than 28 months, marking its biggest cyclical rally in US-dollar terms. The advance became increasingly parabolic, with prices climbing more than 43% above the 200-day moving average—the most overbought reading in almost 46 years. Such extreme conditions pointed to an inevitable correction, and historical comparisons suggested a sizable retracement was likely. Gold subsequently fell about 18.6% over less than two months, broadly matching expectations.
Although that decline may have established a temporary bottom, renewed geopolitical tensions between the US and Iran, expectations of safe-haven flows into the US Dollar, regional central-bank selling, and concerns over further Federal Reserve tightening prolonged the downturn. At the same time, investors have been adjusting to the Fed’s evolving communication strategy under its new leadership, adding further uncertainty. As a result, gold’s correction deepened to roughly 26% by late July, exceeding the average drawdowns seen after previous major bull markets.
Despite the extended weakness, selling pressure has noticeably eased. More than 70% of the total decline occurred during the early phase of the correction, while subsequent losses have become progressively smaller. This slowdown has created a descending support line, whereas increasingly cautious investor sentiment has driven lower highs at a faster pace, producing a steeper resistance line. Together, these converging trendlines have formed a classic falling-wedge pattern.
Falling wedges are characterized by narrowing downward-sloping trendlines, with resistance declining faster than support. They are also typically accompanied by weakening trading volume as bearish sentiment discourages buying activity. As prices become increasingly compressed within the pattern, the setup often culminates in a breakout, making the current technical structure a potentially constructive signal for gold.
Gold’s steep-looking falling-wedge pattern appears more dramatic because it is plotted against the backdrop of the largest cyclical bull market in its history. On a shorter six-month chart, however, the decline looks far less severe. As prices continue to compress between converging support and resistance trendlines, a breakout is drawing closer. Given the nature of falling wedges, the odds favor an upside resolution, potentially marking the beginning of a fresh bullish leg as selling pressure continues to fade and buyers gradually regain control.
Falling wedges are widely regarded as reversal patterns because prolonged declines eventually exhaust selling momentum, leaving fewer sellers while attracting bargain hunters. Although chart patterns alone are not enough to justify investment decisions, they become more compelling when supported by sentiment, technical signals, and underlying fundamentals. In gold’s case, the current wedge follows an extended correction rather than a speculative peak, making it consistent with the characteristics of a potential bottoming formation.
Investor sentiment also reinforces the bullish outlook. After months of losses, enthusiasm for gold has largely faded, with many traders either indifferent or expecting further declines. At the same time, gold reached its most oversold level relative to its 200-day moving average in nearly a decade during mid-July, suggesting downside momentum may be becoming exhausted. Historically, such deeply oversold conditions have often created attractive entry points for long-term investors.
The macro backdrop is also becoming more supportive. Markets appear to be reacting less aggressively to geopolitical headlines surrounding the US-Iran conflict, while fears of additional Federal Reserve rate hikes have started to lose their impact. Despite a more hawkish-than-expected Federal Open Market Committee (FOMC) meeting, gold posted gains instead of extending its losses, a sign that buyers are becoming more resilient as the correction matures.
Fundamentals further strengthen the bullish case. Gold futures positioning indicates that speculative long exposure remains relatively low, leaving ample room for new buying. Investor allocations to gold also remain historically depressed, with the combined value of holdings in major US gold ETFs accounting for only a tiny fraction of the S&P 500’s market capitalization. Even a modest increase in portfolio allocations could generate meaningful demand for bullion. Meanwhile, global central banks continue to accumulate gold at a strong pace, with second-quarter purchases surging from a year earlier according to the latest Gold Demand Trends report.
Seasonal trends add another layer of support, as gold typically performs well through autumn, winter, and spring during bull markets. If gold breaks decisively above the falling-wedge resistance, mining stocks could outperform the metal itself thanks to their operational leverage. Taken together, oversold technicals, subdued investor positioning, supportive fundamentals, and favorable seasonality suggest that the current correction may be nearing its end, with a sustained bullish reversal becoming increasingly likely.
Oil prices come under heavy selling pressure after Iran signals a willingness to reopen the Strait of Hormuz. Despite crude prices surging more than 22% in July amid escalating US-Iran military tensions, traders remain cautious as doubts persist over the durability of the emerging peace agreement.
WTI crude oil futures on the NYMEX remain under significant pressure, falling 7.6% to around $78.60 during Monday’s Asian session. The decline comes after US President Donald Trump announced that planned strikes against Iran had been paused, following Tehran’s reported agreement to abandon its nuclear ambitions and fully reopen the Strait of Hormuz — a vital shipping route that handles nearly 20% of global energy flows.
Trump stated on Truth Social that Iran and other Middle Eastern nations had requested a halt to military action after the framework of a deal was reached, including the immediate reopening of the Strait of Hormuz and the removal of Iran’s nuclear threat.
The announcement has raised expectations for renewed diplomatic negotiations between Washington and Tehran, easing concerns over a prolonged disruption to global oil supplies.
However, WTI had previously surged more than 22.5% in July as escalating military tensions between the US and Iran fueled fears of supply constraints following the collapse of a ceasefire agreement.
Despite the latest developments, market participants remain cautious about the durability of the truce, with concerns that renewed tensions could once again threaten energy flows through the Strait of Hormuz. Analysts at IG Markets warned that the key question is whether this week will repeat the previous pattern, where hopes of a deal fade as Iran maintains pressure over the strategic waterway.
WTI Technical Analysis
WTI crude oil is trading lower near $78.70, maintaining a bearish short-term outlook as prices continue to hold below the 20-hour exponential moving average (EMA) at $81.18. The failure to reclaim this key indicator suggests sellers remain in control following the recent pullback from the mid-$80 range. Meanwhile, the Relative Strength Index (RSI) stands at 34.20, close to oversold levels, indicating that downward momentum remains strong but has not yet reached an extreme exhaustion point.
On the upside, the 20-hour EMA around $81.18 represents the first major resistance level and a crucial hurdle for buyers. A sustained move above this area would help reduce near-term selling pressure and signal a potential recovery attempt.
On the downside, the July 28 low at $77.16 serves as the key support level. A decisive break below this zone could trigger further losses, potentially opening the way toward the July 13 low at $72.53.
Bitcoin retreats below the $64,000 mark despite renewed inflows into spot Bitcoin ETFs. Ethereum’s recovery remains limited below the 100-day EMA, with the decline extending beneath the $1,900 level. Meanwhile, XRP continues to trade sideways within the $1.05–$1.10 range, supported by more than $7 million in ETF inflows recorded so far this week.
The cryptocurrency market broadly moved lower on Friday as investors continued to weigh rising macroeconomic uncertainty and escalating geopolitical risks in the Middle East. Bitcoin (BTC) slipped below the $64,000 level after reaching a weekly high of $65,745, while major altcoins Ethereum (ETH) and Ripple (XRP) remained under pressure below $1,900 and $1.10, respectively.
Investor sentiment weakened further throughout the week, with the Crypto Fear & Greed Index falling to 25, placing the market firmly in “Fear” territory compared with 28 the previous day. The decline reflects cautious positioning as traders assess inflation risks, monetary policy uncertainty, and broader global tensions.
Despite the negative sentiment, institutional demand for crypto investment products remained resilient. The Federal Reserve kept interest rates unchanged at 3.50%–3.75% on Wednesday, although three officials pushed for a 25-basis-point increase, reigniting concerns over inflation and triggering volatility across financial markets.
According to analysts at Crypto Finance, these developments caused a sharp repricing in interest-rate expectations and equities before stronger corporate earnings helped stabilize investor confidence.
Meanwhile, spot crypto ETF inflows continued to improve. Bitcoin ETF inflows rose to $233 million on Thursday, up significantly from $32 million the previous day. Data from SoSoValue shows cumulative Bitcoin ETF inflows approaching $52 billion, highlighting continued long-term institutional confidence in the asset.
Ethereum ETFs saw more mixed activity, recording around $13 million in inflows on Thursday after experiencing $19 million in outflows on Wednesday. XRP ETFs also attracted stronger demand, with inflows climbing to nearly $6 million on Thursday and total weekly inflows exceeding $7 million, suggesting growing institutional interest despite broader market weakness.
Bitcoin Technical Outlook
Bitcoin is trading around $63,969, maintaining a bearish short-term structure as it remains below the 50-day, 100-day, and 200-day exponential moving averages (EMAs). The 50-day EMA near $64,904 represents the closest resistance level, while the 100-day EMA at $67,460 and the 200-day EMA around $72,977 remain key barriers for a potential recovery.
Momentum indicators continue to signal caution. The Relative Strength Index (RSI) remains slightly below the neutral zone, while the MACD histogram stays negative, indicating persistent downside pressure.
On the downside, Bitcoin lacks strong technical support on the current timeframe, leaving the market vulnerable to further declines toward previous lows and psychological levels around $62,000 and $60,000.
Analysts at Crypto Finance noted that while bears have struggled to gain strong momentum, the lack of a fresh bullish catalyst remains a significant challenge for Bitcoin’s recovery.
Ethereum Technical Outlook
Ethereum is trading near $1,890 after retreating from its weekly high of $1,981. The cryptocurrency remains capped below the 100-day EMA at approximately $1,932 and significantly below the 200-day EMA near $2,173, keeping the broader outlook bearish.
Although ETH is holding above the 50-day EMA around $1,850, sellers continue to defend the descending resistance trendline. The RSI near 54 indicates limited bullish momentum, while the MACD turning negative suggests further upside attempts may face resistance.
A breakout above the descending trendline could open the way toward $1,932 and eventually $2,173. However, a daily close below the 50-day EMA could increase downside risks toward $1,800 and $1,600.
XRP Technical Outlook
XRP is trading around $1.07, maintaining a bearish short-term outlook as it remains below its key moving averages. The price is trading beneath the 50-day EMA at $1.13, the 100-day EMA at $1.21, and the 200-day EMA at $1.41.
Momentum indicators remain weak, with the RSI near 44 and the MACD slightly negative, suggesting that any recovery attempts may encounter renewed selling pressure.
Immediate resistance is located near the 78.6% Fibonacci retracement level around $1.12, followed by the 50-day EMA at $1.13. A stronger recovery would require XRP to overcome resistance levels around $1.21, $1.28, and $1.34.
On the downside, the key support level remains near $1.01, corresponding to the 100% Fibonacci retracement area, where buyers may attempt to defend the previous swing low.
Overall, the crypto market remains under pressure as macro uncertainty and geopolitical risks weigh on sentiment. While ETF inflows indicate continued institutional interest, Bitcoin, Ethereum, and XRP must overcome key technical resistance levels to regain bullish momentum.
What’s the full story? Bank of America downgraded Huntington Bancshares from Buy to Neutral and reduced its price target to $18.50. The post-merger integration following the Cadence acquisition has largely stabilized, but the anticipated valuation expansion has lost momentum. BofA is becoming less confident that investors will fully accept management’s ambitious 2027 EPS target of $1.90–$1.93, especially as pressure on net interest income continues to weigh on profitability.
The bank’s core revenue engine is showing signs of weakness. A 2% miss in quarterly net interest income forced management to acknowledge that FY26 revenue may fall below its previous target range. As a result, BofA lowered its EPS forecasts to $1.58 for FY26 and $1.85 for FY27. The new $18.50 price target reflects a balance between forward earnings multiples and tangible book value, suggesting limited upside potential if profit margins continue to deteriorate.
Tuesday – Clorox Co (NYSE: CLX)
What’s the full story? Jefferies downgraded Clorox to Hold after conceding that its previous bullish outlook was overly optimistic. The earlier investment thesis assumed the consumer staples company could generate more than $7.00 in fiscal 2027 earnings per share while successfully overcoming operational challenges. However, weaker market share trends have persisted, and the appointment of a new CEO points toward a broader strategic overhaul.
The expected turnaround will likely require increased investment, putting further pressure on earnings. Jefferies forecasts that Clorox’s upcoming FY27 guidance could come in around 6% below current market expectations. With recovery timelines extending and management preparing for a significant operational reset, the turnaround story has lost momentum. Investors may prefer to wait until the new leadership team demonstrates clearer progress.
What’s the full story? B. Riley upgraded Ribbon Communications from Neutral to Buy and raised its price target to $3.30, despite management recently cutting its full-year 2026 outlook. The upgrade reflects the view that previous company targets were unrealistically ambitious, creating repeated earnings disappointments. By resetting expectations to more achievable levels, management has reduced execution risk and created a stronger foundation for future growth.
Although the company lowered guidance due to weaker-than-expected third-quarter expectations and delayed Tier-1 customer deployments, second-quarter results still exceeded modest forecasts. B. Riley reduced its EBITDA estimates but assigned a higher valuation multiple, applying 1.0x 2027 enterprise value-to-sales. With unrealistic expectations already removed from the stock, the reset could provide a clearer path for operational improvement.
Thursday – New Oriental Education & Technology Group (NYSE: EDU)
What’s the full story? Macquarie upgraded New Oriental Education to Neutral and increased its price target by 15%, driven largely by the company’s strong shareholder return strategy. Fourth-quarter revenue increased 23% year-over-year, exceeding guidance, while non-GAAP operating margins improved by 60 basis points to 7.2%.
However, the improvement remains heavily dependent on the performance of the East Buy segment, while the core education business continues to show limited growth. Macquarie remains cautious about FY27 margin expansion, citing potential overseas restructuring costs that could impact efficiency goals.
Despite operational challenges, New Oriental’s strong cash generation supports investor returns. The company announced a new $500 million capital return program, including $300 million in dividends and $200 million in share buybacks, creating an estimated 6% total shareholder yield. This provides support for the stock’s valuation despite ongoing business pressures.
Friday – AXT Inc (NASDAQ: AXTI)
What’s the full story? Needham upgraded AXT from Hold to Buy and introduced a $90 price target, valuing the company at approximately 26 times projected 2028 earnings. The upgrade comes as the company’s fundamentals begin to improve significantly, making the valuation appear increasingly attractive.
AXT delivered another strong earnings performance, beating expectations for revenue, EPS, and forward guidance. The company plans to double its Indium Phosphide substrate capacity over the next year and has returned to profitability. New agreements with two major global laser manufacturers, combined with accelerating demand from China’s optical networking sector, are turning the data center growth narrative into tangible revenue opportunities and expanding market share.
Gold trades under pressure near $4,050 during Monday’s Asian session, even as falling Oil prices and a weaker US Dollar—driven by the decline in USD/JPY—would typically provide support. Expectations of further Federal Reserve rate hikes, together with ongoing geopolitical tensions in the Middle East, continue to weigh on the precious metal ahead of this week’s closely watched Nonfarm Payrolls (NFP) report.
Technical Analysis
On the daily chart, XAU/USD is trading at $4,082.83 and maintains a bearish short-term outlook as the price remains below key simple moving averages. The 50-day SMA at $4,185.76, the 100-day SMA at $4,426.31, and the 200-day SMA at $4,490.85 are all positioned above the current price, indicating that any recovery attempts may face resistance during the broader corrective trend. Meanwhile, the 21-day SMA at $4,073.95 provides immediate dynamic support. The 14-period Relative Strength Index (RSI) is hovering around 48.3, slightly below the neutral 50 level, signaling weak momentum and suggesting that the market remains in a consolidation phase with a downside bias.
On the upside, the first key resistance level is located around the 50-day SMA at $4,185.76. A daily close above this level would help reduce near-term bearish pressure and potentially pave the way for further gains toward the 100-day SMA at $4,426.31, followed by the 200-day SMA at $4,490.85. On the downside, immediate support stands near the 21-day SMA at $4,073.95. A decisive break below this area could trigger additional declines and indicate that sellers are regaining control of the broader daily trend.
Fundamental Analysis
Gold is struggling to maintain gains above the $4,100 level after briefly closing above this threshold on Thursday, as the US Dollar (USD) rebounds strongly from six-week lows against its major currency counterparts.
Although Pakistan, acting as a mediator, stated that discussions between Tehran and Washington remain ongoing, renewed tensions in the Middle East have boosted demand for the Greenback as a safe-haven asset. The US carried out “heavy” strikes on Iran following new attacks against American forces in Jordan, increasing geopolitical uncertainty and supporting the USD.
In response, Iranian Parliament Speaker Mohammad Bagher Ghalibaf criticized the US actions, stating in a post on X that Washington would face consequences for its military response.
The Dollar is also benefiting from market expectations that the Federal Reserve may resume interest rate hikes later this year, despite Fed Chair Kevin Warsh maintaining a cautious stance on future monetary tightening during Wednesday’s post-meeting press conference.
HSBC analysts noted that the Federal Reserve kept interest rates unchanged for the fifth consecutive meeting, as expected, but highlighted that the close 9-3 vote reflected significant debate within the FOMC. The bank maintains a neutral view on bond duration while favoring high-quality investment-grade credit due to attractive yields. HSBC also remains constructive on the US Dollar, supported by resilient US economic conditions and favorable interest rate differentials.
Beyond the Dollar’s recovery, Gold is facing additional pressure from weaker-than-expected Chinese official manufacturing PMI data for July, while investors remain cautious ahead of the Bank of Japan’s (BoJ) monetary policy decision.
Markets saw sharp volatility during early US trading hours on Thursday after speculation of Japanese currency intervention sent the Yen (JPY) sharply higher, causing USD/JPY to plunge by around 600 pips within minutes. The sudden decline in USD/JPY weighed heavily on the Dollar, briefly allowing Gold to reclaim the $4,100 level.
Meanwhile, mixed US GDP figures and jobless claims data further pressured the USD and provided some support for the precious metal.
Looking ahead, Gold could receive a boost if the BoJ delivers a hawkish hold decision, potentially strengthening the Yen and putting additional pressure on the Dollar. However, a further escalation of Middle East tensions could have a mixed impact, as increased demand for the US Dollar as a safe-haven asset may limit Gold’s upside potential.
The US Dollar Index (DXY) trades with a softer tone near 99.70 during Monday’s Asian session. The greenback came under pressure after President Trump stated that fresh negotiations with Iran would begin on Monday, following his decision to cancel a planned military strike. Investors are now turning their attention to Friday’s US Nonfarm Payrolls (NFP) report, which could provide important clues about the Federal Reserve’s next policy move.
US Dollar Weakens as Improved Risk Appetite and Iran Diplomacy Weigh on Safe-Haven Demand
The US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, trades around 99.70 during Monday’s Asian session. The index remains under pressure as improving market sentiment reduces demand for traditional safe-haven assets. Investors are also awaiting the release of the US ISM Manufacturing PMI later in the day for fresh economic signals.
Risk sentiment received a boost after US President Donald Trump announced on Sunday that he had canceled a planned military strike on Iran and that new talks between Washington and Tehran would begin on Monday. Trump indicated that an agreement to reopen the Strait of Hormuz could be within reach and reiterated his commitment to pursuing a diplomatic solution to Iran’s nuclear program.
The prospect of easing tensions between the United States and Iran has diminished demand for the US Dollar as a defensive asset, weighing on the currency in the short term. If diplomatic progress continues, the greenback could face additional downside pressure against its major peers.
Market participants are now focused on Friday’s US labor market report for further direction. Economists forecast that Nonfarm Payrolls (NFP) increased by 91,000 jobs in July, while the unemployment rate is expected to edge higher to 4.3%. A stronger-than-anticipated employment report could provide support for the Dollar and help limit further losses in the DXY.
Meanwhile, the Federal Reserve left interest rates unchanged at its July meeting last week. According to CME FedWatch data, traders now see roughly a 64.7% probability of a September rate hike, down significantly from nearly 77% before the Fed’s latest decision, reflecting a more cautious outlook for monetary tightening.
Analysts at Commerzbank believe the Dollar could face renewed selling pressure once geopolitical tensions ease further. They argue that the Fed is unlikely to raise rates as aggressively as current market pricing suggests, meaning the fading geopolitical premium could expose the currency to additional weakness if expectations for tighter policy continue to moderate.
The Federal Reserve left interest rates unchanged at 3.50%–3.75% on Wednesday, but the key takeaway for markets was not the decision itself—it was what Chair Kevin Warsh chose not to signal about September.
Three members of the Federal Open Market Committee (FOMC) voted in favor of an immediate 25-basis-point rate increase, while the policy statement retained a generally hawkish stance on inflation. The Fed noted that economic activity continues to expand at a solid pace, the labor market remains resilient, and inflation is still running above the central bank’s 2% target.
Taken at face value, those remarks could be interpreted as laying the groundwork for further tightening.
However, Warsh avoided providing any clear indication that a September rate hike is likely. Instead, he emphasized a data-dependent approach, preserving flexibility rather than committing to another increase.
That nuance is important.
Ahead of the meeting, many investors viewed September as the most probable timing for the next rate hike if policymakers remained on hold in July. After Warsh’s remarks, confidence in that scenario eased noticeably, leaving the outlook for September far less certain.
Hawkish Messaging, Softer Market Interpretation
The result is a notable disconnect.
On one hand, the Fed’s message remains hawkish. Inflation is still above target, economic growth appears strong enough to withstand tighter policy, and several policymakers already favor higher rates.
On the other hand, financial markets interpreted the outcome as relatively dovish because the Fed showed no urgency to tighten further.
This was evident in the immediate market reaction. Two-year Treasury yields declined and the US dollar weakened after the announcement, indicating that traders reduced expectations for near-term rate increases.
From my perspective, the dollar may continue to face pressure unless upcoming inflation reports revive expectations of a September hike.
For now, the Fed has effectively shifted the focus back to incoming economic data.
If inflation proves persistent, markets could quickly reprice toward a more hawkish September outlook. However, if inflation and labor-market data begin to soften, investors may increasingly view July’s decision not as a postponed rate hike, but as the start of a more prolonged pause in the tightening cycle.
DXY: 100.300 Back in the Spotlight
Technically, the US Dollar Index now has the potential to extend its move lower following the post-Fed rejection.
The key downside area to watch is 100.300, which provides the next meaningful support zone.
As long as DXY fails to regain its recent highs and expectations for September tightening remain contained, the path of least resistance could remain lower towards this level.
A clean break below 100.300 would strengthen the bearish dollar narrative, while a recovery driven by stronger inflation data and renewed Fed hike expectations would challenge it.
For now, the interesting takeaway from the Fed is simple: the rhetoric was hawkish, but the market was expecting something even more hawkish.
And in markets, the difference between what happens and what was already expected is often what matters most.
From a technical perspective, the US Dollar Index (DXY) appears vulnerable to further downside after its post-Fed rejection.
The next key level to monitor is 100.300, which stands out as the nearest significant support zone.
As long as DXY remains unable to reclaim its recent highs and market expectations for a September rate hike stay subdued, bearish momentum could continue to build toward this area.
A decisive break below 100.300 would reinforce the case for further dollar weakness and confirm a more bearish outlook. Conversely, stronger-than-expected inflation data or a renewed increase in expectations for Fed tightening could help the dollar recover and invalidate the current downside scenario.
For now, the main lesson from the Fed meeting is straightforward: policymakers delivered a hawkish message, but markets had been positioned for an even more hawkish outcome.
In financial markets, what drives price action is often not the event itself, but the gap between reality and investor expectations.
Bitcoin Gains 9% in July as Crypto Shows Resilience Amid AI-Driven Market Selloff
The Federal Reserve left interest rates unchanged this week, but the bigger story for investors was the continued weakness in AI-related equities. While major technology stocks and semiconductor names extended their declines, Bitcoin quietly advanced around 9% during July, raising questions about whether cryptocurrencies could lead the next market recovery.
Key Takeaways
Bitcoin has remained resilient, holding near $64,000 through the Fed meeting and posting a 9% gain for the month.
AI-focused equities are undergoing a significant deleveraging phase, with the Magnificent Seven ETF (MAGS) recording its steepest one-day decline since April 2025.
South Korea’s KOSPI index plunged roughly 16% over two sessions, triggering consecutive circuit breakers for the first time in the exchange’s history.
Investors are becoming increasingly skeptical of massive AI-related spending without clear evidence of profitable returns.
Regulatory progress in the U.S. crypto market, including support for the CLARITY Act, is providing an additional tailwind for digital assets.
Fed Decision Highlights Pressure on AI Stocks
Although the Federal Open Market Committee opted to keep rates unchanged, markets reacted negatively to the broader policy outlook. Expectations for another rate increase strengthened, with CME FedWatch indicating a 65.1% probability of a hike at the September meeting.
The hawkish backdrop weighed heavily on AI-related stocks. Nvidia lost more than 10% during the week, while investors increasingly questioned whether the enormous capital expenditures being made across the AI ecosystem would translate into sustainable earnings growth.
Earnings Reveal a Shift in Investor Priorities
The recent earnings season highlighted a clear distinction between companies demonstrating tangible AI-driven revenue growth and those merely increasing investment.
The Magnificent Seven ETF fell 4.7% following earnings reports from Alphabet and Tesla, marking its worst session since April 2025. Year-to-date, the ETF remains in negative territory despite strong gains across the broader S&P 500.
Among the major technology companies:
Alphabet reported second-quarter capital expenditures of $44.9 billion and raised its full-year spending outlook to $195–205 billion. Investors responded negatively as heavy investment pushed free cash flow into negative territory, sending shares down 7%.
Tesla missed earnings expectations and generated negative free cash flow of $1.1 billion. The stock declined roughly 20% during the week as investors grew less willing to pay for long-term AI and robotics ambitions without near-term profitability.
Meta delivered strong revenue growth but reported lower net income and shrinking free cash flow. Shares fell after management increased spending guidance despite declining profitability.
Microsoft stood out as the exception. Revenue exceeded expectations, Azure growth accelerated to 43%, and investors rewarded the company for demonstrating measurable AI monetization. Shares rose sharply after earnings.
The message from the market was straightforward: spending alone is no longer enough. Investors now want proof that AI investments can generate meaningful returns.
South Korea Signals Cracks in AI Valuations
The correction has not been limited to U.S. markets.
South Korea’s KOSPI index suffered its worst two-day decline on record, falling approximately 16% and triggering back-to-back trading halts. The selloff was driven largely by semiconductor weakness.
SK Hynix, despite reporting record operating profit and nearly sixfold earnings growth, still disappointed investors by narrowly missing analyst forecasts. The stock plunged almost 19% intraday.
The reaction underscored growing concerns that AI-related valuations may have become detached from realistic earnings expectations. Even exceptional profit growth is no longer guaranteeing positive market reactions.
Why Crypto May Recover Faster
In contrast to equities, Bitcoin has shown relative stability throughout the recent market turbulence.
While AI stocks continue to unwind, Bitcoin remains about 9% higher for July and has largely held key support levels. One explanation is that cryptocurrencies experienced their correction earlier. Bitcoin had already fallen more than 20% in June and remains roughly one-third below its recent highs.
Leverage dynamics also differ significantly.
AI-related equities benefited from a year of aggressive positioning through leveraged ETFs, margin borrowing, and expanding valuations. As sentiment turns, those positions are being unwound rapidly, amplifying downside volatility.
Crypto markets, by comparison, routinely flush excess leverage through liquidations. Significant ETF outflows and price declines during May and June already removed much of the speculative excess from the market. As a result, positioning appears cleaner and less vulnerable to forced selling.
Regulatory Momentum Supports the Crypto Narrative
Fundamentals are also improving.
On July 28, SEC Chair Paul Atkins expressed support for congressional efforts to advance the CLARITY Act and indicated the agency’s willingness to provide technical assistance. If enacted, the legislation would establish a clearer regulatory framework for digital assets in the United States.
This combination of reduced leverage, improving regulation, and an earlier correction strengthens the argument that crypto may be better positioned than AI equities for the next phase of recovery.
Looking Ahead
Several economic releases could shape market sentiment in the coming week:
August 3: U.S. ISM Manufacturing PMI
August 5: U.S. ISM Services PMI
August 7: U.S. Nonfarm Payrolls Report
Ongoing developments in the Middle East and their impact on energy markets
The labor market remains a critical variable. A second consecutive weak payroll report could reduce expectations for further rate hikes, while stronger employment data would reinforce the Fed’s hawkish stance.
Oil prices remain the most significant macro risk. Elevated energy costs continue to threaten inflation progress, and a combination of rising oil prices and stronger-than-expected employment data would likely create a challenging environment for risk assets across both equities and crypto markets.
JPMorgan lowered its silver price outlook to $60–$65 per ounce in July, triggering a broader wave of forecast reductions across Wall Street. However, despite the more cautious price expectations, none of the major banks suggested that the silver market’s underlying supply shortage had disappeared.
As of writing, silver is trading near $58.24 per ounce, while the gold-to-silver ratio stands around 69, meaning it takes 69 ounces of silver to purchase one ounce of gold. Historically, such a level is considered relatively high, implying that silver remains inexpensive compared to gold. Although silver has gained more than 50% over the past year, it still trades roughly 52% below its all-time high of $121.62, reached on January 29.
The Federal Reserve kept interest rates unchanged on July 29 for the fifth consecutive meeting, despite a divided 9–3 vote among policymakers. Silver showed little reaction to the decision and has failed to close above $60 since July 8. Throughout the month, the metal faced pressure from a stronger U.S. dollar, renewed geopolitical tensions in the Middle East, and concerns about slowing industrial demand. Against this backdrop, a series of downward revisions from major banks led some investors to assume that institutional sentiment toward silver had turned bearish.
However, it is important to distinguish between a price forecast and a market balance assessment. A price forecast reflects expectations for where silver prices may trade in the coming months, while a balance assessment evaluates whether global supply can adequately meet demand. During July, banks largely revised the former while leaving the latter intact. Failing to recognize this distinction can lead to misunderstandings about the market’s outlook.
A Wave of Forecast Downgrades
The shift began on July 8, when JPMorgan reduced its year-end silver forecast from roughly $81 to $60–$65 per ounce. The bank cited weakening investor interest following silver’s sharp decline from January’s record highs, along with softer industrial demand as elevated prices encouraged manufacturers to reduce silver usage. JPMorgan also highlighted the development of silver-free solar technologies as a significant long-term challenge for demand growth.
Other financial institutions followed suit. UBS sharply lowered its estimate for the 2026 silver supply deficit, cutting it by approximately 80%, from around 300 million ounces to 60–70 million ounces. The bank also reduced price targets across multiple timeframes and adopted a more neutral outlook, expecting silver to trade largely sideways. ING trimmed its forecasts due to weaker solar demand, rising bond yields, and a stronger dollar, while Commerzbank maintained a target of about $67 per ounce. Collectively, these revisions reflected a more conservative stance from sell-side analysts.
Deficit Remains Despite Lower Forecasts
While the revisions signaled lower price expectations, they did not indicate that the silver market had moved into surplus. Even UBS’s substantially reduced deficit estimate of 60–70 million ounces remains above the 46.3 million-ounce deficit projected for 2026 by the Silver Institute and Metals Focus. In other words, analysts are revising estimates closer to official forecasts rather than suggesting that supply shortages have disappeared.
Forecasts also remain highly dispersed. The difference between the most optimistic and most pessimistic projections is roughly $50 per ounce, nearly equal to silver’s current market price. Citigroup still expects silver to approach $110 during the second half of the year. Bank of America forecasts an average price of approximately $85.93 in 2026, while Goldman Sachs sees potential for $85–$100 if industrial demand remains resilient. Meanwhile, the London Bullion Market Association (LBMA) survey places the average 2026 forecast at $79.57 per ounce.
Perhaps the most notable takeaway is that even after a month of downward revisions, the consensus forecast remains more than $20 above current market levels. At around $58 per ounce, silver continues to trade below every major bank forecast, including the most conservative projections, underscoring the belief that supply constraints remain a key feature of the market despite softer near-term expectations.
Why Lower Price Targets Do Not Change the Core Investment Thesis
A key distinction investors should remember is that a reduced price target does not necessarily signal a change in the underlying market fundamentals. Instead, it often reflects an adjustment to recent price action rather than a reassessment of long-term supply and demand dynamics.
When JPMorgan lowered its silver forecast to $60–$65 per ounce, the bank was effectively acknowledging weaker near-term price momentum and expecting subdued performance over the coming months. However, this does not imply that silver production will suddenly exceed consumption. The long-term bullish thesis is built on physical market fundamentals, and those fundamentals remain largely unchanged. Global mine supply is still expected to remain relatively stable, demand continues to outpace production, and the market is projected to record its sixth consecutive annual deficit.
Historical precedent also supports caution when interpreting analyst revisions. Throughout the current silver cycle, major banks have often adjusted their forecasts in response to price movements rather than anticipating them. Several institutions initially published conservative targets only to raise them repeatedly as silver rallied beyond expectations. As a result, mid-cycle forecast reductions following a correction are consistent with past behavior. In many cases, sell-side forecasts tend to follow market trends, lowering targets after declines and increasing them after rallies, making them better indicators of recent sentiment than future performance.
That said, bearish arguments should not be dismissed. Investor demand has undeniably weakened since silver’s January peak, exchange-traded fund (ETF) holdings have declined, and solar-panel manufacturers continue working to reduce the amount of silver used in production. UBS’s decision to sharply lower its projected supply deficit represents a meaningful reassessment of the market’s scarcity outlook rather than a minor adjustment. Any balanced bullish argument must acknowledge these developments rather than ignore them.
Implications for Silver Investors
For investors, the most important takeaway is to distinguish between short-term price expectations and long-term market fundamentals.
A reduced price target simply indicates that analysts expect silver prices to remain under pressure in the near future. It says little about whether the global market remains undersupplied. On that question, major banks continue to project deficits, despite revising their price forecasts lower. Even the most conservative deficit estimates on Wall Street remain above official industry projections, while the broader analyst consensus still places silver prices significantly above current levels.
At present, silver trades below every major forecast, ranging from the most bearish projections to the most optimistic. This unusual situation highlights a market where investor sentiment has become cautious, yet the underlying supply-demand imbalance remains unresolved.
The broader investment case for silver continues to rest on a structural deficit expected to extend into a sixth consecutive year in 2026. Such a deficit means global consumption exceeds newly mined and recycled supply, forcing the market to draw from existing inventories. Lower analyst price targets do not increase those inventories or eliminate the shortage.
In the short term, silver prices are likely to remain sensitive to macroeconomic factors such as Federal Reserve policy, U.S. dollar strength, and energy market developments. These influences can drive significant volatility from week to week. However, the structural deficit evolves much more slowly and remains largely unaffected by temporary shifts in market sentiment.
As a result, while July’s forecast downgrades may have weakened confidence in the near-term outlook, they did not fundamentally alter the underlying mathematics of the silver market. The sentiment has changed, but the supply-demand imbalance that supports the longer-term thesis remains in place.
USD/CAD edges higher as the US Dollar stages a solid rebound from its lowest level since June 17. Rising tensions between the United States and Iran continue to fuel inflation concerns and reinforce expectations that the Federal Reserve could maintain a hawkish stance, providing support for the Greenback. Meanwhile, worries over potential supply disruptions help keep oil prices elevated, lending support to the Canadian Dollar and limiting further gains in the currency pair.
The USD/CAD pair moved slightly higher during Friday’s Asian trading session, ending a three-day decline that had pushed the pair to its lowest level since June 17. The pair remains above the key 1.4000 level, although buying momentum appears limited.
The US Dollar found modest support as markets continued to price in the possibility of at least one additional interest rate increase from the Federal Reserve. While recent US economic data painted a mixed picture—showing slower economic growth in the second quarter and easing inflation pressures through the Personal Consumption Expenditures (PCE) Price Index—investors remain cautious about ruling out further monetary tightening.
Despite signs of cooling inflation, fluctuating oil prices continue to raise concerns about price stability, potentially encouraging the Fed to maintain a restrictive policy stance. At the same time, escalating tensions between the United States and Iran, along with fears of a wider Middle East conflict, have boosted demand for the safe-haven US Dollar. Most recently, the US military confirmed a major wave of strikes against Iranian targets in response to missile attacks on American forces earlier in the week.
However, gains in USD/CAD may remain constrained by support for the Canadian Dollar. Iran’s rejection of an Omani proposal regarding partial control of the Strait of Hormuz, combined with continued attacks by Yemen’s Houthi forces in key shipping routes such as the Bab al-Mandab Strait, the Red Sea, and the Gulf of Aden, has intensified concerns over potential disruptions to global energy supplies. These risks have helped support crude oil prices, which in turn provide backing for the oil-sensitive Canadian Dollar and may limit further upside in the USD/CAD pair.
Gold comes under renewed selling pressure on Friday as the US Dollar rebounds from a six-week low. Rising tensions between the United States and Iran continue to fuel inflation concerns and reinforce expectations of further Federal Reserve tightening, lending support to the greenback. Meanwhile, bearish technical signals suggest that Gold could remain vulnerable to additional downside in the near term.
Gold prices remain under pressure during Friday’s Asian session, with XAU/USD struggling to sustain its recent rebound above the $4,100 level. A recovery in the US Dollar from its lowest point since mid-June, combined with persistent expectations that the Federal Reserve could still raise interest rates later this year, is weighing on demand for the non-yielding precious metal.
The pressure comes despite softer US economic data released on Thursday. The US economy expanded at an annualized pace of 1.5% in the second quarter, slowing from 2.1% previously and falling short of expectations. Inflation data also pointed to easing price pressures, as the headline Personal Consumption Expenditures (PCE) Price Index declined 0.1% in June, marking its first monthly drop since 2020. Annual headline inflation slowed to 3.7%, while core PCE, the Fed’s preferred inflation gauge, eased to 3.3%.
However, markets remain concerned that renewed volatility in oil prices could reignite inflation. Escalating tensions between the United States and Iran continue to threaten global energy supplies, with Washington launching new strikes against Iran following missile attacks on US forces. Iran has also rejected a proposal regarding shared oversight of the Strait of Hormuz, while Saudi Arabia is leading efforts to secure critical shipping routes against Houthi attacks. These developments have heightened fears of a broader regional conflict and helped support crude oil prices.
As a result, investors worry that higher energy costs could revive inflationary pressures and push the Fed toward a more hawkish policy stance. According to market pricing, traders still see a strong probability of at least one additional Fed rate hike before year-end. Elevated Treasury yields and renewed US Dollar strength continue to reduce the appeal of Gold, although the metal remains trapped within its multi-week trading range as investors await fresh catalysts for a decisive move.
Daily Price Chart of Gold (XAU/USD)
From a technical standpoint, Gold remains trapped within a month-long trading range that can still be viewed as a bearish consolidation pattern following its breakdown below the 200-day Simple Moving Average (SMA). While downside risks remain dominant, momentum indicators present a mixed picture. The MACD histogram has retreated from recent peaks but continues to hold in positive territory, while the Relative Strength Index (RSI) remains slightly below the neutral 50 level, suggesting a modest recovery attempt within an overall bearish environment.
On the upside, resistance is seen near the upper boundary of the current range around $4,175, followed by the key psychological level at $4,200. A decisive break above these barriers could trigger further gains toward the 200-day SMA at $4,490.81. A sustained move beyond this level would be needed to weaken the broader bearish outlook and support a stronger recovery.
On the downside, immediate support is located in the $3,976–$4,000 region, an area that previously attracted buying interest and helped stabilize prices. A break below this zone could reinforce bearish momentum and expose Gold to deeper losses.
WTI crude oil extended its losses during the early European session on Friday, falling nearly 2.6% on the day to trade around $80.50 per barrel. The decline was driven by profit-taking after recent gains and signs of increased oil tanker activity through the Strait of Hormuz, easing concerns over potential supply disruptions.
Market sentiment was also influenced by ongoing geopolitical tensions in the Middle East. Iran’s Parliament Speaker warned that the United States would “pay the price” for the deaths of Iranian civilians, highlighting the risk of further escalation in the region. Despite these tensions, improving shipping flows through the key oil transit route weighed on crude prices and limited support from geopolitical risk premiums.
West Texas Intermediate (WTI) crude oil traded near $80.50 per barrel during Friday’s early European session, retreating as investors locked in profits following the previous day’s strong rally despite persistent geopolitical tensions in the Middle East.
The decline was also fueled by signs of improving oil flows through the Strait of Hormuz. Shipping activity has increased in recent days, with the US reporting that its navy helped escort tankers through the strategic waterway. Data from Kpler showed that 14 commodity vessels passed through the Strait on Wednesday, a notable increase from the single-digit traffic levels recorded last week, easing some concerns over supply disruptions.
Nevertheless, escalating tensions in the region continued to provide underlying support for oil prices. Iranian Parliament Speaker Mohammad Bagher Ghalibaf warned that the United States would “pay the price” for the deaths of Iranian civilians. Meanwhile, Iran’s Islamic Revolutionary Guard Corps (IRGC) announced strikes on US military bases in Kuwait, Jordan, and Bahrain in response to US attacks on a facility located on Iran’s Qeshm Island. The IRGC also reiterated that the Strait of Hormuz would remain closed and vowed retaliation against what it described as aggressors.
Additional support came from stronger-than-expected US inventory data. The US Energy Information Administration (EIA) reported that crude oil stockpiles fell by 7.167 million barrels in the week ending July 24, significantly exceeding market expectations for a 2.5 million-barrel draw. This followed a 2.011 million-barrel increase recorded in the previous week, highlighting robust demand conditions.
Looking ahead, market participants are closely watching the upcoming OPEC+ meeting on August 2. Analysts at ING anticipate the group will approve another production increase of approximately 188,000 barrels per day for September. Such a move would complete the reversal of the 1.65 million barrels per day in voluntary production cuts introduced in 2023. However, reports suggest OPEC+ may halt further supply increases after September, indicating a more measured approach to future output policy.
WTI crude oil extended its decline to around $82.80 during Thursday’s early Asian trading session. Despite escalating tensions in the Middle East, which have heightened concerns over potential supply disruptions and could provide support for oil prices, bearish pressure remains in place. Meanwhile, data from the U.S. Energy Information Administration (EIA) showed that U.S. crude stockpiles dropped by 7.167 million barrels last week, signaling tighter supply conditions.
WTI Falls Below $83.00 as Profit-Taking Offsets Middle East Supply Risks
West Texas Intermediate (WTI) crude oil traded near $82.80 during Thursday’s Asian session, extending losses as traders locked in profits following the Federal Reserve’s latest policy decision. The Fed left interest rates unchanged at 3.5%–3.75%, in line with expectations, while Chair Kevin Warsh reiterated the central bank’s commitment to returning inflation to its 2% target without signaling the future path of monetary policy.
Despite the decline, escalating geopolitical tensions in the Middle East continue to provide underlying support for oil prices. President Donald Trump warned that the United States would retaliate against Iran after a recent attack on a U.S. military installation in Jordan. Overnight, Iranian forces reportedly launched ballistic missiles at a U.S. airbase and command center in Jordan, though all were intercepted. At the same time, U.S. and Saudi forces resumed strikes against Iran-backed militias in Iraq after a brief pause in hostilities.
Additional concerns stem from the Red Sea region, where Yemen’s Iran-aligned Houthi movement is reportedly considering charging commercial vessels passing through the strategically important Bab el-Mandeb Strait, a key route connecting the Red Sea and Gulf of Aden. Such measures could further disrupt global energy shipments and tighten supply conditions.
Supporting the broader oil market, U.S. crude inventories posted a much larger-than-expected drawdown. Data from the Energy Information Administration (EIA) showed stockpiles fell by 7.167 million barrels in the week ending July 24, reversing the previous week’s 2.011 million-barrel increase and significantly exceeding forecasts for a 2.5 million-barrel decline.
Meanwhile, Brent crude also came under pressure after the United States extended its pause on direct strikes against Iran. According to Rabobank strategist Benjamin Picton, Brent futures dropped nearly 5% as President Trump emphasized a preference for diplomacy, describing the current pause as an opportunity for “very deep talks” with Tehran, while warning that negotiations would need to progress quickly.
Gold remains unable to establish a sustained move above the $4,100 mark amid unfavorable fundamental conditions. Rising tensions between the United States and Iran, coupled with growing expectations of additional Federal Reserve rate hikes, continue to strengthen the US Dollar and limit upside momentum for the precious metal. Meanwhile, the technical outlook remains bearish, indicating that the path of least resistance for Gold prices is still to the downside.
Gold (XAU/USD) extends its recovery for a second consecutive session on Thursday, although gains remain limited as the metal continues to trade below the $4,100 level and stays within the previous day’s range during Asian trading hours. A modest rebound in the US Dollar (USD) following its post-FOMC decline is acting as a headwind for Gold. At the same time, escalating US-Iran tensions are fueling inflation concerns, reinforcing expectations that the US Federal Reserve (Fed) could still raise interest rates later this year. These factors continue to support the USD and weigh on the appeal of non-yielding assets such as Gold.
As expected, the Fed left interest rates unchanged at the conclusion of its two-day policy meeting on Wednesday. However, the central bank stopped short of delivering a more hawkish message, triggering weakness in the USD and helping Gold climb to its highest level of the week. Nevertheless, the decision was accompanied by three dissenting votes favoring a 25-basis-point increase. Markets also continue to anticipate at least one additional rate hike before year-end as inflation risks evolve amid volatile energy prices.
Analysts at TD Securities noted that precious metals have struggled under increasingly hawkish Fed expectations. The firm believes renewed strength in oil markets is likely to reinforce this trend, as higher energy costs could sustain inflationary pressures and strengthen the case for tighter monetary policy. As a result, Gold and other precious metals remain vulnerable to further downside pressure.
Oil prices continue to be driven primarily by escalating geopolitical tensions between the US and Iran, particularly around key maritime routes such as the Strait of Hormuz and the Bab el-Mandeb. The situation intensified after US forces carried out strikes against Iran following Iranian missile attacks on American military positions in the Middle East earlier this week. Additional joint US-Saudi operations targeting Iran-backed groups in Iraq have heightened fears of a broader regional conflict. Meanwhile, reports that Yemen’s Houthi forces may impose fees on commercial shipping through the southern Red Sea have added to concerns over global trade and energy flows.
These developments have compounded worries over potential disruptions to global oil supplies, contributing to a sharp rise in crude prices. The resulting increase in energy-driven inflation expectations has strengthened arguments for further Fed tightening. Investors are now focused on upcoming US economic data, including the Advance Q2 GDP report and the Personal Consumption Expenditures (PCE) Price Index, which could provide fresh insight into the Fed’s policy outlook. The results are expected to influence both the US Dollar and the next major move in Gold prices.
XAU/USD Daily Price Chart
From a technical standpoint, Gold’s price action over the past several weeks continues to resemble a bearish consolidation pattern following its breakdown below the 200-day Simple Moving Average (SMA). Despite the recent rebound from levels below $4,000, the broader technical structure suggests that sellers still retain the upper hand, keeping the overall bias tilted to the downside.
Momentum indicators present a mixed picture. The Moving Average Convergence Divergence (MACD) has crossed into positive territory, signaling an improvement in near-term momentum. However, the Relative Strength Index (RSI) remains below the neutral 50 mark, hovering around 48, indicating that bullish conviction is still lacking and that upside attempts may remain limited.
As a result, any further recovery is likely to encounter resistance near the upper boundary of the established trading range, with the $4,200 level acting as an important near-term hurdle. A decisive breakout above this zone could open the door for a stronger advance toward the 200-day SMA at $4,490.80, a critical technical barrier that bulls must reclaim to confirm a more sustainable bullish trend.
On the downside, initial support is located around the recent swing-low region between $3,976 and $4,000, where buying interest previously helped stabilize prices. Unless Gold can break convincingly above the 200-day SMA, any rallies are likely to be viewed as corrective moves within a broader consolidation phase that continues to favor bearish risks.
Silver came under pressure after three members of the Federal Open Market Committee (FOMC) opposed the consensus decision and favored an interest rate increase. Despite mounting inflation risks linked to escalating tensions in the Middle East, the Federal Reserve opted to keep rates unchanged at 3.5%–3.75%. Meanwhile, geopolitical concerns intensified after President Trump vowed a forceful military response to Iran’s missile strike on US forces stationed in Jordan.
Silver prices (XAG/USD) edged lower during Thursday’s Asian session, slipping to around $57.90 per troy ounce after posting modest gains a day earlier. Nevertheless, the precious metal continues to find support from the Federal Reserve’s latest policy decision and expectations that other major central banks will also maintain a cautious approach to monetary policy.
At its July meeting, the Federal Reserve left interest rates unchanged at 3.50%–3.75%, despite rising inflation concerns linked to renewed tensions in the Middle East. The decision helped support silver prices, as stable interest rates reduce the opportunity cost of holding non-yielding assets. Investors also expect both the Bank of England (BoE) and the Bank of Japan (BoJ) to keep rates unchanged while remaining vigilant about inflation risks.
However, divisions emerged within the Federal Open Market Committee (FOMC). Lorie Logan, Beth Hammack, and Neel Kashkari voted against the majority decision, arguing for a 25-basis-point rate hike. During the post-meeting press conference, Fed Chair Kevin Warsh maintained a hawkish tone, emphasizing that the central bank remains fully committed to returning inflation to its 2% target, even though it will not provide explicit guidance on future rate moves.
The Fed’s policy statement received a 7.4/10 score on the FXS Speechtracker, significantly above its historical average of 4.9/10, reflecting a distinctly hawkish stance. By keeping rates steady while highlighting persistent inflation, resilient economic growth, and strong investment activity, policymakers signaled confidence in the economy and a continued focus on price stability. The 9–3 vote split, with three officials favoring tighter policy, further reinforced expectations that the Fed retains a tightening bias, which could support the US Dollar over the medium term.
Similarly, the FXS Fed Sentiment Index remained elevated at 128.64, indicating that the overall policy outlook continues to favor restrictive monetary conditions. The combination of a strong sentiment reading and a hawkish policy statement suggests that any pullbacks in the US Dollar may remain limited, particularly against major currencies such as the euro and yen.
Meanwhile, geopolitical developments in the Middle East remain a key market driver. President Donald Trump vowed a strong response following a recent attack on US forces in Jordan, while diplomatic negotiations remain deadlocked. The main obstacle continues to be Tehran’s insistence on maintaining control over the strategically important Strait of Hormuz, adding further uncertainty to the global economic outlook.
Bitcoin’s recent decline appears to have been driven primarily by excessive leverage being flushed out of the market rather than any deterioration in the cryptocurrency’s underlying fundamentals.
Despite the sharp price drop, key on-chain metrics and broader market indicators suggest that Bitcoin’s long-term outlook remains largely intact. Network activity, investor participation, and overall demand have not shown signs of significant weakness. Instead, the selloff was largely triggered by an unwinding of heavily leveraged positions.
As Bitcoin fell below critical support levels, a wave of forced liquidations swept through the derivatives market. Leveraged long positions were automatically closed, creating additional selling pressure and accelerating the decline. This type of cascading liquidation is common in highly leveraged markets and often amplifies price movements beyond what fundamentals alone would justify.
Data from the derivatives market indicates that leveraged traders absorbed the bulk of the losses. This suggests that the correction was more technical in nature than a reaction to negative developments affecting Bitcoin’s intrinsic value or long-term adoption prospects.
Historically, large liquidation events have served as a market reset, removing excessive speculation and reducing leverage to healthier levels. Once this process is complete, prices tend to stabilize and become more closely aligned with actual supply-and-demand dynamics.
As a result, the recent downturn may be better viewed as a leverage-driven correction rather than a sign of weakening fundamentals. While short-term volatility remains elevated, the broader foundation supporting Bitcoin appears largely unchanged.
Why Gold Is Falling Even as Middle East Tensions Drive Oil Higher
Brent crude surged above $100 per barrel last week, largely due to disruptions in two of the world’s most critical energy chokepoints. Tanker traffic through the Strait of Hormuz—a narrow passage that previously handled around 20% of global seaborne oil shipments—has nearly ground to a halt. Daily vessel transits have plunged from roughly 80 before the conflict to as few as 25.
At the same time, Iran is expanding pressure through its Houthi allies in Yemen, raising concerns about potential disruptions at the Bab el-Mandeb Strait, the southern gateway to the Red Sea. Any attack there could jeopardize approximately 4.5 million barrels of oil per day and disrupt Europe-Asia shipping routes, forcing vessels to take the far longer journey around Africa’s Cape of Good Hope.
Meanwhile, the U.S. Strategic Petroleum Reserve has fallen to its lowest level since 1983. Following the release of up to 172 million barrels earlier this year to contain fuel prices, traders are increasingly concerned that the reserve is approaching operational limits where further withdrawals become difficult.
Why Gold Hasn’t Benefited From the Conflict
Traditionally, gold thrives during geopolitical crises, making its recent weakness surprising to many investors. Instead of rallying, gold has remained near $4,000 an ounce—well below its January peak of around $5,600 and roughly 20% lower than levels seen when the Iran conflict escalated earlier this year.
The primary reason is that rising oil prices are fueling inflation concerns, which in turn are pushing bond yields and interest-rate expectations higher. Higher yields increase the opportunity cost of holding gold because the metal does not generate income.
This relationship has been evident in bond markets. The U.S. 10-year Treasury yield climbed to 4.71% last week, its highest level since January 2025, while German government bond yields reached levels not seen since 2011. With both the Federal Reserve and the Bank of England expected to maintain a hawkish stance, investors are increasingly pricing in the possibility of higher rates for longer.
Historically, real interest rates have been one of the most important drivers of gold prices. When real yields rise, gold often struggles because investors can earn more attractive returns from interest-bearing assets.
China’s Central Bank Is Buying the Dip
Despite gold’s correction, China continues to accumulate the metal aggressively. The People’s Bank of China added 15 tonnes of gold in June, its largest monthly purchase since October 2023, extending its buying streak to 20 consecutive months.
More importantly, China’s purchases have accelerated as prices have declined. The country acquired 40 tonnes during the first half of 2026, even as gold fell nearly 30% from its January record high. Analysts estimate Chinese purchases totaled roughly $5.7 billion during the period, significantly exceeding the pace of buying seen in 2025.
This suggests Beijing may view the recent weakness as a strategic opportunity rather than a reason to reduce exposure.
The Long-Term Bull Case Remains Intact
Hedge fund veteran John Paulson recently argued that the secular bull market in gold is still in its early stages. His thesis centers on declining confidence in fiat currencies and the growing role of gold as a reserve asset.
According to Paulson, as governments continue expanding debt and deficits, gold’s appeal as a store of value could strengthen over time, potentially elevating its role in the global financial system.
Gold Miners Are Generating Exceptional Cash Flow
Even with gold trading near $4,000 an ounce, mining companies remain highly profitable. Average gold prices have hovered around $4,700 in 2026, while industry all-in sustaining costs generally remain below $2,000 per ounce.
That margin is translating into record free cash flow, stronger balance sheets, rising dividends, and increased share buybacks. Major producers such as Newmont, Barrick, Agnico Eagle, and Kinross Gold are expected to continue returning significant capital to shareholders.
Newmont recently reported a record $2.2 billion in free cash flow during the second quarter while producing approximately 1.3 million ounces of gold and increasing shareholder distributions.
Investors Remain Underexposed to Gold
Despite years of strong performance, gold still represents only a small percentage of most investment portfolios. With prices significantly below their January highs, some investors may view the current pullback as an opportunity to gradually build exposure.
A disciplined allocation of 5% to 10% of a portfolio, combined with regular rebalancing, remains a common strategy for gaining exposure without attempting to time geopolitical events or commodity markets.
In the short term, higher interest rates are weighing on gold even as geopolitical risks intensify. Over the longer term, however, continued central-bank buying, fiscal concerns, and strong fundamentals for miners continue to support the broader investment case for the precious metal.
The US goods trade deficit narrowed to $101.5 billion in June, down from $105.9 billion in May. Goods exports declined by $3.8 billion to $204.7 billion, while imports fell by $8.2 billion to $306.2 billion.
Tariff Front-Running and the Subsequent Pullback
In late 2024 and early 2025, companies accelerated imports to get ahead of President Trump’s reciprocal tariffs, leading to a sharp surge in inbound shipments. Later, through the second half of 2025 and into early 2026, imports moderated as businesses worked through elevated inventories accumulated during that earlier rush.
Despite the recent decline in imports, the current goods trade deficit remains larger than every monthly reading between June 2022 and March 2025 except one. The data suggest that tariffs have not delivered a lasting reduction in the trade deficit, with the gap now broadly back to where it stood before the tariff-driven distortions—and potentially slightly wider.
Goods Exports and Imports
The rise in both exports and imports largely reflects higher prices driven by inflation rather than a meaningful increase in real trade activity. While the nominal value of trade has expanded, there has been little improvement in the overall trade balance, as imports have continued to outpace exports. As a result, the growth in trade flows has not translated into a sustained narrowing of the goods trade deficit.
Balance of Trade in Goods and Services
The advance trade figures cover goods only, while the broader goods-and-services data are available through May 2026.
Between July 2021 and May 2026, the US services trade surplus increased from $19.1 billion to $28.9 billion, an improvement of roughly $9.8 billion. Without this stronger services surplus, the overall goods-and-services trade deficit would stand at approximately $87.3 billion rather than $77.6 billion.
The data indicate that tariffs have not meaningfully reduced US trade deficits, though they have contributed to higher costs for consumers and businesses.
Why Tariffs Are Unlikely to Eliminate Trade Deficits
Tariffs are unlikely to resolve trade deficits unless they significantly weaken demand, such as during an economic downturn. Historical trade data show that the most substantial reductions in US trade deficits have occurred during recessions, when consumer spending and imports contract sharply.
Trade Deficits: A Symptom, Not the Root Cause
Trade deficits are better viewed as a symptom of broader economic forces rather than the core problem itself. One key factor is the absence of strong constraints on federal fiscal spending. Following President Richard Nixon’s decision on August 15, 1971, to end the dollar’s convertibility into gold, the US monetary system entered a new era.
Combined with the US dollar’s role as the world’s primary reserve currency, this shift enabled American consumers to become the global economy’s consumers of last resort. At the same time, government deficit spending faced fewer practical constraints. Over subsequent decades, both credit growth and fiscal deficits expanded significantly, contributing to persistent trade imbalances that tariffs alone are unlikely to address.
Total Credit Market Debt Owed vs. GDP
The numbers highlight the scale of debt accumulation in the US economy:
Total Credit Market Debt Owed (TCMDO): $115.6 trillion
Nominal GDP: $31.9 trillion
Real GDP: $24.2 trillion
Critics of the post-1971 monetary system argue that President Richard Nixon’s decision to suspend the dollar’s convertibility into gold removed a key constraint on the expansion of money, credit, government debt, and trade deficits. Although the measure was presented as temporary, the suspension became permanent, fundamentally reshaping the global monetary system.
The Nixon Shock and the Reserve Currency Effect
In 1971, Nixon appointed John Connally as Treasury Secretary. During growing international concerns about inflation and the weakening dollar, Connally famously told European officials that the dollar was “our currency, but your problem.”
As US money supply growth accelerated, several countries began distancing themselves from the Bretton Woods framework. West Germany and Switzerland moved away from the system, while foreign governments increasingly sought to exchange dollars for gold. On August 15, 1971, Nixon closed the so-called “gold window,” ending the ability of foreign governments to redeem dollars for gold. He also imposed a 90-day freeze on wages and prices in an effort to curb inflation.
At the time, the move was widely applauded. Financial markets rallied, and many viewed the decision as a necessary response to inflation and exchange-rate pressures. However, what was announced as a temporary measure evolved into a permanent shift away from the Bretton Woods system.
A World Without the Gold Constraint
According to this perspective, the end of gold convertibility made it easier for the US government to finance deficits and debt expansion. Military spending, fiscal stimulus, and other government expenditures could be funded without the discipline previously imposed by a gold-backed monetary framework.
Former Federal Reserve Chair Paul Volcker later expressed concern about the collapse of Bretton Woods, famously remarking that “nobody’s in charge” of the international monetary system.
Why Trade Deficits Persist
Proponents of the “reserve currency curse” theory argue that as long as the US dollar remains the world’s dominant reserve currency, the United States will continue to run sizable trade deficits. Global demand for dollars encourages capital inflows into the US, supporting consumption and imports while making it difficult to achieve a sustained trade surplus.
From this viewpoint, tariffs are unlikely to eliminate trade deficits because the underlying drivers are structural: reserve-currency status, persistent fiscal deficits, rising debt levels, and strong domestic consumption. Historically, the most significant reductions in US trade deficits have occurred during recessions, when demand and imports contract sharply.
The result, critics contend, is that tariffs may raise costs for consumers and businesses without materially changing the long-term trajectory of US trade balances.
US Dollar bulls stay cautious ahead of the highly anticipated FOMC policy announcement later on Wednesday.
Ongoing geopolitical tensions continue to support demand for the safe-haven US Dollar.
A rebound in oil prices has reignited inflation concerns and strengthened expectations of further Fed tightening, lending support to the greenback.
The US Dollar Index (DXY), which measures the Greenback against a basket of major currencies, is trading in a narrow range below the 101.50 mark during Wednesday’s Asian session as investors await the outcome of the Federal Reserve’s two-day FOMC meeting. Despite the consolidation, the index remains supported near a one-month high reached on Tuesday and continues to exhibit a constructive bias amid ongoing geopolitical tensions.
Market sentiment shifted after Iran’s Islamic Revolutionary Guard Corps (IRGC) launched multiple ballistic missiles at US military positions in the Middle East late Tuesday. Adding to the uncertainty, President Donald Trump reiterated that Washington is prepared to resume strong military action against Iran if diplomatic efforts fail to quickly resolve the crisis. These developments have heightened concerns about a renewed escalation in the region, boosting demand for the safe-haven US Dollar.
At the same time, the latest Middle East tensions have triggered a sharp rebound in crude oil prices, reigniting worries about inflation and increasing speculation that the Federal Reserve could raise interest rates again. This backdrop is likely discouraging traders from taking aggressive bearish positions on the DXY, though gains remain limited ahead of the Fed’s policy announcement later in the day.
Investors are primarily focused on the Fed’s guidance regarding future monetary policy, which is expected to be the next major catalyst for the US Dollar. Analysts at DBS note that markets remain “highly cautious” ahead of the FOMC decision, despite the recent pullback in oil prices following a temporary easing of US-Iran hostilities. According to the bank, traders are still pricing in roughly a 34% probability of a rate hike at this meeting and nearly 100% odds of a hike in September, highlighting expectations that the Fed may resume tightening even as some geopolitical risk premium in energy markets has faded.
WTI crude draws strong buying interest following Iran’s ballistic missile strikes on US military personnel.
President Trump cautioned that military action could resume should talks with Iran fail to produce an agreement.
Ongoing concerns over potential supply disruptions continue to underpin crude oil prices and provide additional upside support.
WTI rebounds sharply on renewed Middle East tensions, climbing nearly 4% on Wednesday after hitting a more than two-week low in the previous session. The US benchmark crude oil price trades around the mid-$81.00s during Asian trading, snapping a three-day losing streak as fears grow over a potential resurgence of US-Iran hostilities.
The latest escalation came after Iran’s Islamic Revolutionary Guard Corps (IRGC) launched multiple ballistic missiles at US military forces across the Middle East on Tuesday. At the same time, US President Donald Trump renewed his warning that military action could resume if diplomatic efforts with Tehran fail. In an interview with Fox News, Trump stated that the US could strike critical Iranian infrastructure, including major bridges and power facilities, should negotiations break down.
Further fueling concerns, US Central Command reported that American and Saudi forces carried out coordinated strikes against Iran-backed militants in Iraq. The renewed escalation, coupled with ongoing tensions over the Strait of Hormuz, has prompted traders to factor a geopolitical risk premium into oil markets, helping drive crude prices higher. Shipping activity through the crucial waterway has already declined significantly after Iran attacked several vessels earlier this month.
Additional support for oil prices comes from the Iran-backed Houthi movement, which recently announced a naval blockade targeting Saudi Arabia in the Red Sea, opening a new front in the months-long conflict. The move has intensified fears of disruptions to global energy supplies. Meanwhile, a weaker US Dollar is providing an extra tailwind for dollar-denominated commodities, reinforcing the bullish tone ahead of the Federal Reserve’s policy announcement.
Gold remains under pressure as oil prices rebound after the US intercepted Iranian missiles, reigniting geopolitical tensions in the Middle East and fueling inflation worries. Meanwhile, uncertainty surrounding the Federal Reserve’s upcoming policy decision remains unusually elevated, with some market participants still anticipating additional rate hikes. Traders currently assign a 76.6% probability to a September rate increase, supporting expectations for higher borrowing costs and weighing on bullion demand.
Gold prices (XAU/USD) remain under pressure for a second consecutive session, hovering near $4,020 per ounce during Wednesday’s Asian trading. The precious metal is weighed down by a rebound in oil prices after renewed conflict in the Middle East reignited geopolitical concerns, prompting investors to reassess inflation risks and the outlook for interest rates.
Tensions escalated after Iran launched several ballistic missiles at a US military base in Jordan at around 5:45 p.m. ET, targeting American forces stationed in the region. US military officials reported that all missiles fired by the Islamic Revolutionary Guard Corps (IRGC) were successfully intercepted, according to official statements and released footage. The attack is widely viewed as retaliation for recent US operations against Iranian naval assets.
Attention now turns to the Federal Reserve’s policy announcement, with policymakers broadly expected to keep interest rates unchanged. However, uncertainty remains elevated despite persistent pressure from US President Donald Trump for lower borrowing costs. Markets currently assign a 30.5% probability to an unexpected rate hike at this meeting, an unusually high level of uncertainty ahead of a Fed decision. Looking beyond this week, traders are pricing in a 76.6% chance of a rate increase in September, reinforcing expectations that interest rates may stay higher for longer and limiting the appeal of non-yielding assets such as gold.
USD/JPY remains below the 164.00 mark after last week’s rally stalled just shy of that psychological level, leaving the pair at its strongest level against the Japanese Yen since 1986.
Japan’s authorities spent a record ¥11.73 trillion intervening in April and May to support the Yen—nearly twice the size of the previous record effort. Despite the massive defense, the protected exchange-rate level was breached within six weeks.
Attention now turns to Friday’s packed schedule, which will feature the Bank of Japan’s policy decision, the release of its quarterly Outlook Report, and the Finance Ministry’s monthly intervention data, all arriving in the same trading session.
USD/JPY Outlook: Tokyo Can Still Defend the Yen, but Its Options Are Narrowing
The Japanese Yen edged slightly higher on Monday, with USD/JPY slipping 0.05% while remaining just below the 164.00 level after last week’s rally stalled a mere ¥0.01 short of the mark. Investors have spent the past two weeks wondering whether Japanese authorities will step in again—and whether they can still afford to do so. The issue, however, is not a shortage of funds but a shortage of effective policy options.
Japan Has Plenty of Dollars, but Limited Flexibility
Japan’s foreign-exchange reserves stand at roughly $1.3 trillion, second only to China globally. However, around $1.1 trillion is invested in foreign securities—primarily U.S. Treasury bonds—which cannot be sold quickly without disrupting markets and potentially locking in losses.
The country’s readily deployable reserves are estimated at $150–180 billion in cash deposits held at the Bank of Japan and other central banks. In addition, Japan maintains a Federal Reserve swap line worth up to $120 billion. Based on the average size of previous interventions, analysts estimate Japan could still conduct roughly 30 more operations if necessary. The real limitation is therefore not financial capacity.
A Record Intervention Delivered Only Temporary Relief
After USD/JPY broke above 160.00 in April, Japan’s Ministry of Finance spent a record ¥11.73 trillion (around $73 billion) intervening in April and May. The effort was nearly twice as large as any previous intervention campaign.
Despite the scale of the operation, the market erased its impact within six weeks, with USD/JPY not only reclaiming the defended level but advancing roughly four yen beyond it. The episode highlighted how difficult it is to reverse a strong market trend without supportive economic fundamentals.
IMF Rules Create Another Constraint
A lesser-known challenge comes from international classification rules. The International Monetary Fund generally considers a currency “freely floating” only if official interventions remain limited and infrequent over a rolling period.
Analysts estimated earlier this year that Japan may have room for only a few additional interventions before risking scrutiny over its free-floating status. In other words, Tokyo’s ability to defend the Yen may be constrained more by policy credibility and international standards than by available cash.
Monday’s Market Action Highlighted the Yen’s Weakness
The Yen’s muted reaction to a sharp decline in oil prices underscored the currency’s structural challenges. Crude oil plunged nearly 9% following easing tensions between Washington and Tehran—a development that should significantly benefit energy-importing Japan.
Yet the Yen gained less than ¥0.10 against the U.S. Dollar.
This suggests that factors beyond energy costs are driving the currency. Although the U.S.-Japan yield gap has narrowed by roughly 40 basis points from its cycle extremes, the Yen has continued to weaken. Rising domestic inflation expectations and persistent capital outflows appear to be offsetting the impact of narrowing rate differentials.
Meanwhile, verbal intervention from Japanese officials has continued, but markets are increasingly ignoring such warnings.
A Critical Week for USD/JPY
Tokyo’s relative silence may be strategic. Currency intervention tends to be most effective when it aligns with broader market forces, and this week’s calendar could provide such an opportunity.
The key event arrives on Wednesday, when the Federal Reserve announces its policy decision. Markets largely expect rates to remain unchanged at 3.75%, though some investors still see a possibility of a surprise hike.
Japan’s data releases follow shortly afterward:
Thursday: Tokyo CPI, unemployment, and retail sales data.
Friday: Bank of Japan policy decision, Outlook Report, and Governor press conference.
Friday: Ministry of Finance intervention statistics for July, which could reveal whether authorities have already entered the market.
While the consensus expects the BoJ to keep rates unchanged at 1.00%, some reports suggest policymakers are becoming increasingly concerned that Yen weakness is adding inflationary pressure, potentially opening the door to a faster tightening cycle.
Key USD/JPY Levels
Resistance
164.00 remains the crucial barrier.
Above that, there is little historical chart structure, leaving 164.50 and 165.00 as the next psychological targets.
Support
163.00 is the first important support level.
162.50 follows below.
The rising 50-day EMA near 161.50 remains the key trend support.
Outlook
The broader trend remains bullish while USD/JPY holds above 163.00. However, the primary risk to further gains is not economic data or technical factors but potential official action from Japanese authorities. The period immediately following Wednesday’s Federal Reserve decision could prove especially important, as it offers the most favorable backdrop for any surprise intervention or policy shift.
