The ECB aims to reduce inflation to its target in about three years, highlighting a cautious approach to monetary policy. The French Central Bank has revised its second quarter growth forecast to 0.2%, indicating resilience in the economy. This improvement may benefit the overall euro area performance
The recent ECB minutes highlight that inflation is likely to stay significantly above the 2% target until at least mid-next year. Core inflation is also anticipated to remain above 2% throughout the entire forecast period, even with the ongoing tightening of monetary policy.
Traders should watch for how this persistent inflation could influence European market sentiment and the €’s performance against major currencies. The continued focus on inflation may lead to a more cautious approach from the ECB, impacting interest rate expectations.
In conclusion, inflation pressures may influence monetary policy direction.
In the Strait of Hormuz, ongoing exchanges of attacks between the US and Iran continue to disrupt shipping routes. This situation creates challenges for the global economy while providing support for crude oil prices, appealing to oil bulls.
Conversely, President Trump has indicated that Iran has requested a ceasefire. Historically, such comments from him have signaled a preference for de-escalation and negotiating a resolution. As a result, oil prices are currently under pressure and could drop further unless a major escalation occurs.
Current volatility in oil prices hinges on US-Iran relations and potential ceasefire developments.
The US dollar’s outlook could be shifting positively. Recent tensions in the Middle East have increased demand for the dollar, as geopolitical risks rise. The U.S. Military launched strikes on 80 Iranian targets, prompting Iran to retaliate by targeting American bases in the area. Furthermore, the U.S. has reinstated oil sanctions against Iran, which could drive market volatility.
Additionally, traders should keep an eye on today’s FOMC meeting minutes. They are expected to highlight that several Federal Reserve members support increasing interest rates, which may further strengthen the dollar.
In conclusion, watch for US dollar strength amid Middle East tensions and potential Fed rate hikes.
Recent GDP, Services PMI, and Retail Sales have all come in stronger than expected. That matters because firmer US growth usually supports the US dollar, which is typically negative for gold.
On the chart, DXY still looks to be in a broader daily uptrend. The 100.0–100.5 area stands out as a key support zone where buyers could step back in. If the dollar holds that area and pushes higher, it would continue to support the bearish gold view. If DXY loses that support, the setup should be reassessed, not defended blindly.
Even after the softer jobs print, money markets haven’t meaningfully shifted. The bigger story is that the market still sees a possible path toward higher rates into 2026 and 2027.
Bottom line: as long as growth stays firm and DXY holds support, USD strength remains the cleaner read — and that keeps pressure on gold.
