US CPI Cools, But Is the Market Looking in the Rear-View Mirror?

The softer-than-expected US inflation report improved market sentiment and supported risk assets.

The moderation was driven primarily by lower energy prices during June, while underlying inflation also continued to ease.

However, the CPI report is backward-looking and reflects June conditions. Since then, energy prices and geopolitical risks have evolved, meaning the latest data may not fully capture current inflation pressures.

The report reduced expectations of an immediate Federal Reserve rate hike, but policymakers are still likely to maintain a restrictive stance until there is clearer evidence that inflation is sustainably moving toward target.

Traders should remain focused on upcoming inflation releases, US labor market data, and developments in energy markets, as these will be critical in shaping the Fed’s next policy decisions.

Bottom Line: The CPI report was a positive surprise for markets, but it may already be outdated. Whether the rally can continue will depend on incoming data rather than the June inflation print alone.

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Jul 14, 2026

What you should know for today.

Geopolitical Conflict: Crude oil prices are surging due to escalating tensions between the US and Iran, specifically regarding the blockade of the Strait of Hormuz.

US Economic Data: Investors are awaiting the release of the June Consumer Price Index (CPI) data, which is expected to show a softening in annual inflation to 3.8%.

Federal Reserve Policy: Fed Chair Kevin Warsh is scheduled to testify before the US House Financial Services Committee.

Recent comments from Fed Governor Christopher Waller suggest a hawkish stance, with potential for rate hikes if core inflation remains high.

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US CPI Forecast: What to Watch

All eyes are on the June US CPI release today at 8:30 a.m. EST. The biggest macro event of the week. Headline inflation is expected to ease as energy prices fall, but the main focus is core inflation and whether price pressures are spreading more broadly. The US dollar remains fundamentally strong, although crowded long positioning means a weak CPI print could trigger a sharper pullback. Warsh’s comments after the release could also shape the market’s first policy reaction.

Consensus expectations:

• Headline CPI MoM: -0.1% (range: -0.3% to 0.3%)

• Headline CPI YoY: 3.8% (range: 3.6% to 4.0%)

• Core CPI MoM: 0.2% (range: 0.0% to 0.4%)

• Core CPI YoY: 2.9% (range: 2.8% to 3.0%)

What matters most:

• If CPI is soft, the dollar could weaken as traders scale back hawkish Fed bets. That may support gold and pressure USDJPY lower.

• If CPI is hot, the market may lean more hawkish. EURUSD could stay under pressure, while gold may weaken as yields and the dollar rise.

• Warsh and Waller matter too. If Warsh sounds cautious, hawkish pricing may ease. If he backs tighter policy, rate hike expectations could strengthen. Waller has already warned that stronger core inflation may require stricter policy.

• If the data is mixed, price action may turn choppy, with markets waiting for clearer guidance from Warsh.

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Week Ahead # 29 (13 July – 17th July)

• The US Dollar enters the new week on a firm footing as sticky inflation continues to support the Federal Reserve’s higher-for-longer policy outlook.
• Traders will closely watch US CPI and Fed Chair Kevin Warsh’s testimony for fresh direction. Stronger-than-expected data or a hawkish tone from the Fed could extend the Dollar’s rally, while softer inflation figures may revive rate-cut expectations and trigger profit-taking.
• Overall, the Dollar’s outlook remains constructive, with upcoming economic data likely to determine whether bullish momentum can continue.
  
• Tuesday: Fed Chairman Warsh Testifies | US CPI
• Wednesday: BoC Interest Rate
• Thursday: UK GDP

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Gold Weekly Forecast

Forecast

Gold ended the week under pressure as higher US Treasury yields and a stronger US Dollar outweighed safe-haven demand from renewed Middle East tensions. Rising oil prices increased inflation concerns, leading markets to expect the Federal Reserve to keep interest rates higher for longer, reducing the appeal of non-yielding gold. Next week’s direction will largely depend on US inflation data (CPI & PPI), Retail Sales, and Fed Chair Kevin Warsh’s testimony, which could reshape rate expectations.

Key Numbers to Watch

• US CPI (June): Consensus +0.3% MoM, 2.9% YoY
• Core CPI: +0.3% MoM, 3.0% YoY
• US PPI: Expected +0.2% MoM
• US Retail Sales: Expected +0.2% MoM
• Fed Funds Rate: 3.50%–3.75%
• Market-implied probability of a September Fed rate hike: ~62%
• Spot Gold: Around $4,100–4,120/oz at the end of the week.

Bottom line: Gold remains fundamentally supported by geopolitical risks, but US inflation and Federal Reserve expectations are the dominant drivers. A hotter-than-expected CPI would likely strengthen the USD and pressure gold, while softer inflation could revive bullish momentum.