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Commerzbank analysts highlight that China’s June Consumer Price Index (CPI) slowed to 1.0% year-on-year while Producer Price Index (PPI) rose 4.1%, widening the PPI-CPI gap and squeezing downstream margins. The PBoC acknowledged “structural divergence” between high-tech strength and weak consumption. Despite this backdrop, USD/CNY and USD/CNH both fell, reflecting some currency strength even as domestic demand remains subdued.

China reflation momentum softens

"China's reflationary recovery lost further traction in June, with CPI rising 1.0% yoy (Bloomberg consensus: 1.1%) vs 1.2% in both April and May. The reading marks the slowest CPI print in three months and reinforces concerns that domestic demand remains structurally weak even as the broader economy stabilises."

"Core CPI, which excludes food and energy, also came in at 1.0% yoy against an expected 1.1%, signalling that underlying demand-side price pressures have yet to broaden in a meaningful way."

"The producer price index told a different story, rising 4.1% yoy in June, in line with consensus and up from 3.9% in May, sustained by elevated upstream input costs tied to metals and energy. The widening gap between factory-gate inflation and subdued consumer prices continues to compress margins for downstream producers unable to pass costs through to end consumers."

"In FX, USD/CNY fell 140 pips to 6.79 and the offshore USD-CNH fell 100 pips to 6.80 yesterday."

"Industrial profit growth also showed early signs of fatigue, with the year-on-year gain softening for the first time since November, suggesting that strong exports and price gains are no longer sufficient to offset weak domestic demand."

"The two-speed dynamic is equally visible at the sectoral level. PBoC’s quarterly monetary policy committee statement, released Wednesday, introduced new language acknowledging “structural divergence” within the economy, a characterisation the central bank had not previously used, reflecting the growing imbalance between AI-driven high-tech sector outperformance and tepid consumer spending."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• The US Dollar struggles for direction despite renewed geopolitical tensions.
• Hawkish Fed expectations keep US Dollar bears on the sidelines.
• Traders turn their focus to next week's US CPI release.

The US Dollar Index (DXY) trades within a volatile range on Friday as a sparse US economic calendar leaves traders watching developments in the Middle East after renewed hostilities between the United States (US) and Iran this week. Even so, the latest flare-up has provided only limited support, with the DXY set to finish the week virtually unchanged.

At the time of writing, the index, which tracks the Greenback's value against a basket of six major currencies, is trading around 100.85 after slipping to a one-week low of 100.60 earlier in the Asian session.

On Friday, US President Donald Trump said in a Truth Social post that Iran had asked to continue talks and that the US had agreed, while reiterating that the ceasefire was “over.”

The mix of diplomacy and ongoing tensions has kept traders cautious about a quick end to the war. Meanwhile, hawkish Federal Reserve (Fed) expectations have kept US Dollar (USD) bears on the sidelines.

Minutes of the Fed's June policy meeting released on Wednesday reinforced the view that interest rate cuts remain off the table for now, as policymakers remain concerned about inflation, which is well above the central bank's 2% target.

New York Fed President John Williams said on Thursday that "inflation is still far too high," adding that the Fed is "actively debating scenarios around inflation" and remains committed to returning inflation to its target.

According to the CME FedWatch Tool, markets are pricing in a roughly 66% probability that the Fed will leave interest rates unchanged at this month's meeting, while the odds of a rate hike in September stand at 70%.

Attention now turns to next week's US Consumer Price Index (CPI) data, due on Tuesday, which could shape expectations for the Fed's interest rate path in the coming months.

• EUR/USD treads water despite earlier US Dollar weakness supporting the pair.
• Softer German and French inflation data may reduce pressure on the ECB to maintain an aggressively restrictive stance.
• Trump’s warning that the Iran ceasefire is “over” is lifting geopolitical uncertainty and limiting the Euro’s gains.

EUR/USD trades in a muted fashion near the 1.1430 area on Friday, as a weaker US Dollar (USD) helps the pair hold onto modest Thursday gains. That was true even after inflation data from Germany and France showed limited price pressure.

Germany’s Consumer Price Index (CPI) fell 0.3% MoM in June, while the annual rate remained unchanged at 2.3%. The Harmonized Index of Consumer Prices (HICP) declined 0.2% MoM and rose 2.4% YoY. In France, the EU-harmonized CPI fell 0.3% on the month and increased 2.0% from a year earlier.

The readings suggest that inflation in two of the Eurozone’s largest economies remains relatively contained. This could reduce the need for the European Central Bank (ECB) to maintain an aggressively restrictive policy stance, limiting the Euro’s upside.

Meanwhile, geopolitical uncertainty remains in focus. United States (US) President Donald Trump said on Truth Social that Iran had requested further negotiations and that Washington had agreed to continue talks. However, Trump also warned that the ceasefire was “over,” raising concerns that hostilities could intensify despite ongoing diplomatic contact.

Renewed tensions between the US and Iran may support safe-haven demand for the Greenback and keep EUR/USD gains limited. Still, the pair holds onto meager gains from Wednesday and Thursday as broader US Dollar weakness offsets the impact of softer European inflation data.

Short-term technical analysis:

On the 4-hour chart, EUR/USD trades at 1.1433, holding above the 20-period Simple Moving Average (SMA) at 1.1425 and the 100-period SMA at 1.1415, which provide near-term trend support but leave the pair capped by a dense band of overhead levels. Price is already testing the lower edge of this cap, with nearby horizontal resistances at 1.1442, 1.1450 and 1.1461 limiting upside attempts, while the Relative Strength Index (RSI) around 52 hints at steady but not aggressive bullish momentum, reinforcing a mildly capped tone as long as these barriers remain intact.

On the downside, initial support is seen at the horizontal floor at 1.1431, followed by the 20-period SMA at 1.1425 and the 100-period SMA at 1.1415, which together form a compact demand zone that would need to give way to signal a deeper pullback. On the topside, immediate resistance comes first at 1.1442, ahead of 1.1450 and then 1.1461, and only a sustained break above this ascending cluster would open the door for a more constructive recovery in the pair.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• DJIA adds 0.26% to trade near 52,600, two sessions removed from a record high and still on track for a small weekly loss.
• President Trump repeats his ceasefire obituary on social media while Tehran denies that fresh talks are scheduled, and equities barely blink.
• Tuesday's US inflation print is the real threat to the record tape, with markets pricing roughly one-in-four odds of a July hike.

The Dow Jones Industrial Average trades at 52,609 on Friday, up 0.26%, two sessions after printing a record 53,333 and one news cycle into the second official death of the US-Iran ceasefire. The index shook off a morning slip to 52,410 and now sits mid-range, on track to surrender just under 1% for the week while the S&P 500 paces toward a 1% weekly gain.

A ceasefire obituary with shrinking box office

President Trump declared the ceasefire over on Wednesday after Tehran attacked commercial vessels in the Strait of Hormuz, then repeated the declaration in a Friday morning social media post that added nothing to the original except the date. Iranian sources spent the same morning rejecting rumours that a fresh round of talks is scheduled for next week, even as Qatar and Pakistan work both capitals and Washington insists technical talks continue in the background.

The shooting itself has been real enough. US forces have struck Iranian targets more than 170 times across two days, Tehran has answered with ballistic missiles fired at a base in Jordan and attacks on commercial shipping, and tanker traffic through the Strait has slowed to a trickle. Equities have simply stopped paying for it; Thursday's session rallied on a claim that Iran had called to negotiate, and Friday's rerun of the collapse drew a modest bid rather than a rush for cover.

Each iteration of the collapse-and-courtship cycle now commands a smaller risk premium than the last. That repricing is rational if the conflict stays contained to the Gulf's shipping lanes and irrational if it does not, and the market has evidently decided not to pay for the second scenario until it arrives.

The week's real story trades on the Nasdaq

SK Hynix supplied Friday's actual news, opening its American depositary receipts at $170 against a $149 pricing in a $26.5 billion raise, with the stock trading up around 14% by mid-session. The debut rattled the US memory complex it now competes with for capital: Micron shed more than 1%, while Marvell and Intel dropped more than 2% apiece.

Nvidia rose more than 3% and Meta jumped 6% on reporting that its artificial intelligence cost structure is improving, while Seoul's Kospi added 2.5% overnight on the listing halo. That distribution of firepower flatters the growth indices and leaves the price-weighted Dow watching from the sidewalk; the blue-chip index has slipped just under 1% this week against gains above 1% for the S&P 500 and Nasdaq Composite.

Strategist warnings making the rounds on Friday framed the chip complex as the market's new concentration risk and floated a second-half bust in the trade. With Micron up more than 200% year to date and several peers having doubled, the euphoria arithmetic is not subtle, and the Dow's relative dullness this week starts to look like a feature rather than a flaw.

A hawkish committee has removed the safety net

The rates backdrop offers no cushion under any of it. May's Consumer Price Index (CPI) ran 4.2% YoY, the June dot plot lifted the committee's median year-end projection to 3.8%, and futures markets now assign roughly a one-in-four probability to a hike at the July 28 to 29 meeting, with cuts effectively priced out of 2026.

Equities are grinding to records into a central bank that has abandoned its easing bias, which leaves the tape leaning entirely on earnings and artificial intelligence spending to justify each new high. That arrangement has worked so far; it also concentrates the downside into any single data point that hardens the hike case.

Tuesday holds the pin

June's US CPI lands Tuesday at 12:30 GMT, followed by two days of congressional testimony from the Fed chair at 14:00 GMT on Tuesday and Wednesday, producer prices on Wednesday, and retail sales on Thursday at 12:30 GMT. May's 4.2% headline was driven substantially by war-inflated energy costs, and June covers the weeks in which Hormuz flows recovered before seizing up again.

A hot print converts hike speculation into the base case and hands the record tape its first genuine test since April; a cool one buys the melt-up another fortnight. Either way, that number will move the Dow more than anything issued from Washington or Tehran this week has managed.

Dow Jones technical levels

Resistance: Friday's high at 52,668 is the first hurdle, ahead of the 53,000 handle and Wednesday's record print at 53,333. The daily Stochastic Relative Strength Index is easing from overbought near 79, so a fresh push at the record needs a catalyst rather than momentum alone.

Support: The session low at 52,410 anchors the 52,400 shelf, with the 52,000 handle beneath it and the 50-day Exponential Moving Average far below at 51,126, a line the index has not tested since the April rebound.

Bias: Higher while 52,400 holds. The two-day stall reads as digestion rather than distribution, and a retest of 53,333 remains the path of least resistance into Tuesday's inflation print; a daily close below 52,400 is the first development that would change that call.

Dow Jones daily chart

• WTI Crude Oil trades near $71.00, down 1%, after a morning spike to $72.83 was sold back to the session low inside two hours.
• The International Energy Agency forecasts the first annual decline in worldwide demand since 2020, recasting the war as demand destruction rather than a supply squeeze.
• President Trump repeats that the ceasefire is over and Tehran denies rumours of fresh talks, yet the risk premium shrinks with every rerun.

West Texas Intermediate (WTI) Crude Oil trades at $70.98 on Friday, down 1%, after a European-morning climb to $72.83 met a wall of New York selling that drove the barrel to a $70.70 session low inside two hours. The escalation premium built off the $68.00 base earlier in the week is still intact on paper, and Friday's tape is eating it in real time, on a day when the news flow should have paid sellers to stay home.

A war that no longer clears the headline bar

The raw material of a supply scare is all present and accounted for. US forces have struck Iranian targets more than 170 times in two days, Tehran has fired ballistic missiles at a base in Jordan and attacked commercial vessels around the Strait of Hormuz, and tanker traffic through the chokepoint has slowed to a trickle while hundreds of stranded ships await clearance.

President Trump repeated on Friday morning that the ceasefire is over, recycling Wednesday's declaration in a social media post, while Iranian sources rejected rumours that a fresh round of talks is scheduled for next week. Qatar and Pakistan are working to drag both sides back to the table, Oman and Turkey are fielding calls from Tehran, and Washington maintains that technical talks continue regardless. Iran also buried its former supreme leader on Friday, a succession moment that in any prior decade would have added dollars to the barrel on its own.

The market sold all of it. Thursday's tape cooled on a claim that Iran had called to negotiate, Friday's push above $72.50 lasted roughly the length of a lunch order, and each escalation now buys fewer dollars per barrel and holds them for less time than the one before it. Positioning explains part of the decay; a market that spent June erasing its entire wartime premium has little appetite to rebuild it on rhetoric alone.

The International Energy Agency turns the bull case inside out

Friday's monthly report from the International Energy Agency (IEA) put a number on what the tape already suspected: worldwide demand for Crude Oil and refined products is set to fall by 1 million barrels per day in 2026, the first annual decline since 2020, with the contraction skewed heavily toward the products and regions the Hormuz closure hit hardest. Supply is healing faster than consumption, having rebounded by 4.1 million barrels per day in June to 98.8 million as flows through the Strait resumed, though output remains 9.4 million barrels per day below pre-war levels.

The agency's forward math is worse for bulls than its history. The balance swings back to surplus toward the end of the year and into a significant 2027 overhang if transit volumes keep recovering, and the entire projection is explicitly contingent on a lasting peace that nobody is currently signing. De-escalation therefore fast-forwards the glut, renewed escalation deepens the demand destruction, and only a full, sustained loss of the Strait genuinely re-prices supply. Traders have now watched two shutdowns of the waterway fail to stick.

Beneath the headline, the report describes a crude market that is loose and a products market that is not, with refinery margins and gasoline cracks running at multi-year highs while damaged Gulf refining capacity limps back online. That squeeze rewards refiners rather than the barrel itself; for WTI, tight products are a consolation prize, not a bid.

Next week trades on Washington data, not Gulf rhetoric

June's US Consumer Price Index (CPI) lands Tuesday at 12:30 GMT, and it matters for the barrel twice over: May's 4.2% YoY headline was driven substantially by war-inflated energy costs, and a hot repeat would keep the Fed hawkish and the Dollar firm, a standing headwind for Crude Oil. The Fed chair testifies at 14:00 GMT on Tuesday and Wednesday, with US retail sales due Thursday at 12:30 GMT.

On the supply side, the weekly Energy Information Administration (EIA) inventory report lands Wednesday at 14:30 GMT and the Baker Hughes rig count arrives later Friday at 17:00 GMT. The genuine red-band release remains unscheduled: Hormuz tanker-tracking data has replaced the calendar as the market's real tape, and it prints continuously.

Crude Oil technical levels

Resistance: Friday's rejected spike at $72.83 caps the tape under the $73.00 handle. Above it the air stays thin until $76.00, where June's breakdown began, with the falling 200-day Exponential Moving Average just behind at $77.28.

Support: The session low at $70.70 defends the $70.00 handle. Below that, the late-June base at $68.00 is the level the entire rebound is built on, and a daily close beneath it would put the February trough near $62.00 back on the map.

Bias: Lower. Sellers are meeting strength on schedule while $73.00 caps, and although the daily Stochastic Relative Strength Index curling up from oversold near 28 argues against chasing weakness, the path of least resistance runs back toward $68.00; only a daily close above $73.00 forces shorts to reconsider.

WTI daily chart

• Trump says ceasefire is over, reviving Middle East risk.
• Fed minutes show a tightening bias, but officials await data.
• Burnham's support and IMF upgrade cushion Sterling sentiment.

The Pound Sterling (GBP) holds firm on Friday during the North American session as risk appetite deteriorated after US President Donald Trump posted on social media that the ceasefire with Iran is over, even though negotiations continue. At the time of writing, the GBP/USD pair trades at 1.3406, unchanged, after reaching an almost one-month high of 1.3451 earlier in the day.

GBP/USD steadies as geopolitics, Fed minutes and UK politics collide

This week, GBP/USD is poised to finish with gains of over 0.58% following the resumption of hostilities in the Middle East. The end of the ceasefire between the US and Iran could bolster the Greenback even though both countries are set to continue negotiations next week in Switzerland.

In the meantime, the Fed’s meeting minutes showed that officials favored further tightening but supported holding rates, as they assess incoming data. Data-wise, Initial Jobless Claims were better than expected, though they did little to move the needle, as market participants were digesting geopolitical news.

Aside from this, the US economic docket was light, but it will get traction next week. Investors are eyeing the release of inflation data on the consumer and producer sides, alongside speeches by Federal Reserve officials, the University of Michigan (UoM) Consumer Sentiment and the appearance of the new Fed Chair Kevin Warsh at the US Congress.

In the UK, the schedule was also absent, but traders are supporting Sterling amid comments from the former Greater Manchester mayor Andy Burnham, who is set to become the new Prime Minister.

Regarding political news, Burnham has already taken the first step to be the new PM. He secured the support of the majority of Labour MPs to succeed the current PM, Keir Starmer.

Next week, the UK economic calendar will feature speeches by the Bank of England’s Chief Economist, Huw Pill, and Governor Andrew Bailey. Alongside this, traders will eye the release of BRC Retail Sales, followed by the release of Gross Domestic Product (GDP) in May.

Earlier, the International Monetary Fund (IMF) upgraded forecasts for the UK economy, predicting a 1% growth in 2026, affirming that it would be the third fastest-growing economy in the G7, just behind Canada and the US.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3421. The pair holds above the latest reading of the 50/100/200-day simple moving averages (SMA) cluster at 1.3394, suggesting a modestly constructive near-term tone while still operating below the broken resistance and support trend-line levels around 1.3500. The Relative Strength Index (14) at 59.2 leans towards bullish momentum without yet signaling overbought conditions, hinting that buyers retain the upper hand as long as price stays supported over the nearby SMA floor.

On the downside, immediate support is seen at the SMA cluster around 1.3394, just below the current spot, with the latest close at 1.3421 acting as a nearby pivot level for short-term dip-buying interest. On the topside, initial resistance emerges at the former support trend-line break near 1.3501, followed closely by the downward-sloping resistance trend-line break at 1.3504, where a sustained clearance would open the path for a more decisive bullish extension in the days ahead.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

The Federal Reserve (Fed) released its monetary policy report on Friday , in which the US central bank acknowledged that inflation remains elevated and that the labor market is broadly stable, a signal that the price stability goal hasn’t been achieved.

The report noted that inflation rose further in the spring, indicating that economic activity is expanding solidly despite uncertainty sparked by the war in Iran. M2 money supply growth rates “were moderate and broadly similar to the pace typically observed during the 2010s.”

Credit conditions for small businesses and households remained tight, according to the Fed, and Q1 2026 growth was boosted by investment in high tech and government spending.

The Fed said that the housing market is stagnant, that the financial system remained sound and resilient, and that asset valuations in stocks, corporate debt, residential and real estate are above historic norms.

Key highlights:

INFLATION REMAINS ELEVATED, DRIVEN BY TARIFFS AND FACTORS RELATED TO MIDDLE EAST WAR, AI

ALREADY STRONG INFLATION TICKED UP FURTHER IN THE SPRING

LABOR MARKET BROADLY STABLE, 'SOLID' NOMINAL WAGE GROWTH HAS BEEN JOINED BY ‘STRONG’ PRODUCTIVITY GAINS

ECONOMIC ACTIVITY EXPANDING AT SOLID PACE DESPITE ELEVATED UNCERTAINTY DUE TO IRAN WAR

M2 MONEY SUPPLY GROWTH RATES WERE MODERATE AND BROADLY SIMILAR TO THE PACE TYPICALLY OBSERVED DURING THE 2010S

LABOR SUPPLY GROWTH DOWN ON IMMIGRATION SLOW DOWN, DEMOGRAPHIC SHIFT

SMALL BUSINESSES AND HOUSEHOLDS CONTINUED TO FACE RELATIVELY TIGHT CREDIT CONDITIONS

FIRST QUARTER 2026 GROWTH BOLSTERED BY HIGH TECH INVESTMENT, GOVERNMENT SPENDING

MEASURES OF LONG-TERM INFLATION EXPECTATIONS ‘BROADLY CONSISTENT’ WITH 2% GOAL

IN MOST CASES, FUNDS IMPOSED REDEMPTION LIMITS, AND PRIVATE CREDIT MARKETS CONTINUED TO FUNCTION NORMALLY

SOME PRIVATE CREDIT VEHICLES FACED NOTABLE INCREASES IN REDEMPTION REQUESTS IN Q1, REFLECTING SOME DEFAULTS AND CONCERNS ABOUT UNDERLYING ASSET QUALITY

ACTIVITY IN HOUSING MARKET HAS BEEN ‘STAGNANT’

STRONG FACTORY OUTPUT DRIVEN BY DATA CENTER INVESTMENT TIED TO AI; US PRODUCTIVE CAPACITY RISING AT 'SOLID PACE'

FOREIGN ECONOMIC ACTIVITY GROWTH WAS SUBDUED IN H1 2026 FROM HEADWINDS FROM MIDDLE EAST CONFLICT

AND US TARIFFS, PARTIALLY OFFSET BY AI INVESTMENT

FINANCIAL SYSTEM REMAINED ‘SOUND AND RESILIENT,’ VULNERABILITIES UNCHANGED

BANK RESERVES REMAIN IN ‘AMPLE’ RANGE AMID RESERVE MANAGEMENT BUYING

ASSET VALUES IN STOCKS, CORPORATE DEBT, RESIDENTIAL REAL ESTATE ABOVE HISTORIC NORMS

• Silver trades around $59.90, down a modest 0.08% on Friday despite heightened geopolitical tensions.
• Fears of energy-driven inflation are reinforcing expectations that the Federal Reserve could raise interest rates.
• Investors now await next week's US Consumer Price Index data for fresh clues on the Fed's policy outlook.

Silver (XAG/USD) trades slightly lower on Friday, hovering around $59.90 at the time of writing, down a modest 0.08% on the day. The white metal is struggling to extend its rebound as renewed tensions in the Middle East fuel concerns about persistent inflation, reinforcing expectations that the Federal Reserve (Fed) could raise interest rates.

The resumption of hostilities between the United States (US) and Iran has revived concerns over energy supplies, lifting Oil prices and strengthening expectations of persistent inflation. This backdrop keeps expectations for monetary tightening alive and weighs on non-yielding assets such as Silver.

According to the CME FedWatch tool, markets are now pricing in a high chance of at least one interest rate hike before the end of the year. This outlook is also supporting the US Dollar (USD), whose rebound is limiting the appeal of USD-denominated precious metals.

Meanwhile, investors continue to monitor the latest diplomatic developments between Washington and Tehran. Media reports indicate that technical talks are continuing despite the military clashes, raising hopes of a de-escalation that could ease tensions in energy markets.

Attention now turns to the release of the US Consumer Price Index (CPI) on Tuesday. The inflation report could shape expectations for the Fed's interest rate path and provide the next major catalyst for Silver prices.

• NZD/USD heads for a second straight weekly gain after the RBNZ's hawkish rate hike.
• Technical indicators point to improving momentum as NZD/USD climbs above the 21-day SMA.
• The pair faces stiff resistance from a cluster of key moving averages overhead.

NZD/USD remains on the front foot on Friday and is heading for a second consecutive weekly gain after the Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) by 25 basis points (bps) on Wednesday and signaled that further policy tightening may be needed, boosting the New Zealand Dollar (NZD).

At the time of writing, the pair is trading around 0.5771 after hitting an intraday high of 0.5794, its highest level since June 18.

From a technical perspective, NZD/USD has been recovering after bottoming at 0.5626 in late June, its lowest level since November 2025. The latest leg higher pushed NZD/USD above the 21-day Simple Moving Average (SMA) at 0.5717, reinforcing the bullish near-term outlook.

Momentum has also improved, with the Relative Strength Index (RSI) climbing above the neutral 50 threshold after recovering from near-oversold territory. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram remains in positive territory, suggesting bearish momentum is fading rather than confirming a sustained bullish reversal, as NZD/USD continues to trade below a cluster of key moving averages.

On the topside, initial resistance emerges at the psychological 0.5800 mark, closely aligning with the 50-day Simple Moving Average (SMA) at 0.5815, followed by the 200-day SMA at 0.5820 and the 100-day SMA at 0.5838.

A decisive break above these levels could pave the way for a move toward the horizontal resistance levels at 0.5900 and 0.6000.

On the downside, immediate support lies at the 21-day SMA at 0.5718. A move back below this level would weaken the near-term bullish bias and bring the late-June low of 0.5626 back into focus.