The latest CPI data showed an unexpected rise to 2.7%, while labor market data underperformed expectations, contributing to increased dollar volatility. The release of the July CPI report may offer more clarity on the outlook.
Gold is hovering near 3350, EURUSD is struggling to surpass the 1.17 level, and the Nasdaq remains just below its 23,700 record high, all reflecting a cautious market sentiment as investors await further data confirmation.
Technical Outlook: Quantifying Uncertainties
EURUSD continues to trade between support at 1.1580 and resistance at 1.17, following a bullish rebound from a 200+ pip drop in July. A firm hold above 1.17 could push prices towards the 1.18 resistance, with potential further upside toward the 2021 highs, particularly key levels at 1.20 and 1.24.
On the downside, if the DXY recovery persists, EURUSD may face selling pressure below 1.1580, potentially pulling prices to 1.1450 and 1.1380. A confirmed break below these levels could pave the way for a deeper decline toward 1.12 and 1.11, where bullish positioning may re-emerge.
Gold has remained in consolidation since April 2025, following its record high of 3500, trading within a narrowing range between 3450 resistance and 3260 support. With tariff-related news easing, price action has softened but continues to stay within the consolidation zone near 3350, awaiting confirmation from the CPI report. The data could either reinforce expectations of dollar weakness and rate cuts or reverse the current narrative.
Technically, a clean hold above 3400 and 3450 could extend the rally beyond the 3500 record, targeting 3780 first, and then 4000. On the downside, a close below 3260 would expose further downside risk toward 3130 and 2980, which could provide another long-term accumulation zone.
Summary:
Market sentiment remains cautious as investors await confirmation from upcoming U.S. CPI data. EURUSD is testing key resistance at 1.17, while gold consolidates near 3350. The outcome of the CPI report could significantly influence dollar movements and the expectations for future rate cuts. A break of critical support or resistance levels could lead to further market volatility and potential directional shifts.
