Conflict Fuels Inflation Fears (07.23.2026)

Middle East tensions lifted Brent crude above $95, a six-week high, on fears of supply disruptions.

Trump warned of strikes on Iranian infrastructure if shipping through the Strait of Hormuz is targeted, after Iran-backed Houthis attacked two Saudi oil tankers in the Red Sea.

Higher oil prices reinforced inflation concerns, with markets now pricing a 61% chance of a September Fed rate hike, while both the Fed and ECB are expected to leave rates unchanged at their upcoming meetings.

The euro hovered near a one-year low, sterling slipped after softer UK inflation, and the yen remained close to a four-decade low despite growing expectations of further BOJ tightening. Meanwhile, the offshore yuan strengthened on continued progress in China's internationalization efforts.

Gold eased to around $4,120, silver held near $59, the US 100 Tech Index lost 0.54%, and Bitcoin fell 0.66% as higher oil prices and rising rate expectations weighed on sentiment.

Oil Clouds the Euro Outlook

The euro traded near $1.14, close to a one-year low, before Thursday's ECB decision as traders also tracked Middle East developments. After June's hike, the ECB is widely expected to keep rates unchanged while assessing incoming data and geopolitical risks. Even so, markets still price in around two more rate hikes this year, with September seen as the most likely timing.

Concerns that rising tensions could disrupt oil supplies have kept eurozone inflation risks high. Brent crude climbed to a recent high after Trump ruled out near-term talks with Iran, warned of further strikes, and pledged retaliation if Yemen's Iran-backed Houthis target Red Sea shipping.

The first resistance is positioned at 1.1450 while the support starts from 1.1380.

Fed Week Casts Shadow Over Gold

Gold slipped from a two-week high to around $4,120 per ounce as rising Middle East tensions drove oil to a six-week high. Houthi militants claimed attacks on two Saudi tankers in the Red Sea, while Trump warned of strikes on Iranian infrastructure if shipping through the Strait of Hormuz is targeted.

The Fed is expected to hold rates next week, though markets still assign a 61% chance of a September hike. The ECB is also expected to leave rates unchanged while keeping September open.

First resistance is seen at $4160, with initial support near $4100.

Intervention Talk Falls Flat

The yen traded around 163 per dollar after hitting a four-decade low of 163.24 earlier this week. Reports that the BOJ could tighten policy sooner lifted the probability of an October rate hike to 80%, from 70% a day earlier. Finance Minister Satsuki Katayama repeated that authorities are prepared to intervene if necessary.

The yen still remains under pressure from the strong dollar, Japan's low interest rates, and uncertainty over Prime Minister Sanae Takaichi's policy direction. Rising oil prices are also adding pressure to Japan's import-dependent economy.

Initial resistance stands at 163.30, while the first support is at 162.80.

Cooling CPI Weighs on the Pound

Sterling remained below $1.34, its lowest level in more than a week, after UK inflation slowed more than expected, reducing the likelihood of a Bank of England rate hike this month. Annual inflation eased to 2.6% in June, below the 2.7% forecast, helped by lower transport and food prices.

Core inflation (2.6%) and services inflation (3.6%) both exceeded expectations. CBI economist Martin Sartorius warned inflation could pick up again, while Chancellor John Healey announced measures including lower VAT on electricity bills and a £2 cap on single bus fares across England from January. Middle East tensions also remained in focus after Trump warned of further strikes on Iran.

Resistance stands at 1.3430, while support is 1.3340.

Supply Issues Support Silver

Silver traded around $59 per ounce, remaining below its nearly two-week high as rising Middle East tensions lifted oil prices. Houthi militants claimed attacks on two Saudi tankers in the Red Sea, while Trump warned of strikes on Iranian infrastructure if shipping through the Strait of Hormuz is targeted.

Meanwhile, India's silver imports have slowed sharply after a new licensing regime disrupted shipments, lifting local premiums to multi-month highs.

Resistance stands at $60.50, while support is $58.50.