Daily Market Analysis

Latest Economic Insights

Headlines:

• The U.S. dollar remains strong ahead of the Federal Reserve’s interest rate decision.
• Markets are pricing in greater than one-third probability of a rate hike on Wednesday.
• Gold declines amid concerns over further tightening of U.S. monetary policy.
• Talks between the United States and Iran are putting downward pressure on oil prices.
• The resumption of exports through the Caspian Pipeline is improving supply outlooks.
• Bitcoin falls to around $63,200 as expectations for higher interest rates increase.

Fundamental Analysis

• The U.S. dollar Index and Monatery Policy:
  • The U.S. Dollar Index traded near the 101.5 level on Tuesday, holding onto the gains recorded in the previous session as investors awaited the Federal Reserve’s monetary policy decision scheduled for Wednesday.
  • Markets are currently pricing in a probability of more than one-third that the Fed will raise interest rates at this meeting, reflecting an unusually high degree of uncertainty for a market that is just one day away from a Federal Open Market Committee (FOMC) decision.
  • This uncertainty stems from persistent inflationary pressures in the U.S. economy, particularly following the sharp rise in oil prices, as well as the continued resilience of the labor market and a series of stronger-than-expected economic data releases.
  • Meanwhile, Citadel Securities expects the Federal Reserve to raise interest rates at the current meeting, arguing that such a move would help reinforce the inflation-fighting credibility of Fed Chair Kevin Warsh. Warsh has repeatedly emphasized that restoring price stability remains a primary objective of monetary policy.
  • At the same time, market pricing indicates roughly a 56% probability of an interest rate increase at the September meeting, suggesting that investors expect the Federal Reserve to maintain a hawkish policy stance even if rates are left unchanged this week.
  • The U.S. dollar remained resilient despite comments from U.S. President Donald Trump that the United States is engaged in constructive talks with Iran aimed at ending the conflict in the Middle East.
  • These remarks contributed to a decline in oil prices and helped ease inflation concerns. However, the U.S. warning that military strikes could resume if negotiations fail has kept a degree of caution in financial markets.
  • Looking ahead, the dollar’s performance in the coming sessions will largely depend on the Federal Reserve’s policy decision, the tone of the Chair’s remarks, and whether policymakers opt for an immediate rate hike or choose to postpone any tightening move until September.

• Gold:
  • Gold retreated to around $4,050 per ounce on Tuesday, surrendering part of the previous session’s gains as investors grew increasingly concerned that the Federal Reserve may raise interest rates at its policy meeting on Wednesday.
  • The precious metal typically faces headwinds from higher interest rates and rising U.S. Treasury yields because it does not generate income. Consequently, growing expectations of a rate hike prompted profit-taking and dampened investor demand for gold.
  • Additional pressure came from the stronger U.S. dollar, which increased the cost of purchasing gold for investors holding other currencies, weighing further on the metal’s appeal.
  • Despite lower oil prices, gold remained under pressure after the United States and Iran announced the resumption of diplomatic talks. While the decline in energy prices helped alleviate inflation concerns, it also reduced demand for safe-haven assets as geopolitical risks appeared to ease.
  • President Donald Trump said that discussions with Iran are advancing constructively, while cautioning that Washington remains prepared to reinstate military action should negotiations break down. His remarks suggest that geopolitical tensions have eased somewhat but continue to pose a meaningful risk to global markets.
  • Looking ahead, gold is expected to remain highly sensitive to the Federal Reserve’s policy decision and accompanying guidance.
  • A rate increase or a more hawkish-than-expected message could weigh further on the metal by boosting Treasury yields and the U.S. dollar. In contrast, a decision to keep rates unchanged, coupled with a softer policy tone, may provide support for gold and encourage a recovery in prices.

• Oil:
  • Oil prices extended their decline on Tuesday, posting a third straight session of losses as market sentiment improved on expectations that the United States and Iran could reach a diplomatic breakthrough, potentially paving the way for a normalization of crude oil supplies from the region.
  • Brent crude hovered around $87 per barrel, while U.S. West Texas Intermediate crude traded near $82 per barrel.
  • The downward move came after President Donald Trump announced that the United States would pause military operations against Iran to provide additional room for negotiations, reiterating that the discussions are intended to help resolve the ongoing conflict in the Middle East.
  • Washington suspended its military campaign late Friday following nearly two weeks of fighting, while Iran also ceased its retaliatory attacks on U.S. military installations in neighboring countries.
  • Separately, Iranian and Omani officials held talks over the weekend aimed at securing an agreement that would restore normal maritime traffic through the Strait of Hormuz, a critical chokepoint that handles a significant share of global oil shipments.
  • The supply outlook received additional support following the resumption of crude oil exports from the Caspian Pipeline Consortium (CPC) terminal on Russia’s Black Sea coast. The terminal, a critical export hub for Kazakh crude, had faced operational disruptions after being struck by Ukrainian drone attacks.
  • The restoration of export flows helped alleviate concerns over tighter global oil supplies and prompted a partial erosion of the geopolitical risk premium that had been embedded in crude prices during recent weeks.
  • Nevertheless, oil markets remain highly sensitive to geopolitical developments. Any setback in U.S.-Iran negotiations or a renewed escalation in military activity could reignite concerns over potential disruptions to shipping through the Strait of Hormuz, increasing supply-risk perceptions and potentially driving crude prices higher.

• Bitcoin:
  • Bitcoin fell roughly 2.6% to trade around $63,200, as stronger expectations for further U.S. monetary tightening and robust economic indicators weighed on sentiment across risk assets.
  • Market participants remain cautious ahead of the Federal Reserve’s policy decision, with the prospect of higher interest rates potentially reducing market liquidity and diminishing investor appetite for speculative assets, including cryptocurrencies.
  • Activity in CME-listed Bitcoin futures and options also remained muted, pointing to restrained participation from institutional investors as they await greater clarity on the Fed’s policy path and forward guidance.
  • On the technical front, Bitcoin faces a significant resistance area between $68,000 and $68,500. A sustained break above this range would be needed to confirm renewed upside momentum and strengthen the case for a continuation of the short-term bullish trend.

Economic Calendar (GMT+3 / KSA time)

From the United States

CB Consumer Confidence Index– 17:00

Smart Technical Analysis — Methodology

A primary scenario is proposed for the day, with an estimated probability of 60% to 75%. If the primary scenario fails, an alternative scenario becomes active, also with an estimated probability of 60% to 75%.

The primary scenario is considered invalid once the price reaches the trigger level for the alternative scenario, at which point the alternative scenario is activated and the primary scenario is disregarded.

The scenarios and probabilities presented in this report are based on technical analysis and are intended as reference guidance only. These reports are not a substitute for independent trading decisions. Traders should use them as a supporting tool alongside their own analysis and judgment.

GOLD

• Trend: Bearish
• Timeframe: 30 minutes
• Current Price: 4,045
• Primary Scenario: Buy on a breakout above 4,073
• Targets: 4,102 followed by 4,137
• Alternative Scenario: Sell on a breakdown below 4,029
• Targets: 3,995 followed by 3,962
• Note: Gold remains under selling pressure below key moving averages. A break above 4,073 could improve short-term momentum, while a move below 4,029 may trigger further downside.

CRUDE OIL

• Trend: Bearish
• Timeframe: 30 Minutes
• Current Price: 83.41
• Primary Scenario: Buy on a breakout above 84.34
• Targets: 86.06 followed by 87.96
• Alternative Scenario: Sell on a breakdown below 82.20
• Targets: 80.36 followed by 78.58
• Note: Oil remains below its key moving averages, with recovery prospects dependent on a break above 84.34

EURUSD

• Trend: Bearish
• Timeframe: 30 Minutes
• Current Price: 1.1366
• Primary Scenario: Buy on a breakout above 1.1383
• Targets: 1.1411 followed by 1.1446
• Alternative Scenario: Sell on a breakdown below 1.1350
• Targets: 1.1316 followed by 1.1283
• Note: the pair remains below key moving averages and a major resistance zone, keeping the near-term bias tilted to the downside unless 1.1383 is decisively breached.

GBPUSD

• Trend: Bearish
• Timeframe: 30 Minutes
• Current Price: 1.3290
• Primary Scenario: Buy on a breakout above 1.3315
• Targets: 1.3349 followed by 1.3385
• Alternative Scenario: Sell on a breakdown below 1.3266
• Targets: 1.3230 followed by 1.3196
• Note: The price remains in a bearish trend below key moving averages. The outlook would only improve after a breakout above 1.3315 and a recovery above the 1.3349 resistance level.

NAS 100

• Trend: Bearish
• Timeframe: 30 Minutes
• Current Price: 27,705
• Primary Scenario: Buy on a breakout above 27,876
• Targets: 28,006 followed by 28,132
• Alternative Scenario: Sell on a breakdown below 27,581
• Targets: 27,413 followed by 27,203
• Note: The trend remains strongly bearish, with price trading below all key moving averages. Any current rebound should be viewed as a corrective move unless the price breaks above and holds above 27,876.