Iran Strikes US Bases; Fed Decision Ahead - CPT Markets

Market Wrap-up: Iran Attack Lifts Oil Ahead of Fed Decision

WTI crude oil rallied sharply during today's Asian session after the US Central Command (CENTCOM) confirmed that US forces had successfully intercepted a ballistic missile attack launched by Iran against American military bases in the Middle East.

WTI surged as much as 4.4% to an intraday high of $82.73 per barrel, reversing the previous session's sharp decline as renewed geopolitical tensions brought global energy supply risks back into focus.

Despite the escalation in the Middle East, the US Dollar Index (DXY) remained below 101.50 as traders refrained from taking aggressive positions ahead of today's Federal Reserve policy decision. Markets currently price a 69% probability that the Fed will leave rates unchanged at 3.50%-3.75%, while 31% expect a 25-basis-point rate hike.

Investors will also closely monitor the Fed's policy statement and Chair Kevin Warsh's press conference for guidance on potential policy moves in September, particularly as this meeting will not include an updated dot plot or revised interest rate projections.

Although the US dollar softened modestly, it continues to trade near its highest level in almost one month, limiting upside potential for gold. The precious metal fell roughly 1% in the previous session to around $4,021/oz.

Since the US-Israel-Iran conflict intensified in late February, gold has declined by approximately 24% as investors increasingly expect conflict-driven inflation risks to keep the Federal Reserve maintaining restrictive monetary policy for longer.

According to Commerzbank, unless interest rate expectations shift meaningfully, it will remain difficult for capital to return to gold ETFs, limiting the prospects for a sustained recovery in gold prices. The bank therefore lowered its year-end gold price forecast by $300 to $4,500 per ounce.

Looking ahead for today, traders will be fully focused on the Federal Reserve's interest rate decision, followed by Chair Kevin Warsh's press conference. With policy uncertainty already elevated throughout the week, today's announcements could trigger significant volatility across global financial markets.

XAU/USD: Gold Slides as Strong Dollar Caps Safe-Haven Demand 

Key takeaway:

Gold fell more than 1% on 28 July as the US dollar remained close to a one-month high while investors awaited the Federal Reserve's interest rate decision and further guidance on the monetary policy outlook.

Since the US-Israel-Iran conflict escalated in late February, gold prices have declined by approximately 24%.

Commerzbank has lowered its year end gold price forecast by $300 to $4,500 per ounce.

Technical Outlook:

Daily Bias: Bearish

Support: 4,000

Resistance: 4,060

Oil: WTI Surges on Iran Attack and Supply Risk Concerns 

Key takeaway:

US crude oil surged after Iran launched a missile attack against US military bases in the Middle East, reviving concerns over potential disruptions to global energy supplies.

The Commonwealth Bank of Australia (CBA) warned that risks to global energy supply remain elevated amid persistent geopolitical uncertainty.

Meanwhile, Goldman Sachs expects oil prices to ease toward $80 per barrel by year end if shipping through the Strait of Hormuz is fully restored during the fourth quarter.

However, the bank also cautioned that attacks on Saudi Arabian oil infrastructure or renewed shipping disruptions in the Red Sea could push crude oil and refined fuel prices higher again.

Technical Outlook:

Daily Bias: Bullish

Support: 79.60

Resistance: 85.72

DXY: US Dollar Holds Steady Before Fed Rate Decision 

Key takeaway:

The US Dollar Index (DXY) traded sideways below 101.50 as investors remained cautious ahead of the FOMC decision despite rising geopolitical tensions involving Iran.

President Donald Trump warned that the United States would resume strong military action against Iran if diplomatic efforts fail to produce a swift resolution to the crisis.

Markets will also look for additional guidance on the Federal Reserve's future policy path at today's meeting, which could provide the next major catalyst for the US dollar.

Technical Outlook:

Daily Bias: Bearish

Support: 101.11

Resistance: 101.57

EUR/USD: Euro Gains as Markets Await the Fed 

Key takeaway:

The euro strengthened as the US dollar softened ahead of the Federal Reserve's policy decision.

Meanwhile, the European Central Bank (ECB) kept its policy rate unchanged at 2.25% on 23 July but delivered a firm signal that a rate increase in September remains likely.

ECB officials noted that several Governing Council members had argued for an immediate rate hike, citing concerns that persistently elevated energy prices could feed broader inflation through second-round effects.

Technical Outlook:

Daily Bias: Bullish

Support: 1.13823

Resistance: 1.14183

USD/JPY: Japanese Yen Awaits Tokyo Inflation Data Amid Geopolitical Risks 

Key takeaway:

The Japanese yen remained broadly stable despite renewed hostilities in the Middle East, although Japan continues to face heightened vulnerability to rising energy costs.

Markets are now awaiting upcoming Tokyo inflation and labour market data for fresh signals on Japan's economic outlook.

Tokyo Core CPI, excluding fresh food, is expected to accelerate to 1.7% YoY in July from 1.6% previously.

Meanwhile, headline inflation previously stood at 1.7%, while CPI excluding both food and energy was 1.9%.

Technical Outlook:

Daily Bias: Bearish

Support: 163.24

Resistance: 163.80

Renewed geopolitical tensions in the Middle East have put oil back at the center of market attention, lifting crude prices as traders reassessed global supply risks. However, the broader market remains driven by expectations surrounding today's Federal Reserve decision.

The US dollar has softened modestly as investors avoid aggressive positioning before the FOMC outcome, while gold continues to struggle under the weight of elevated rate expectations despite ongoing geopolitical uncertainty.

Equity and FX markets are also trading cautiously, with participants waiting for Chair Kevin Warsh's policy guidance to determine whether the Fed leaves the door open for a move in September.

Today's policy statement and press conference are likely to set the near term direction across oil, the US dollar, gold, and major currency pairs.

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