US Charges 20% Hormuz Fee; Oil Soars 9% - CPT Markets

Market Wrap-up: Middle East Tensions Trigger Six Year Oil RallyThe trading week opened with a sharp deterioration in geopolitical sentiment, driving oil prices to their strongest single-day gain in six years.

On Monday, President Donald Trump announced on Truth Social that the United States would reinstate a naval blockade targeting Iranian ports near the Strait of Hormuz, placing the region back at the center of rapidly escalating tensions between Washington and Tehran.

In addition, the US will impose a 20% transit fee on all goods passing through the Strait of Hormuz while declaring itself the "protector" of this critical global oil shipping route.

The announcement triggered an aggressive repricing across asset markets. Brent crude surged 9.6% to settle at USD 83.30 per barrel, marking its biggest one-day gain since May 2020, while WTI climbed 9.4% to close at USD 78.14 per barrel.

US equity markets moved lower, with the Nasdaq, Dow Jones, and S&P 500 all ending the session in negative territory. Major US banking stocks, including JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, and Citigroup, also posted broad-based declines.

The sharp rally in oil revived inflation concerns and reinforced expectations that US interest rates could remain higher for longer, weighing heavily on gold. The precious metal fell 3% to trade back below the USD 4,000/oz level. According to CME Group's FedWatch Tool, traders are now pricing a 71% probability of a Federal Reserve rate hike in September.

Looking ahead, alongside developments in the Middle East, markets will closely watch the June US CPI report, scheduled for release on July 14. Economists surveyed by Dow Jones expect headline CPI to decline 0.2% month on month while rising 3.8% year on year.

Later in the day, Fed Chair Kevin Warsh is scheduled to testify before the House Financial Services Committee on the Federal Reserve's semiannual monetary policy report.

XAU/USD: Gold Drops as Oil Rally Revives Fed Hike Expectations 

Key takeaway:

Gold declined 3% on July 13 after US President Donald Trump announced the reinstatement of a naval blockade targeting Iran.

The resulting surge in oil prices reignited inflation concerns and strengthened expectations that US interest rates could remain higher for longer, increasing downside pressure on bullion.

According to CME Group's FedWatch Tool, markets are currently pricing a 71% probability of a Federal Reserve rate hike in September.

Technical Outlook:

Daily Bias: Bearish

Support: 3,950

Resistance: 4,050

WTI: Oil Surges on Middle East Supply Disruption Fears 

Key takeaway:

WTI gained more than 9% after President Donald Trump reinstated a naval blockade targeting Iranian vessels and customers transiting the Strait of Hormuz.

He also announced that all commercial goods passing through the strategic waterway would be subject to a 20% transit fee.

Early this morning, the UAE Ministry of Defence confirmed that two of its national oil tankers, Mombasa and Al Bahiyah, were struck by Iranian cruise missiles.

Technical Outlook:

Daily Bias: Bullish with Correction Risk

Support: 76.09

Resistance: 82.00

DXY: US Dollar Gains Ahead of CPI & Kevin Warsh Testifies 

Key takeaway:

The US Dollar Index (DXY) strengthened as escalating tensions between the United States and Iran boosted safe-haven demand while surging energy prices reinforced expectations of tighter US monetary policy.

Attention now turns to the US Consumer Price Index report. Headline inflation is expected to ease to 3.8% year on year in June from 4.2%, while the monthly reading is forecast to decline 0.1% after rising 0.5% previously.

Core CPI is projected to remain unchanged at 2.9% year on year, with the monthly reading expected at 0.2%.

Technical Outlook:

Daily Bias: Bullish

Support: 100.95

Resistance: 101.27

EUR/USD: Euro Slides as Safe-Haven Flows Lift the US Dollar 

Key takeaway:

The euro weakened as Iran's attacks fueled demand for the US dollar amid rising geopolitical uncertainty.

Alongside heightened geopolitical risks, Fed Governor Christopher Waller stated that another elevated core inflation reading would support an immediate discussion on raising interest rates, providing additional support for the US dollar.

Technical Outlook:

Daily Bias: Bearish

Support: 1.13620

Resistance: 1.14500

USD/JPY: U/J Advances on Fed Rate Bets and Risk Aversion 

Key takeaway:

The Japanese yen weakened as escalating tensions around the Strait of Hormuz and shifting monetary policy expectations weighed on the currency.

Safe-haven flows into the US dollar, combined with growing expectations of a Federal Reserve rate hike, continued to support USD bulls ahead of the US CPI release and Fed Chair Kevin Warsh's congressional testimony.

Meanwhile, Japan's Finance Minister Satsuki Katayama said the Government Pension Investment Fund (GPIF) could consider adjusting its asset allocation should investment conditions change significantly, a development that could provide some support for the yen.

Technical Outlook:

Daily Bias: Cautiously Bullish

Support: 161.89

Resistance: 162.71

Middle East tensions have become the dominant driver across global markets. The sharp surge in oil prices has revived inflation concerns, prompting traders to price in a greater likelihood that the Federal Reserve will keep policy tighter for longer.

That repricing supported the US dollar while weighing on equities and gold despite the broader risk-off backdrop. Currency markets also reflected the shift, with the dollar outperforming as higher rate expectations reinforced safe-haven demand.

The immediate focus now turns to the June US CPI report and Fed Chair Kevin Warsh's testimony, both of which could determine whether markets further increase expectations for additional Fed tightening or begin to reassess the current pricing.

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