US-Iran Deal Collapse Sends Oil Up 6% - CPT Markets

Market Wrap-up: Oil Rally and Fed Outlook Dominate MarketsUS President Donald Trump declared that the temporary agreement with Iran had collapsed after two consecutive days of retaliatory strikes between the two countries.

Speaking on the sidelines of the NATO summit in Ankara on July 8, Trump said he believed the agreement with Iran had "fallen apart" and expressed no interest in resuming negotiations with Tehran. "It is a waste of time negotiating with them," he said.

Energy markets reacted immediately to the renewed geopolitical tensions, with Brent crude surging 6.3% and WTI climbing 6.4%. The market narrative has shifted from viewing the conflict as an isolated escalation to pricing in a recurring cycle of attacks, retaliation, temporary agreements, and renewed hostilities unfolding within days rather than months.

Meanwhile, the latest FOMC Minutes highlighted growing divisions among policymakers over the future path of interest rates. While officials unanimously agreed to keep rates unchanged at 3.50%-3.75%, some members argued that easing inflation could justify future rate cuts, whereas others warned that persistent price pressures could require additional policy tightening.

The combination of escalating geopolitical risks and a more divided yet cautious Federal Reserve continued to support the US dollar during the previous session. The US Dollar Index (DXY) briefly reached 101.27 during US trading hours and continues to maintain a constructive short-term uptrend.

Gold came under renewed pressure, falling 1% to around $4,025 per ounce. The precious metal has now surrendered more than 70% of its gains since the beginning of July after previously reaching $4,200 per ounce. Separately, Bank of America lowered its average 2026 gold price forecast by 14% to $4,360 per ounce, citing expectations that the Federal Reserve will maintain a more hawkish policy stance.

Before the US-Iran ceasefire agreement broke down, the International Monetary Fund (IMF) had already downgraded its 2026 global growth forecast once again. The IMF now expects global economic growth to reach 3.0% this year, down from the 3.1% projection released in April. Notably, this marks the second downgrade to the global growth outlook this year.

Looking ahead for today, traders will continue to monitor developments in the Middle East for signs of further escalation. In the US, Initial Jobless Claims, Existing Home Sales, and remarks from New York Fed President John Williams will be closely watched for additional clues on the Fed's policy outlook.

XAU/USD: Gold Falls as Oil Rally Strengthens Fed Hawkish Bets 

Key takeaway:

Gold prices declined on July 8 as the sharp rally in crude oil intensified inflation concerns after US President Donald Trump declared that the temporary agreement to end the conflict with Iran had collapsed.

Higher energy prices could fuel inflationary pressures and encourage central banks to keep interest rates elevated for longer. Although gold is traditionally viewed as an inflation hedge, the non-yielding metal tends to lose relative appeal when higher interest rates raise the opportunity cost of holding bullion.

Technical Outlook:

Daily Bias: Bearish

Support: 4,000

Resistance: 4,134

WTI: Oil Jumps as Middle East Tensions Escalate 

Key takeaway:

WTI crude posted strong gains on July 8 after President Donald Trump threatened further military action against Iran and warned of renewed naval blockades in response to attacks on oil tankers transiting the Strait of Hormuz.

The prospect of additional strikes and tighter restrictions on Iranian shipping reignited concerns that renewed conflict could disrupt oil exports through the Strait of Hormuz, just as crude flows through the region had begun to recover.

Iran's Foreign Ministry described the US airstrikes as a "serious violation" of the memorandum of understanding signed by Washington and Tehran last month to end the conflict.

Technical Outlook:

Daily Bias: Bullish with Correction Risk

Support: 72.85

Resistance: 76.00

DXY: US Dollar Climbs on Fed Minutes and Geopolitical Risks 

Key takeaway:

The US Dollar Index (DXY) strengthened on Wednesday as investors weighed both the latest FOMC Minutes and renewed geopolitical tensions in the Middle East.

The Minutes reinforced the Fed's cautious policy stance and leaned toward a higher for longer interest rate outlook, with several policymakers suggesting that another rate hike could eventually become appropriate should inflation prove more persistent than expected.

According to the CME FedWatch Tool, traders are now pricing in a 67% probability of a September rate hike, up from 62% on Tuesday.

Technical Outlook:

Daily Bias: Bullish

Support: 100.95

Resistance: 101.27

 EUR/USD: Euro Faces Pressure Ahead of ECB Meeting Accounts 

Key takeaway:

The euro continues to show relative resilience against the US dollar, although escalating tensions in the Middle East could limit further upside.

At the same time, expectations for additional European Central Bank (ECB) rate hikes have softened following the unexpected decline in Eurozone inflation, making traders less willing to build aggressive bullish positions in the single currency.

Market participants are now awaiting the ECB Monetary Policy Meeting Accounts for fresh directional catalysts.

Technical Outlook:

Daily Bias: Bearish

Support: 1.14317

Resistance: 1.13914

USD/JPY: Yen Recovers as Intervention Risks Persist 

Key takeaway:

The Japanese yen weakened during the previous session but recovered some ground in Asian trading as markets remained alert to the risk of official intervention.

Japanese Finance Minister Satsuki Katayama said Tokyo remains in close communication with the United States on foreign exchange issues and stands ready to respond appropriately whenever necessary.

Michael Nizard, Head of Multi-Asset and Portfolio Management at Edmond de Rothschild Asset Management, said the yen's current weakness is excessive and does not reflect the underlying strength of Japan's economy, creating an imbalance that could prompt coordinated intervention by major central banks.

Technical Outlook:

Daily Bias: Bearish

Support: 161.67

Resistance: 162.70

Renewed geopolitical tensions remain the dominant driver across global markets after the collapse of the temporary US-Iran agreement triggered a sharp rally in crude oil.

Higher energy prices have reinforced inflation concerns, supporting expectations that the Federal Reserve may need to keep policy restrictive for longer. That combination lifted the US dollar, weighed on gold, and kept pressure on major currency pairs despite pockets of safe-haven demand.

Market attention now shifts to fresh headlines from the Middle East alongside US Initial Jobless Claims, Existing Home Sales, and comments from New York Fed President John Williams. These developments will help shape expectations for the Fed's next policy move and determine whether the current strength in the US dollar can be sustained.

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