Important calendar events
The dollar experienced some volatility last week, and the dollar index slipped from 98.4 to 97.8. The dollar dipped after the release of soft U.S. CPI inflation data on Tuesday but rallied on Thursday on hotter-than-expected PPI data. U.S. Treasury yields edged higher, providing support for the dollar, with the 10-year bond yield rising from 4.29% to 4.32%.
The Fed held rates steady at its July policy meeting, as expected, but Fed Chair Powell struck a more hawkish tone in his press conference. Powell acknowledged progress on disinflation but emphasized the need for more data before considering rate cuts.
Fed rate cut expectations shifted strongly last week. Soft inflation data released early in the week fueled speculation that easing could occur sooner than previously expected, pushing the odds of a September rate cut to 98% and putting pressure on the dollar. Later in the week, however, PPI data tempered those bets, bringing odds of a September rate cut down to 83%.
Meanwhile, U.S. Treasury Secretary Scott Bessent called for aggressive easing, stating that the Fed should cut rates by 50 basis points in September, rather than the more modest 25-bps priced in, and said that rates should be up to 175-basis-points lower in total. At the same time, Trump’s renewed pressure on the Fed, combined with doubts about its independence, fueled rate-cut expectations.
U.S. Consumer Price Index (CPI) rose by 0.2% in July, according to data released on Tuesday. This was in line with expectations, easing from June’s 0.3% print. July’s U.S. headline inflation remained steady at 2.7% year-on-year, versus 2.8% expected. Core CPI went up to 3.1% annually from 2.9% previously, versus 3.0% anticipated. Core CPI rose by 0.3% monthly, marking the largest gain in six months.
Producer Price Index (PPI) data released on Thursday for July surged 0.9%, well above the flat reading seen in June and exceeding expectations of 0.2%. Core PPI, excluding food and energy, also jumped 0.9% from 0.0% in June, significantly higher than the expected 0.2%. The hot PPI reading revived concerns that inflationary pressures remain elevated, lowering Fed rate cut expectations in September and boosting the dollar.
On the labor front, initial jobless claims came in at 224,000, below the prior week’s 227,000, suggesting the labor market remains firm.
Retail sales in July rose 0.5%, slightly lower than the 0.6% expected and following an upwardly revised 0.9% gain in June. Core retail sales, which exclude the sales of automobiles, gained 0.3%, matching consensus forecasts, while June’s print was again revised upward to 0.8%.
Last week, markets were poised to react to the outcome of the Trump–Putin summit in Alaska on August 15. The two leaders issued a joint press conference after the meeting, revealing that the summit had been mostly fruitless. The two parties did not reach a ceasefire agreement on the Russia-Ukraine conflict or any concrete agreements. Markets largely interpreted this as a win for Putin, leaving Trump’s position weakened. Market reaction has so far been muted, while the dollar gained some stability as no new sanctions against Russia were announced.
Advance GDP data for the second quarter of 2025 showed that the U.S. economy is rebounding. The GDP data showed robust 3.0% annual growth, coming in above estimates of 2.4% and reversing the first quarter’s 0.5% decline. The stronger GDP print boosted the dollar as it suggested increased economic growth.
This coming week, the following events and data releases are likely to affect the dollar:
EUR/USD traded in a tight range last week, dropping from 1.167 to 1.159 early in the week but pairing losses later in the week and climbing to 1.170. If the EUR/USD pair declines, it may find support at 1.139, while resistance may be encountered near 1.178.
The European Central Bank (ECB) held interest rates steady at 2% in July, after cutting rates eight consecutive times. The Euro gained strength after the ECB policy meeting, countering the dollar’s rally. The ECB held rates steady, as expected, but struck a cautious tone, acknowledging progress on inflation but warning of the possible effects of trade tariffs. ECB President Christine Lagarde stated that the central bank monitors rates rather than targeting them, and that policymakers intend to work with the data that comes in moving forward.
However, weak Euro area economic growth has led to market speculation that the ECB might adopt a more dovish approach, potentially leading to rate cuts later in the year.
Economic health data released last week for the Euro area were disappointing, putting pressure on the Euro. Germany’s ZEW economic sentiment plunged to 34.7, down sharply from 52.7 in July and below forecasts of 39.5, signaling a notable hit to investor confidence. At the same time, sentiment across the broader euro area slid to 25.1 from 36.1 previously, falling short of expectations around 28, and undercutting optimism about the bloc’s near-term outlook.
Meanwhile, the flash GDP estimate for the second quarter of 2025 showed only modest growth of 0.1% in the Euro area, which was in line with expectations, with year-on-year GDP growth at 1.4%. Overall, weakening confidence and sluggish growth kept the Euro under pressure last week.
Eurozone GDP for the first quarter of 2025 was revised upward to reflect 0.6% expansion, up from 0.3% previously, beating the 0.4% consensus. The upward revision highlights resilience amid global trade headwinds.
EU flash CPI data showed that inflationary pressures in the Euro Area remain sticky, reinforcing the ECB’s decision to pause rate cuts and keeping future rate cut odds low. EU flash CPI came in at 2.0% year-on-year in July, matching June’s print and just above expectations of 1.9%, aligning with the ECB’s target and reducing immediate pressure for further easing. Core inflation, which excludes food and energy, remained steady at 2.3% annually in July as forecasted.
GBP/USD remained bullish last week, rising from 1.344 to 1.355 on an upbeat UK economic outlook. If the GBP/USD rate goes up, it may encounter resistance at 1.368, while support may be found near 1.313.
Last week, the Sterling was supported by upbeat economic growth data for the UK. UK GDP surprised on the upside, rising by 0.4% in June, beating estimates of 0.2% growth, as well as May’s dismal print showing 0.1% contraction.
Preliminary quarterly GDP data showed that the British economy expanded by 0.3% in the second quarter of the year against just 0.1% growth anticipated, indicating the economy is slowly expanding.
The Bank of England (BOE) lowered its base rate by 25 basis points to 4.0% at its August policy meeting, but the Monetary Policy Committee (MPC) was deeply divided. The central bank narrowly passed the decision in a tight 5-4 vote after two rounds—a historic first for the MPC, with four members voting in favor of keeping rates steady.
BOE Governor Bailey warned against cutting rates too soon, urging patience moving forward. Bailey highlighted that inflation and wage pressures are easing, but warned that uncertainty remains, especially with rising food and energy costs affecting consumer expectations. He indicated a downward trend for rates but cautioned against moving too quickly, dismissing recession fears as a reason for the cut. Despite Bailey’s cautious tone, the Sterling remained bullish as markets interpreted the rate cut and Bailey’s comments as a sign of the BOE’s commitment to supporting economic growth.
Headline CPI rose to 3.6% year-on-year in June, up from 3.4% in May and beating expectations of 3.4%. Every month, CPI increased by 0.3% in June, up from May’s 0.2%, and in line with forecasts. Core CPI, which excludes food and energy, climbed to 3.7% YoY, above May’s 3.5% and above expectations around 3.5%.
USD/JPY traded sideways last week, oscillating around the 147.3 level. If the USD/JPY pair declines, it may find support at 145.7. If the pair climbs, it may find resistance at 150.9.
The BOJ left rates unchanged at its July meeting, as expected, and signaled it’s in no hurry to tighten further. The BOJ raised its inflation forecast, hinting at a tightening path ahead, although the timing of future rate hikes has yet to be determined.
BOJ Governor Kazuo Ueda acknowledged that price pressures are gradually firming and suggested that another rate hike remains on the table. Ueda, however, pointed to uncertainty around wage growth and domestic consumption and stressed the importance of sustained evidence that inflation remains on target before hiking rates further.
Preliminary GDP data released on Friday for the second quarter of 2025 showed that Japan’s economy is more resilient than anticipated. GDP rose 0.3% in Q2 of the year, approximately 1.0% annualized, beating market estimates of 0.1%.
At the same time, the GDP Price Index, which is a measure of domestic inflation, edged down slightly to 3.0% year-on-year, dipping from 3.3% in Q1 and missing expectations of 3.1%. Firmer economic growth, combined with sticky price pressures, is renewing bets on the BOJ resuming rate hikes later this year, boosting the Yen.
Cooling inflation in Japan has reduced BOJ rate hike expectations, weakening the Yen and pressuring bond yields. Tokyo core CPI came in at 2.9% year-on-year in July from 3.1% year-on-year in June, suggesting cooling price pressures. Headline inflation dipped to 3.3% year-on-year in June from 3.5% in May. Core CPI, which excludes food and energy, cooled to 3.3% from 3.7% in May.
Japan's economy remained stagnant in the first quarter of 2025, exceeding the anticipated 0.2% decline. On an annualized basis, GDP shrank by 0.2%, compared to -0.7% in the previous reading. The BOJ may delay interest rate hikes further to support the country’s weakening economy, especially if trade tensions rise.
Gold’s rally was halted last week, and gold prices dipped from $3,385 to $3,335 per ounce. If gold prices rise, they may encounter resistance at $3,440 per ounce, while if gold prices decline, support may be encountered near $3,268 per ounce.
Gold prices have been typically directed by the dollar’s movement, as the competing gold typically loses appeal as an investment when the dollar rises. The dollar weakened last week, and the dollar index slipped from 98.4 to 97.8. U.S. treasury yields, on the other hand, edged higher, providing support for the dollar, with the 10-year bond yield rising from 4.29% to 4.32%.
Last week, markets were poised to react to the outcome of the Trump–Putin summit in Alaska on August 15. The two leaders issued a joint press conference after the meeting, revealing that the summit had been mostly fruitless. The two parties did not reach a ceasefire agreement on the Russia-Ukraine conflict or any concrete agreements. Markets largely interpreted this as a win for Putin, leaving Trump’s position weakened. Gold prices dipped slightly ahead of the Trump–Putin summit on optimism that the peace talks would succeed. Gold prices rose slightly after the summit, as optimism gave way to disappointment over the outcome, but dipped again later, and so fa,r market reaction has been muted.
Gold prices are supported by rising Fed rate cut expectations. The Fed held rates steady at its policy meeting in July, as expected, but Fed Chair Powell struck a more hawkish tone in his press conference, boosting the dollar.
Gold gained support after the release of soft U.S. CPI inflation data on Tuesday, which were interpreted as dovish for the Fed by markets, but a hot PPI print on Thursday put pressure on gold prices.
U.S. Consumer Price Index (CPI) rose by 0.2% in July, according to data released on Tuesday. This was in line with expectations, easing from June’s 0.3% print. July’s U.S. headline inflation remained steady at 2.7% year-on-year, versus 2.8% expected. The soft inflation print fueled speculation that easing could come sooner than previously expected, pushing odds of a September rate cut to 98%, boosting gold prices. Later in the week, however, hotter-than-expected PPI data tempered those bets, bringing odds of a September rate cut down to 83%.
Oil prices remained rangebound last week, and the WTI price traded close to the $63.5 level. If WTI price retreats, it may encounter support near $62.1 per barrel, while resistance may be found near $71.3 per barrel.
Last week, oil prices were pulled in opposite directions by shifting macroeconomic and geopolitical forces. The net effect was that oil prices traded sideways in a tight range, lacking direction.
On one hand, renewed uncertainty around the Trump–Putin summit and lack of progress on the crisis between Russia and Ukraine raised concerns about supply disruptions, providing support for oil prices.
On the other hand, the Energy Information Administration (EIA) reported a surprise build of 3.0 million barrels in U.S. crude oil inventories for the week to August 8. This large build far exceeded forecasts of 0.9M barrels and the previous week’s 3.0M barrels. At the same time, gasoline stocks dipped by 0.8 million barrels, while distillate inventories rose by around 0.7 million barrels. The unexpected rise in U.S. stockpiles helped offset geopolitical jitters around the Trump-Putin summit, putting a lid on oil’s gains.
Oil prices are kept in check by high central banks’ interest rates. The Fed held rates steady at its policy meeting in July, as expected, but Fed Chair Powell struck a more hawkish tone in his press conference, boosting the dollar.
Fed rate cut expectations shifted strongly last week. Soft inflation data early in the week fueled speculation that easing could come sooner than previously expected, pushing odds of a September rate cut to 98%. Later in the week, however, PPI data tempered those bets, bringing odds of a September rate cut down to 83%.
OPEC+ has raised its oil production for August by 548,000 bpd, well above the prior 411,000 bpd. This supply boost signals the cartel’s intent to allow oil prices to ease amid growing concerns over weakening global demand and trade uncertainties.
Bitcoin price surged mid-week, reaching 124,400, its highest value in history. Bitcoin dipped sharply after hitting this record high, dropping to $111,700 on profit-taking, and hovered close to this level over the weekend. If BTC price declines, support can be found at $111,170, while resistance may be encountered at the all-time high of $124,400.
Ethereum continued its bullish run last week, rising to $4,790 for the first time since December 2021 and almost touching its all-time high of $4,847 reached at the time. Ethereum price declined towards the end of the week, trading near $4,500 over the weekend. If the Ethereum price declines, it may encounter support near $3,340, while if it increases, it may encounter resistance near $4,790.
Bitcoin price reached an all-time high above $124,400 last week as markets reacted to the recent U.S. executive order allowing crypto in 401(k) plans, unlocking trillions in retirement capital. Bitcoin price plummeted immediately after, however, as many traders rushed to realize their gains.
Ethereum also surged to $4,790, its strongest since December 2021. Ethereum’s rally was fueled by SEC clarity, strong ETF inflows, and rising institutional demand. Altcoins also gained strength, pushing the total crypto market cap past $4.1T. Many analysts predict that ETH will retest its all-time high in the following days, while others warn about overbought signals.
Cryptocurrency prices are also affected by central banks’ interest rates. The Fed held rates steady at its policy meeting in July, as expected, but Fed Chair Powell struck a more hawkish tone in his press conference, boosting the dollar.
Fed rate cut expectations shifted strongly last week. Soft inflation data released early in the week fueled speculation that easing could occur sooner than previously expected, pushing the odds of a September rate cut to 98% and boosting crypto markets. Later in the week, however, hotter-than-expected PPI data tempered those bets, bringing odds of a September rate cut down to 83%, putting pressure on risk assets.
Last week, markets were poised to react to the outcome of the Trump–Putin summit in Alaska on August 15. The two leaders issued a joint press conference after the meeting, revealing that the summit had been mostly fruitless. The two parties did not reach a ceasefire agreement on the Russia-Ukraine conflict or any concrete agreements. Markets largely interpreted this as a win for Putin, leaving Trump’s position weakened. Risk sentiment dropped after the announcement of the disappointing outcome, putting pressure on crypto markets.
BTC/USD 1h Chart
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Written by:
Myrsini Giannouli
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