WTI Opens 7% Lower; Focus Shifts to NFP - CPT Markets

Market Wrap-up: Oil Falls, Dollar Weakens Before NFP

Markets opened the week with significant volatility, led by a sharp decline in oil prices. Over the weekend, US President Donald Trump announced that Iran and several Middle Eastern countries had requested additional time to finalize an agreement.

The proposed deal would result in the immediate, full reopening of the strategic Strait of Hormuz while effectively eliminating Iran's nuclear threat. Trump also confirmed that a new round of negotiations with Iran will begin on Monday after he canceled a planned military strike against the country.

WTI crude opened with a nearly 7% downside gap, falling below the $80 per barrel mark as geopolitical risk premiums unwound. At the same time, the US Dollar Index (DXY) dropped sharply toward the 99.40 level before showing signs of a modest recovery after declining around 0.3% during Monday's Asian session.

The weaker US dollar from Friday through the start of the new week also supported gold prices, allowing the precious metal to rebound from the $4,020 area to around $4,070 per ounce. For July as a whole, gold gained approximately 0.5%, marking its strongest monthly performance since February, when the US-Iran conflict first escalated.

Meanwhile, Wall Street ended July with mixed performance. The Dow Jones Industrial Average rose 0.3%, extending its winning streak to a fourth consecutive month. In contrast, the S&P 500 edged down 0.1%, while the Nasdaq Composite declined 3.2% as investors took profits in technology stocks following an extended AI-driven rally.

Looking ahead, this week will provide an important test of whether the US dollar can recover after the broad selloff seen during the final week of July.

Market attention is shifting from central bank decisions to a fresh round of US economic data. The July Nonfarm Payrolls (NFP) report will be the primary focus, while ISM surveys, ADP employment figures, and JOLTS job openings will offer additional insight into the strength of the US economy. Stronger-than-expected data could reinforce the Fed's hawkish stance, while softer readings may revive expectations for policy easing.

XAU/USD: Gold Rebounds Above $4,070 as Dollar Weakens

Key takeaway:

Gold recovered above $4,070 after President Trump suspended planned military action against Iran.

Trump canceled the planned strikes as negotiations progressed toward an agreement covering Iran's nuclear program and the full reopening of the Strait of Hormuz.

Meanwhile, CME FedWatch data indicates markets now assign a 65% probability of a Fed rate hike in September, down significantly from more than 80% a week ago. The pullback in rate hike expectations weighed on the US dollar and provided near-term support for gold despite the easing in geopolitical tensions.

Technical Outlook:

Daily Bias: Bearish

Support: 4,000

Resistance: 4,080

Oil: WTI Slumps Below $80 on Iran Negotiation Hopes

Key takeaway:

WTI crude plunged nearly 7% after President Trump said Middle Eastern countries had requested additional time to finalize an agreement.

The proposed deal would immediately and fully reopen the strategic Strait of Hormuz while removing the threat posed by Iran's nuclear program, prompting markets to unwind geopolitical supply risk premiums.

In addition, OPEC+ approved a modest increase in production quotas.

The decision completes the group's planned restoration of supply cuts introduced in 2023 and provides room for further production increases should tensions in the Middle East continue to ease.

Technical Outlook:

Daily Bias: Bearish with Rebound Potential

Support: 77.76

Resistance: 81.50

DXY: Dollar Falls as Focus Shifts to US Jobs Data

Key takeaway:

The US Dollar Index weakened toward the 99.40 area as market attention shifted from central bank decisions to a fresh round of US economic data.

This week's focus turns to the US labor market following the Fed's hawkish internal split.

The July Nonfarm Payrolls report will be the key event, while ISM surveys, ADP employment data, and JOLTS job openings are expected to provide further guidance on the strength of the US economy. These releases are likely to determine whether the recent dollar weakness extends or begins to reverse.

Technical Outlook:

Daily Bias: Bullish

Support: 99.41

Resistance: 100.43

EUR/USD: Euro Holds Near Multi-Week High as Dollar Softens

Key takeaway:

The euro remained near its highest level since 17 June as easing expectations for additional Fed rate hikes continued to pressure the US dollar.

The single currency also remained supported by resilient Eurozone inflation, reinforcing the case for the European Central Bank to deliver another rate hike in September.

This week, investors will assess whether inflationary pressures in the Eurozone are beginning to moderate through Producer Price Index (PPI), Retail Sales, and Factory Orders data.

Technical Outlook:

Daily Bias: Bearish

Support: 1.14554

Resistance: 1.15591

USD/JPY: Yen Rallies on Coordinated Currency Intervention

Key takeaway:

The Japanese yen strengthened sharply after Japan announced coordinated currency intervention with the United States.

According to data released by the Bank of Japan on July 31, Japan may have sold up to ¥8.2 trillion (approximately $58.97 billion) in foreign currency during its latest intervention to support the yen.

Japanese Finance Minister Satsuki Katayama and US Treasury Secretary Scott Bessent are now coordinating their efforts at a level not seen in decades to stabilize the currency.

Traders remain alert to the possibility of further coordinated intervention as President Trump continues to support Japan's efforts to strengthen the yen.

Technical Outlook:

Daily Bias: Bearish

Support: 155.54

Resistance: 158.00

The sharp decline in oil prices set the tone for the start of the week after signs of progress in US-Iran negotiations reduced geopolitical risk and triggered a broad unwind of the Middle East risk premium.

The weaker dollar helped gold recover, while Wall Street delivered mixed performance as investors rotated out of technology shares following July's strong gains.

Markets are now shifting away from central bank meetings and focusing on incoming US economic data. The July NFP report, together with ISM surveys, ADP employment, and JOLTS job openings, will be the key catalysts for expectations around the Fed's next move.

Stronger data could support a rebound in the US dollar, while weaker readings may reinforce expectations for policy easing and extend recent moves across gold, currencies, and broader risk assets.

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