Stocks Rally, USDX Slides on Rate Cut Hopes; CPI Data Eyed

The EUR/USD closed Friday with slight losses but still posted a 0.63% weekly gain, supported by a weaker U.S. dollar as soft labor market data fueled expectations that the Federal Reserve may resume its easing cycle.

Market sentiment received a boost from reports of a potential Trump–Putin meeting this week, which has raised hopes for a ceasefire in Eastern Europe. While the news initially supported the euro, gains faded as the greenback regained some ground. Speculation over the Fed’s leadership also influenced the currency pair, with rumors circulating that Fed Governor Christopher Waller could be nominated to succeed Jerome Powell as Fed Chair. The nomination of Stephen Miran as head of the Council of Economic Advisers added further support to the dollar.

On the policy front, St. Louis Fed President Alberto Musalem moderated his previously hawkish tone, noting risks to both inflation and employment.

Traders are now pricing in an 88% probability of a 25 basis point Fed rate cut at the September FOMC meeting, according to Prime Market Terminal. In contrast, the European Central Bank is widely expected to keep policy unchanged next month, with market odds for no change also at 88%.

In the week ahead, the euro will take cues from inflation figures in Italy and Germany, the release of the ZEW Economic Sentiment surveys, and second-quarter GDP data for the euro area. Across the Atlantic, U.S. releases will include Retail Sales, Initial Jobless Claims, the University of Michigan’s Consumer Sentiment Index, and speeches from several Fed officials. For now, the euro’s upside remains capped, with investors closely watching geopolitical headlines and central bank signals for the next decisive move.

Gold prices eased from record highs on Friday after reports that the White House is preparing an executive order to clarify the country’s stance on gold bar tariffs. The move follows a U.S. Customs and Border Protection ruling suggesting that Washington may impose country-specific import tariffs on widely traded bullion bars.

The ruling disrupted global bullion flows, prompting some Swiss refiners to halt shipments to the U.S., according to Reuters. Industry groups warned the measure could dent international gold trade, particularly from Switzerland, the world’s leading refining hub. The White House has since pledged to issue an executive order clarifying the policy, a move that has eased some tensions in futures markets.

Attention now turns to the U.S. Consumer Price Index for July, due Tuesday, which is expected to rise around 0.2% from June. The Producer Price Index will follow later in the week. The readings will be closely watched for clues on the Federal Reserve’s next policy move, with markets currently pricing an 89% chance of a September rate cut. Weak labor market data earlier this month has reinforced those expectations.

Adding to the geopolitical backdrop, the U.S.-China tariff truce—credited with preventing further escalation in trade duties—is set to expire on August 12. While investors are hopeful for an extension, uncertainty over the outcome remains.

Oil prices were little changed on Friday as traders awaited an anticipated meeting between Russian President Vladimir Putin and U.S. President Donald Trump, but both benchmarks recorded their steepest weekly declines since late June amid concerns over a tariff-hit economic outlook.

Earlier in the session, U.S. crude slid more than 1% after Bloomberg reported that Washington and Moscow were working toward a deal to end the war in Ukraine, potentially locking in Russia’s control over occupied territories. The report said the agreement could be finalized at a summit between Trump and Putin as early as next week.

The potential meeting has fueled speculation that a diplomatic resolution could lead to eased sanctions on Russia. At the same time, trade tensions remain high, with Trump threatening higher tariffs on India over its purchases of Russian crude and warning that China could face similar measures.

Concerns about global oil demand intensified after higher U.S. tariffs on a range of imports took effect on Thursday. On the supply side, OPEC+ agreed on Sunday to raise output by 547,000 barrels per day in September—fully reversing the voluntary cuts of 2.2 million bpd made earlier this year. The U.S. oil rig count also rose by one to 411, signaling potential further increases in production.

The U.S. dollar firmed on Friday but was still set for a weekly loss. A stronger greenback typically pressures oil demand by making dollar-priced crude more expensive for buyers using other currencies.

Bitcoin climbed early on Monday, extending last week’s sharp rebound as cryptocurrency markets reacted positively to an executive order from U.S. President Donald Trump permitting retirement funds to invest in digital assets. Ether also advanced, holding near levels last seen during its 2021 bull run, while several altcoins posted double-digit percentage gains in early trading.

The world’s largest cryptocurrency has posted strong gains since late last week, when Trump signed an order directing regulators to allow retirement savings plans such as 401(k)s to access alternative assets and private equity investments, including cryptocurrencies. Analysts say the move could mark a pivotal shift in U.S. investment policy, potentially unlocking billions of dollars in long-term capital from pension funds and retirement accounts into the digital asset sector.

The announcement coincided with a surge in institutional interest in crypto, with leading U.S.-listed Bitcoin exchange-traded funds recording three consecutive days of strong inflows — their best run since the beginning of the year.

Trump’s action followed a series of crypto-friendly measures from his administration in recent months, including legislation to establish a regulatory framework for stablecoins, streamline licensing requirements for digital asset custodians, and encourage blockchain adoption in financial infrastructure.

Broader cryptocurrency markets rose early on Monday, extending the strong momentum built in the latter half of last week. Market sentiment was further buoyed by a weaker U.S. dollar and speculation that the Federal Reserve may slow the pace of interest rate hikes later this year — factors that historically tend to support risk-on assets like Bitcoin.