COOLER CPI IGNITES A RISK-ON RALLY
Markets entered the day bracing for another round of volatility as the conflict between the U.S. and Iran continued to intensify. Instead, a softer-than-expected U.S. inflation report completely shifted sentiment, sending equities and cryptocurrencies sharply higher.
Bitcoin reclaimed $64K, altcoins surged across the board, and investors rapidly priced out the possibility of another near-term Federal Reserve rate hike. While geopolitical tensions remain elevated, today’s CPI report reminded markets that macroeconomic data can still overpower headlines at least for now.
INFLATION DATA CHANGES THE FED OUTLOOK
The biggest catalyst of the day was June’s Consumer Price Index, which came in lower than expected, providing fresh evidence that inflation is beginning to cool.
Following the release, the probability of a Federal Reserve rate hike at the July 29 meeting collapsed to just 8%, as traders aggressively repriced expectations for monetary policy. The report marked the largest monthly decline in CPI since April 2020, easing concerns that inflation would remain stubbornly high.
The softer inflation print immediately boosted risk assets, with investors returning to equities and cryptocurrencies while the U.S. dollar weakened.
The next major macro event arrives tomorrow with the release of the Producer Price Index (PPI). Markets expect headline producer inflation to cool to -0.1% to -0.2% MoM from +1.1% previously. If producer inflation also surprises to the downside, today’s rally could extend. However, a hotter-than-expected report could quickly reverse today’s gains.
WAR ESCALATES AS THE STRAIT OF HORMUZ BECOMES THE FOCUS
The United States and Iran entered a third consecutive night of direct military strikes, with both sides targeting military assets across the region. Trump formally notified Congress that the United States is at war with Iran, allowing military operations to continue for another 60 days without additional congressional approval.
Iran claimed responsibility for targeting oil tankers and warned commercial vessels against entering the Strait, while Trump proposed imposing a 20% transit fee on cargo passing through Hormuz. Iran’s Foreign Minister responded by saying that commercial ships should indeed pay for secure passage, although calling the proposed fee excessive. Estimates suggest such a fee would cost roughly $30 million per fully loaded oil supertanker, significantly increasing global shipping costs.
Although today’s CPI report dominated price action, the Middle East remains the biggest geopolitical risk facing markets. Any further disruption to global energy supplies could quickly reignite inflation concerns.
OIL SURGES AS GEOPOLITICAL RISKS RETURN
Crude oil remained one of the strongest-performing assets as traders continued pricing in the risk of supply disruptions. Technically, WTI has reclaimed its 4-hour 25-period Moving Average ($73.46), 100-period Moving Average ($73.00), and 200-period Moving Average ($71.16), confirming a strong shift in short-term momentum.
Price is now testing the critical $80-$80.50 resistance zone. A breakout above this area could open the door toward $85.42, while easing geopolitical tensions could trigger a pullback toward $78.62, followed by the $76.51-$74.23 support region.
SPY APPROACHES A MAJOR BREAKOUT LEVEL
SPY responded strongly to today’s inflation data, reclaiming the 4-hour 100-period Moving Average ($747.31) after successfully defending the $746.97-$749.19 support zone.
Price is now trading around $752.23, just below the key $758.57 resistance level. A successful breakout would strengthen the bullish structure and expose the next upside targets at $762.99 and $767.95.
On the downside, the 4-hour 100 MA ($747.31) and 200 MA ($744.97) remain the key support levels. As long as it holds above these moving averages, the broader uptrend remains intact.
COMMODITIES
Precious metals also benefited from the weaker dollar. Gold gained 2.06%, Silver rose 2.70%, Copper added 2.30%, and Platinum climbed 2.86%, reflecting renewed demand for both safe-haven and industrial metals.
CRYPTO WATCH
Crypto was one of today’s biggest beneficiaries of the CPI surprise. Bitcoin reclaimed $64K, Ethereum moved sharply higher, and broad altcoin strength returned as investors rotated back into risk assets following the softer inflation print.
Today’s rally also forced bearish traders to unwind positions, accelerating the move higher.
SHORT LIQUIDATIONS FUEL THE RALLY
The CPI surprise triggered another major short squeeze across crypto markets. Over the past 24 hours, approximately 85,866 traders were liquidated, with total liquidations reaching $390.6 million.
Short positions accounted for $222.3 million, compared to $168.3 million in long liquidations. Ethereum led the squeeze with $132.8 million in liquidations, followed by Bitcoin at $98.2 million. The forced closing of bearish positions added further buying pressure, helping accelerate today’s rally.
BITCOIN RETURNS TO A KEY LIQUIDITY ZONE
BTC has reclaimed the $64K region following today’s CPI release and is now approaching its next major liquidity cluster. The liquidation heatmap shows heavy concentrations of short liquidity between $64.8K and $66K. A breakout into this zone could trigger another wave of short liquidations, extending today’s rally.
On the downside, strong bid liquidity remains concentrated between $61K and $62K, making this the key support area if Bitcoin experiences a pullback.
Tomorrow’s PPI report will likely determine whether Bitcoin has enough momentum to attack the next liquidity pocket.
LDO EYES A BREAKOUT AFTER A SHARP RECLAIM
Lido DAO (LDO) is one of the standout alt movers today, surging 7.17% and reclaiming its Daily 50-period Moving Average ($0.2826) and 100-period Moving Average ($0.3258) in a single session.
Price is now testing the $0.3423 resistance zone. A confirmed breakout above this level could open the door toward $0.3961, with the 200-period Moving Average ($0.3697) acting as an intermediate hurdle along the way. A clean close above $0.3961 would expose the $0.4481 level as the next major target.
On the downside, the $0.2902 zone is the first line of defense, followed by the reclaimed 50 MA at $0.2826. A rejection here could send LDO back toward the $0.2422 support that has held since June.
With today’s move breaking a multi-month downtrend structure, LDO’s next few sessions above or below $0.3423 will likely determine whether this is the start of a broader trend reversal or another failed reclaim within the range.
WHAT TO WATCH NEXT
- U.S. Producer Price Index (PPI) tomorrow at 8:30 AM ET
- Can Bitcoin break through the $64.8K-$66K liquidity zone?
- Will SPY clear resistance near $758.57?
- Can oil break above the critical $80-$80.50 resistance area?
- Can LDO hold the $0.3423 breakout level?
- Further developments in the U.S.-Iran conflict
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