EUR/USD & Gold Price Outlook: Hormuz Strikes, US CPI and Dollar Strength in Focus

Fragile rebounds across precious metals and major FX pairs face renewed risks from the latest developments around the Strait of Hormuz and this week's US CPI report. Key technical levels remain in focus to determine the next directional breakout.

• Iran and the US exchanged strikes following the disruption of the ceasefire framework.
  • The US launched strikes against Iran's key Hormuz gateway and military infrastructure.
  • Iran launched strikes against commercial shipping in the Strait of Hormuz, including oil and LNG vessels.
• Fed Governor Kevin Warsh is expected to testify on Wednesday following Tuesday's US CPI report.
• US CPI is expected to decline from 4.2% to 3.8%, in line with the more than 40% decline in crude oil prices from their yearly highs.
• Crude oil prices continue to hold a fragile bullish rebound following the latest strikes, within a broader selloff driven by oversupply risks, rising OPEC+ production quotas, and recovering Gulf production and exports. Latest analysis: Crude Oil Weekly Outlook: Oversupply Risks Challenge WTI & Brent Despite Hormuz Tensions
• EUR/USD and gold are also holding fragile rebounds despite persistent US dollar strength, supported by lingering inflationary pressures stemming from the US-Iran conflict, reinforcing expectations for a higher-for-longer interest rate environment.
• As the US Dollar Index (DXY) holds above 101:
  • EUR/USD continues to face bearish pressure below 1.1470.
  • Gold continues to face bearish pressure below 4,200.

EUR/USD Price Outlook: Monthly Time Frame – Log Scale

Source: TradingView

Key points from this chart:

• EUR/USD's monthly price action continues to test the multi-year resistance-turned-support zone between 1.1280 and 1.1300.
• This area aligns with the 38.2% Fibonacci retracement of the January 2025-January 2026 advance. A breakdown below 1.1280 would expose the 1.1130-1.1000 region, where the 50% Fibonacci retracement converges with the upper boundary of the 2008-2025 descending channel, creating another potential major rebound zone.
• On the upside, a sustained move back above 1.1470, followed by 1.1600, would reinforce bullish continuation toward the key 1.1730-1.1800 resistance area. This zone could either trigger another major pullback or open the door for a rally toward levels last seen in 2021 and 2018 near 1.2300.

These scenarios largely depend on whether the US dollar pulls back or breaks above its major resistance zone, as discussed in this video. USD/JPY Bulls Prepare for Major Move Higher?

Gold Price Outlook: Six-Month Time Frame – Log Scale

Source: TradingView

Key points from the six-month chart:

• Gold is testing a breakdown below the 27.2% Fibonacci retracement of the 1920-2026 advance. A close below 3,930 would expose the 38.2% Fibonacci retracement near the 3,500-3,460 zone, which served as a five-month resistance area throughout 2025.
• Price action is also aligned with the trendline connecting consecutive highs between 2016 and 2025, a major resistance-turned-support level. This high-time-frame confluence zone could determine whether gold stages a major reversal or experiences a deeper decline.

Gold Price Outlook: Daily Time Frame – Log Scale

Source: TradingView

Key points from this chart:

• Despite the high-time-frame support confluence, gold's daily price action remains capped below a descending trendline connecting lower highs since March 2026, maintaining an overall bearish bias.
• Price action is currently holding a fragile rebound, testing the 27.2% Fibonacci retracement of the April-July decline. A move above 4,200 would shift focus toward:
  • 4,300: 38.2% Fibonacci retracement.
  • 4,420: 50% Fibonacci retracement, which would mark a sustained bullish shift from the current bearish bias.

As long as DXY strength persists, as discussed in this video, downside risks remain elevated across both EUR/USD and gold unless a change in monetary policy direction is confirmed and/or key resistance levels are reclaimed.

Written by Razan Hilal, CMT

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