US CPI Data Set to Test Fed Rate Expectations and Market Rally

Ultima Markets Daily Market Insights — 12 August 2026

CPI Preview: July Inflation Report Takes Centre Stage

Following last week’s disappointing US Non-Farm Payrolls (NFP) report, which fuelled heightened market volatility, global financial markets have entered a temporary holding pattern. Investor focus is now firmly fixed on today’s release of the US July Consumer Price Index (CPI) report.

Recent market developments have seen the US dollar continue to weaken, gold extend its breakout rally, and equities remain close to record highs. This risk-on environment has been driven by markets steadily reducing expectations for further Federal Reserve tightening amid softer energy prices and signs of cooling labour market conditions.

Today’s CPI release will provide a crucial test of whether inflationary pressures are genuinely easing, potentially reinforcing the market’s increasingly dovish view of the Federal Reserve.

Market Consensus for July CPI:

• Headline CPI YoY: Expected at 3.4% (Previous: 3.5%)
• Core CPI YoY: Expected at 2.5% (Previous: 2.6%)

According to the CME FedWatch Tool, the probability of a Federal Reserve rate hike in September has fallen to 48.7%, slipping below the key 50% threshold.

A softer inflation reading would reinforce expectations that price pressures are continuing to moderate, likely keeping September rate hike odds subdued, weighing further on the US dollar and providing support for gold and equities. Conversely, a stronger-than-expected CPI report could revive tightening expectations, sending Treasury yields and the US dollar higher.

FX, Commodities & Equities Insights

US Dollar Index: Consolidating Below 100.00 Ahead of CPI

The US Dollar Index remains within a bearish technical structure below the 100.00 psychological level.

USDX, H4 Chart | Ultima Markets MT5

While the broader trend remains negative following the completion of a double-top reversal, support has emerged around 99.50, leaving the index in a near-term consolidation phase.

The next major move is likely to depend on today’s CPI outcome:

• A weaker-than-expected CPI reading could drive a break below 99.50, opening the way towards 99.00 support.
• A stronger inflation reading could trigger a rebound back towards 100.00 resistance.

From a technical standpoint, 100.00 remains the key resistance level. Until the index regains this threshold, upside potential is expected to remain limited.

Gold Outlook: CPI to Determine the Next Move

Gold continues to display a strong technical profile following its breakout above $4,200 and subsequent advance beyond $4,400.

XAUUSD, H4 Chart | Ultima Markets MT5

From a technical perspective, immediate support is located at $4,300 and $4,250, while the $4,400-$4,360 area remains a critical zone for price action.

Fundamental Outlook: Gold’s next major move will depend heavily on the impact of CPI on Treasury yields and Federal Reserve expectations. Further declines in September rate hike probabilities would likely provide additional support for bullion.

Although a short-term retracement towards $4,300 remains possible, the broader strategy continues to favour buying on dips unless inflation data triggers a significant hawkish repricing.

US Equities: Nasdaq 100 Challenges 30,000 Resistance

Major US equity indices continue to trade constructively, with the S&P 500 remaining near record highs as financial conditions become more supportive.

NAS100, H4 Chart | Ultima Markets MT5

Attention remains focused on the Nasdaq 100, which is currently testing the key 30,000 resistance level. Given the technology sector’s sensitivity to interest rate expectations:

• A softer CPI reading could provide the catalyst for a breakout above 30,000.
• A stronger-than-expected reading could lead to a pullback towards 29,000 support.

Despite this event risk, sentiment towards technology stocks remains broadly constructive. As a result, the Nasdaq 100 may continue to trade within the 29,000–30,000 range until a decisive catalyst emerges.

Market Summary & Key Highlights Today

Global financial markets face a critical test as investors prepare for potentially significant volatility following the release of US inflation data.

Simply put, today’s CPI report will serve as a key gauge for the Federal Reserve’s September policy outlook, making it one of the most important market events of the week.

What to Watch Today:

• US July CPI Release (12:30 GMT): Monitor Headline CPI (3.4% expected) and Core CPI (2.5% expected) for clues on the Fed’s September outlook.
• US Dollar Index at 99.50: Watch whether softer inflation pushes the index below 99.50 towards 99.00.
• Gold Support at $4,400 and $4,360: Monitor potential buy-on-dip opportunities if CPI data weighs on yields.
• Nasdaq 100 at 30,000: Assess whether technology stocks can break resistance following the inflation release.

Disclaimer

Comments, news, research, analysis, price, and all information contained in the article only serve as general information for readers and do not suggest any advice. Ultima Markets has taken reasonable measures to provide up-to-date information, but cannot guarantee accuracy, and may modify without notice. Ultima Markets will not be responsible for any loss incurred due to the application of the information provided.