Oil is trading near a one-month high after renewed U.S.–Iran hostilities disrupted shipping through the Strait of Hormuz, and that single story is rippling through gold, silver, the U.S. dollar, and oil-linked currencies like the Canadian dollar.
On top of that, the European Central Bank meets Thursday, July 23, days after its first rate hike in three years, and the Bank of Japan’s historic move to 1% hasn’t stopped the yen from sliding to a 40-year low.
This week’s biggest opportunities and biggest risks both trace back to the same place: how far the Middle East conflict goes, and how central banks respond to the inflation it’s creating.
Why This Week Matters: An Oil Shock Meets a Live Central Bank Calendar
If you only remember one thing about markets this week, make it this: a shipping disruption near Iran is currently doing more to move currencies and commodities than almost anything else on the calendar. U.S. and Iranian forces have traded strikes for several days running, and Washington has reinstated naval measures near Iranian ports.
As a result, ship traffic through the Strait of Hormuz — the narrow waterway between Iran and Oman that a large share of the world’s seaborne oil passes through — has dropped by more than half compared with the previous week.
That matters because when oil supply looks uncertain, oil prices rise. Brent crude has climbed to roughly $85 a barrel and WTI to about $79.60, both around one-month highs. Higher oil prices ripple outward: they lift inflation expectations, they boost the currencies of oil-exporting countries like Canada and Norway, and they tend to push nervous investors toward traditional safe havens like gold, silver, and the Swiss franc.
A safe-haven asset is simply something investors buy when they’re nervous about the outlook — an asset that tends to hold or gain value during periods of uncertainty rather than lose it. Gold, silver, and the Swiss franc have earned that reputation over decades of crises. Keep that definition in mind, because this week actually tests it: as you’ll see below, one of this week’s usual safe havens — the Japanese yen — isn’t behaving like one.
Why is the U.S. dollar rising along with oil? Isn’t that unusual?
Normally, a weaker dollar makes oil (which is priced in dollars) cheaper for the rest of the world, so the two tend to move in opposite directions. This week is an exception. Both oil and the dollar are being bought for the same reason — as a hedge against Middle East uncertainty — which is a pattern markets sometimes call a ‘stagflation scare’: rising prices and rising risk aversion happening together.
Why would a central bank raise rates during an oil shock?
It sounds backwards, but it’s exactly what the European Central Bank did in June, delivering its first interest rate hike in three years and lifting its deposit rate to 2.25%.
The logic: when oil and energy costs spike, they push up inflation even if the underlying economy isn’t overheating. A central bank that’s already worried about inflation may choose to hike anyway, to prevent expectations of higher prices from becoming self-fulfilling.
Trading the Oil Shock? Here’s Where to Start
Brent near $85 on Strait of Hormuz disruption, USD/CAD and USD/NOK moving in lockstep with crude — trade the currency pairs and commodities covered in this report with tools built for active traders.
Explore Pepperstone →This Week’s Economic Calendar
Here are the scheduled events most likely to move forex and commodity markets this week. All times are approximate UTC and subject to change.
| Date | Country | Event | Importance |
|---|---|---|---|
| Mon, Jul 20 | China | PBOC Loan Prime Rate decision | High |
| Mon, Jul 20 | Canada | CPI (y/y) | High |
| Mon, Jul 20 | New Zealand | CPI (q/q, y/y) | High |
| Tue, Jul 21 | UK | Labour market report (jobs, wages) | Medium-High |
| Tue, Jul 21 | Eurozone | Bank Lending Survey | Medium |
| Wed, Jul 22 | UK | CPI inflation | High |
| Wed, Jul 22 | US | EIA crude oil inventories | Medium-High |
| Thu, Jul 23 | Australia | Employment change / unemployment rate | High |
| Thu, Jul 23 | Eurozone | ECB interest rate decision & press conference | Critical |
| Thu, Jul 23 | US | Initial jobless claims | Medium-High |
| Fri, Jul 24 | Germany/Eurozone/UK | Flash manufacturing & services PMI | High |
| Fri, Jul 24 | UK | Retail sales | Medium |
| Fri, Jul 24 | US | Flash manufacturing & services PMI | High |
| Ongoing | Middle East | Iran–U.S. conflict / Strait of Hormuz shipping status | Critical |
Central Bank Watch
Five major central banks are relevant to markets this week, each sending a different signal. Here’s where they stand.
| Central Bank | Current Rate | Stance | Next Decision |
|---|---|---|---|
| Federal Reserve | 3.50%–3.75% | On hold; labor market softening | Jul 28–29 (next week) |
| European Central Bank | 2.25% (deposit) | Hawkish hold expected | Thu, Jul 23 (this week) |
| Bank of England | 3.75% | Hawkish hold; sticky services inflation | Jul 30 (next week) |
| Bank of Japan | 1.00% | Normalizing; more hikes signaled | No meeting this week |
| Bank of Canada | On hold | Neutral; oil is the bigger CAD driver | No meeting this week |
The Federal Reserve isn’t due to meet until next week, but it’s already shaping this week’s trading. June’s jobs report showed hiring slowed sharply to just 57,000 new jobs, with the two prior months revised down by a combined 74,000, and unemployment ticked up to 4.2%. That’s made the case for a strong, one-directional dollar less clear-cut than it was a month ago — even as the oil shock provides its own separate source of dollar demand.
The European Central Bank’s Thursday decision is this week’s single most important scheduled event. Markets currently assign roughly a 95% probability that the ECB holds rates steady this week, while leaving the door open to another 25-basis-point hike in September if energy prices stay elevated. (A basis point is one-hundredth of a percent, so 25 basis points equals 0.25%.)
The tone of ECB President Christine Lagarde’s press conference — whether she sounds urgent or patient about further hikes — will likely matter more for the euro than the decision itself.
You’ll see two different ECB rates mentioned in coverage this week: the deposit rate (2.25%) and the refinancing, or ‘refi,’ rate (2.40%). The deposit rate is what the ECB pays commercial banks for parking cash with it overnight, while the refi rate is what it charges banks to borrow from it. In practice, markets treat the deposit rate as the ECB’s key policy rate — the one to watch — since it’s the rate that most directly shapes short-term borrowing costs across the eurozone.
The Bank of Japan already delivered its own surprise this cycle, raising rates in June to 1%, the highest level since 1995. Board members have suggested further hikes are likely every few months as Japan moves toward a ‘neutral’ rate near 2%. Yet the yen has kept weakening anyway, trading near 162.5 per dollar — its softest level in roughly four decades.
That’s a reminder that interest rate differentials, not just direction of travel, drive currency moves: even after hiking, Japan’s rates remain far below U.S. levels, so investors continue borrowing yen cheaply to invest in higher-yielding dollar assets, a strategy known as a carry trade.
ECB Decision Thursday — Position Ahead of the Move
Gold near $4,070, silver at a multi-year high near $58.55, and EUR/USD sitting on genuine two-way risk into Thursday’s ECB press conference — get the spreads and execution tools built for trading forex, gold, and oil in real time.
Trade Gold, Oil & FX with Pepperstone →Top 10 Forex Pairs to Watch
Ranked by our assessment of which pairs are most likely to see significant, catalyst-driven movement this week.
| Rank | Pair | Trend | Confidence | Primary Catalyst |
|---|---|---|---|---|
| 1 | EUR/USD | Neutral, high volatility | 75% | Thursday’s ECB decision & press conference |
| 2 | USD/JPY | Bullish, stretched | 65% | Wide U.S.–Japan rate gap despite BoJ hikes |
| 3 | USD/CAD | Bearish (CAD strength) | 70% | Oil prices near one-month highs |
| 4 | GBP/USD | Neutral, data-dependent | 60% | UK CPI & jobs data ahead of Jul 30 BoE meeting |
| 5 | AUD/USD | Neutral-to-bullish | 55% | Australian jobs data & PBOC policy signal |
| 6 | NZD/USD | Data-dependent | 55% | Monday’s New Zealand CPI |
| 7 | USD/CHF | Bearish (CHF strength) | 55% | Safe-haven demand from Middle East risk |
| 8 | EUR/GBP | Neutral, event-driven | 50% | ECB vs. BoE policy divergence |
| 9 | USD/CNH | Neutral, policy-dependent | 50% | Monday’s PBOC rate decision |
| 10 | USD/NOK | Bearish (NOK strength) | 55% | Sustained oil-price strength |
The clearest story here is EUR/USD. It sits directly under this week’s biggest scheduled event, with genuine two-way risk: a hawkish Lagarde could push the pair toward 1.1450–1.1560, while a message that frames June’s hike as a one-off energy response could send it back toward 1.1100–1.1200.
USD/CAD and USD/NOK are the most direct ways to trade the oil story, since both currencies typically strengthen alongside crude prices.
USD/JPY, meanwhile, is worth watching less for its base case and more for tail risk — trading this close to 40-year yen weakness raises the odds of verbal or actual intervention from Japanese officials.
Chart the Hormuz Risk Premium in Real Time
Brent and WTI at one-month highs, gold’s speculative net-longs climbing to 194,000 contracts, USD/JPY testing a 40-year yen low — follow every move with free charts, watchlists, and price alerts.
Open Free Charts on TradingView →Top 10 Commodities to Watch
Ranked by expected volatility and the strength of this week’s catalysts.
| Rank | Commodity | Trend | Confidence | Key Driver |
|---|---|---|---|---|
| 1 | Brent Crude | Bullish | 75% | Strait of Hormuz disruption |
| 2 | WTI Crude | Bullish | 75% | Same Hormuz dynamics + US inventories |
| 3 | Gold | Bullish, consolidating | 65% | Safe-haven demand, rising speculative longs |
| 4 | Silver | Bullish | 65% | Sixth straight annual supply deficit |
| 5 | Natural Gas | Bullish, volatile | 55% | Energy-complex risk premium |
| 6 | Copper | Neutral-to-bearish | 50% | Energy-cost drag on manufacturing |
| 7 | Platinum | Neutral-to-bullish | 50% | Tracks precious-metals safe-haven flow |
| 8 | Palladium | Neutral | 45% | Autocatalyst demand, Russian supply |
| 9 | Wheat | Neutral-to-bullish | 45% | Shipping-risk spillover |
| 10 | Corn | Neutral | 40% | U.S. growing-season weather |
Oil dominates this list for obvious reasons, but silver’s story is worth a closer look because it’s not just about the Middle East. The Silver Institute has now confirmed a sixth consecutive annual global supply deficit — 46.3 million ounces, wider than 2025’s shortfall — meaning silver has a structural demand-supply imbalance layered on top of this week’s safe-haven bid. That combination is why our confidence in silver matches gold’s despite silver typically being the more volatile of the two.
Gold itself is worth a caution flag: CFTC data show speculative net-long positioning in gold futures rose to 194,000 contracts as of the most recent report, up from 181,300 the week before. In plain terms, that means large speculative traders were already leaning heavily bullish before the latest escalation — a position that can unwind quickly and sharply if there’s any sign of a ceasefire.
That data comes from the Commitment of Traders (COT) report, a weekly release from the U.S. Commodity Futures Trading Commission (CFTC) that shows how large speculative traders and commercial hedgers are positioned across futures markets like gold, oil, and currencies.
A rising ‘net-long’ number means more traders are betting on higher prices than lower ones. It’s a useful gauge of market sentiment, but it can also flag when a trade has become crowded — and crowded trades are more prone to sharp reversals.
Build a Watchlist for This Week’s Top 10 Setups
From bullish Brent and silver to a live EUR/USD setup ahead of Thursday’s ECB decision, track every pair and commodity on this week’s list in one place.
Set Up Your Watchlist on TradingView →How These Markets Connect
It can be easier to understand this week’s moves by thinking of them as one chain reaction rather than ten separate stories.
- Iran tensions → lower Strait of Hormuz shipping traffic → higher oil prices.
- Higher oil prices → higher inflation expectations and safe-haven demand → dollar and gold both rise together, an unusual pairing.
- Higher oil prices → direct tailwind for oil-exporter currencies like the Canadian dollar and Norwegian krone.
- Rising uncertainty → demand for traditional safe havens like the Swiss franc and gold, though notably not this time for the Japanese yen, which remains anchored down by the wide U.S.–Japan rate gap.
- Elevated oil prices → a headwind for global manufacturing and copper demand, since energy is a major input cost.
The key thing to watch is that every link in this chain depends on the first one. If there’s a ceasefire or de-escalation headline at any point this week, oil, gold, silver, CAD, NOK, and CHF could all reverse in a matter of hours — which is exactly why position sizing and risk management matter more than usual right now.
Risks to Watch This Week
This week carries more two-way risk than a typical calendar week, for a few specific reasons.
- Geopolitical reversal risk: a Strait of Hormuz de-escalation or ceasefire could sharply reverse this week’s dominant trades (long oil, long gold, long CAD/NOK, long CHF) within hours.
- Crowded positioning: gold’s speculative net-long positioning is already elevated, raising the odds of a sharp pullback even without new negative news.
- Central bank surprise risk: a more hawkish or more dovish ECB tone than expected could move EUR/USD sharply in either direction.
- Currency intervention risk: with USD/JPY near 40-year highs, the odds of Japanese officials stepping in — verbally or with actual intervention — are elevated, though still a lower-probability event.
- Labor market data risk: Thursday’s U.S. jobless claims could either confirm or challenge the idea that the American labor market is cooling meaningfully ahead of next week’s Fed meeting.
Key Takeaways
- Oil (Brent ~$85, WTI ~$79.60) is near a one-month high after U.S.–Iran strikes disrupted Strait of Hormuz shipping, with transits down more than 50% week-on-week.
- The ECB meets Thursday, July 23, and is expected to hold at a 2.25% deposit rate after June’s surprise hike, its first in three years.
- The Fed is on hold at 3.50%–3.75%, with its next decision on July 28–29 — just outside this week — but a weak June jobs report has softened the dollar-bullish case.
- The Bank of Japan hiked to 1.00% in June, yet USD/JPY has still pushed toward 162.5, near a 40-year yen low, showing rate hikes alone haven’t stopped the slide.
- Gold is consolidating near $4,060–$4,075/oz with rising speculative positioning, while silver has surged to roughly $58.55/oz on a sixth straight annual supply deficit.
- USD/CAD, USD/NOK, and Brent/WTI are the most direct trades on this week’s dominant oil-shock theme.
- Positioning in gold, silver, and oil-linked currencies already looks crowded, raising reversal risk if there’s any de-escalation headline.
- Thursday, July 23 is the week’s single most important day, combining the ECB decision, Lagarde’s press conference, and U.S. jobless claims.
FAQ
Why is oil rising this week?
Oil is rising because renewed fighting between the U.S. and Iran has disrupted shipping through the Strait of Hormuz, a narrow waterway that a large share of the world’s seaborne oil passes through. Reduced shipping traffic through that channel raises concerns about global oil supply, which pushes prices higher.
What will the ECB decide on Thursday?
Markets currently expect the European Central Bank to hold interest rates steady at its July 23 meeting, following a surprise 25-basis-point hike in June. Investors will focus closely on the press conference for signals about a possible further hike in September.
Why is the Japanese yen so weak even though Japan raised interest rates?
Japan’s central bank has raised rates to 1%, the highest since 1995, but that’s still far below rates in the U.S. and other major economies. Investors continue to borrow cheaply in yen to invest in higher-yielding assets elsewhere — a strategy called a carry trade — which keeps downward pressure on the currency despite the rate hikes.
What is the Strait of Hormuz and why does it matter for markets?
The Strait of Hormuz is a narrow shipping channel between Iran and Oman that a significant share of the world’s seaborne oil exports pass through. Any disruption to shipping there — whether from military conflict, blockades, or attacks on vessels — raises concerns about global oil supply and tends to push oil prices higher.
Why are gold and the U.S. dollar both rising at the same time?
Gold and the dollar usually move in opposite directions, but this week both are being bought for the same reason: as a hedge against Middle East uncertainty. That kind of simultaneous safe-haven demand for both assets is a pattern markets sometimes describe as a stagflation scare.
What is a good way to track these markets during the week?
Traders often use charting platforms like TradingView to follow live price action, set alerts, and monitor the currency pairs and commodities covered in this outlook.
Related Reading
Forex and Commodities to Watch This Week (July 13–17, 2026)
Forex and Commodities to Watch This Week (July 6–10, 2026)
7 Best Forex Pairs to Watch This Week (June 29–July 3, 2026)
Conclusion
This week’s forex and commodities markets are being shaped by two forces working at once: an unfolding geopolitical shock in the Middle East, and a genuinely active central bank calendar led by Thursday’s ECB decision.
The two stories overlap more than they compete — higher oil prices are part of why the ECB has reason to stay cautious about inflation, and the same energy-driven dollar demand that’s lifting USD/CAD is also complicating the more dovish U.S. rate story building since June’s soft jobs report.
The most important thing to keep in mind heading into the week is that many of the current trades — long oil, long gold, long silver, long CAD and NOK, long CHF — are moving in the same direction largely because of one story. That makes them powerful while the story holds, and vulnerable to a fast reversal if it doesn’t.
Traders should treat this as a week for disciplined position sizing and close attention to headlines, not a week for assuming any one trend is guaranteed to continue.
Trade These Markets
Forex and commodity markets like the ones covered in this outlook can move quickly, especially around events like Thursday’s ECB decision. If you’re looking to trade currency pairs, gold, or oil, Pepperstone offers access to a wide range of forex and commodity CFDs. As always, only trade with capital you can afford to risk, and remember that CFDs carry a high level of risk.
Disclosure: The content on this page was produced with AI writing assistance under the editorial direction of a licensed Electrical Engineering practitioner and certified investor in different markets with over a decade of experience. All articles are reviewed and approved by the author before publication.