Markets Eye Breakout Scenarios Amid US Inflation and Middle East Tensions
Markets are digesting softer US inflation data, stronger-than-expected corporate earnings, and renewed Middle East tensions. These factors have led to consolidations across major asset classes, creating key technical scenarios for potential directional breakouts.
The US Dollar Index (DXY) has begun unwinding its recent bullish momentum following the larger-than-expected decline in US inflation. This has allowed major currency pairs to recover, with EUR/USD struggling near the 1.1480 resistance level and DXY testing the critical 100.30 support level.
A breakout above 1.1480 would expose EUR/USD to key upside targets, including 1.1530 (38.2% Fibonacci retracement) and 1.1650 (61.8% Fibonacci retracement). However, a breakdown below the 1.1300-1.1280 support zone would confirm a decisive break below the August 2025-July 2026 consolidation range.
Similarly, the Nasdaq continues to consolidate with a neutral-to-bearish bias despite ASML's earnings beat. A breakout above the descending resistance connecting lower highs since June 22 would expose key upside targets, while a breakdown below the 28,800-28,600 support zone would confirm a decisive break.