silver extended its decline for a third straight session, slipping to about $58 per troy ounce during Asian trading on Tuesday. The metal came under pressure as investors reacted to rising tensions in the Middle East, which pushed oil prices higher and renewed concerns that energy costs could keep overall inflation elevated.
The latest move in rates markets reflects that shift. The CME FedWatch Tool indicates that traders now assign a 51% probability to a Federal Reserve rate increase in September, while the odds of no change stand at 23%. The adjustment suggests investors are becoming more cautious about the pace of policy easing, with persistent inflation risks seen as a reason for the Fed to maintain a restrictive stance for longer.
Geopolitical developments have added to the strain. US President Donald Trump has reinstated a blockade affecting Iranian vessels and customers using the Strait of Hormuz, while also imposing a 20% transit fee on other commercial ships passing through the strategic waterway. The measures have intensified concerns about supply disruptions in a region critical to global energy flows, helping keep oil prices elevated.
Attention now turns to two key US economic events due later on Tuesday. The June Consumer Price Index is expected to show a slight 0.1% monthly decline in headline inflation, while core inflation is forecast to remain firm with a 0.3% rise. That combination would likely reinforce the view that inflation is proving sticky, even as overall price pressures ease modestly.
Also in focus is Federal Reserve Chair Kevin Warsh’s congressional testimony. Traders will scrutinize his remarks for clues on the central bank’s policy outlook and for any indication that officials are prepared to confirm the market’s more hawkish expectations. EUR/USD traded with modest gains near 1.139 in early Asian trading on Tuesday, though the pair’s advance appeared limited as renewed tensions in the Middle East supported the US dollar. Market participants were also awaiting the US June consumer price index report, due later in the session, for a clearer signal on the Federal Reserve’s next policy move.
Escalating confrontation between the United States and Iran has added to demand for safer assets. The US administration said it was tightening restrictions on maritime traffic through the Strait of Hormuz and would impose a 20% charge on cargo moving through the waterway. The development followed fresh US strikes on Iranian targets, including Bandar Abbas and the Qeshm and Kish islands.
Iran retaliated by hitting two UAE tankers, the Mombasa and Al Bahiyah, underscoring the risk of a broader regional disruption. Any prolonged increase in geopolitical stress typically lends support to the dollar, which can pressure the EURO in the near term.
Attention now turns to the inflation data from the United States. A softer-than-expected reading would weaken the case for further Fed rate hikes, which would weigh on the dollar and provide the EURO with some support. By contrast, a firm CPI outcome could revive bets on a more restrictive stance and keep EUR/USD under pressure.
For now, the pair remains sensitive to both headlines from the Middle East and incoming US macroeconomic data. With the dollar benefiting from risk aversion and the EURO lacking a strong immediate catalyst, gains in EUR/USD may remain capped until markets receive clearer evidence on the inflation outlook and the Fed’s policy path.
