CZECHIA: Inflation Data Seen As Supportive Of CNB's Current Stance

Military tensions between Russia and the US continue to escalate ahead of the 8 August deadline for Russia to agree a ceasefire in Ukraine. Over the weekend, President Donald Trump redeployed nuclear submarines in the context of perceived verbal threats from National Security Council Deputy Chair Dmitry Medvedev. Following this, Kremlin spox Peskov says that Russia "considers itself entitled to take any appropriate measures to deploy intermediate- and shorter-range missiles (INF); it is now not limited in any way." 

• The Russian Foreign Ministry announced on 4 July that it would no longer abide by the provisions of the defunct Intermediate-Range Nuclear Forces (INF) Treaty. Trump pulled out of the INF Treaty in 2019, claiming persistent breaches by Russia, mirroring those first made by the Obama administration in 2014 following the annexation of Crimea.
• On 1 August, President Vladimir Putin confirmed the nuclear-capable Oreshnik intermediate-range ballistic missile had entered service (it is widely assumed to have already been used in a strike on the Ukrainian city of Dnipro in November 2024) and would be deployed in Belarus, which borders three NATO member states.
• As NYT reports, "The announced collapse of the I.N.F. Treaty and tensions with Russia over Ukraine have raised worries in the West of a return to a dangerous Cold War-style arms race, in which extremely fast Russian missiles armed with nuclear weapons could reach European capitals in a matter of minutes, with little warning or ability to mount a defense."

The USD Index remains in a bear cycle and in July pierced a key long-term support at 96.55 - a trendline drawn from the May 2011 low. Trend signals highlight a number of important technical conditions.

• On a monthly, weekly and daily scale, an oversold condition has been highlighted .
• This does not mean that a trendline break (if confirmed) isn’t important and that the downtrend cannot extend.
• However, the oversold position does raise the possibility that either; a correction unfolds soon, or that the pace of the trend slows down.
• As is always the case in such situations, the momentum/oversold position is merely a warning sign for chartists. A reversal signal in price is required to highlight a base.
• July could prove to be a key month. Based on the close, a bullish engulfing candle pattern has developed.
• This is regarded as a strong reversal signal and the fact that it has occurred at the trendline, strengthens the importance of the pattern.
• Furthermore, it also suggests that the daily, weekly and monthly time scales are in sync - a bullish signal.
• Key support is at the July low of 96.38 and this price point represents an important pivot point.