The direct reason for today's market decline is clear: July's PPI surged 3.3% year-on-year, far exceeding the expected 2.5% and the previous value of 2.3%. PPI is an important leading indicator of inflation, and both PPI and CPI are key components of the core PCE inflation data that the Federal Reserve values most. This data undoubtedly doused the expectations for a rate cut.

Market logic is subtly changing.

  • Although the probability of a rate cut in September remains as high as 94.4%, trading sentiment has turned cautious.

  • Previously, the market believed that 'regardless of the data, Trump would push for a rate cut', but the Federal Reserve is not completely beholden to the president.

  • If inflation continues to rebound, a forced rate cut by the Federal Reserve will face political risks, especially as the Democrats may use this to attack Trump for interfering with monetary policy.

    Key point analysis.

  1. Data credibility: This PPI is still released by the U.S. Bureau of Labor Statistics, but the position of director is currently held by an interim leader, and Trump's nominee for the new director has not yet been confirmed by the Senate.

  2. Subsequent data impact: Before the September interest rate meeting, there are still key data like retail sales and CPI, leaving room for market speculation.

  3. Short-term trend forecast:

    • If there is no strong rebound overnight, BTC may test support around 112,000.

    • If the decline continues, today's high may become a short-term peak, and the market may enter a correction similar to that at the end of 2023.

      Operational strategy.

  • Short-term wait-and-see: Awaiting the market's further digestion of the PPI data, paying attention to tomorrow's retail sales data.

  • Key support level: BTC 112,000 is the dividing line for long and short positions; holding it means the trend is not broken, while breaking it warrants caution for deep corrections.

  • Strict risk control: Regardless of long or short positions, be sure to set stop losses to avoid emotional trading.

The market is always changing, but discipline must not change. The fluctuations in inflation data are just interludes; the real opportunities belong to those who wait calmly and act decisively.

People are more important than anything else! If you are still wandering in confusion, you might as well take a look at @crypto Guang Ge, who will guide you to seize every wave of the bull market.

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