The markets are taking their cue from comments out of Trump suggesting the war may be nearing an end. That comes even as the Iranian Foreign Minister pushes back, saying negotiations have not been particularly intense or productive. So the question becomes: is this a real shift toward de-escalation, or just a tactical narrative while risks on the ground remain?
At the same time, the headlines are anything but calm. Reports of Israeli strikes in Lebanon and continued Iranian threats tied to the Qatar coast keep geopolitical tensions elevated. So while the tone has improved at the margin, the backdrop is still fragile.
Markets are leaning toward the optimistic interpretation for now:
- Stocks higher
- Yields lower
- Oil backing off highs, now below $100 at $98.47 (down ~$3 on the day)
That said, context matters. The move above $100 earlier this week was the first close above that level since July 2022, so even at $98, prices remain historically elevated. Gas prices in the U.S. reflect that, rising to $4.06 from $2.98 just a month ago.
In FX, the USD is weaker across the board, with traders leaning into the softer risk tone and lower yields.
In the video above, I take a look at the three major pairs to kickstart the North American session:
EURUSD
The pair surged above its 100- and 200-hour moving averages yesterday, shifting the bias more to the upside. It is now testing the 38.2% retracement of the move down from the February 10 high, which comes in at 1.1606.
- Above that level → more bullish momentum
- Failure → risk of a stall after the breakout
USDJPY
The pair also broke below its 100- and 200-hour moving averages, giving sellers more control. It remains below a key swing area at 158.89, which now defines near-term risk.
- Stay below → targets 157.51, followed by the 38.2% retracement at 157.33
- Move back above → neutralizes the downside bias
GBPUSD
The pair is lagging a bit, just now testing its 200-hour moving average at 1.32183. Buyers are pushing against that level in early North American trading.
- Break above → opens the door to the 38.2% retracement at 1.33702
- Failure → keeps buyers on the defensive
Bottom line:
The market is pricing in hope for de-escalation, but the headlines remain mixed. That tension is showing up in price action—risk assets firmer, yields lower, USD weaker—but with oil still elevated and geopolitical risk far from resolved.
This article was written by Greg Michalowski at investinglive.com.
