Action Forex

Hope of US-Iran deal boosts sentiment but oil prices stay elevated. March CPI due in Canada, Japan, New Zealand and UK. Flash April PMIs also on tap ahead of central bank decisions. Kevin Warsh’s Senate hearing to likely overshadow US data. Hopes are running high that US and Iranian negotiators will be able to hash out a deal over the coming days to end to the seven-week war that has wreaked havoc on energy supplies from the Persian Gulf.

Another week with volatility induced by the Iran war seems to be ending with oil prices lower, equity prices higher and reduced expectations of interest rate hikes. Reports of progress towards a degree of peace and a potential reopening for traffic through the Strait of Hormuz is largely behind the relative optimism. A key step was the 10-day ceasefire agreed on Thursday between Israel and Lebanon, as an end to the fight there is a key Iranian demand.

Crude oil prices were sharply down on Friday on announcement from Iranian government that the Strait of Hormuz was open for all commercial vessels. Brent crude price fell around 10% immediately after the announcement in early US session, hitting the lowest in five weeks, in the biggest daily drop since March 23.

The Euro jumped to two-month high on Friday, as bulls regained traction after eight-day rally paused for narrow consolidation in past two sessions. Further drop of the dollar continued to fuel risk appetite and provided fresh support to the single currency, which recovered all losses caused by the war in the Middle East in past almost two months.

So much for the initial cautious trading session going into a weekend that centers around a second round of US-Iranian talks. Axios during European afternoon trading cited sources in reporting that both countries are negotiating a cash-for-uranium deal, releasing $20bn in frozen Iranian funds in return for giving up its stockpile of enriched uranium.

Daily Pivots: (S1) 158.48; (P) 158.90; (R1) 159.56; More… USD/JPY’s sideway consolidation from 160.45 continues and intraday bias stays neutral. Outlook will stay bullish as long as 157.49 cluster support (38.2% retracement of 152.25 to 160.45 at 157.31) holds. On the upside break of 160.45 will target a retest on 161.94 high. However, firm break of 157.31/49 will bring deeper fall back to 61.8% retracement at 155.38 next.

Brent crude has broken below the $90 mark, confirming a decisive shift in market sentiment as geopolitical risks ease. The move follows a sharp selloff triggered by news that the Strait of Hormuz has been declared fully open for commercial shipping during the ceasefire period. The development removes one of the most critical supply risks and accelerates the unwind of the war premium that had supported oil prices in recent weeks.

Daily Pivots: (S1) 1.3498; (P) 1.3547; (R1) 1.3576; More… Intraday bias in GBP/USD stays neutral first and more consolidations could still be seen below 1.3594. Further rally is expected as long as 1.3379 support holds. On the upside, firm break of 61.8% retracement of 1.3867 to 1.3158 at 1.3596 will extend the rise from 1.3158 to retest 1.3867 high.

Daily Pivots: (S1) 0.7808; (P) 0.7827; (R1) 0.7857; More…. USD/CHF’s fall from 0.8041 resumed after brief consolidations and intraday bias is back on the downside. Sustained break of 61.8% retracement of 0.7603 to 0.8041 at 0.7770 will pave the way to retest 0.7603 low. On the upside, above 0.7844 minor resistance will turn intraday bias neutral again first. In the bigger picture, rebound from 0.7603 medium term bottom is seen as correcting the fall from 0.9200 only.

Daily Pivots: (S1) 1.1758; (P) 1.1792; (R1) 1.1817; More…. EUR/USD’s rally resumed after brief consolidations and intraday bias is back on the upside. Sustained trading above 61.8% retracement of 1.2081 to 1.1408 at 1.1824 will extend the rally from 1.1408 to retest 1.2081 high. On the downside, below 1.1765 minor support will turn intraday bias neutral again first.