Strength Dashboard
| Symbol | Rating | Reason |
|---|---|---|
| Currencies | ||
| GBP | Neutral | Holding 1.3600, limited upside, USD pressure. |
| USD | Weak Bullish | DXY near six-week highs on Iran deal doubts. |
| EUR | Neutral | Oscillating below 1.1800, no strong catalyst. |
| JPY | Weak Bullish | Safe-haven demand, BoJ watching the 160 level. |
| AUD | Weak Bearish | Risk-off pressure, modest pullback this week. |
| NZD | Weak Bearish | Medium-term downward trend, limited support. |
| CHF | Neutral | Safe-haven appeal offset by slight USD recovery. |
| DXY | Weak Bullish | Weekly gain above 1%, near one-month high. |
| Indices | ||
| S&P 500 | Strong Bullish | Eight-week winning streak, closing at 7,473. |
| Dow Jones | Strong Bullish | New record close at 50,579, third up week in four. |
| Commodities | ||
| Gold (XAU) | Weak Bearish | Down ~4% this week on USD strength, at $4,509. |
| Oil (Brent) | Weak Bearish | Down ~6% this week on Iran peace deal hopes. |
Geopolitical Spotlight
The US-Iran conflict dominated markets this week. The Strait of Hormuz has been effectively closed since US and Israeli-led strikes against Iran began in late February, cutting off roughly 20% of global oil and LNG supply. This is the largest energy supply disruption on record.
By Thursday, President Trump said a peace deal was “largely negotiated” and could be announced as early as Sunday. The proposed terms include a 60-day ceasefire, full reopening of the strait with no tolls, and Iran gaining the right to sell oil freely. The nuclear question has been deferred for now.
On Friday, Iran’s Supreme Leader complicated things by ordering the country’s enriched uranium stocks to remain inside Iran. Oil, which had dropped more than 6% on deal optimism, bounced back toward $105 on Brent. The dollar firmed, with the DXY pushing near six-week highs around 99.4.
Watch Sunday May 24 for any deal announcement. A confirmed ceasefire would hit oil sharply lower and weaken the USD, lifting risk sentiment broadly. If talks collapse, expect oil to spike back above $110 and the dollar to strengthen further. The Iran situation is the single biggest driver for markets in the week of May 26.
Forex Markets
The dollar recovered ground this week. The DXY reached near six-week highs around 99.4, driven by hawkish Fed commentary and renewed doubts about the Iran deal timeline. With just a 2.6% probability of a June rate cut priced in, the dollar has fundamental support.
GBP held above 1.3600 but has lacked the catalyst to push higher. The Bank of England held rates at 3.75% on April 30 in an 8-to-1 vote, with the next BoE decision not until June 18. EUR was range-bound below 1.1800, trading around 1.1728-1.1800. The ECB also meets June 18, limiting near-term catalysts for both.
JPY drew safe-haven demand, with USD/JPY briefly breaching 160 before BoJ intervention signals pulled it back to the 156-158 range. AUD edged lower on risk-off sentiment, though the broader trend over recent months has been upward-leaning. NZD remained soft, with the medium-term trend pointing modestly lower. CHF weakened slightly against the dollar but retains its safe-haven appeal.
Currencies to watch
USD/JPY: Key level at 160. A confirmed Iran deal would likely push this pair lower as USD weakens and safe-haven demand for JPY eases.
GBP/USD: Holding 1.3600 support. Needs a risk-on catalyst to break higher, with 1.3650 as the next area to watch.
AUD/USD: Best placed to rally if a confirmed Iran deal improves risk appetite broadly. Worth watching closely if a deal is announced this weekend.
FX is headline-driven while the Iran situation remains unresolved. Watch the DXY around 99.0: a break below there would suggest the dollar is turning over again. The next round of central bank decisions is not until mid-June, so geopolitical headlines hold the reins for now. AUD/USD is the pair to watch most closely if a deal is announced.
Indices
US equities extended their impressive run this week. The S&P 500 posted its eighth consecutive weekly gain, the longest such streak since December 2023. The Dow Jones hit a new record close at 50,579.70, and the Nasdaq logged its seventh weekly advance in eight.
The engine behind the rally is earnings. More than 90% of S&P 500 companies have now reported, with growth averaging nearly 28% according to FactSet. That is a powerful fundamental backdrop, offsetting headwinds from elevated oil prices and persistent inflation uncertainty.
Risk sentiment remained broadly positive as markets looked past the energy supply disruption. The S&P 500 has fully recovered the 9% pullback from earlier this year and reached new all-time highs. Note that US exchanges are closed on Monday May 25 for Memorial Day.
Indices are in a clear uptrend, but the Iran deal outcome this weekend could create gap moves when markets reopen Tuesday. A confirmed peace deal would likely trigger a risk-on rally. A breakdown could spark a quick pullback after eight straight weekly gains. Watch for US consumer confidence and GDP revision data from Tuesday May 26 onwards for signals on whether the rally has legs into June.
Gold & Oil
Gold (XAU/USD) had a difficult week. Prices fell from around $4,700 at the start of the week to approximately $4,509 by Friday, a decline of around 4%. The twin headwinds were a recovering US dollar and continued hawkish signals from the Federal Reserve. With just a 2.6% probability of a June rate cut priced in, gold lacks the catalyst it needs. Key resistance sits at $4,580-4,590, with support tested around $4,460 during the week.
Brent crude was the week’s most volatile instrument. Oil fell more than 6%, from around $110 to roughly $105 by Friday, as markets priced in an increasing likelihood of the Iran deal reopening the strait. However, Iran’s Supreme Leader complicated talks late Friday, causing Brent to bounce back off its lows. With roughly 20% of global oil and LNG supply potentially returning to market if a deal is signed, the downside risk for oil remains significant.
Gold’s path of least resistance is lower while the dollar stays firm and rate cut expectations remain minimal. Watch the $4,460 support level closely: a break there opens the $4,380 area. For oil, a confirmed Iran deal could send Brent toward $90-95. A breakdown in talks would likely see a spike back above $110. Both instruments will move sharply on any Iran headline this weekend.
Week in Review
- Trump said the Iran deal was “largely negotiated,” driving Brent down more than 6%.
- S&P 500 extended its winning streak to eight consecutive weeks, the longest since December 2023.
- Dow Jones hit a new record close at 50,579.
- Gold fell ~4%, from $4,700 to $4,509, on USD strength and hawkish Fed commentary.
- DXY rose to near six-week highs at 99.4 as late-week Iran deal doubts firmed the dollar.
- Iran deal announcement expected Sunday May 24, the biggest risk event for markets this week.
- US markets closed Monday May 25 for Memorial Day, watch for Sunday night gap moves.
- US consumer confidence and GDP revision data from Tuesday May 26 onwards.
- Fed speakers throughout the week, any surprise shift in tone on rates could move USD sharply.
- Brent crude and gold will react instantly to any Iran-related headline..
