Market Roundup
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Currency Forecast
EUR/USD : The euro edged higher against dollar on Monday as a renewal of hostilities in the Middle East fanned inflation fears and raised prospects for interest rate hikes among global central banks.U.S. and Iranian forces exchanged heavy missile and drone assaults at the weekend, with Tehran targeting U.S. facilities in states across the Gulf on Sunday and saying it had again closed the vital Strait of Hormuz shipping route.Inflation risks are likely to remain in focus with the release of U.S. CPI data on Tuesday, PPI gauges the following day, and Fed Chair Kevin Warsh's testimony before the House and Senate, Westpac analysts wrote in a research report.Fed funds futures are pricing an implied 50.9% probability of two or more rate hikes by the time of the U.S. central bank's December meeting, up from a 47.6% chance on Friday, according to the CME Group's FedWatch tool. Immediate resistance can be seen at 1.1475(SMA 20), an upside break can trigger rise towards 1.1495(50%fib).On the downside, immediate support is seen at 1.1368(38.2%fib), a break below could take the pair towards 1.1291(Lower BB).
GBP/USD: The pound dipped on Monday as investors sought safe-haven assets amid escalating Middle East tensions. U.S. forces carried out another wave of precision strikes against Iran on Sunday, targeting dozens of military sites across multiple locations, according to U.S. Central Command. In retaliation, Iran's Revolutionary Guards said on Monday they launched missile attacks on U.S. military bases in Kuwait and Bahrain, marking a further escalation in regional tensions and heightening concerns over broader conflict in the Middle East.Meanwhile, U.S. President Donald Trump said on Sunday that the Strait of Hormuz remains open to commercial shipping, despite Iran's earlier announcement that it had closed the vital waterway after a vessel allegedly sailed through an unauthorized route and was subsequently struck. The conflicting statements have fueled uncertainty over global energy supplies, with investors closely monitoring developments in one of the world's most critical oil transit routes.Immediate resistance can be seen at 1.3433(Daily high), an upside break can trigger rise towards 1.3485(50%fib).On the downside, immediate support is seen at 1.3343(38.2%fib), a break below could take the pair towards1.3296(SMA 20).
AUD/USD: The Australian dollar edged higher on Monday as investors shifted toward safe-haven assets following a sharp escalation in Middle East tensions. Market sentiment deteriorated after Iran launched retaliatory strikes on U.S. military facilities in Gulf states in response to recent U.S. attacks, while Tehran declared the strategic Strait of Hormuz closed, raising fears of significant disruptions to global oil supplies.The geopolitical uncertainty lifted energy prices, with U.S. crude oil climbing around 3%, while equity markets came under pressure as S&P 500 futures slipped 0.3%. U.S. Treasury futures also declined by five ticks as investors reassessed inflation risks stemming from higher energy costs.Commodity-linked currencies such as the Australian dollar remained under pressure despite the rise in oil prices, as the broader flight to safety boosted demand for the U.S. dollar. Immediate resistance can be seen at 0.6952 (SMA 20), an upside break can trigger rise towards 0.7000(Psychological level).On the downside, immediate support is seen at 0.6875(23.6%fib), a break below could take the pair towards 0.6811(Lower BB).
USD/JPY: The U.S. dollar strengthened on Monday as escalating tensions in the Middle East pressured the yen.The U.S. launched fresh strikes on Iran over the weekend after Tehran announced the closure of the Strait of Hormuz. Iran retaliated with missile strikes on U.S. military bases in the Gulf, heightening uncertainty in global energy markets.Japan’s economy and currency remain particularly vulnerable to higher oil prices due to the country’s heavy reliance on crude imports from the Middle East.Japan's finance minister said the government will encourage pension funds, including GPIF, to significantly increase investments in domestic financial assets..The comments boosted the yen and Japanese bonds as investors anticipated GPIF could channel billions into domestic markets through its ¥293.6 trillion ($1.81 trillion) asset portfolio. Immediate resistance can be seen at 162.73(23.6%fib) an upside break can trigger rise towards 163.00(Psychological level) .On the downside, immediate support is seen at 160.81(38.2%fib) a break below could take the pair towards 159.58(50%fib).
Equities Recap
Asian shares fell on Monday as escalating Gulf tensions and Iran's claimed closure of the Strait of Hormuz sent oil prices soaring and revived global inflation fears.
Japan’s Nikkei 225 was up by 1.76% , KOSPI was up at 8.96 %, China A50 was down at 0.63%
Commodities Recap
Gold prices fell more than 1% on Monday as surging oil prices, driven by Strait of Hormuz tensions, fueled expectations of higher interest rates to curb inflation.
Spot gold dropped 1.5% to $4,060.36 per ounce by 0541 GMT. U.S. gold futures for August delivery were down 1.1% at $4,068.30.
Oil prices jumped more than 4% on Monday after renewed U.S.-Iran military strikes threatened energy shipments through the Strait of Hormuz..
Brent crude futures climbed $3.10, or 4.08%, to $79.11 by 0325 GMT, while U.S. West Texas Intermediate crude rose $2.95, or 4.11%, to $74.36 a barrel.
