U.S. markets staged a sharp rebound yesterday, with the S&P 500 up 2.9% and the Nasdaq gaining 3.4%, marking its best session since April 2025. SPX remains modestly higher and is trading 0.45% up in the early session today. Optimism about a possible end to U.S. military operations in Iran within weeks is helping ease short-term geopolitical concerns.
Yesterday’s rally was driven by a rapid rotation back into growth and cyclicals. Technology, communication services, and consumer discretionary sectors each rose 3-5%. Defensive sectors like utilities and consumer staples lagged, and energy fell 1.1%. Market breadth was notably strong, with broad participation and buying momentum reflecting a sharp compression in geopolitical risk premium.
However, markets have already shown a tendency to reverse on shifting geopolitical narratives. While signs of de-escalation are supportive, a sustained recovery will depend on a clearer resolution of the conflict and a meaningful easing in energy prices. Oil remains above $100 a barrel, showing that supply problems are not yet resolved.
Structurally, the rebound also reflects positioning. The recent sell-off in mega-cap tech and AI-linked names had left valuations more attractive, with the sector’s premium to the broader market narrowing to its lowest since 2019. As a result, dip-buying has re-emerged quickly on any positive headline.
On the daily charts, the 9-day SMA at $6,507 is a key support for SPX today, and resistance is near the 20-day SMA at $6,620. The rally shows improving sentiment, but the outlook is still cautious. Volatility will likely continue as markets balance optimism with ongoing risks.
Crude Oil
In yesterday’s trading session, Brent and WTI oil prices declined by nearly 5% and 3%, respectively, as Trump again indicated the possibility of ending the Iran conflict, despite the Strait of Hormuz remaining mostly closed. In today’s session, Brent and WTI have declined further by almost 4% after Trump said the US could leave Iran within two to three weeks. This is reflected in the Brent-WTI spread narrowing to $4 from $12.3 almost two weeks ago. The 1-month implied volatility in Brent has also declined significantly, from the peak of $104.6 touched on 27th March to the current 71.73 levels. Moreover, the Brent spread between the active June and July futures contracts has narrowed from yesterday’s peak of 7.8 to 7.14 today. Looking ahead, investors will closely watch the President’s address on the Iran war today at 9 p.m. Eastern time, to gauge the next moves. However, in the longer term, market participants will also remain cautious because, even if the war concludes within the timeframe, it will take time for the flow to resume through the strait and for the damaged energy facilities to be restored.
Technically, Brent is trading at $102 and has crossed below its 9- and 21-day SMAs of $105.3 and $103.8, respectively. A fib retracement drawn from the highs of $120 to the lows of $81.5 shows that the 78.6% level of $112 is a significant resistance. The price tested that level multiple times over the past few days but couldn’t break out. Hence, support is observed at the 50% level at $100.82. If it breaks this level, $96.26, coinciding with the 38.2% fib level, can also be tested.
WTI is trading at $98.2, close to testing its 9-day SMA level at $97.34. It has re-entered the $86-$102 consolidation range, indicating a failed breakout if it closes the day at this level. The higher end of the range, at $102, becomes significant resistance. Support levels can be observed at the 21-day SMA of $93.62, followed by $86, the lower end of the range.
U.S. Dollar
The U.S. Dollar Index fell by 0.63% in yesterday’s session, closing at $99.85, as safe-haven demand eased after Donald Trump said the U.S. may withdraw from the Iran conflict in the next two to three weeks. Currently, DXY is trading at $99.58, down 0.27%, and is hovering near an important support level.
Despite the decline, the dollar is still holding steady. Markets are hopeful about a possible ceasefire, but uncertainty remains. While Trump indicated some positive developments, Pete Hegseth warned that the situation could worsen if Iran does not agree to a deal, which is helping support the dollar. Also, ongoing tensions and higher oil prices continue to support the dollar, as the U.S. is better placed than other countries to handle oil supply disruptions, which is positive for the dollar.
Looking ahead, Trump is expected to speak at 9 p.m. EDT (5:00 a.m. Thursday UAE time) to give an update on the Iran situation, which could impact market direction.
On the FX side, EUR/USD is up 0.34% at 1.1592. In Europe, inflation for March came in at 2.5%, slightly below expectations. This gives the European Central Bank some time before making any policy changes, although rising energy prices remain a concern.
Technically, the U.S. Dollar Index remains in a rising channel that has been in place since late January. The index is currently trading near a key support level around $99.49, which is a crucial level to hold for maintaining the upward trend. A break below this could see further downside toward the next support at $98.88, (last week’s low). On the upside, immediate resistance is seen at the current week’s high of $100.64, followed by the next resistance level near $100.86. EUR/USD has an immediate support at its 9 Day SMA level at 1.5545 and resistance at 1.1642.
Gold and Silver
Precious metals opened today’s session higher after notching another session in green yesterday on renewed optimism of a swift end to the Iran conflict. Gold is up 0.2% above $4,680, and silver is trading steadily above $74. With both metals having captured their 100-day EMAs, the upside momentum continues to build.
The advance came after President Trump on Tuesday said the US would leave Iran in two to three weeks. He also added that his goal of eliminating the country’s nuclear threat has been attained and that the US doesn’t need a deal with Iran to leave the country. Additionally, he would leave others to reopen the Strait of Hormuz. Dollar and treasury yields fell after this announcement, with gold and silver rallying into the session close. Bond traders are reducing bets that central banks will hike rates to tame inflationary risks arising from the conflict, turning instead to the war’s impact on economic growth. Gold’s safe-haven appeal tends to re-emerge when the narrative shifts from inflation to growth risk. Silver’s rebound is also based on increasing bets for a quick end to the conflict and decreasing rate-hike bets. President Trump will address the nation tonight to provide an important update on Iran. Expect market volatility today.
Technically, gold closed above the key 100-day EMA level of $4,610 yesterday, which is now acting as initial support. The $4,500 mark appears to be the next support level. Resistance is likely at the 20-day EMA at $4,730, followed by the $4,790-$4,800 range, which includes the 50-day EMA. The momentum is steady and slowly rising, with the RSI inching towards 50. Silver will aim to close above $75 (20-day EMA acting as initial resistance) today, with support likely in the $70-$73 range.
