US Markets
US equity markets staged a recovery on Monday after a s steep fall at the end of last week, with the SPX index rising 0.62% and the NDX index recovering 2.11%. The strength seems to be continuing during the Asian session on Tuesday, with the SPX up 0.4% and the NDX up 0.83%.
The recovery on Monday was largely led by technology and chip stocks, lifting the broader market higher after a sharp selloff last week. Broadcom, which was under immense pressure after weaker earnings guidance last week, recovered 2.82%, while AI bellwether Nvidia rose by 1.73%, lifting up broader US indices. Dip buying also extended to Asian markets on Tuesday, with the memory heavyweight SK Hynix rising almost 16%, lifting the KOSPI index by 8.18%, indicating that optimism towards the AI theme remains firm. Adding to that, overall investor sentiment remained strong as oil prices eased after Iran and Israel pledged to ease strikes that threatened the peace talks in the Middle East.
From a technical standpoint, the SPX index held firmly near the support from the lows of 20th May, around $7342. On the upside, near-term resistance could come from the 21- and 9-day EMAs near $7449 and $7481, respectively. Meanwhile, after recovering from the mid-May lows around the $28,700 support level, the NDX has rallied above its 21-day EMA, suggesting an upside trend, with near-term resistance around the 9-day EMA at $29,758.
US Dollar Index Â
DXY retreated 0.11% yesterday as Iran and Israel announced a temporary pause in hostilities, pressuring oil prices and bond yields lower. However, DXY is still hovering around $100 in the current session. The hawkish repricing in rates will continue to underpin an upside case for the US dollar.
Looking through the headline noise, the greenback has found support from a global edge in rates that could underpin its advance beyond the short term. The US 2-year yield spread to G-7 sits around 1.3%. Traders are increasingly looking at September for the Fed to raise borrowing costs, and these bets look stickier given the US economy’s resilience in the face of elevated crude prices. That’s supporting expectations for a higher neutral rate and rising inflation in the months ahead, which will help the dollar. Granted, the risk of looming intervention in the Japanese yen and an interest rate hike expected out of Europe might cap DXY’s upside. The USD/JPY pair is near the intervention zone above 160 (trading around 160.13, slightly lower than yesterday). The previous reversal was seen from 160.70.
Technically, DXY is trending higher in an ascending channel with initial resistance around $100.21 (last Friday’s high), followed by March highs around $100.40. On the downside, initial support could be around last Friday’s open of $99.50, followed by the 200-day EMA at $99.03. The EUR/USD pair is trading around 1.154; the initial resistance appears at the 9-day EMA of 1.159. On the flip side, support is likely at 1.150.
Crude Oil
Crude Oil is trading lower today while markets continue to assess current developments surrounding Iran-Israel. Currently, Brent is trading near $93.05 per barrel today after surrendering most of the previous session’s gain, and WTI is hovering near $88.42, down 1.15%. Despite the pullback, prices remain elevated as ongoing tensions continue to support geopolitical risk premiums and increase market concern of disruptions to global energy supplies.
In recent developments, a rapid reduction in Chinese crude imports has helped stop oil from trading even higher since the outbreak of the U.S.-Iran. Furthermore, when looking at the Middle East, a key reason the market has been able to avoid worst-case supply shock is that Gulf producers like the UAE and Iraq bypass a part of their crude exports through the Strait of Hormuz. This helps ease the risks of complete disruptions to oil low and helps prevent prices from decisively moving above the $100 per barrel mark despite the elevated geopolitical backdrop.
However, this may not last as prices could remain elevated, because the key driver remains to be further threats or disruptions of energy infrastructure or shipping activity through the Strait of Hormuz. As long as that risk remains present, the downside in oil prices is likely to remain limited. Looking ahead, the market’s next directional move will depend on whether negotiations between Iran and Israel can lead to a meaningful de-escalation, which, as of yesterday, President Donald Trump has also urged. A meaningful de-escalation between Iran and Israel could trigger profit-taking and a correction lower, particularly given how sharply prices have risen in recent sessions.
Technically, Brent remains constructive while holding above its 9-Day SMA near $94, which continues to act as immediate support near $91. A sustained break above $98 could open the door toward $104. WTI remains supported above its 9-Day SMA near $89.87, with resistance near $99 and a potential upside target around $105 if geopolitical tensions escalate further.
Gold & Silver
Gold advanced 0.35% to $4,344, while silver gained 0.50% to $68.50.
Yesterday, Gold prices were broadly unchanged as the market felt the push-and-pull between the war front and hawkish policy expectations. Macro forces such as resilient U.S. data, sticky inflation, and rising oil prices tied to energy flow disruptions have led markets to price in the expectation that the Fed will remain restrictive for longer, or even raise rates further.
According to CME’s FedWatch tool, markets now price in a chance of a rate rise before year-end, and some banks have even trimmed their short-term price forecasts to reflect a more hawkish path. However, longer-term bullish factors such as central bank accumulation of gold remain intact, meaning near-term price action is likely to stay muted, with gold trading in a narrow range as investors await key U.S. inflation data and clearer signals on both interest-rate direction and a potential peace deal.
On the chart, Gold is trying to stabilise after a sharp decline, and if it can hold above its key support level, it may rebound toward the resistance levels around $4,365 and $4,400. While support can be seen near $4,285, the overall outlook remains cautiously bullish.
Silver opened above the 200-day moving average after dipping below it in the previous sessions. Price moved higher from $66.16, suggesting the pullback may be over and that an uptrend could start, with an initial target around the $70 psychological level, and support could be located near the previous day’s lows.
