The SPX notched a solid performance last week, gaining 4.5% and reaching all-time highs, propelled by a relief rally in the broader technology sector (which is more immune to energy shocks). In today’s session, SPX is trading slightly lower, down 0.67% to around $7,070, following developments over the weekend that led to a spike in crude prices at Monday’s open. This is more of a consolidation and a pause for equity markets rather than any change to the underlying bullish trend.
The next round of the US-Iran peace talks is likely to begin today in Islamabad, and with the ceasefire set to expire anywhere between tomorrow and midweek, any news of an extension is likely to propel markets higher. Investors showed last week they are keen to focus on AI themes driving the tech narrative, while putting energy disruptions in the background. That suggests there is pent-up demand for tech stocks. With valuations reset to a lower level by last month’s slump, equities are likely to extend their advance unless there is a return to sustained conflict in the Middle East. Also, the focus has shifted to the earnings season, with big names in the tech, AI, and software space like Vertiv, Intel, Tesla, and ServiceNow expected to report this week. The gamma levels on 0DTE options show a strong positive gamma concentration on $7,050 and $7,100 strikes. This means that the $7,050 could act as an initial support level from potential dealer buying, whereas $7,100 could prove to be today’s first major resistance level due to potential dealer selling.
Technically, SPX has been trending higher in a parallel channel since 31st March. It is comfortably above all EMAs, with the 20-day EMA having crossed above the 50 and 100-day EMAs and sloping higher. $7,000-$7,050 acts as an important support zone (including the previous ATH). $7,000 also marks the largest positive dealer gamma concentration zone. A break below this could open the door to $6,900 (the next major support level). On the flip side, initial resistance could be in the $7,100 to $7,150 zone, followed by the $7,200 level. Momentum remains strong, with the RSI above 65. Along with an ADX (trend strength) reading above 25, this favours a bullish bias.
WTI surged at the start of the week, trading 4% higher, above $90, as escalating tensions between the U.S. and Iran drove a sharp return of the geopolitical risk premium. With over 11 million barrels per day of crude supply effectively disrupted, supply expectations have tightened again with the closure of the Strait of Hormuz.
Oil prices retreated on Friday following the announcement of the opening of the Strait. However, as the weekend events unfolded, talks stalled, and both sides escalated actions. The U.S. naval blockade of Iranian ports, along with the interception and seizure of an Iranian-flagged cargo ship in the Gulf of Oman, prompted Iran to close the Strait of Hormuz again for commercial vessels. These developments tempered hopes for further peace talks and fuelled global supply concerns, pushing crude oil prices higher. Since the Strait is still closed, markets are increasingly pricing in the possibility that the standoff may persist longer than initially expected.
While some market participants may still expect a quick resolution to the conflict, with talks stalled and tensions rising, the possibility of prolonged supply disruptions remains high. So prices do not fully reflect the risk. This situation could drive oil prices much higher, with Brent possibly reaching $100 if disruptions continue. Support is likely around $92.5, a level that has been tested before.
From a technical perspective, WTI remains above key averages on the daily chart, with a key resistance near $93.6, but improving momentum signals scope for further upside. Near-term support is seen around $85.5 at the 50-day SMA, with bullish bias intact as long as supply risks remain dominant.
U.S. Dollar IndexThe U.S. Dollar Index is showing strength again after recent volatility. Last week, DXY fell by 0.46%, after a sharper 1.4% drop the week before. However, Friday’s price action suggests a shift in momentum. The index was down about 0.55% during the day on news that the Strait of Hormuz had reopened, which briefly supported risk sentiment. But those gains reversed quickly, and DXY ended the day higher, forming a hammer candle in spirit, a sign that buyers are stepping in at lower levels.
Over the weekend, tensions picked up again. Reports of ships being fired upon and Iran maintaining control over the Strait have kept the situation uncertain. The U.S. continues to signal pressure, while talks toward any agreement could take time. This ongoing uncertainty is helping support demand for the dollar as a safe haven.
Technically, the setup remains supportive. DXY is holding above a long-term ascending trendline from 2008, while also trading within a broader downward trendline from early 2025. This forms a triangle pattern, and the recent bounce from the lower end suggests some near-term strength.
For now, support is seen at 97.93 (last week’s close), followed by 97.51 near the trendline. On the upside, resistance is at 98.18 (today’s high) and 98.34 (50-day moving average).
EUR/USD is starting to weaken after forming an inverted hammer on Friday, near 1.185, which is a key resistance level. Resistance is now at 1.176 and 1.185, while support is seen at 1.172 and 1.170.
The Japanese yen also remains weak. Low volatility is encouraging carry trades, and with only gradual tightening expected from the Bank of Japan, the yen is likely to stay under pressure.
Overall, the dollar looks supported in the near term, backed by geopolitical uncertainty and steady technical levels.
Gold & Silver
Gold prices rose 0.85% on Friday, closing the third straight week higher, while Silver witnessed a 3.02% jump, marking a fourth consecutive weekly rise. Both precious metals are facing pressure during the Asian session today, with Gold down 0.80% and Silver down 1.34%.
The metals have come back under pressure, with geopolitical developments over the weekend renewing inflation risks after a brief reopening of the Strait of Hormuz was reversed by Iran, reinforcing the energy supply shock. Oil prices opened around 4% higher on Monday, and the 10-year Treasury yield was up 20 bps, pricing in a prolonged inflation risk. The latest incidents have led to heightened uncertainty on potential peace talks scheduled in Islamabad this week, with the US-Iran ceasefire expiring on Tuesday. The expected inflation moving forward from higher energy prices is making central banks more likely to hold interest rates steady or even raise them, a headwind for non-yielding bullion, with odds of an interest rate cut in the US by the end of the year now falling from 61.2% on Friday to 49.6% on Monday.
Technically, Gold prices are forming a rising wedge pattern that can be seen on the daily and 4-hour charts. This is formed by connecting the highs of 20th March, 2nd, 8th, 15th and 17th April, along with the lows of 24th, 26th March, and 20th April. This is generally a bearish pattern, with a break below $4,755 unlocking further downside potential. Silver price, on the other hand, has retreated after taking a 0.618 Fib retracement resistance near the $82.96 level on the daily chart. This remains a key level to be broken before further upside can be seen.
