Market Digest:

Global markets opened the week with a sharp shift in sentiment as optimism surrounding a potential US-Iran agreement triggered widespread repositioning across asset classes. Easing geopolitical tensions reduced safe-haven demand, leading to a softer US dollar and increased appetite for risk-sensitive currencies.

Gold rebounded toward the $4,570 region, supported by a weaker dollar and declining Treasury yield expectations. The move reflects renewed interest in bullion as traders reassess inflation risks and the Federal Reserve’s policy path.

Meanwhile, crude oil prices plunged below the key $90 level, marking a significant unwind of the geopolitical risk premium. Improved prospects for reopening the Strait of Hormuz reduced fears of supply disruptions, driving aggressive selling in energy markets.

The New Zealand dollar strengthened ahead of the Reserve Bank of New Zealand decision, benefiting from improving global sentiment and expectations of future tightening. In contrast, the Canadian dollar traded mixed as falling oil prices offset broader USD weakness.

The US Dollar Index slipped below 99.00 as fading safe-haven demand and softer inflation expectations pressured the greenback. Markets now turn their focus to upcoming US Consumer Confidence data and further developments in Middle East negotiations for directional cues.

Technical Analysis:

NZD/USD – Kiwi Consolidates Below Key Resistance as Bullish Momentum Slows

Technical Analysis:
NZD/USD continues to trade within a medium-term recovery structure but is struggling to break above the 0.5960 resistance level. Price action is consolidating around the 20 and 50 EMAs, reflecting market indecision ahead of the RBNZ decision.

Momentum indicators remain mixed. While the MACD is still in bullish territory, the shrinking histogram signals fading upside momentum. RSI remains near neutral, indicating a lack of strong directional conviction.

Bollinger Bands are narrowing, suggesting volatility compression and the potential for a breakout move in the near term. A sustained break above resistance could push the pair toward 0.5995, while downside pressure may re-emerge below 0.5830.

Key Levels:

• Resistance: 0.5960, 0.5995
• Support: 0.5830, 0.5680

USD/CAD – Bulls Push Higher as Pair Tests Long-Term Resistance Zone

Technical Analysis:
USD/CAD remains in a strong recovery phase, supported by bullish momentum after rebounding from the 1.3550 region. The pair is trading above the 50 and 100 EMAs, indicating strengthening upside structure.

RSI remains firmly bullish, while the MACD crossover and widening histogram confirm accelerating upward momentum. Price action riding the upper Bollinger Band highlights strong buying pressure, although near-term overextension may lead to temporary consolidation.

The pair is now approaching the 1.3935 resistance zone near the 200 EMA. A breakout could open the path toward 1.4105, while rejection may trigger a pullback toward 1.3580.

Key Levels:

• Resistance: 1.3935, 1.4105
• Support: 1.3580, 1.3490

XAU/USD – Gold Holds Above Key Support as Bearish Pressure Persists

Technical Analysis:
Gold remains under medium-term pressure despite its recent rebound, with price action still trading below the 20 and 50 EMAs. Sellers continue to dominate near-term momentum following the failure to sustain gains above the 4,730 resistance zone.

The bearish MACD crossover and widening histogram indicate increasing downside pressure, while RSI below 50 reinforces the current bearish bias. However, narrowing Bollinger Bands suggest a potential breakout as volatility compresses.

Importantly, gold continues to hold above the 200 EMA, preserving its broader long-term bullish structure. A break below 4,480 could expose deeper downside, while recovery above 4,730 is needed to shift sentiment.

Key Levels:

• Resistance: 4,730, 4,840
• Support: 4,480, 4,380

Economic News:

1. Gold Rebounds as US-Iran Deal Optimism Weakens Dollar and Oil

Gold prices rallied toward $4,570 as optimism surrounding US-Iran negotiations pressured both the US dollar and oil prices. Falling yields and easing inflation concerns supported demand for bullion.

Key Takeaway:
Gold gained as traders reassessed inflation and Fed expectations amid easing geopolitical tensions.

2. Oil Slides as Supply Disruption Fears Ease

WTI crude fell sharply below $90 as improving prospects of a US-Iran agreement reduced fears of supply disruptions in the Strait of Hormuz.

Key Takeaway:
Oil dropped as markets unwound geopolitical risk premiums, though long-term supply concerns remain.

3. NZD Gains Ahead of RBNZ Decision

The New Zealand dollar strengthened on improved risk sentiment and expectations of future tightening by the RBNZ.

Key Takeaway:
NZD benefited from risk-on flows and hawkish policy expectations.

4. CAD Mixed as Oil Weakness Offsets USD Decline

The Canadian dollar traded unevenly as falling oil prices limited gains despite a weaker US dollar.

Key Takeaway:
CAD remains highly sensitive to oil price movements, keeping outlook mixed.

5. USD Weakens as Safe-Haven Demand Fades

The US dollar declined broadly as improving geopolitical sentiment reduced demand for defensive assets.

Key Takeaway:
USD direction remains tied to geopolitical developments and upcoming US data.

Upcoming Economic Indicators to Watch – May 26

USD – CB Consumer Confidence
Forecast: 91.9 | Previous: 92.8

Consumer confidence remains a key driver of US economic outlook and spending behavior.

•  Above forecast: Bullish for USD
•  Below forecast: Bearish for USD
•  In line: Neutral impact

Market Outlook:

Markets are currently being driven by a rapid shift in geopolitical sentiment, with US-Iran negotiations acting as the primary catalyst across asset classes. While easing tensions have reduced immediate risk premiums, uncertainty remains high, keeping volatility elevated.

Traders should remain cautious as both macroeconomic data and geopolitical headlines continue to drive sharp, unpredictable moves across currencies, commodities, and global markets.