Market Overview

Global markets opened the week under heightened volatility as geopolitical risks, fluctuating oil prices, and shifting central bank expectations created a complex macroeconomic environment.

Investor sentiment remains fragile as the ongoing US–Iran tensions continue to influence commodity markets and inflation expectations. While energy prices initially surged on supply concerns, signs of partial normalization in shipping through the Strait of Hormuz triggered a sharp correction in oil prices, highlighting the market’s sensitivity to geopolitical developments.

At the same time, the U.S. dollar struggled to maintain its recent strength, pressured by mixed economic data and a decline in Treasury yields. This shift in momentum has introduced uncertainty ahead of the upcoming Federal Reserve policy decision, which remains a key focal point for global markets.

Currency markets are now reflecting diverging monetary policy expectations across major economies, with traders increasingly positioning around inflation risks driven by energy prices and the likelihood of prolonged restrictive policies from central banks.

Gold Drops Below $5,000 as Rate Expectations Dominate Sentiment

Gold prices faced renewed pressure at the start of the week, briefly falling below the key psychological level of $5,000 per ounce before stabilizing.

The decline reflects a shift in market focus from geopolitical safe-haven demand toward monetary policy expectations. Rising oil prices linked to Middle East tensions have intensified inflation concerns, reducing expectations for near-term interest rate cuts by major central banks.

As a result, investors rotated toward the U.S. dollar, limiting gold’s upside despite ongoing geopolitical uncertainty.

Price action in XAU/USD showed increased volatility, with gold falling from the $5,030–$5,040 range toward $4,980–$4,990 before recovering near $5,010. The $5,000 level remains a critical support zone, with consolidation suggesting a balance between inflation-driven headwinds and safe-haven demand.

Oil Prices Retreat as Hormuz Supply Fears Ease

Crude oil markets experienced a sharp pullback after reports indicated that tanker traffic had partially resumed through the Strait of Hormuz, easing immediate fears of a prolonged supply disruption.

WTI crude declined significantly, falling from levels above $100 to stabilize near the $93–$94 range. The move reflects profit-taking following a strong rally, as traders reassessed the severity of the supply shock.

Additional pressure came from policy signals, including coordinated discussions among global energy authorities regarding potential strategic reserve releases to stabilize markets.

Despite the correction, oil remains highly sensitive to geopolitical developments. The Strait of Hormuz continues to carry approximately 20% of global oil supply, meaning any renewed escalation could quickly restore upward pressure on prices.

Currency Markets Reflect Diverging Central Bank Expectations

New Zealand Dollar Rebounds on Rate Hike Bets

The New Zealand dollar showed signs of recovery after recent weakness, supported by stronger-than-expected consumer spending data and rising expectations of future monetary tightening.

Markets are increasingly pricing in a potential rate hike by the Reserve Bank of New Zealand later this year, with expectations exceeding 70% probability for further tightening in the coming months.

NZD/USD rebounded above the 0.5800 level, reflecting improved sentiment and renewed demand for the currency.

British Pound Gains as Inflation Risks Shift BoE Outlook

The British pound edged higher as traders reassessed the Bank of England’s policy trajectory.

Rising energy prices have pushed inflation concerns higher, leading markets to scale back expectations for rate cuts and consider the possibility of prolonged restrictive policy.

GBP/USD moved higher toward the 1.3330 level, supported by shifting rate expectations despite ongoing concerns about weak domestic growth in the UK economy.

U.S. Dollar Softens on Mixed Data and Falling Yields

The U.S. dollar weakened slightly after mixed economic data reduced immediate support from interest rate expectations.

Recent data releases showed softer manufacturing activity, while housing data remained relatively stable. At the same time, declining Treasury yields reduced the dollar’s appeal.

The Dollar Index retreated toward the 99.80 level after previously trading above 100, reflecting a temporary pullback as markets await further clarity from the Federal Reserve.

Technical Analysis

NZD/USD – Bearish Structure Remains Intact

NZD/USD continues to trade within a broader bearish structure despite recent recovery attempts.

Momentum indicators remain negative, with a bearish MACD crossover and RSI around 43 signaling continued selling pressure. The pair’s break below key moving averages confirms a weakening trend.

A move below 0.5725 could expose further downside toward 0.5680, while a recovery above 0.5890–0.5950 would be required to shift the outlook toward stabilization.

GBP/USD – Downtrend Persists Below Key Resistance

GBP/USD remains under pressure after breaking below major moving averages, reinforcing a sustained bearish trend.

Technical indicators, including a bearish MACD crossover and RSI near 41, point to ongoing downside momentum. Although oversold conditions may trigger a short-term bounce, the broader bias remains negative.

Key support levels are seen near 1.3060 and 1.3020, while resistance is located around 1.3355.

USOIL – Bullish Trend Shows Signs of Exhaustion

WTI crude oil remains in a strong uptrend despite the recent correction, supported by broader bullish momentum.

However, technical indicators suggest potential exhaustion. RSI levels above 70 and price movement above the upper Bollinger Band indicate overbought conditions.

A break below 93.66 could trigger deeper corrections toward 83.55, while renewed bullish momentum may target levels near 122.40 and 126.70.

Market Outlook

Global markets remain at a critical juncture as geopolitical tensions, energy price volatility, and central bank expectations continue to shape investor sentiment.

While oil price fluctuations are driving inflation concerns, gold remains under pressure due to shifting interest rate expectations. Meanwhile, currency markets are increasingly driven by divergence in monetary policy outlooks across major economies.

The upcoming Federal Reserve decision is expected to be a key catalyst, with investors closely watching for signals on the timing of future rate cuts.

In the near term, markets are likely to remain highly sensitive to both geopolitical developments and macroeconomic data, with volatility expected to persist across commodities, currencies, and equities.