US President Donald Trump’s call for a “complete and total” ceasefire between Israel and Iran drew mixed market reactions, as missile attacks continued and both nations insisted the other must stop first. Still, diplomats signaled reluctance to escalate, and global policymakers hinted that the “12-day war” may be coming to an end. Trump also noted that he’s watching oil prices, which influence both the US Dollar and crude oil, and have recently risen due to Middle East tensions.
Meanwhile, upbeat US S&P Global PMIs for June were overshadowed by dovish Fed comments and growing expectations of a 0.25% rate cut in July. Trade negotiations stalled, with no progress in US talks with the EU, Japan, or China.
The cautious mood ahead of Fed Chair Powell’s testimony also weighed on the US Dollar Index (DXY), pulling it back from key resistance. This helped EURUSD to extend a four-day rally despite mixed Eurozone PMIs and dovish ECB comments. GBPUSD also rose on USD softness, while USDJPY retreated after a three-day climb despite Japan’s looming election and mixed data.
Commodity currencies like AUD, NZD, and CAD pared losses, though CAD lagged as oil prices—Canada’s main export—remained under pressure after a sharp drop. Bitcoin and Ethereum rebounded from a four-day slide, supported by risk-on sentiment and a weaker dollar. Equities stayed firm, while US and Japanese bond yields lacked clear direction.
EURUSD continues its four-day winning streak as the US Dollar softens and market sentiment remains cautiously optimistic following the mixed Israel-Iran war stories. The pair ignores unclear Eurozone and German June PMI readings, as well as trade tensions with the US. EU policymakers’ divided views on Ukraine and the latest trade jitters with China also weigh on the Euro as EURUSD nears the nine-week trendline resistance at 1.1650. The market is consolidating ahead of Fed Chair Powell’s testimony, with dovish Fed rate expectations further supporting the Euro’s advance.
GBPUSD surged the most in over a week, supported by better-than-expected June PMIs for the UK, while ignoring dovish comments from BoE Governor Bailey on low debt costs. The softer US Dollar played a key role in the Pound’s recovery.
Meanwhile, USDJPY recorded its first daily loss in four, despite overall positive market sentiment. The Yen’s recent gains shrugged off political concerns in Japan ahead of the July 20 upper house election. The BoJ’s Core CPI met market expectations, adding to the growing hawkish sentiment, which placed further pressure on the Yen as markets await key US data/events.
Commodity-linked currencies recovered some recent losses, supported by cautious market optimism, though the Canadian Dollar (CAD) lagged due to falling crude oil prices. Canadian PM Carney’s comments also weighed on USDCAD, noting that while a good deal with the US is possible, nothing is guaranteed. Meanwhile, AUDUSD and NZDUSD extended their recovery from five-week lows, despite a lack of major positive news from their respective economies.
Crude oil suffered its biggest daily drop since March 2022, driven by hopes for a ceasefire between Israel and Iran and Trump’s focus on oil prices. Oil remains under pressure as the market expects a potential halt to the US inventory drawdown and a temporary resolution in the Middle East.
Meanwhile, gold prices fell to their lowest point in nearly two weeks, unaffected by the risk-on market mood. Despite China’s plans to increase gold reserves and rising physical demand from major buyers, not to forget a softer US Dollar, the metal repeats seasonal price corrections.
Bitcoin (BTCUSD) and Ethereum (ETHUSD) ended a four-day losing streak on Monday and edged higher early Tuesday, supported by hopes of an Israel-Iran ceasefire, despite ongoing conflict. The gains were also fueled by continued ETF inflows and whale accumulation, even as retail traders pulled back.
Tuesday’s key data includes Germany’s June IFO sentiment, Canada’s May inflation, U.S. CB Consumer Confidence, Fed Chair Powell’s testimony, BoE Governor Bailey’s comments, and API’s U.S. oil inventory report.
With rising dovish expectations from the Fed, cautious remarks from Powell, and softer U.S. data could push the U.S. Dollar lower, supporting EURUSD, other major currencies, and Antipodeans. Commodities may trade mixed—crude could dip on easing supply fears, while gold may soften due to seasonal trends.
Cryptocurrencies have rebounded and may stay firm. Equities could revisit recent highs unless tensions in the Middle East escalate further.
May the trading luck be with you!
