USD mostly lower to start the new trading week as geopolitics continue to dominate
The USD is lower vs the major currencies to start the North American session and the new trading week. The declines come after sharp gains in the dollar on Friday as yields moved higher, and stocks moved sharply lower with the NASDAQ index losing over 1100 points on geopolitical concerns and a stronger than expected US jobs report. Fed funds futures are now leaning toward tightening – not easing – in 2026. The strong labor market and rising energy prices have pushed the market to price a meaningful probability of at least one rate hike this year, while expectations for rate cuts have largely disappeared.
Having said that, the tone has improved this morning. Pres. Trump has posted on Truth Social:
Both sides, Israel and Iran, are looking to do an immediate CEASEFIRE! Final negotiations on “Peace” are proceeding, subject to ignorance or stupidity getting in its way. The Blockade will remain in place, and in full force and effect, until a “Final Deal” is reached. Things should move quickly
It is curious that the word “peace" is in quotations (as if not not believe it), but the markets have jumped on the good story. Subsequently Iran announced end of military operations against Israel, BUT warned of harsher attacks if Israel resumes attacks on Lebanon. Israel launched missiles toward Lebanon despite Pres. Trumps pleas to not do it. Now it seems there is a truce.
The USD has moved lower with the USD or by 0.19% versus the EUR, by -0.22% versus the JPY and -0.20% versus the GBP. The declines versus the NZD (-0.59%) and the AUD (-0.41%) are larger as some of the risk-off trades from Friday are unwound. In the video above, I take a look at the three major currency pairs from a technical perspective and outline the key technical levels implied including the risk, and targets
Crude oil is trading lower from higher levels with the current price at $91.57. That is still about $1.00 up on the day, but well off the highs of $95.47. The low price is at $91.52 not far from the current levels.
Looking at the US stock indices in premarket trading:
- Dow industrial average is up 146 points, after falling 695 points on Friday
- S&P index is up 56 points after falling -200.59 points.
- NASDAQ index is up 378 points after tumbling -1121.53 points on Friday
Looking at the US debt market, yields are little changed but modestly lower in the short end:
- 2 year 4.151% -1.1 basis points
- 5 year 4.274%, -0.6 basis points
- 10 year 4.540%, +0.4 basis points
- 30 year 5.006%, +0.8 basis points
In other markets:
- Gold is up $5.40 or 0.12% at $4332
- Silver is up #0.61 or 0.91% at $68.50
This article was written by Greg Michalowski at investinglive.com.