The US dollar strengthened against major currencies in early trading on Monday as the United States and Iran failed to reach a peace deal over the weekend, dampening market sentiment and boosting demand for some safe-haven assets.
Risk-sensitive currencies led the decline, with the Australian dollar and the South African rand both falling by 1%. Crude oil futures prices rose sharply after the US blocked the Strait of Hormuz, while the Asia-Pacific stock market index dropped. US Treasury bonds and gold prices also declined.
Analysts say that if investors believe the negotiations are only a temporary setback for hopes of peace, the scale of the market reaction may be limited.
Over the past week, the market has started to pay more attention to the negative impact of high oil prices on economic growth, rather than just the effects of inflation and hawkish central bank policies. Negotiations are still possible, and Trump’s previous 14-day deadline leaves enough time for talks, so people may still hold out hope for progress.
Trump’s announcement of a maritime blockade on the Strait of Hormuz is bound to reignite market risk aversion this week. Crude oil prices may recoup some of the losses seen last week due to the ceasefire agreement, while the potential escalation of tensions with China, a major buyer of Iranian oil, could also heighten market unease.
The energy shock may not be over yet, but we still believe that the worst period might have passed. If so, the interest rate differential between the United States and other major economies will continue to keep the US Dollar Index (DXY) within the 96.00-100.00 range for the next few months.
The subtle differences are worth noting: The Iranian Foreign Ministry has not ruled out the possibility of further negotiations, so this is not a complete breakdown but rather ongoing uncertainty. This is crucial for determining whether the reaction on Monday will be intense or restrained.
Technical analysis:
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Gold: It is expected that the price will continue to fill the gap at the opening within the day. We are watching for the opportunity to set a buy limit when it retests the green area. Meanwhile, if the gap is filled, we will then pay attention to whether 4750/4780 can be held steady and then consider buying again. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: There is a gap of around 400 points after the opening price. Focus on the opportunity to fill the gap within the day. The key demand area in the morning session is around 24,850. You can try a buy limit once. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: The first round of negotiations between the US and Iran failed to reach an agreement, but the current negotiation channel remains open. Today, we closely monitor whether there are any signs of failure after the price opens high. If so, we will attempt to sell on a pullback. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Key economic data and events to focus on today:
22:00 US March NAR seasonally adjusted existing home sales (annualized monthly rate)
