Oil Retreat as Markets Track US-Iran Negotiations

Market Wrap-up: US-Iran Deal Hopes Push Oil Lower as Dow Jones Hits Record HighMarkets continued to trade with a broadly positive tone in the previous session following developments suggesting that the US and Iran could move closer toward a potential peace agreement.

During the session, US Secretary of State Marco Rubio stated that there were encouraging signs surrounding the possibility of a deal with Iran. Meanwhile, senior Iranian officials acknowledged that the gap between the two countries had narrowed.

These developments continued to pressure oil prices lower, with both WTI and Brent crude falling around 2%. The decline in oil prices partly supported US equities, helping the Dow Jones rise more than 300 points to a fresh record high of 50,285.66.

At the same time, the Cboe Volatility Index (VIX) remained near the 17 level, suggesting investors were still relatively comfortable with risk exposure amid ongoing optimism surrounding AI-related momentum and stronger-than-expected corporate earnings.

However, the latest US economic data continued to point to a resilient labor market, reinforcing hawkish Fed expectations and keeping the US dollar stable around the 99.20 level.

Specifically, data from the Department of Labor showed that initial jobless claims declined slightly to 209K last week. In addition, the US PMI reading rose above expectations to 55.3.

Meanwhile, US President Donald Trump is set to swear in Kevin Warsh, his selected candidate to lead the Federal Reserve, at a ceremony later today. Warsh is expected to chair the Federal Open Market Committee’s first policy meeting in June, replacing current Fed Chair Jerome Powell.

Looking ahead, markets will focus on the University of Michigan’s Revised Consumer Sentiment and Inflation Expectations data. The CB Leading Index and remarks from FOMC member Christopher Waller will also be closely monitored.

Gold: Gold Steady as Rising Treasury Yields Limit Safe-Haven Demand

Key takeaway:

Gold remained broadly stable as markets awaited further developments regarding a potential US-Iran ceasefire.

At the same time, the rebound in US 10-year Treasury yields continued to increase the opportunity cost of holding non-yielding assets such as gold.

Gold prices have now fallen more than 15% since the conflict escalated in late February.

Technical Outlook:Daily Bias: Bearish.Support: 4,404Resistance: 4,589

WTI: Oil Extends Losses as Markets Price in Easing Middle East Risks

Key takeaway:

Oil prices declined during the May 22 session as investors increased expectations that the US and Iran could reach an agreement, reducing the risk of renewed escalation in the Middle East.

US Secretary of State Marco Rubio stated that there were encouraging signs surrounding a potential agreement with Iran, while adding that Pakistani mediators were expected to visit Tehran as Iranian officials reviewed Washington’s latest proposal.

Meanwhile, senior Iranian officials clarified that no formal agreement had yet been signed with the United States, although they acknowledged that the gap between both sides had narrowed.

Technical Outlook:Daily Bias: Bearish.Support: 93.82    Resistance: 100.00

DXY: Dollar Holds Firm as Strong US Data Reinforces Hawkish Fed Expectations

Key takeaway:

The US Dollar Index (DXY) remained stable as resilient US labor data reinforced hawkish Fed expectations, despite improving sentiment surrounding a potential US-Iran agreement.

Data released by the US Department of Labor on Thursday showed that weekly jobless claims declined, signaling continued strength in the labor market and allowing the Federal Reserve to maintain focus on elevated inflation pressures.

Technical Outlook:Daily Bias: Bullish.Support: 99.00Resistance: 99.80

EUR/USD: Euro Under Pressure as Weak Eurozone PMI Data Supports USD Strength

Key takeaway:

The euro remained under pressure as increasingly hawkish Fed expectations continued to support the US dollar.

According to the latest preliminary PMI data released by S&P Global yesterday, the Eurozone economy contracted in May at the fastest pace since late 2023, as rising living costs linked to the conflict weighed on services demand and pushed input price inflation to a three-year high.

Market attention now turns toward upcoming German economic indicators, including the June GfK Consumer Confidence survey, Q1 GDP figures, and the IFO Business Climate survey.

Technical Outlook:Daily Bias: Bearish.Support: 1.15662  Resistance: 1.16548

USD/JPY: Japanese Yen Advances After Softer Japan CPI Weakens Yen Outlook

Key takeaway:

The Japanese yen weakened after Japan’s CPI inflation data came in softer than expected.

Data released by Japan’s Statistics Bureau on Friday showed that the National CPI rose 1.4% year-on-year in April, down from 1.5% in March. Meanwhile, Japan’s Core CPI also increased 1.4% year-on-year in April, marking the slowest annual pace in four years.

The data will likely be one of the key factors considered by the Bank of Japan at its June policy meeting, where the board is still widely expected to raise the short-term policy rate to 1.0% from 0.75%.

Technical Outlook:Daily Bias: Bullish.Support: 158.00  Resistance: 159.50

Overall, markets continue to trade around two dominant drivers: expectations of easing US-Iran tensions and the Fed’s increasingly hawkish stance following stronger-than-expected US economic data.

Softer oil prices are supporting risk appetite and helping US equities extend record highs, while the US dollar remains stable as Treasury yields and rate expectations continue to reprice higher.

Gold is currently lacking strong upside momentum as safe-haven demand gradually fades alongside rising bond yields.

Meanwhile, the euro remains under pressure amid weak European growth prospects, while the Japanese yen weakened after softer than expected CPI data reduced pressure on the BOJ to tighten policy aggressively.

Market focus will now shift toward the University of Michigan’s inflation expectations and consumer sentiment data, alongside comments from Fed officials, as investors assess whether hawkish rate expectations will continue to strengthen in the near term.

If you are looking for a platform to take advantage of market volatility, CPT Markets is a compelling choice. Trade global markets on advanced trading platforms with competitive spreads, fast execution, and a seamless experience across all devices.

Whether you are a beginner or an experienced trader, trading short-term or long-term, the right platform can make the difference - Trade smarter with CPT Markets!

This content is for informational purposes only and should not be considered investment advice. Trading financial products such as Forex and CFDs involves a high level of risk and may not be suitable for all investors. You may lose all of your invested capital. Please ensure that you fully understand the risks involved and carefully consider your financial situation before trading.