Risk Appetite Improves as Iran Peace Hopes Weigh on Dollar and Lift FX Markets | 7th May 2026

Risk Appetite Improves

Forex markets are maintaining a risk-on tone today as optimism surrounding a potential US–Iran peace agreement continues to weaken the US Dollar and support higher-yielding and risk-sensitive currencies. The Australian and New Zealand Dollars are gaining traction, EUR/USD is holding near multi-week highs, while commodity-linked currencies remain mixed as falling crude oil prices offset broader improvements in market sentiment.

AUD/USD Forecast

Current Price and Context

The Australian Dollar (AUD/USD) is recovering recent losses following the release of Trade Balance data, with improving sentiment helping the pair stabilize. Price action reflects renewed buying interest amid softer USD conditions.

Key Drivers

• Geopolitical Risks: Iran peace hopes are improving overall market sentiment and reducing demand for safe-haven assets.

• US Economic Data: Softer USD conditions are supporting AUD recovery.

• FOMC Outcome: Neutral Fed expectations continue to limit aggressive USD upside.

• Trade Policy: Positive trade data supports confidence in the Australian economy.

• Monetary Policy: Stable RBA expectations support gradual upside.

Technical Outlook

• Trend: Mildly bullish.

• Resistance: 0.7050

• Support: 0.6950

• Forecast: Further upside likely if risk appetite remains strong.

Sentiment and Catalysts

• Market Sentiment: Bullish.

• Catalysts: Trade data and USD direction.

AUD/JPY Forecast

Current Price and Context

AUD/JPY is trading above the 113.00 level, maintaining bullish momentum as risk appetite improves across global markets. Price action remains supported above key technical averages.

Key Drivers

• Geopolitical Risks: Easing tensions are reducing demand for the safe-haven Japanese Yen.

• US Economic Data: Stable global conditions support carry trades.

• FOMC Outcome: Neutral Fed stance supports broader market stability.

• Trade Policy: Stable Asia-Pacific trade outlook supports AUD demand.

• Monetary Policy: Divergence between RBA and BoJ continues to favor AUD/JPY upside.

Technical Outlook

• Trend: Bullish.

• Resistance: 114.50

• Support: 112.00

• Forecast: Near-term outlook favors continued upside while above support.

Sentiment and Catalysts

• Market Sentiment: Bullish.

• Catalysts: Risk sentiment and geopolitical developments.

EUR/USD Forecast

Current Price and Context

EUR/USD is trading above the mid-1.1700 region and remains close to a two-week high as peace hopes surrounding US–Iran negotiations undermine the US Dollar. Price action reflects broad USD softness.

Key Drivers

• Geopolitical Risks: Improved geopolitical sentiment is weakening safe-haven demand for USD.

• US Economic Data: Softer Dollar conditions aresupporting EUR/USD upside.

• FOMC Outcome: Stable Fed expectations are limiting USD strength.

• Trade Policy: Stable Eurozone outlook continues to support the Euro.

• Monetary Policy: ECB stability contrasts with fading USD momentum.

Technical Outlook

• Trend: Bullish.

• Resistance: 1.1800

• Support: 1.1680

• Forecast: Continued upside likely while USD remains weak.

Sentiment and Catalysts

• Market Sentiment: Bullish.

• Catalysts: US Dollar movement and geopolitical developments.

USD/CAD Forecast

Current Price and Context

USD/CAD remains relatively flat as falling crude oil prices offset broader USD weakness. Price action reflects balanced pressure between softer USD conditions and weaker energy markets.

Key Drivers

• Geopolitical Risks: Easing tensions are reducing safe-haven demand for USD.

• US Economic Data: Softer USD conditions are limiting upside in the pair.

• FOMC Outcome: Neutral Fed expectations support consolidation.

• Trade Policy: Falling crude oil prices are weighing on the Canadian Dollar.

• Monetary Policy: Balanced outlook between Fed and Bank of Canada.

Technical Outlook

• Trend: Sideways.

• Resistance: 1.3650

• Support: 1.3500

• Forecast: Range-bound movement likely while oil prices remain weak.

Sentiment and Catalysts

• Market Sentiment: Neutral.

• Catalysts: Oil prices and USD direction.

NZD/USD Forecast

Current Price and Context

NZD/USD is trading above the 0.5950 level, gaining traction as improving geopolitical sentiment weakens the US Dollar. Price action reflects stronger demand for risk-sensitive currencies.

Key Drivers

• Geopolitical Risks: Iran peace deal hopes are supporting global risk appetite.

• US Economic Data: Softer USD conditions continue to support NZD/USD gains.

• FOMC Outcome: Stable Fed expectations limit USD upside.

• Trade Policy: Stable regional trade outlook supports NZD demand.

• Monetary Policy: Balanced policy outlook supports gradual upside.

Technical Outlook

• Trend: Bullish.

• Resistance: 0.6000

• Support: 0.5900

• Forecast: Further upside possible if risk sentiment remains positive.

Sentiment and Catalysts

• Market Sentiment: Bullish.

• Catalysts: USD weakness and geopolitical updates.

Wrap-Up

Forex markets remain tilted toward a risk-on environment as improving optimism around a potential US–Iran peace agreement continues to weaken the US Dollar and support major risk-sensitive currencies, while traders monitor whether easing geopolitical tensions can sustain the current bullish momentum across FX markets despite softer oil prices.

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