Israel is also on standby, simply waiting for the "green light" from the Americans.
So will the approaching weekend be quite hot? The situation is not entirely clear due to the planned USA‑China summit on May 14‑15 - in Beijing, Presidents Trump and Xi are to meet.
Undoubtedly the discussions will also cover the situation in Iran, which is in the Chinese sphere of influence. This may explain why markets are not reacting too nervously today – U.S. index contracts are trying to rebound, oil is slightly cheaper, and cryptocurrencies are climbing (though the market has a strong motive in the form of breaking the impasse around the Clarity Act, which opens the way for stablecoins).
In the traditional currency market the dollar is slightly mixed today – it gains most against the AUD, which lost 0.2% despite the fact that the RBA raised rates by 25 basis points. (The decision was not unanimous (8‑1), which may suggest some caution with further moves, although the narrative was strongly "inflationary").
On the other side we have strong Scandinavian crowns, although the scale of the move is small (0.15%). It seems that markets are waiting for resolutions – escalation of the war with Iran would be a strong signal for further risk‑off escalation and dollar strengthening.
In the macro calendar today we have a series of U.S. data, although key will be PMI/ISM for services, and JOLTS from the labor market. In the coming days the labor market will attract more attention (ADP on Wednesday and NFP on Friday).
EURUSD – falling pressure mounts...
The EURUSD pair has not returned above the 1.17 level broken yesterday. Markets fear escalation of the war in the Middle East and its impact on the oil and gas market, which will also negatively affect the European economy. Technically, pressure is rising to break the previous week’s low at 1.1653. Further pretexts in the Strait of Hormuz could be an issue in the coming hours, which will heighten market emotions.
Daily EURUSD chart
