TACO Trump still in play. “The conflict is tightening again,” says expert
Donald Trump announced a plan to suspend actions related to providing aid to ships stranded in the Strait of Hormuz, carried out under the “Project Freedom” initiative.
“In response to requests from Pakistan and other states, considering the huge military success we achieved during the campaign against Iran, and the fact that significant progress has been made toward a full and final agreement with Iranian representatives, we have jointly agreed that, though the blockade will remain in full force, Project Freedom will be temporarily suspended, to test, whether the agreement can be finalized and signed,” the U.S. president said.
Read also: Dollar and euro rates before a strong change of direction! A well-known bank issued forecasts for USD/PLN and EUR/USD
Current events in the FXMAG interview were commented on by Adam Fuchs, analyst and currency dealer at Walutomat.pl.
“A quick agreement in the Middle East had seemed unlikely to me for a long time, and the last few days only reinforced that belief. There is no even minimal convergence of positions. On the contrary— the conflict is tightening again,” he said.
The expert also addressed the latest reports that Donald Trump pledged to increase the throughput of the Strait of Hormuz.
“Instead of responding to further, largely still unacceptable Iranian demands, President Trump announced protection for ships passing through the Strait of Hormuz. Such protection would be provided by U.S. Navy units. From Iran’s perspective, this would be treated as a breach of the ceasefire,” he recalled.
“And that is already a very short path to re-entering the conflict into a hot phase, i.e., a situation where drones and missiles will again fly in all directions,” he added.
Some markets, especially exchanges, try to ignore negative signals from the Persian Gulf. The problem is that the prolonging supply crisis in the commodity market may ultimately strike with doubled force. And that is what central banks cannot ignore.
Their approach to interest rates is now one of the key factors for the currency market, alongside geopolitics itself. The problem with drafting a sensible FX scenario, however, is that almost all major central banks are currently moving in a more hawkish direction, even if the rate market has already somewhat moved forward with pricing future hikes.
“Since almost everyone is moving in a similar direction, it is hard to pinpoint which currency the market should especially premium today. Therefore, in the short term, unless clear new signals from the Persian Gulf appear, a more likely scenario seems to be developing consolidation rather than a strong trend move,” noted Adam Fuchs.
“In such a setup, EUR/USD should not yet clearly deviate from 1,17 USD, and USD/PLN may continue to move within the range 3,60–3,65 PLN,” he summarized.
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See also: Will the dollar surprise again? The expert issued a forecast for USD/PLN and EUR/USD. “It’s hard for me to believe there will be no more fires”
Dollar and euro rates on Wednesday, May 6
The dollar to zloty rate on Wednesday, May 6 fell 0.34% to 3,61 PLN.
Chart. Dollar to zloty rate (USD/PLN)
Source: TradingView.
The euro to dollar rate reached 1,17 USD after a 0.32% rise.
Chart. Euro to dollar rate (EUR/USD)
Source: TradingView.
Read also: Euro rate will soon surprise? The expert says what will happen with EUR/PLN and EUR/USD
See also: Will the dollar return to 4 PLN? A land invasion of Iran still poses a threat. Expert: “Unlikely, but still potentially possible”
Source: Truth Social.
