At the same time, sources say that spiritual leader Mojtaba Khamenei has little influence over what is happening in the country. If the factional struggle in Iran has indeed strengthened the role of the so‑called hardliners (IRGC) – distributing cards while maintaining full control over the military – it could signal to the US and Israel a restart of war with Iran.
Especially since the Iranian foreign ministry apparently intended to accept that the issue of returning owned uranium would not be part of any talks with Americans. In the context of these unsettling reports, Donald Trump is trying to appear friendly – a post on social media suggested that it is Iran, not the US, that should rush negotiations – although markets "may know their own". For now the approach that does not allow a full risk‑off scenario still dominates.
Yesterday the Wall Street indices finished the session in decline (but the correction ultimately proved smaller), and today indices in Asia and Europe are slightly correcting. The dollar is mixed in the morning, and changes on major pairs do not exceed +/-0.15%.
Markets are aware that the situation around Iran is effectively very tense and, regardless of Trump’s narrative or Iranian representatives, the trade route through the Strait of Hormuz will remain closed for several or even a dozen good weeks…
This will force a greater verification of the optimistic approach that seems to have prevailed so far. Stagflation scenarios may appear in the game (though ultimately they will likely be exaggerated).
USDJPY hovers around the 160.00 barrier
In the macro data calendar we already have Japan’s inflation figures (core inflation rose to 1.8% YoY in March), although the yen did not react strongly to this information. USDJPY hovers around the 160.00 barrier, which activated the narrative among Japanese decision makers (again "fear" of intervention).
We also saw UK retail sales data (in March a slowdown to 1.7% YoY instead of the expected 1.3% YoY), but the reading had little impact on the pound.
At 10:00 a.m. German Ifo data also came out – business sentiment worsened again in April, reading fell to 84.4 points from 86.3 points.
We still have UK retail sales data at 2:30 p.m., and US consumer sentiment reading at 4:00 p.m. The risk of further, clear deterioration in sentiment is high, which could heighten concerns about a stronger pullback in consumer demand in the coming months.
What next? Emotions like to feed on uncertainty, which may grow before the weekend. It is not unlikely that Israel will decide to break the ceasefire between the US and Iran, and it will be crucial how much these provocations will trigger escalation at the start of next week.
However, if nothing happens on Saturday and Sunday, Monday will see a short‑term relief rally and a rise in risky assets, along with a pullback in the dollar and oil.
EURUSD – support at 1.1665 in play
Today the EURUSD pair did not break yesterday’s low, which fell just above the key support at 1.1665.
The minimum is 1.1668 and today we are higher despite ongoing tension before the weekend and weaker German Ifo data, which could affect the EUR.
Daily EURUSD chart
In theory, investors’ emotions bring some fear of the weekend (or a break of the ceasefire with Iran?), but in fact the market seems more inclined towards the latter scenario – nothing happens on Saturday and Sunday – from Monday we have a relief rally, i.e. a pullback of the USD on many pairs, including EUR.
Technical analysis suggests that a strong resistance in such a situation would be the 1.1765 area.
