Market analysis

Date: Monday, 4th of May 2026

EUR/US D : Climbs to Weekly High as US-Iran Developments Weigh on Dollar

GBP/USD : Gains Slightly Despite Middle East Tensions

USD/JPY : Stabilizes as Japan’s intervention curbs the Yen’s decline

Dow Jones : Hold Near 50K as Iran Proposal Eases Tariff Concerns

Gold : Hawkish Signals from Major Central Banks Deter Buyers

Crude Oil : Prices slip after Iran’s state media reports that Tehran has submitted a new peace proposal

Climbs to Weekly High as US-Iran Developments Weigh on Dollar

EUR/USD strengthened on Friday, rising toward 1.1768 and hovering near its highest level in over a week, as fresh developments in the US-Iran conflict pressured the US Dollar and supported the Euro. Reports indicate that Iran has submitted a revised proposal via Pakistani mediators after Washington rejected an earlier offer, though details remain undisclosed. At the same time, Iranian Foreign Minister Abbas Araghchi has been engaging with regional partners, raising cautious optimism that stalled peace talks could resume. This improved sentiment has slightly eased oil prices from recent highs, while the US Dollar has weakened to two-week lows. However, part of the Greenback’s decline is also linked to suspected intervention by Japanese authorities to support the Yen. The US Dollar Index (DXY) is trading near 97.88, down around 0.22% on the day. On the macro front, US manufacturing data presented a mixed outlook. The ISM Manufacturing PMI held steady at 52.7 in April, below expectations, while the S&P Global PMI was revised higher to 54.5, marking the strongest expansion since May 2022. Central bank commentary also remained in focus after both the Federal Reserve and the European Central Bank kept rates unchanged. Fed officials signaled caution, with Dallas Fed President Lorie Logan suggesting the next move could be either a hike or a cut, while Minneapolis Fed President Neel Kashkari warned that significant price shocks could push inflation expectations higher. Meanwhile, ECB policymakers adopted a cautious but firm stance, with Governing Council member Madis Müller indicating a growing likelihood of rate hikes, and Ireland’s central bank governor Gabriel Makhlouf highlighting rising inflation risks alongside slowing growth prospects.

Separately, trade tensions resurfaced after President Donald Trump threatened higher tariffs on EU-made vehicles unless production shifts to the United States. The European Commission rejected the claims and signaled readiness to defend its interests if needed.

EUR/USD

GBP/USD

Gains Slightly Despite Middle East Tensions

GBP/USD records modest gains around 1.3580 during Monday’s Asian session. However, further upside may remain limited amid ongoing uncertainty in the Middle East, with markets turning their attention to the US April employment report due later this week. Investor sentiment could turn cautious after US President Donald Trump announced efforts to assist ships stranded in the Strait of Hormuz as a “humanitarian gesture” during the US-Israel conflict with Iran. In response, an Iranian official warned that any US involvement in the region would be seen as a breach of the ceasefire, stressing that the Strait of Hormuz and the Persian Gulf should not be used for political posturing. Iran also noted it is reviewing Washington’s response to its 14-point proposal, though Trump indicated it may not be acceptable. Rising geopolitical tensions could support safe-haven demand for the US Dollar, potentially capping gains in GBP/USD. On the monetary policy front, both the Bank of England and the Federal Reserve held interest rates steady last week. BoE Governor Andrew Bailey stated that significant price pressures stemming from the conflict could require “forceful tightening,” while downplaying the likelihood of immediate rate hikes and emphasizing close monitoring of economic developments. At its latest policy meeting, the Bank of England kept interest rates unchanged at 3.75%, in line with expectations, marking the third consecutive hold. Among the nine-member Monetary Policy Committee, Chief Economist Huw Pill dissented, voting in favor of a rate hike.

GBP/USD

USD/JPY

Stabilizes as Japan’s intervention curbs the Yen’s decline

USD/JPY trades largely unchanged on the day, recovering from a drop to a session low of 155.48 on Friday after Japanese authorities intervened for a second consecutive day to support the Yen, which had weakened beyond the 160.00 level. The pair is currently hovering near 156.67.On Thursday, Japan stepped into the FX market, with Bank of Japan data released Friday showing intervention worth around $35 billion, slightly below the $36.8 billion deployed in July 2024. Market sentiment also improved after reports that Iran submitted a proposal to the United States through Pakistan, even as Washington maintained its economic blockade. Iran’s Parliament Speaker Mohammad Bagher Ghalibaf criticized the move, dismissing the effectiveness of such measures. On the data front, US manufacturing remained steady, with the ISM Manufacturing PMI holding at 52.7 in April, signaling continued expansion. Meanwhile, dissenting voices within the Federal Reserve highlighted rising concerns over inflation. Cleveland Fed’s Beth Hammack pointed to growing price pressures driven by higher oil prices, while Minneapolis Fed President Neel Kashkari warned that prolonged disruptions in the Strait of Hormuz could trigger a significant price shock, potentially requiring tighter policy. Dallas Fed President Lorie Logan added that the Fed’s next move could go either way, depending on evolving economic conditions. Additionally, Reuters reported on Friday that the Bank of Japan may have spent around 5.48 trillion Yen (approximately $35 billion) last week to support the Japanese Yen. Japanese Finance Minister Satsuki Katayama warned that authorities are prepared to take firm action against currency speculators after USD/JPY breached the 160.00 level, widely seen as a key threshold for intervention. Since then, the Yen has experienced several sharp rebounds. Meanwhile, consumer inflation in Tokyo, Japan’s capital, fell short of expectations across all measures in April and stayed below the Bank of Japan’s 2% target for a third consecutive month. This provides the central bank with further justification to remain on hold, despite earlier signals of a potential rate hike in June. The softer inflation data offsets the rise in Japan’s Manufacturing PMI to its highest level since January 2022 and fails to offer strong support to Yen bulls. In addition, a modest rebound in the US Dollar lends support to the USD/JPY pair.

USD/JPY

Dow Jones

Dow Futures Hold Near 50K as Iran Proposal Eases Tariff Concerns

Dow Jones futures traded above 49,800 in overnight and pre-market activity, extending a nearly 1,500-point rebound from Thursday’s lows near 48,500 and moving closer to the 50,000 milestone. The improved risk sentiment is being supported by optimism around Iran’s latest diplomatic proposal, which could help ease tensions in the Strait of Hormuz, even as Treasury Secretary Scott Bessent maintains a firm tone and President Donald Trump introduces new tariff measures targeting Europe. According to Iran’s state news agency IRNA, a revised negotiation proposal was delivered to the United States via Pakistani mediators on Thursday evening, marking the first tangible diplomatic progress in weeks. Pakistani officials have reportedly expressed cautious optimism, suggesting a potential agreement may be closer than at any time since the April 8 ceasefire, with the new proposal addressing nuclear concerns previously rejected by Washington. On the economic front, U.S. growth picked up in the first quarter, driven largely by a rebound in government spending. The Bureau of Economic Analysis reported that GDP expanded at an annualized rate of 2.0%, slightly below expectations of 2.3%. However, the boost is seen as temporary, as rising fuel costs linked to the Iran conflict could weigh on consumer spending. Inflation data showed stability, with the Personal Consumption Expenditures (PCE) Price Index rising 3.5% year-over-year in March, in line with forecasts, while increasing 0.7% month-over-month. Core PCE, which excludes food and energy, also met expectations with a 0.3% monthly gain, indicating that inflation pressures remain relatively contained despite ongoing geopolitical tensions .

Dow Jones

Gold

Hawkish Signals from Major Central Banks Deter Buyers

Gold (XAU/USD) ended the week in negative territory, weighed down by ongoing uncertainty surrounding the Middle East conflict and a broadly hawkish stance from major central banks. As attention shifts toward the upcoming US April employment report, the near-term technical outlook for the metal remains bearish. At the start of the week, investor sentiment turned cautious after US President Donald Trump canceled a planned delegation to Pakistan for further talks with Iran. Although he later stated that the conflict would end soon with a US victory, markets adopted a risk-off tone early Monday. Sentiment improved later in the session after reports that Iran had submitted a proposal to end the war and reopen the Strait of Hormuz, helping gold limit its losses. However, renewed doubts emerged after reports suggested the proposal was unlikely to be accepted, leaving Gold to close the day slightly lower. On Tuesday, rising oil prices—driven by reports that the US was preparing for an extended blockade of Iranian ports—added to market tensions. Despite safe-haven demand, Gold dropped nearly 2% as the US Dollar strengthened. The Greenback extended its gains on Wednesday, pushing XAU/USD to a fresh April low near $4,500. The Federal Reserve kept its policy rate unchanged at 3.5%–3.75%, but internal divisions were evident. While one policymaker supported a rate cut, several others opposed including an easing bias in the policy statement. Fed Chair Jerome Powell maintained a balanced tone, noting the central bank remains in a position to move either way while policy stays slightly restrictive. Gold attempted a strong rebound on Thursday, rising over 1.5% as the US Dollar weakened sharply following suspected Japanese intervention to support the Yen. However, the recovery proved short-lived. By Friday, the metal came under renewed pressure as the Dollar stabilized and markets reacted to hawkish signals from major central banks. The European Central Bank held rates steady but flagged upside inflation risks, with expectations building for a potential rate hike in June. Similarly, the Bank of England kept rates unchanged at 3.75%, though one policymaker voted for a hike, and inflation forecasts were revised higher. Governor Andrew Bailey emphasized the need for proactive policy action if inflation pressures persist.

Gold also faced outflows against major currencies, with XAU/EUR and XAU/GBP both falling over 3% for the week. Toward the weekend, improved risk sentiment—following reports of a new Iranian proposal—helped the metal recover part of its earlier losses.

GOLD

Crude Oil

Prices slip after Iran’s state media reports that Tehran has submitted a new peace proposal

Crude oil prices surged on Thursday, climbing to their highest levels since the 2022 Russia-Ukraine conflict after reports indicated that President Donald Trump was weighing additional military options against Iran. These reportedly included measures such as forcibly reopening the Strait of Hormuz, launching further strikes, and potentially seizing Iran’s enriched uranium through a special forces operation. At the same time, Trump signaled that the U.S. naval blockade on Iran would remain in place, reiterating his view that sustained economic pressure could push Tehran toward a deal. In response, Iran’s Supreme Leader, Mojtaba Khamenei, struck a defiant tone in a rare statement, asserting that Iran would retain control over the Strait of Hormuz while continuing to protect its nuclear and missile programs. His remarks underscored the lack of near-term de-escalation in the conflict, which has now extended beyond two months. Although Trump has prolonged the ceasefire indefinitely, efforts to revive negotiations have made little progress, highlighting a prolonged stalemate in the region. OPEC+ agreed on Sunday to a modest increase in oil production for June, though the impact is expected to remain largely limited as ongoing disruptions from the Iran conflict continue to affect Gulf supplies through the Strait of Hormuz. Seven OPEC+ members will raise output targets by 188,000 barrels per day in June, marking the third straight monthly increase. The group noted that the adjustment mirrors May’s planned rise, excluding the United Arab Emirates’ share following its exit from the alliance on May 1. Elsewhere, Ukrainian drone strikes targeting a Russian port and other energy infrastructure heightened concerns over potential supply disruptions. Meanwhile, President Donald Trump said on Sunday that the U.S. would begin efforts from Monday to assist and guide ships stranded in the Strait of Hormuz, aiming to support neutral countries amid the U.S.-Israel conflict with Iran.

He offered limited details on the plan but noted that his representatives were engaged in “very positive discussions” with Iran.

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MAJOR DATA RELEASED DURING LAST WEEK

MAJOR DATA COMING OUT THIS WEEK (Time zone GMT)

Disclaimer

Moving Average Convergence/Divergence (MACD):

MACD uses different exponential moving averages to generate buy and sell indicators. The lower pane of the chart shows two lines: a Differential Line and a Signal Line. The Differential Line is the difference between a short and long-period exponential moving average, typically 12 and 26 periods. The Signal Line is typically a 9-period exponential moving average. When the DL crosses the SL from above, a sell indicator is generated, and when it crosses from below a buy signal is generated.

Relative Strength Index (RSI):

This is a momentum indicator that measures a security's price in relation to itself. The lower pane of the chart shows a line that fluctuates on a scale of 0 to 100. Typically buy signals are generated at 30 and sell signals are generated at 70. If the line breaks 30, the security is oversold, and a reversal is imminent. If the line breaks 70, it is overbought and is due for a downward correction.

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