- Trump rejects Iran's peace proposal
- Oil benchmarks jump on geopolitical risk
- Trump/Xi summit may shape outcome of Iran war
- Gold kicks off new week on negative note
- EURUSD trapped in 150 pip range, on breakout watch
The peace offer came.
Trump dismissed it in two words – “TOTALLY UNACCEPTABLE.”
Iran proposed to transfer some of its stockpile of highly enriched uranium to a third country but rejected the idea of dismantling its nuclear facilities.
This was not enough for Washington. Trump didn’t like it, neither did markets as seen on Sunday’s open:
- WTI: ↑ 4.0%
- BRENT: ↑ 3.6%
- XAUUSD: ↓ 0.5%
Note: Gains shown represent the gap from Friday’s close.
Asian markets opened on a shaky note while European/US equity futures are pointing to a negative open.
What next:
The Trump/Xi summit on Thursday 14th may influence the outcome of the Iran war.
- This will be the first visit by a US president to China since 2017.
- All eyes will be on China’s response to the closure of the Strait of Hormuz
- If talks end on a positive note, it may raise hopes of an end to the Iran war
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EURUSD – on breakout watch
DID YOU KNOW:
The world’s most-traded FX pair has been trapped within a 150-pip range since early-April…
Note: Key support can be found at 1.1650 and resistance at 1.1800.
WHY?
- On one side, the Euro remains supported by expectations over higher rates in Europe amid conflict-induced inflation. With Eurozone inflation hitting 3.0% in April, it’s highest since September 2023 – markets are pricing in two ECB rate hikes in 2026.
- On the other side, geopolitical risk initially bolstered appetite for the safe-haven dollar with inflation fears also supporting the upside. However, the dollar has been trending lower in recent weeks.
WHAT TO LOOK OUT FOR THIS WEEK:
Wednesday, May 13th = Eurozone Q1 GDP (Second estimate)
Any major deviations from the first forecasts could trigger prices swings on the EURUSD.
First estimate GDP rose 0.1% QoQ and 0.8% YoY.
The EURUSD is forecasted to move as much as 0.3% higher OR 0.5% lower in the 6 hours after the GDP report.
POTENTIAL SCENARIOS:
BULLISH – A breakout above the 1.1800 resistance may trigger a move toward 1.1880 – the upper limit of Bloomberg’s FX model.
BEARISH – Sustained weakness below 1.1800 may spark a selloff toward the 100-day SMA and 1.16620 – the lower limit of Bloomberg’s FX model.
