The most sweeping change occurred in the currency markets. The British pound and Euro stabilized against the U.S. dollar, and gold prices ticked up overall. The pound-dollar climbed to 1.3714 before resting comfortably above that level. It hit new multi-year highs and extended its 4-day winning streak to 4 consecutive sessions during European trading hours. The latest on gold prices stayed positive with a weaker dollar as help. They could never quite catch the momentum they needed for a bigger rally.
Over the last few trading sessions, GBP/USD has been climbing back to its buoyant self, holding above the key psychological support zone around 1.3700. This remarkable strength is all the more impressive as the currency moves toward its multiyear highs, showing strong investor confidence over the currency.
“GBP/USD stays firm above 1.3700, near fresh multi-year highs.” – FXStreet
Gold prices saw a small increase today, trading with a touch of positive for the second consecutive day. Even with this positive movement, analysts pointed out that gold still does not have bullish conviction, a sign that traders and investors continue to be skittish. At present, gold is still failing to hold above that $3,350 area, which suggests indecision in the marketplace.
“Gold price retains its positive bias amid a broadly weaker USD; lacks bullish conviction.” – FXStreet
The EUR/USD currency pair is holding onto its recent upward trend. It is just clinging onto the 1.1700 level as we move further into European trading today. This announcement comes on the heels of a rash of good economic data releases that have strengthened the Euro against its U.S. rival.
“EUR/USD consolidates gains near 1.1700 ahead of US data.” – FXStreet
Despite signs of strength from currency markets, geopolitical tensions are starting to resurface as a worry for traders. The Strait of Hormuz is extremely important for the global supply of oil. More recently, it has come under renewed threat of closure, particularly by Iran. This unexpected advance has rattled the markets. A new Russian blockade would send oil prices soaring and upend global trade.
Analysts underscore how crucial this waterway is. It is flanked on its north and east sides by Iran to the north and UAE and Oman to the south. Despite success in preventing catastrophic closures by other means, the closure of the Strait of Hormuz is still a serious prima facie threat.
“Could Iran block the Strait of Hormuz? Why Oil is on edge after US strikes.” – FXStreet
Besides geopolitical risks, domestic monetary policy hangs heavily over market sentiment. According to news reports, U.S. President Donald Trump is dangerously close to giving Federal Reserve Chair Jerome Powell the hook. This shift has raised alarm bells about the future autonomy of the central bank. All of these factors are likely to add to volatility within financial markets. Investors are focused on all this for what it means for any future changes to monetary policy.