US Iran tensions have markets on edge
US Retail Sales on tap
Nikkei -0.40% Dax -0.61%
UST 10Y 2.06%
Oil $52/bbl
Gold $1352/oz.

Europe and Asia:
CNY Industrail Production 5.0% vs. 5.4%

North America:
USD Retail Sales 8:30

Markets were on edge at the end of the week with USD and yen gaining in overnight trade on safe harbor flows as tensions between the US and Iran continued to escalate over the sabotage of oil tankers in the Gulf.

US accused Iran of masterminding the attacks on oil tankers in the Strait of Hormuz producing a grainy video of what US officials purported to be an Iranian navy ship removing an unexploded mine off the hull of a Japanese tanker. US officials quickly stated that they have no intentions to escalate the conflict - but the tension in the Gulf clearly demonstrates Iran's frustration at the US led effort to isolate its economy.

Faced with near ironclad sanctions and seeing its economy hemorrhage, the Iranians may be resorting to state-sponsored terrorism in the Gulf to disrupt the vital oil shipping lanes. The US/Iran conflict has been simmering for quite some time and if it escalates it could present the isolationist Trump administration with an inevitable choice of engaging in yet another Middle East conflict.

All of this has put the capital markets on guard with US 10 year yield now at an astounding 2.06% rate as safe harbor flow are relentless. The drop in yields revived risk off flows into the buck and the yen with both topping the leaderboard in overnight trade as high beta currencies drift back to multi week lows. The Aussie has given up the .6900 figure, kiwi broke below .6550 and cable is once again flirting with the 1.2600 level.

Today's US Retail Sales numbers could change the narrative if they print better than expected - and the market is projecting a big rebound to 0.7% from -0.2% the period prior - but if we learned anything over the past six months it's that the US consumer has been far more cautious than the surveys indicate, so any miss in the data would only amplify the calls for a Fed cut by July.

For now USDJPY remains above its key spike lows of 10.65 from the start of the year and if it can hold this level for the rest of the day, it may begin to form a hint of a double bottom. Negative sentiment in the market is near hysterical levels, but for now it shows no signs of abating.

Past performance is not indicative of future results. Trading forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis

Latest Forex Analysis

Editors’ Picks

AUD/USD continues to trade uneventfully just below 0.7000

Upbeat Australian data and Wall Street’s recovery fell short of boosting the Aussie against its American rival. Westpac Consumer Confidence coming up next.


Gold advances to fresh daily highs near $1,810

The XAU/USD pair closed the first day of the week with small gains above $1,800. After spending the European session moving sideways in a tight channel, the pair turned north on broad USD weakness during the American session. 

Gold News

BOJ Preview: No changes in policy, but forecast downgrades expected

After a chaotic end to Q1, the Bank of Japan is back to usual business. Policymakers will have a meeting to decide on monetary policy early Wednesday.

Read more

Bitcoin low volatility indicates a significant move to $8,000 or $10,000 is nearby

Bitcoin price is currently at $9,229 after a brief dip to $9,104. It is currently below the daily 12-EMA and the 26-EMA which have been unable to cross positively due to the lack of bullish continuation. 

Read more

WTI Oil Outlook: Concerns of slowdown in global demand recovery pressure oil price

WTI oil remains at the back foot on Tuesday and establishes below $40 level, as sentiment weakened on news of new restrictions in California due to increased number of infections.

Oil News

Forex Majors