Markets rebound as ceasefire calms Hormuz risk

Good morning everyone. Sentiment remains mixed this week, especially after yesterday’s price action when saw a sell-off on stocks during the US session due to ongoing disruptions in the Strait of Hormuz, but the market rebounded nicely into the close after Trump announced an extension of the Israel–Lebanon ceasefire. So, going into the end of the week, it looks like stocks could still see some near-term upside. At the same time, the dollar is also recovering and has been moving higher since Monday as expected, when we highlighted that at least a three-wave recovery should unfold from the 97.64 level after the March gap fill.

Now the key question is whether this rebound is just a temporary a-b-c correction, representing wave four, or if it could evolve into a new impulsive move higher. It’s still too early to confirm direction, but the key levels are clear; a break above 99.32 would support further upside and continuation of the bullish move, while a break below 98.40, especially with a daily close, would suggest that bears are back and that a fifth wave lower could follow.

Overall, it’s better to stay patient into the end of the week, especially with potential event risk over the weekend. Markets may remain more neutral, and with the risk of gaps on Sunday, it may be wiser to wait for key levels to break before looking for new opportunities next week.