USD rises amid geopolitical tensions – Markets brace for pivotal decisions

Overview – Geopolitical risk Trumps economics, Dollar surges

In a market climate defying traditional economic logic, the US dollar maintained strong gains on Tuesday, fueled by rising tensions between Israel and Iran.
Fears of direct US involvement in military operations have bolstered demand for the greenback as a safe haven, with markets largely ignoring weak retail sales and industrial production data — highlighting the current dominance of geopolitics over macro fundamentals.

The US Dollar Index (DXY) climbed past 98.85, hitting a 4-day high with a 0.74% gain.

Falling US yields did not hinder the dollar’s rise, signaling a clear market shift toward "hedging, not analysis."

Key events and data – Wednesday, June 18

United States:

• Initial Jobless Claims.
• Building Permits & Housing Starts.
• FOMC Interest Rate Decision (Main Event of the Week).
• Jerome Powell's Press Conference – 22:30 Dubai Time.

Markets expect rates to remain unchanged, but Powell's forward guidance will be crucial, especially as traders price in a potential rate cut by September.

Forex movements – USD dominates despite mixed data

EUR/USD

• Broke below 1.1500, despite a positive German ZEW reading.
• The ECB adopts a cautious stance, similar to the Fed.
• Support: 1.1440 – Resistance: 1.1530

GBP/USD

• Pressured by broad risk-off sentiment.
• Investors expect BoE to hold rates on Thursday.
• Focus today: UK inflation data.
• Support: 1.3530 – Resistance: 1.3620

USD/JPY

• Surged past 145.00 after BoJ kept rates at 0.50%.
• Governor Ueda noted “downside risks remain high,” weighing on the yen.
• Resistance: 145.60 – Support: 144.20

AUD/USD

• Dropped sharply by 0.75% to 0.6470.
• Weighed by weak consumer confidence and Fed anticipation.
• Support: 0.6440 – Resistance: 0.6510

NZD/USD

• Fell to 0.6010, down 0.77%, amid lack of strong local data.
• Eyes on current account data today.

Commodities – Gold cautious, Oil surges on risk

Gold (XAU/USD)

• Consolidating near $3,387, after touching a high of $3,403 and low of $3,366.
• Investors await the Fed decision and broader signals on gold's role as a reserve asset.
• Short-term trend: Sideways-to-bullish.
• Support: $3,360 – Resistance: $3,408 then $3,435.

Crude Oil (WTI)

• Jumped 4.8%, closing at $73.33, rebounding from $69.56.
• Gains driven by heightened tensions and fears of Middle East supply disruptions.
• Support: $70.00 – Resistance: $74.40

Technical trade setups – June 18

Buy Gold on pullbacks toward $3,365 – $3,375

• Target: $3,430.
• Stop Loss: $3,345.
• Note: Caution ahead of the Fed, but uptrend holds above $3,350.

Buy Crude Oil (WTI) on dips to $71.50 – $72.00

• Target: $74.80.
• Stop Loss: $70.40.
• Note: Continued tension could push prices above $75.

Sell EUR/USD if it breaks below 1.1480

• Target: 1.1440.
• Stop Loss: 1.1530.
• Note: Euro remains weak despite upbeat data, dollar shows clear dominance.

Buy USD/JPY on pullbacks toward 144.60

• Target: 145.80
• Stop Loss: 143.90
• Note: Highly sensitive to US yields; tonight’s Fed guidance is pivotal.

Summary

Geopolitical developments are firmly steering the markets. Fears of a potential regional war in the Middle East have driven safe-haven demand for both the USD and gold, while risk-sensitive currencies are under pressure.
In this environment, traditional economic data has limited short-term impact, with attention firmly on three key elements:

• The Fed rate decision.
• Jerome Powell’s speech at 22:30 Dubai time.
• Military developments in Iran.

Until clarity emerges, risk management and disciplined positioning are critical. The opportunities are significant — but so are the risks.