US-Iran MoU agreed

The US-Iran MoU agreed announcement has improved market sentiment, raising hopes for a de-escalation of tensions in the Middle East. Reports suggest that the United States and Iran have reached a memorandum of understanding that could lead to the gradual reopening of the Strait of Hormuz and the easing of economic restrictions. The development has boosted risk appetite across financial markets, supporting equities, cryptocurrencies, and gold, while weighing on the US dollar and oil prices. Investors are now turning their attention to key central bank decisions from the Reserve Bank of Australia (RBA) and the Bank of Japan (BoJ), which could drive further volatility in currency markets.

US-Iran Pactum est

Pakistani authorities have announced that the US and Iran have reached a memorandum of understanding. Although the terms of the deal are still not clear, it seems that the Straits of Hormuz are to be gradually opened by Iran, while the US is to lift the blockade, the deal includes also Lebanon, while the stance of Israel is still unclear. The news have lifted the market mood supporting cryptocurrencies, equities and gold’s price, while the USD and oil prices are on the retreat. 

RBA expected to remain on hold, BoJ to hike rates

In tomorrow’s Asian session, we get two interest rate decisions. In Australia, RBA is expected to remain on hold, yet given Australia’s inflationary pressures we may see RBA sounding hawkish which could provide some support for the Aussie. In Japan, BoJ is expected to hike rates and should the hike be materialised and possibly accompanied by a hawkish forward guidance by BoJ Deputy Governor Uchida (given BoJ Governor Ueda’s absence) we may see JPY getting some support.

Autres points forts pour aujourd'hui

Today we get Euro Zone’s industrial output for April, Canada’s House Starts for May, Manufacturing sales for and wholesale trade for April and from the US the NY Fed manufacturing index and industrial production for May.  In tomorrow’s Asian session, we get UK’s Rightmove House prices, China’s House prices, Urban investment, industrial output and retail sales, while BoJ and RBA are to release their interest rate decisions.

Charts to keep an eye out

USD/JPY

USD/JPY remained in a tight rangebound motion just below the 160.50 (R1) resistance line. The bullish market sentiment seems to have eased, as the RSI indicator remains slightly above the reading of 50. The Bollinger bands are narrowing implying lower volatility for the pair, which in turn may allow the sideways motion to continue. Hence for the time being we maintain a bias for the sideways motion to continue, but at the end of the day, the pair’s direction may alter by BoJ’s interest rate decision. Should the bulls take over, USD/JPY may break the 160.50 (R1) line and start aiming for the 164.40 (R2) resistance level. Should the bears be in charge, USD/JPY’s price action may start aiming if not breaching the 157.50 (S1) support line.   

WTI

WTI dropped breaking the 82.00 (R1) support line, now turned to resistance. We maintain a bearish outlook for WTI’s price given that, given that the RSI indicator edged even lower, signaling an intensifying bearish market sentiment for WTIs’ price. Yet the commodity’s price action has dropped below the lower Bollinger band which may slow down the bears or even cause a correction higher. Should the bears maintain control as expected, we may see WTI’s price aiming for the 76.60 (S1) support line, while even lower we note the 69.00 (S2) support base. For a bullish outlook which we consider as a remote scenario at the current stage, we would require WTI’s price to break the 88.60 (R2) resistance level, paving the way for the 98.50 (R3) resistance hurdle.

USD/JPY Daily Chart

• Support: 157.50 (S1), 155.00 (S2), 152.10 (S3)
• Resistance: 160.50 (R1), 164.40 (R2), 168.00 (R3) 

WTI Daily Chart

• Support: 76.60 (S1), 69.00 (S2), 60.90 (S3)
• Resistance: 82.00 (R1), 88.60 (R2), 98.50 (R3) 

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