Global markets whipsaw as the Israel-Iran conflict continues. The US dollar weakens despite dovish central bank moves from the Bank of England and Swiss National Bank.
The US dollar retreated after Trump’s “two-week notice” towards Iran
Global financial markets whipsawed yesterday as US President Trump reversed from his earlier hawkish rhetoric of a potential immediate strike on Iran this weekend to a “two-week grace period” to allow an option for diplomacy.
Meanwhile, retaliatory attacks between Israel and Iran continued for the seventh day on Thursday, 19 June, as Israel’s military aircraft hit more Iranian nuclear sites, and warned its attacks may bring down a regime change in Tehran.
Meanwhile, a missile from Iran hit an Israeli hospital yesterday for the first time since the war began, underscoring the risk to civilians in both countries, which suggests that the ongoing Israel-Iran conflict and geopolitical risk premium are showing no signs of abating.
Have you read our latest blog, Singapore strengthens trading safety. Are your funds safe?
The US dollar erased all its post-FOMC gains despite a dovish hold from the Bank of England (BoE) that left its policy interest rate unchanged at 4.25% as expected and expects significant slowing of wage growth in the UK for the rest of 2025 with Governor Bailey’s comments that interest rates remain on a gradual downward path.
In case you missed it: What is leveraged FX trading – the main attractions and key risks
In addition, the Swiss National Bank (SNB) cut its policy interest rate to zero by 25 basis points to deter speculators from pushing up the franc, supported lower inflationary pressure in Switzerland and issued guidance that negative interest rates may return.
The US Dollar Index ignored these dovish moves from the BoE and SNB and staged a bearish retreat below its 20-day moving average, which is acting as an intermediate resistance at 99.00 after an intraday bullish break on Thursday to hit an intraday high of 99.16 to close lower at 98.78 at the close of the US session.
The lack of bullish follow-through in the US Dollar Index yesterday, reinforced by US President Trump's “wait and see” approach towards attacking Iran, brings back the TACO trade narrative – “Trump always chickens out” that tends to be negative for the US dollar.
In today’s Asia session, the US Dollar Index retreated further (-0.2%). The Japanese yen gained by 0.1% against the US dollar, supported by a rising inflationary trend in Japan as the core-core CPI (excluding fresh food and energy) rose to a 3.3% y/y in May, a 16-month high from 3% in April. The EUR/USD rallied by 0.2% at the time of writing, while the AUD/USD and GBP/USD gained by 0.1% each.
WTI crude oil continued to hold firm in today’s Asia session at US$74.77/barrel, above Thursday and Wednesday’s intraday lows at US$74.02 and US$72.71, respectively. Meanwhile, Gold (XAU/USD) dipped lower by -0.8% to challenge the 20-day moving average support at US$3,350.
The latest intraday technical analysis on US Wall Street 30, US Nas 100, US SPX 500, Hong Kong 33, Japan 225, Germany 30, EUR/USD, GBP/USD, AUD/USD, USD/JPY, Gold (XAU/USD), and West Texas Oil can be found in our YouTube video above.
