The US-Iran ceasefire deal signals relief for the markets, calming investors’ fears of a potential escalation in the Middle East. With Iran agreeing to ensure safe passage through the Straits of Hormuz for the next two weeks, oil prices tumbled, the USD weakened, and risk-on sentiment lifted global equities. Traders and analysts are closely watching market reactions ahead of the release of the Fed’s March meeting minutes, which could further influence financial markets.
US-Iranian ceasefire deal weighs on oil prices
The US and Iran reached a ceasefire deal, just hours before the US deadline was about to end. The deal is to last for two weeks, in order to provide time for a more permanent ceasefire agreement. The Straits of Hormuz ae to open in that period, with Iran guaranteeing safe passage. The news acted as a relief for the markets investors and analysts alike, were bracing for a potential escalation of the war in Iran. Especially market worries for the supply side of the international oil market have eased allowing oil prices to tumble in today’s Asian session.
Xcellence Research Team opinion
Should we see the markets’ worries for the US war in Iran easing further, we may see oil prices continuing to lose ground. Any interruption of the ceasefire, could take the markets by surprise and cause oil prices to rally easily above US$100 per barrel.
WTI H4 Chart
- Support: 96.80 (S1), 107.15 (S2), 119.40 (S3)
- Resistance: 84.80 (R1), 76.90 (R2), 67.20 (R3)
WTI’s price dropped breaking today the 96.80 (R1) support line now turned to resistance. We tend to maintain a bearish outlook for the commodity’s price yet warn that it may have reached over sold levels as the RSI indicator has reached the reading of 30 while the commodity’s actual price action is below the lower Bollinger band, hence a correction higher is possible.
USD’s safe-haven status weighs
The USD was on the retreat in the FX market in today’s Asian and European sessions. The greenback’s safe haven status was maybe the main issue behind the weakening of the USD as the US-Iranian ceasefire deal improved the market sentiment. We also highlight the release of Fed’s March meeting minutes as it could shake the markets. We consider the Fed’s intentions as maybe the second most important issue tantalising the markets currently.
Xlence Research Team opinion
In the grand scheme of things the US-Iranian ceasefire deal is expected to continue weighing on the USD on a fundamental level. On the other hand should the Fed’s minutes be characterised by a more hawkish tone than what the market may be expecting, we may see the USD getting some support.
EUR/USD H4 Chart
- Support: 1.1640 (S1), 1.1410 (S2), 1.1210 (S3)
- Resistance: 1.1810 (R1), 1.1925 (R2), 1.2080 (R3)
In the FX market we note that EUR/USD is on the rise and has broken the 1.1640 (S1) resistance line, now turned to support. We maintain a bullish outlook for the EUR/USD’s price action yet at the same time we issue a warning for a possible correction lower as it seems to have reached overbought levels.
US stock markets rally on ceasefire deal
Major US stock market indexes rallied yesterday signalling substantial support for US equities from market participants. The US-Iranian ceasefire deal tended to erase a factor of uncertainty in the markets and created a risk on approach benefiting US stock markets. We also highlight the release of the Fed’s March meeting minutes as a potential market mover for US equities later today.
Xlence Research Team opinion
Overall, the US-Iranian ceasefire deal tends to be a positive for the markets, yet the release of the Fed’s meeting minutes later today could weigh on US equities, should the document be characterised by a hawkish tone. Should the Fed signal that it intends to maintain a restrictive monetary policy for a longer period than what the market expects, we may see US stock markets ending their day in the reds.
US 30 Cash H4 Chart
- Support: 47450 (S1), 46800 (S2), 45700 (S3)
- Resistance: 48400 (R1), 49680 (R2), 50530 (R3)
On a technical level we note that Dow Jones rallied breaking the 47450 (S1) resistance line now turned to support. Hence we switch our bias for a sideways movement in favour of a bullish outlook for the index and set as the next possible target for the bulls the 48400 (R1) resistance level. Once again though we highlight that the index seems to be at overbought levels and seems ripe for a correction lower.
Gold gains on weaker USD
Gold’s price rose in today’s Asian session as it benefited from the weakening USD. The reports for the selling of gold by the Turkish central bank to defend the TRY, in late March is interesting for gold traders, sending a negative signal for gold’s price, yet is overshadowed. We note though that the rise of gold’s price and the weakening of the USD seems to be asymmetric, as gold’s gains seemed to be somewhat capped. Furthermore, we also highlight the release of the Fed’s March meeting minutes later today, as a potential market mover for gold.
Xlence Research Team opinion
Overall on a fundamental level, we note that a possible continuance of the weakening of the USD could provide some support for gold’s price and vice versa. As the release of the Fed’s meeting minutes, should we see a more hawkish than expected tone characterising the document we may see gold’s price being on the retreat, while a more dovish tone could provide some support for the precious metal’s price.
XAU/USD H4 Chart
- Support: 4550 (S1), 4350 (S2), 4100 (S3)
- Resistance: 4800 (R1), 5000 (R2), 5230 (R3)
Gold’s price rose in today’s Asian session, yet corrected lower in today’s European session. The RSI indicator tends imply a bullish predisposition on behalf of the markets for gold’s price. Should the bulls maintain control over gold’s price we may see it clearly breaking the 4800 (R1) resistance line and start aiming for the 5000 (R2) resistance barrier. On the flip side should the bears take over, we may see gold’s price aiming if not reaching the 4550 (S1) support level.
Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.
