The USD is lower vs the major currencies to start the North American session and the new trading week. The declines come after sharp gains in the dollar on Friday as yields moved higher, and stocks moved sharply lower with the NASDAQ index losing over 1100 points on geopolitical concerns and a stronger than expected US jobs report. Fed funds futures are now leaning toward tightening – not easing – in 2026. The strong labor market and rising energy prices have pushed the market to price a meaningful probability of at least one rate hike this year, while expectations for rate cuts have largely disappeared.
Having said that, the tone has improved this morning. Pres. Trump has posted on Truth Social:
Both sides, Israel and Iran, are looking to do an immediate CEASEFIRE! Final negotiations on “Peace” are proceeding, subject to ignorance or stupidity getting in its way. The Blockade will remain in place, and in full force and effect, until a “Final Deal” is reached. Things should move quickly
It is curious that the word “peace” is in quotations (as if not not believe it), but the markets have jumped on the good story. Subsequently Iran announced end of military operations against Israel, BUT warned of harsher attacks if Israel resumes attacks on Lebanon. Over the weekend, Israel launched missiles toward Lebanon despite Pres. Trumps pleas to not do it. Now it seems there is a truce.
The USD has moved lower with the USD down by 0.19% versus the EUR, by -0.22% versus the JPY and -0.20% versus the GBP. The declines versus the NZD (-0.59%) and the AUD (-0.41%) are larger as some of the risk-off trades from Friday are unwound. In the video above, I take a look at the three major currency pairs – the EURUSD, USDJPY and GBPUSD – from a technical perspective and outline the key technical levels in play including the bias, the risk levels, and targets.
Crude oil is trading lower from higher levels with the current price at $91.57. That is still about $1.00 up on the day, but well off the highs of $95.47. The low price is at $91.52 not far from the current levels.
Looking at the US stock indices in premarket trading:
- Dow industrial average is up 146 points, after falling 695 points on Friday
- S&P index is up 56 points after falling -200.59 points.
- NASDAQ index is up 378 points after tumbling -1121.53 points on Friday
Looking at the US debt market, yields are little changed but modestly lower in the short end after Friday’s move higher:
- 2 year 4.151% -1.1 basis points
- 5 year 4.274%, -0.6 basis points
- 10 year 4.540%, +0.4 basis points
- 30 year 5.006%, +0.8 basis points
In other markets:
- Gold is up $5.40 or 0.12% at $4332
- Silver is up #0.61 or 0.91% at $68.50
UPDATED (10 minutes later).
- Israel sources says “Our operations against Hezbollah in Lebanon are ongoing”
- There are also reports of airstrikes targeting Tyre, Lebanon
- Netanyahu and Trump spoke with Netanyahu saying that Pres. Trump and he were “consensual” in positions.
There is no believing what is said. Despite the news headlines. the US stock market is remaining positive with the NASDAQ index now up 400 points in premarket futures trading.
