Trump says Iran war "close to over" amid hopes for more negotiations
Good morning everyone,
Stocks are seeing a strong recovery as crude oil breaks sharply to the downside, which suggests growing optimism that the situation in the Middle East may improve.
Recent headlines indicate that some tankers have passed through Hormuz and reached Iranian waters, and Trump also mentioned that extending the ceasefire may not be necessary, because the primary goal is that a deal is reached, which supports risk sentiment. At the same time, US PPI data yesterday came in lower than expected at 0.5% on a monthly basis versus 1.1% expected, which adds to the view that inflation pressures may not be as strong as previously feared.
This is helping stocks push higher, while the US dollar remains weak in the short term.
Looking at the US dollar index, it still appears to be trading in a wave five move lower, approaching key support around 98 to 97.60, where we could see a potential rebound. The main question is whether we get a breakout from the current channel this week, which would allow at least a three-wave recovery. For now, it looks like major currencies against the dollar are approaching near-term resistance levels, so we should be aware of possible retracements.
GH