Forex Top Team

Middle East Tensions Intensify, But Forex Markets Remain Calm Amid Stock Declines and Rising Oil Prices

The forex market has had a relatively quiet start to the week. Tensions in the Middle East, particularly the situation involving Israel and Hamas, continue to escalate. A large-scale Israeli invasion of the Gaza region appears imminent, raising concerns of a major humanitarian crisis. However, there have been reports of potential U.S. political intervention, offering some hope of avoiding the worst-case scenario. Nevertheless, the situation remains fluid, and careful monitoring of news developments is advisable.

The USD/JPY pair has been trading around the 149 yen level, showing some consolidation after the dollar gained strength in response to last week’s strong CPI data. The pair has retreated slightly from the 150 yen level. Meanwhile, the EUR/USD pair has maintained levels around 1.05, with some buying interest in the lower 1.05 range. The GBP/USD pair has edged higher from the mid-1.21s to the late 1.21s, contributing to a general pause in the dollar’s rally.

In contrast, the New Zealand dollar (NZD) has been performing well. The ruling party’s defeat in the weekend’s general election has led to a change in government after six years. While the previous government aimed to balance inflation and employment, it seemed that discrepancies had emerged. The new government is expected to focus more on inflation management, which the forex market views as a positive for the NZD. The NZD/USD pair has gapped up from the mid-0.58 range to the mid-0.59 range as the trading week began and has maintained levels around 0.59. The Australian dollar (AUD) has also strengthened, contributing to the pause in the dollar’s recent rally.

 

Today, we have seen some NZD buying due to the change in New Zealand’s government. While it hasn’t gained much momentum yet, we have hopes for further gains in the near future.