📊 Dollar Rally Pauses — Middle East De-escalation Hopes vs Position Adjustment

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■ Market Overview

The FX market continues to monitor developments in the Middle East.

However, for now:

👉 Safe-haven dollar buying has paused, and
👉 Correction flows are becoming more dominant

Statements from Donald Trump have been mixed:

• Hawkish stance
• More conciliatory tone

👉 Markets are reacting to both, creating volatile sentiment swings

The environment is shifting from a pure:

“geopolitical crisis market” → to a mix of expectations and correction

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■ FX Developments

USD/JPY

After a sharp drop, the rebound remains limited:

• Drop: mid-159 → low 158
• Low: around 158.02
• Current: around 158.80

👉 Recovery is visible, but:

• Momentum back to 159+ is weak
• Upside remains heavy

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Broad USD

Dollar strength is losing momentum

Key drivers:

• Oil collapse: $100 → mid-$80s
• Unwinding of safe-haven USD positions

👉 Current flows:

• Position adjustment
• Sell-on-rally bias

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European Currencies

• EUR/USD: Holding relatively firm
• GBP/USD: Under pressure

Especially GBP:

👉 Weighed down by weak PMI data

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■ Economic Data (Key)

UK Flash PMI

• Composite: 51.0
  (Previous: 53.7 / Forecast: 52.8)

👉 Significant deterioration

Drivers:

• Demand slowdown due to geopolitical tensions
• Rising costs
• Supply chain disruptions

👉 Signals a stagflation-like environment:

• Slowing growth
• Persistent inflation

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■ Market Structure

Two opposing forces are currently in balance:

① Geopolitical Risk

→ USD buying

② De-escalation / Ceasefire Expectations

→ USD selling

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Plus:

• Position crowding
• Profit-taking

👉 Result: Unstable, directionless market

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■ Geopolitics

Mixed signals dominate:

• Ongoing conflict
• Iran maintaining a hardline stance
• At the same time, mediation efforts emerging

👉 Market behavior is shifting toward:

“Reacting more to positive news than negative”

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■ Key Focus Points

• Statements from Donald Trump (especially 20:00–21:00)
• Oil price movements
• Progress in ceasefire negotiations

👉 A single headline can reverse the market

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■ Market Environment

Current characteristics:

• Accumulated long USD positions
• Heavy upside resistance
• Strong headline-driven dynamics

👉 No longer a one-way USD rally
👉 Increasingly two-way volatile market

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■ Trading Perspective

Current phase:

👉 “From geopolitical trend → to correction phase”

Key points:

• USD: shifting from dip-buy → sell-on-rally awareness
• High risk of sharp reversals
• Headlines dominate over fundamentals

👉 Better to adapt to short-term flows rather than chase direction

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■ Summary

Safe-haven dollar demand is pausing, and the market is entering a phase where:

• Correction flows
• De-escalation expectations

are mixing together.

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📌 The next direction will depend heavily on:

• Middle East developments
• Oil price dynamics

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👉 The current phase is best described as:

“Not the start of a trend, but a correction phase.”