Equities Rally, but FX Still Depends on the Middle East | USD Maintains Its Geopolitical Premium
■ Market Overview
Equity markets remain strong.
- Nikkei 225: Briefly touched the 60,000 level, marking a new all-time high
- Nasdaq-100 / Nasdaq: Also pushed to fresh highs
→ The AI-driven boom continues, keeping equities firmly in risk-on mode
However, FX markets are telling a completely different story.
The Middle East remains the main driver, and USD continues to trade nervously.
Expectations of a U.S.–Iran ceasefire briefly triggered USD selling,
but renewed concerns over the Strait of Hormuz quickly brought risk back.
→ Even with equities rallying, FX remains far from stable
■ FX Market Dynamics
- Reports of explosions in Iran → Oil spikes → USD buying
- Denial of those reports → Reversal of USD buying
U.S. Dollar Index
98.73 → 98.55 → back to the 98.6 area
→ Holding above the 200-day moving average (98.54)
shows continued underlying strength
■ Core Market Theme
“A geopolitical market where equities and USD strength coexist”
- Equities = AI-driven market
- FX = Middle East-driven market
→ Different markets have completely different leaders
■ Key Focus (Top Priority)
- Future of the Strait of Hormuz situation
- Oil price direction
- Progress in U.S.–Iran negotiations
- Flash PMI data
However, the real drivers remain:
Oil + Middle East headlines
■ Scenario Outlook
① Easing tensions
→ Oil falls
→ USD selling
→ Risk-on continues
② Renewed escalation
→ Oil rises
→ Safe-haven USD buying accelerates again
③ Prolonged uncertainty (most likely)
→ Oil stays elevated
→ USD remains supported
■ Strategy Points
- Dangerous to sell USD based only on equity strength
- Oil must remain the top priority
- Trade with a headline-driven mindset
■ Summary
The current market is:
“Optimism in equities, caution in FX.”
→ Even with Nikkei at record highs,
USD will not collapse easily
→ Most important factors:
Middle East headlines and oil direction
