Middle East Risks Linger, but FX Market Stays Cautious | USD/JPY Searches for Direction Around 159
Overview
Markets were mixed at the start of the week.
In the Middle East, negotiations are still ongoing,
but no decisive breakthrough has been reached.
- President Trump remains cautious on Iran’s proposal
- Iran has submitted a revised proposal
- Limited clashes continue
→ Geopolitical risks remain elevated.
That said, price action in the FX market remains relatively calm.
Current Market Theme
The market right now is:
“Middle East tensions remain, but traders are waiting for a decisive headline.”
- Oil is moving higher
- Stocks remain firm
- The US dollar is slightly stronger
Even so,
no major trend has developed yet.
Oil and Equities
NY crude rebounded from the 86-dollar area
to around 90 dollars.
→ Markets are showing some concern over geopolitical risks.
At the same time, equities remain strong.
- US equity futures are in positive territory
- AI-related stocks continue to attract buying
- The Nikkei is trading around the 67,000 level
→ This is not a full risk-off environment.
FX Market
- USD/JPY: low to mid-159 range
- EUR/USD: low 1.16 area
- GBP/USD: mid-1.34 area
The dollar index is slightly higher.
However,
it remains within last week’s range.
→ The market is still cautious.
Key Events Today
Today’s economic calendar includes:
- Final PMI readings
- Eurozone M3 money supply
- ECB inflation expectations
- US ISM Manufacturing
- US construction spending
The biggest focus is:
US ISM Manufacturing
Forecast: 53.0
→ The result could influence the dollar’s next move.
Middle East Headlines
Iran’s foreign ministry repeated that:
“We are not negotiating nuclear issues with the United States.”
They also stated that:
“Israel’s attacks on Lebanon are preventing progress toward an agreement.”
→ Hopes for a deal remain,
but uncertainty is still high.
Possible Scenarios
1) Positive Middle East headlines
→ Oil declines
→ Dollar pulls back
2) Escalation in tensions
→ Oil rises
→ Dollar buying increases
3) Lack of fresh catalysts
→ USD/JPY stays range-bound around 159
Trading Focus
- Headlines remain the top priority
- Watch the battle around 90-dollar oil
- Monitor dollar reaction after ISM
- Watch whether USD/JPY can hold the 159 level
Summary
The market right now feels like:
“Uncertain, but not breaking down.”
Oil is slightly higher.
Stocks remain strong.
The dollar is still holding firm.
But there is no decisive catalyst yet.
→ The most important themes remain:
Middle East headlines
and
whether USD/JPY can maintain the 159 level
