How The Day Played Out
Following the long bank holiday weekend, investors were visibly unsettled by the latest U.S. military actions in Iran, which caused oil prices to rebound around 4% from their lows hit on Monday. The session opened with peace deal optimism carried over from the weekend intact, but that optimism was rapidly tested once the facts on the ground became clear.
Iran's Islamic Revolutionary Guard Corps warned it has a "legitimate" right to respond to any "violation" of the ceasefire after the U.S. military carried out what it called "self-defence strikes" targeting Iranian missile launch sites and boats around the Strait of Hormuz. It was unclear how the attacks would affect the ceasefire. The strikes came hours after Iranian negotiators met with Qatari mediators in Doha for talks coordinated with the U.S. The U.S. and Iran are working toward a memorandum of understanding, but disputes over language concerning Iran's nuclear program and sanctions have held up a deal.
Adding further weight to the pessimistic case, Austria's domestic intelligence service reported on May 26 that Iran was pursuing an advanced nuclear weapons program with ballistic missiles capable of carrying nuclear warheads over long distances. That headline arrived quietly but carried strategic significance for the talks.
Optimism about a resolution to the three-month U.S.-Iran conflict faded after Washington confirmed the defensive strikes in southern Iran, signalling that any peace deal remains distant. On the policy front, ECB official Isabel Schnabel told Reuters the central bank should raise interest rates in June even if a peace agreement is reached, citing the scale and persistence of the energy shock. Money markets now price in a near 90% chance of a June hike, with roughly 60 basis points of tightening expected by year-end, pointing to at least two quarter-point increases.
Market sentiment turned cautious after fresh U.S. military strikes in southern Iran reduced hopes that the Middle East conflict would end anytime soon. Elevated oil prices continue to fuel inflation concerns globally, with markets pricing in nearly a 40% chance of a Fed rate hike in December.
The dollar firmed on Tuesday as renewed U.S. strikes on Iran dented optimism for a near-term deal. Sterling drifted quietly lower in response to dollar resilience and the renewed Middle East uncertainty. The session's mood is best described as a corrective unwind of Monday's peace premium, not a full reversal, but a material recalibration.
The U.S. Dollar Index traded around 99.15 after briefly slipping below the 99.00 mark on Monday. The dollar's partial recovery was the thread connecting most of today's moves across both commodities and FX.
Key Moves And Levels
Wti Crude Oil
WTI was trading at approximately $92.09 as of May 26. The renewed U.S.-Iran uncertainty resulted in a sharp recovery in oil prices, with WTI trading 1.5% higher to near $91.00 during European hours. Despite Tuesday's rebound, oil prices are still down more than 10% over the past week amid growing optimism surrounding U.S.-Iran negotiations. The morning briefing identified $89.00 - $90.00 as the key support zone following Monday's plunge, and that zone held. The bounce from those lows toward $92 confirmed there are buyers at the lower range, but the pair has not reclaimed the $94 - $96 resistance zone that the briefing flagged as the threshold signalling a return of war premium. The 38.2% Fibonacci retracement from the breakdown sits at $95.58, which aligns closely with the broken triangle support and could now act as resistance. The directional picture remains bearish on trend but with elevated two-way risk given the live headline environment.
GOLD (XAU/USD)
Gold was trading at approximately $4,538, having opened at $4,569.86, with today's range running from $4,528 to $4,580. The metal opened at the top of the range and sold off through the session as dollar strength reasserted and the peace premium wavered. The morning briefing's key support zone of $4,509 - $4,528 was tested intraday and held at the lower bound, which is a technically constructive outcome. The resistance at $4,576 - $4,580 was touched on the open but not cleared on a closing basis. A daily close above $4,580 was the constructive signal flagged this morning; that did not materialise. Gold traded a bit softer during the session, with spot prices around $4,547 per ounce and down approximately 0.5% on the day.
SILVER (XAG/USD)
Silver fell to $75.68 on May 26, down 3.07% from the previous day. Silver was trading around $76.43 at mid-session, down nearly 2.0% on the day. The metal traded 2% lower to near $76.50 during the European session, resuming its downside journey after rising in the last four trading days as market participants turned cautious over peace in the Middle East. The morning briefing's primary instrument call was silver long from a retest of $76.50 - $77.00, citing the overnight strength as real momentum. That overnight gap filled entirely and then some. The near-term tone remains uncertain as silver struggles to return above the 20-day EMA, which sits at $77.66. The $75.50 signal level cited in the early warning section was approached but not cleanly breached on close, leaving the setup in an uncomfortable middle ground.
USD/JPY
The Japanese yen steadied near 159 per dollar on Tuesday, moving sideways as fresh U.S. military operations in southern Iran and ongoing peace negotiations kept investors cautious. The U.S. military reportedly targeted missile launch sites and vessels suspected of attempting to deploy mines in southern Iran. Meanwhile, President Trump said talks with Tehran were progressing well, though he warned additional attacks could follow if negotiations broke down. USD/JPY was quoted at approximately 158.955 with a daily change of 0.06. The pair remained well within the 158 - 160 channel. No intervention was triggered and no fresh BoJ verbal guidance emerged today. The morning's core view - that USD/JPY was not a trade but a monitoring instrument - was the correct posture. The pair simply ground sideways, validating the caution.
GBP/JPY
GBP/JPY was trading near 213.72, up approximately 0.15% on the day. The pair retreated from the morning briefing's opening level near 214.58 as the risk-on tone from the weekend faded. The lower end of the briefing's support zone at 212.00 - 213.00 was not tested, but the pair gave back Monday's gains and closed in the lower half of its recent range. The 215.50 - 216.00 resistance target was never in reach today.
EUR/USD
EUR/USD was trading at 1.1625 in midday European action on Tuesday, down 0.15% from Monday's close, fluctuating in a tight channel. In the FX space, things were relatively quiet. The major pairs formed only small gaps in response to the weekend posts by Trump suggesting negotiations were "proceeding nicely." Some of that optimism faded with U.S. forces carrying out "self-defence" strikes in southern Iran early on Tuesday. The morning's pullback-buying zone of 1.1620 - 1.1640 was reached but the pair struggled to bounce cleanly from it. EUR/USD bears need to see a clean break below the 1.1570 - 1.1600 support zone to open the door for another test of 1.1500. That level held on a closing basis.
USD/CAD
USD/CAD was quoted at approximately 1.38036, with a daily change of 0.009. The pair tracked oil's intraday bounce closely, edging slightly higher as WTI recovered from its session lows. The morning briefing called for continuation longs on dips toward 1.3760 - 1.3780 provided oil was not recovering sharply. Oil did recover, which was the stated condition for managing risk tightly on this setup. The upper resistance zone of 1.3820 - 1.3830 was tested and held as a cap.
USD/CHF
The opening price for USD/CHF today was 0.7867. USD/CHF was quoted at approximately 0.78313 with a daily change of 0.11. A separate source placed the latest available rate at 0.78498, with a daily change of 0.35. The pair drifted lower through the session, consistent with the briefing's neutral posture and its note that the pair would move reactively to broader USD direction. The dollar recovered against most G10 peers but the franc held its own, consistent with safe-haven demand reasserting mildly as oil bounced and inflation fears returned.
Morning Calls Review
The morning briefing's dominant thesis - that today would be a headline-driven, volatile session centred on the Gulf - proved entirely correct. What played out differently was the direction of the surprise.
The primary call was silver as the key instrument, with a retest of $76.50 - $77.00 on the London open cited as the entry point for a long. That level was not a retest - it was a breakdown. Silver opened near the top of its overnight range and sold off through the session, closing below $76.50 and approaching $75.68. The fundamental premise was sound - a deal-positive scenario favours silver - but the intraday early warning system in the briefing identified exactly this outcome. Signal three was clear: if silver fails to hold $75.50, the metals move was an overnight squeeze. That signal was close to triggering. Anyone who took the long entry on the open without waiting for confirmation paid for it.
The EUR/USD call for pullback-buying at 1.1620 - 1.1640 was reached, but the pair provided no meaningful bounce from that zone. The pair's downward drift through the day means the 1.1620 long entry generated minimal reward and required patience or generated a small loss depending on stop placement. The macro thesis supporting EUR - ECB rate hike premium and USD softness - partially inverted as the dollar firmed on renewed strikes.
The USD/CAD continuation long on dips to 1.3760 - 1.3780 was predicated on oil not recovering sharply. Oil recovered approximately 1.5% to 2% during European hours, which was the stated condition for tight risk management. That caveat was explicit in the briefing and traders who respected it avoided a squeeze.
The best call in the briefing was the USD/JPY guidance. The pair was explicitly flagged as a monitoring instrument, not a trade. It traded sideways between 158.90 and 159.30 all day. The intervention risk and extreme CoT short positioning kept it in check, and no position in that instrument today was the correct outcome.
The Brent-WTI divergence watch - Signal five in the early warning section - was relevant today. Brent crude was quoted around $100.21 while WTI recovered only to around $92. The spread between the two benchmarks remained elevated, confirming that the peace narrative is not yet fully reflected in physical Middle Eastern barrels. That signal was correctly flagged as the subtlest but potentially most important one to monitor.
Positioning Into Tomorrow
The next 12 to 24 hours carry two dominant risks. The first is the pace of the diplomatic deterioration or recovery. Secretary of State Rubio indicated that the Iran deal is being held up by disputes over the wording of the agreement. That framing suggests talks have not collapsed but are genuinely stalled. Any overnight statement from Washington or Tehran - particularly given the IRGC's warning of a legitimate right to retaliate - can move oil 3% to 5% inside a single session.
The second risk is data. Thursday brings Initial Claims, Advance Durable Goods, the GDP Second Release, and Personal Income alongside the PCE Deflator, all at 08:30 Eastern. The PCE print is the Federal Reserve's preferred inflation gauge and, given current market pricing of a Fed rate hike by late 2026, any surprise to the upside would materially extend the dollar rally and pressure gold, silver, and EUR/USD simultaneously. Gold prices are expected to face moderate volatility this week amid the release of U.S. first-quarter GDP data, initial jobless claims, and other macroeconomic indicators.
For the Asia session overnight, the primary watch is USD/JPY. Traders remain cautious about the possibility of currency intervention, with the yen still trading near the 160-per-dollar level that reportedly prompted Tokyo's intervention efforts in late April and early May. Japan likely spent around $34.5 billion in its first currency intervention to prop up the yen in early May, marking its first intervention since July 2024. A second intervention episode cannot be ruled out if USD/JPY pushes toward 160 during the thin Asia session. Position holders long USD/JPY overnight carry asymmetric risk.
For Wednesday's European session, the setup across all instruments depends entirely on whether any overnight newsflow from the Gulf shifts the balance of the peace deal narrative. Any meaningful progress towards a temporary deal may only offer limited support for EUR/USD until oil prices fall sharply again. Europe is still likely to face the lingering effects of the recent energy shock for several months.
WTI holding above $90 overnight is the baseline scenario. A close below $89 on Wednesday would signal that physical market conditions are beginning to ease, which would be incrementally bullish for EUR/USD and gold. A WTI spike above $96 would be a session-defining event and would require a full defensive repositioning across all risk-sensitive longs.
New Residential Sales data is due Wednesday from the U.S. at 15:00 BST. It is secondary in this environment but worth noting as confirmation data on whether the U.S. economy is holding up under the current rate and energy pressure.
Markets Mastered - Today's Takeaway
The morning briefing correctly identified silver as the highest-momentum instrument but the market did not offer the entry it required. Patience was the trade. When a briefing gives you an entry level and a signal level, both matter equally - the entry tells you where to buy, the signal tells you whether the setup is still valid. The overnight gap that created the silver opportunity also absorbed the day's reward; by the London open, the easy money was gone and the risk-reward had inverted. Going into Thursday's PCE data, the single most important variable across every instrument in this portfolio is whether U.S. inflation is running hotter or cooler than market pricing - everything else follows from that answer.