How The Day Played Out
Today's session was defined by a sharp reversal in the geopolitical narrative. Overnight, the Asia session opened against a backdrop of renewed military hostilities between the US and Iran, erasing the residual optimism from Wednesday's deal speculation. WTI crude futures climbed back above $91 per barrel as renewed hostilities weakened expectations for a near-term peace agreement, with US forces reportedly striking an Iranian military site believed to pose a threat to American troops and commercial shipping routes through Hormuz. The US said it destroyed several attack drones near the strait, while Kuwait reported intercepting a missile fired toward the country. Iran's Revolutionary Guard said several ships attempted unauthorised entry into the Persian Gulf, with some forced to turn back, warning it would respond strongly to any disruption in Hormuz.
The London session opened into a risk-off tilt. Equities slid across Asia and European futures came under pressure as the overnight strikes reset positioning. The euro fell toward $1.161 as rising Middle East tensions dimmed hopes for a swift resolution to reopen the Strait of Hormuz, with Brent crude climbing to around $97 a barrel after reports of US airstrikes on an Iranian military site. Kuwait reporting countering hostile drone and missile threats deepened regional instability, while money markets increased their bets on ECB interest rate hikes, pricing in just under 65 basis points of tightening this year, up from just under 60 basis points late on Wednesday.
The principal data catalyst of the day arrived at 13:30 BST. Real GDP increased at an annual rate of 1.6 percent in the first quarter of 2026, according to the second estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2025, real GDP increased 0.5 percent. Real GDP was revised down 0.4 percentage point from the advance estimate, primarily reflecting downward revisions to investment and consumer spending. This was a soft print relative to the 2.0% advance estimate and to market expectations. On the inflation side, the PCE Index advanced 3.8% in April on an annualised basis, while core PCE, which excludes food and energy, rose 3.3% on an annualised basis in April, up 0.2% on a monthly basis. Both inflation readings landed broadly in line with forecasts, which denied the market the stagflationary shock scenario that would have ignited a more violent dollar reaction. On labour, jobless claims rose in the week ending May 23 to 215,000 from 210,000 in the prior week, above a Dow Jones estimate of 213,000, while the four-week moving average for claims rose to 209,000. The rise in claims was modest but ticked incrementally in the wrong direction for the labour market narrative.
The combination of softer growth, contained-but-elevated inflation, and a mild claims miss did not produce a clean dollar-negative signal. Instead, the market's reaction was muted on the data itself and dominated instead by the geopolitical reset. The war in the Middle East has unleashed an oil-driven inflationary shock spreading through the US economy, eroding purchasing power and compressing growth. As the conflict drags on with rising risks of a prolonged stalemate, the Fed will likely remain on an extended pause navigating risks of a potential tradeoff between containing inflation and supporting the labour market. That stagflation framing kept the dollar broadly supported even on the softer GDP number. BOJ Deputy Governor Ryozo Himino reaffirmed the central bank's commitment to further rate hikes, noting that the timing and pace would depend on how the Middle East conflict affects Japan's economy and inflation outlook. That statement provided a marginal yen tailwind into the New York afternoon.
By the close, despite the oil rebound, prices remained sharply lower for the week and month as markets still expect a potential deal between Washington and Tehran to eventually materialise.
Key Moves And Levels
WTI CRUDE OIL. Today's trading range for WTI crude oil futures was between $87.80 and $93.68. The session opened near $89.37, tested the $88 handle in the early London session as deal-optimism residue lingered, then reversed sharply higher on the geopolitical headlines. WTI crude futures rose approximately 2% to $90.50 per barrel as renewed attacks in the Persian Gulf increased concerns over energy supplies. The morning briefing's support level at $88.00 to $88.30 held precisely, with the intraday low of $87.80 providing only a brief test before buyers re-engaged. The resistance zone at $93.50 to $94.00 was not reclaimed, consistent with the morning call. The day's close appears near the low-to-mid $89 area based on late session data. Despite the latest escalation, oil prices are still on track for a second consecutive weekly decline amid expectations that both sides could eventually reach a peace agreement and reopen the Strait of Hormuz.
GOLD (XAU/USD). Today's XAU/USD range was from $4,425.07 to $4,527.49. The opening price was $4,507.56. Gold attempted to hold the open but sold off through the London session as the market initially leaned toward deal optimism, before recovering partially on the military escalation headlines and the soft GDP print. Gold rose to approximately $4,456.83 on May 28, 2026. The morning briefing's support level at $4,425 held, with the intraday low touching almost exactly that zone. The resistance at $4,520 to $4,560 was tested early in the session before the pair rejected lower. The soft GDP revision did provide a partial stagflation bid as anticipated, but without a material upside inflation surprise, gold lacked the fuel for a decisive recovery. Gold traded near $4,450 after falling for two consecutive sessions, as ongoing uncertainty surrounding US-Iran negotiations kept concerns over inflation and prolonged high interest rates firmly in focus, with key disagreements including Tehran's insistence on maintaining control of the Strait of Hormuz remaining unresolved.
SILVER (XAG/USD). Silver opened near $76.99 and fell sharply. At 8:45 AM Eastern Time, silver was trading at $73.51 per ounce. The 50-day SMA break flagged in this morning's briefing accelerated. The broken SMA at $75.77 acted as resistance precisely as anticipated, with any attempt to recover into the $75 to $76 range meeting sellers. Silver remains nearly 20% below levels seen at the start of the conflict, as concerns over an energy-driven inflation shock strengthened expectations that major central banks may keep monetary policy tighter for longer.
USD/JPY. During the past week, USD/JPY fluctuated between a high of 159.615 on May 28 and a low of 158.845 on May 24. The pair reached an intraday high of 159.615, probing but not breaching the 159.75 early warning level from the morning briefing. The USD/JPY exchange rate fell to 159.3820 on May 28, down 0.09% from the previous session. The MoF intervention threshold at 160.00 was not triggered. The Japanese yen weakened to around 159.50 per dollar, marking its lowest level in four weeks and moving closer to the 160 threshold. The soft GDP revision nudged yields modestly lower in the afternoon, which contributed to the pair's pullback from the daily high - consistent with the morning's guidance that a weaker GDP revision would weigh on yields and press USD/JPY lower.
GBP/JPY. Today's GBP/JPY range was from 214.13 to 214.48, with the opening price at 214.17. Yesterday's GBP/JPY rate was 214.1167, compared to today's 214.0425. The pair traded in a notably compressed range, holding broadly within the 212.00 to 215.00 band flagged this morning, with no clear directional impulse. A break of the 214.40 resistance level suggests the rebound from 210.43 may be resuming, with intraday bias back to the upside targeting a retest of the 216.58 high.
EUR/USD. The EUR/USD exchange rate rose to 1.1651 on May 28, up 0.22% from the previous session. The current price of the EUR/USD pair is $1.16228 as of May 28. The pair bounced from its morning low of approximately 1.161, finding a partial recovery bid from the soft GDP print and the reassertion of some risk-off dollar softness. However, the morning briefing's key resistance zone at 1.1640 to 1.1660 capped the recovery with precision. Investors parsed ECB meeting minutes showing several policymakers viewed the April decision to hold rates as a close call, with some indicating they would have supported a hike had it been proposed. Money markets are now pricing in an almost fully expected 25-basis-point rate hike on June 11.
USD/CAD. USD/CAD was quoted at 1.3848 as of May 28. The oil rebound on military escalation headlines knocked this pair lower from its session highs, which is the inverse of the morning's primary bull case. The 1.3870 resistance level identified as the key confirmation level was not cleanly breached, and the oil bounce forced a pullback. The pair remains elevated relative to last week's close, consistent with the broader oil-weakness theme that has driven CAD lower through May.
USD/CHF. The opening price for USD/CHF today was 0.7859. USD/CHF was trading near 0.7846. The pair edged slightly lower on the day, with the safe-haven franc receiving modest support from the renewed hostilities. The pair traded broadly within the 0.7820 to 0.7900 zone flagged this morning. Latest available rates show USD/CHF at approximately 0.7865, with a daily change of 0.089%.
Morning Calls Review
This section reviews the calls made in the morning briefing against how the day actually traded.
WTI CRUDE OIL. The directional bias was bearish, which was broadly correct for the first part of the session. The $88.00 to $88.30 support level was tested almost to the pip, with the intraday low touching $87.80 before buyers re-engaged. However, the morning's guidance to avoid chasing the open and wait for the New York session was validated - the session did not make a clean break below $88.00. What the briefing did not fully anticipate was the speed and magnitude of the geopolitical reversal during the New York session, which pushed WTI back to $90.50 to $91.00 and rendered short positions entered in the $90 to $92 zone unrewarded without very active management.
GOLD (XAU/USD). The morning's neutral to cautiously bearish bias was correct in direction but the $4,425 support held. The early warning signal to watch $4,500 as resistance was accurate - gold rejected precisely that zone. The call that a downward GDP revision with elevated inflation would provide a recovery bid toward $4,500 partially played out, with gold finding a floor near the $4,425 level and bouncing. The bias to sell into the $4,520 to $4,560 supply zone remained valid throughout.
SILVER (XAG/USD). The bearish call was correct. The broken 50-day SMA at $75.77 acted as resistance precisely as described. The $73.40 Wednesday low was tested and briefly undercut with the intraday print at $73.51. This was the cleanest directional call of the day.
EUR/USD. The primary trade call. The sell-rallies-into-1.1640-to-1.1660 guidance was correct. The pair attempted a recovery after the soft GDP print but was capped within that zone on multiple attempts. The 1.1580 early warning level was not breached pre-data as the pair held above it in the London session, meaning the fast-move scenario to 1.1525 did not trigger before data. The 1.1525 target was not reached today, with the pair finding partial support from the GDP miss. Directional bias was correct, but the magnitude of the move was limited by the data outcome.
USD/JPY. The 159.75 early warning level was tested with a daily high of 159.615 - close but not triggering the clear warning to reduce longs. The guidance to not chase longs above 159.50 was appropriate given the pair's failure to sustain above that level and the afternoon retreat following the GDP data. No MoF intervention occurred, but the pair behaved exactly as described: range-bound with upside constrained by intervention risk and softening by afternoon.
USD/CAD. The 1.3870 resistance level was not cleanly breached, as anticipated. The WTI rebound on military escalation headlines was the mechanism that limited upside, which is the oil-recovery downside risk the morning briefing explicitly flagged. The broad direction was correct - USD/CAD remained elevated near 1.3848 - but traders who chased longs above 1.3870 were caught by the oil bounce.
Positioning Into Tomorrow
The geopolitical backdrop remains the dominant driver and is highly unstable. Despite today's rebound in oil, prices remain sharply lower for the week and month, with negotiations remaining difficult and disagreements over Iran's nuclear programme and control of Hormuz unresolved. Tonight's Asia session will be sensitive to any overnight headline from either Washington or Tehran. Investors are now awaiting official finance ministry data due Friday that could confirm government action to stabilise the yen, with some analysts estimating authorities may have spent as much as 10 trillion yen in support operations. Friday's MoF data is therefore a significant early event for USD/JPY positioning, as confirmed intervention spending would validate the intervention risk thesis and create fresh discussion of a follow-up action.
On the data front, the PCE inflation data for April has been released today alongside GDP - the PCE Index advanced 3.8% on an annualised basis - and the market's reaction to those numbers is now largely incorporated. Friday's calendar should be reviewed for any secondary Fed speakers who may comment on the GDP and PCE combination. Money markets are now pricing in an almost fully expected 25-basis-point ECB rate hike on June 11, with at least one additional increase anticipated by year-end. The ECB rate decision is the dominant medium-term driver for EUR/USD and is the single most important scheduled event building in the week ahead.
For WTI, the overnight period will be watched closely. Signs of progress toward a US-Iran agreement are being overshadowed by renewed hostilities that continue to cloud the broader outlook. Any formal statement from either side - whether advancing a deal or categorically rejecting one - will move the market by three to five dollars in the open session. Traders in oil, gold, silver, and USD/CAD must have defined exit levels in place before the Asia session.
Consumer income growth is being capped by the war's economic drag, and even if diplomacy prevails, the negative shock to the economy is already in motion. Spillovers are likely to extend into the second half of the year even if a peace agreement is reached in the coming weeks. This stagflation dynamic will remain the structural backdrop into June regardless of near-term diplomatic outcomes.
For GBP/JPY, intraday bias has turned neutral with the current retreat, though above 214.66 would extend the rebound from 210.43 toward a retest of the 216.58 high. Watch 213.25 as the pivot. A break below that level targets 211.23 support. EUR/USD continues to trade near the 200-day EMA with 1.16 as near-term support and 1.17 as the resistance ceiling ahead of the June ECB decision.
Markets Mastered - Today's Takeaway
The $88.00 level in WTI held and produced a $3.00 bounce - respecting stated support is not optional, it is the trade. The GDP miss plus in-line PCE produced a whipsaw, not a trend - data days require smaller size and wider perspective, not conviction. EUR/USD called correctly but the move was limited to 50 pips: booking partial profits at the first clear support level would have been the correct execution. Geopolitical headline risk is binary and asymmetric - you cannot predict the next strike or statement, but you can ensure your stops are set before the session opens.