The new week began with a significant sentiment shift on the geopolitical front. The US and Iran have reached a preliminary agreement that should put an end to the conflict. According to the US president, one of the key points of the agreement is the reopening of the Strait of Hormuz, which is a critical chokepoint for oil transportation. The signing is scheduled on Friday in Switzerland. 

Markets reacted immediately with WTI plunged bearly 5%. Traders and investors are unwinding the geopolitical premium that has been added to the quotes for over three months. However, according to analysts, the reopening is not the main problem now. The Iranian nuclear program is still subject to negotiations, and Israel will continue its activities against Hezbollah.

While geopolitical risks ease, markets now turn attention to macroeconomic data and inflation. According to the latest releases, US consumer prices reached 4.2% YoY in May, which is far above the Fed’s forecasts, and UK inflation is close to 3%, also beyond the comfortable range for the Bank of England. The Fed is going to hold a meeting this week, with Kevin Walsh taking the wheel as the new Chair. According to market expectations, the Fed is likely to hike rates one time by December 2026. 

EUR/USD: The Dollar Awaits the Fed’s Signal

The currency pair remains squeezed between geopolitical pressures and lower oil prices. EUR is supported by a market sentiment shift, but a broader fundamental picture still favors the US dollar. The US labor market shows strength, while inflation is far above the Fed’s target range. The European economy still remains vulnerable, with stagflation shock in the eurozone hitting harder than in the US. Risks of renewed escalations in the Middle East still persist, which is another factor that may put pressure on the currency pair. Therefore, the path remains down in both cases.

From a technical analysis view, EUR/USD is trying to break above 1.1600 amid de-escalation in the Middle East, but further growth is capped by both geopolitics and macroeconomics. Traders can sell below the middle line of the Bollinger Bands indicator targeting 1.1510 and 1.1450. On the upside, traders can buy above 1.1600 targeting 1.1650 and 1.1700.

GBP/USD: The BoE’s Lone Hawk Faces a Dovish Tide

The pound finds itself in a unique position among other major currencies. The Bank of England remains hawkish, with one of the members voting for 4% rates during the last meeting. This helps the currency pair to resist the dollar pressure. However, the resilience is increasingly fragile as risks of another round of hostilities and disappointing UK economic data put pressure on the pound. 

From a technical analysis view, the pair is trying to hold above 1.3400 and even move higher, but the dollar strength is a tailwind for any further upside. Sellers can step in below 1.3400, targeting 1.3300. Buyers can engage above 1.3420, targeting 1.3500.

WTI Crude: The Blockade Is Over, But the Hangover Remains

The hopes of reopening the Strait of Hormuz put pressure on WTI and Brent as geopolitical premium eases. WTI lost nearly 5% and is trading close to $80 per barrel, a level not seen since March 2026. The blockade premium is quickly evaporating. According to the IEA, normal supply chains can be restored within two weeks. OPEC+ decision on the increase of supply puts additional pressure. However, uncertainties still give some support to oil prices. 

From a technical analysis perspective, WTI is trading below $80 and the pressure is far from weakening. Buyers can try to engage, but sellers are now in control and the price may reach $75 and even $73 in the near term.

Gold: The Ultimate Frustration Trade

Gold is trapped between hawkish Fed and geopolitical risks. The Israel-Hezbollah tensions remain active, and the negotiation period between the US and Iran may result in nothing and put in place another round of hostilities. Yields on 10-year Treasuries support stronger demand for the US dollar, which is another factor putting pressure on the precious metal. 

From a technical analysis view, gold is trading right below 4,350. The upside is possible if the resistance level is broken. XAU/USD may reach 4,370 and 4,400 in this case. On the downside, traders can sell below 4,330, targeting 4,300 and 4,280.