U.S. Dollar Index
The U.S. Dollar Index rose to 98.45 on Monday, rebounding from the near two-month low reached last week, as escalating tensions in the Strait of Hormuz once again pushed oil prices higher. Investors are also watching several speeches from Federal Reserve officials and a series of key economic releases, including the closely watched employment report. The U.S. economy is expected to have added around 60,000 jobs in April, a sharp slowdown from 178,000 in March. Markets currently expect the Fed to keep the federal funds rate unchanged for the rest of the year, although the probability of a 25-basis-point rate hike in December is around 15%. Meanwhile, traders remain alert to the risk of intervention by Japanese authorities to support the yen, particularly amid thin holiday trading conditions in Japan.

In the short term, global FX markets have experienced sharp volatility driven largely by administrative measures. Against the backdrop of tariff rhetoric and diverging interest-rate paths among major economies, the Dollar Index moved lower in choppy trading and eventually closed near 98. However, market attention did not remain focused solely on expectations of a Fed policy shift; instead, it was drawn to Japan’s forceful intervention measures. On the daily chart, price action showed a week-long pattern of consolidation and decline. During the first three trading days, the index came under pressure from stronger non-dollar currencies, briefly falling below 98.00 and touching support near 97.80. Although there was a modest rebound toward the end of the week, with the index recovering part of its losses to 98.22, it remains capped by the Bollinger Band midline at 98.51 and last Monday’s high at 98.88. On the downside, focus is on 97.72, last week’s low, followed by the 97.50 level.

WTI Spot Crude Oil
West Texas Intermediate crude oil futures rose about 3% on Monday to reach USD 102 per barrel, as Middle East tensions escalated sharply and the United States and Iran exchanged fire in the Strait of Hormuz. The U.S. military said Iran’s Revolutionary Guard launched cruise missiles at U.S. warships and commercial vessels, while U.S. forces moved to “protect all commercial shipping” from drones and small boats deployed by Tehran. At the same time, the United Arab Emirates reported that it had intercepted incoming Iranian missiles and confirmed a fire at its Fujairah oil hub, the first major infrastructure attack in several weeks. A tanker was also struck by a drone near the Strait. These developments followed President Trump’s plan to resume shipping through the key waterway and assist stranded vessels, although shipowners remain cautious amid rising security risks. U.S. Central Command added that two U.S.-flagged vessels had successfully passed through the region, and efforts to restore traffic are continuing.

The international oil market has now moved from geopolitical confrontation into a new phase of “negotiation instead of direct conflict.” The sharp pullback in oil from elevated levels is essentially a repricing of extreme supply-risk assumptions. Volatility in trade expectations triggered by tariff rhetoric, combined with uncertainty in the Middle East, weakened crude oil’s safe-haven characteristics toward the end of the week. If the U.S. stance remains firm, the geopolitical premium may return. In the short term, the technical correction following overbought conditions has not yet finished, with attention on whether U.S. crude can defend the key psychological USD 100 level. Although short-term pressure has emerged, crude oil remains broadly within the support area below the Bollinger Band midline at USD 93.70 and the USD 95.00 level. On the upside, watch USD 103.40, last Friday’s high, followed by the USD 105.00 level. At present, WTI price volatility is being driven entirely by marginal changes in geopolitics. Until negotiations achieve a substantive breakthrough, the USD 93.70 level, the 20-day moving average, to USD 107.35, last week’s high, may become the new consolidation range.

Spot Gold
Gold prices pulled back below USD 4,600 per ounce on Monday as investors assessed President Trump’s plan to escort ships through the Strait of Hormuz and signs of progress in U.S.-Iran peace talks. The initiative is designed to help civilian vessels flying the flags of non-aligned countries safely leave the disputed waters and resume operations. Meanwhile, Iran said it was reviewing Washington’s response to its latest 14-point proposal, strengthening optimism over a diplomatic resolution to the conflict. The Middle East war has entered its tenth week, driving energy prices sharply higher and intensifying inflation risks, raising concerns that central banks may keep interest rates higher for longer or even tighten policy further. Since the start of the conflict, gold has fallen by about 12%. At the same time, data from the World Gold Council show that central banks increased their gold reserves in the first quarter.

From a short-term perspective, the strong buying interest gold has shown near USD 4,500 is an important technical signal. Last Friday, gold almost fully recovered from a decline of more than 1%, indicating that dip-buying demand remains strong around this level. On the other hand, gold also encountered clear resistance above USD 4,660, and the late-session pullback showed that bulls are still cautious at current levels. This pattern of “resistance above and support below” may continue for some time. The market is likely to trade back and forth within a relatively wide range. The previous lows around USD 4,500 to USD 4,400 can serve as an important support reference zone, while USD 4,660 to USD 4,700 forms the near-term resistance area. Until that range breaks, gold is more likely to maintain a “two steps forward, one step back” pattern of choppy upward movement. Each pullback triggered by geopolitical headlines may create a new entry opportunity, while each rally driven by stronger rate-cut expectations should also be treated with caution, as weaker-than-expected data may create reverse risk.

AUD/USD
The Australian dollar briefly rose above 0.72 against the U.S. dollar, its highest level since April 2022, as the dollar weakened broadly and investors positioned ahead of this week’s Reserve Bank of Australia policy decision. The Dollar Index traded at a two-month low, mainly due to losses caused by a sharp rise in the yen following intervention by Japanese authorities. Meanwhile, markets expect a 25-basis-point rate hike on 5 May, which would mark the third consecutive increase and lift the cash rate to 4.35%. Rates are expected to climb to 4.60% or higher by year-end, as inflation pressure remains a key concern and the closure of the Strait of Hormuz disrupts global supply chains. Australia’s annual inflation rate rose to 4.6% in March, far above the central bank’s 2-3% target and the highest reading since monthly CPI reports began in 2025. At the same time, the April manufacturing PMI rose to 51.3, above the preliminary estimate of 51 and March’s 49.8.

Technically, AUD/USD has recently been trading near the 0.72 round-number level, allowing the bullish structure to remain intact for a time. On the daily chart, last Thursday’s close broke above the early-March consolidation high of 0.7188. This breakout is an important signal, especially compared with previous failed attempts to hold key levels, which eventually triggered pullbacks. It also extends the recent pattern in which the pair has attracted buying support whenever it approaches the 0.7100 area. Although there is bearish divergence between price action and the RSI, the RSI remains in a strong zone above 59, while the MACD continues to hold in positive territory above the signal line. This suggests that near-term bullish momentum has not fully faded. If AUD/USD regains and holds above the key psychological 0.7200 level, targets may extend to 0.7270, the 2 June 2022 high, and then 0.7300, the round-number level. If the pair hesitates around that area, it may indicate that bulls are choosing to take partial or full profits, with pullback support at 0.7136, the 20-day moving average, and 0.7100, the round-number level.

GBP/USD
The pound climbed to USD 1.36 in early May, reaching its highest level since mid-February, before pulling back below 1.36 at the start of this week. The move followed the Bank of England’s latest policy decision and a renewed rise in oil prices triggered by Middle East tensions. The Bank of England’s Monetary Policy Committee voted 8-1 to keep Bank Rate at 3.75%, with Chief Economist Huw Pill the only dissenter, arguing for a 25-basis-point hike. Governor Andrew Bailey described the decision as an “active hold,” stressing the need to monitor whether the energy-price shock will persist against a softer economic backdrop. Meanwhile, oil prices continued to rise as President Trump insisted on maintaining a maritime blockade of Iranian ports. Investors are also turning their attention to the upcoming U.K. local elections on Thursday, with polls suggesting that Labour leader Keir Starmer could face a significant setback.

In the short term, GBP/USD is likely to remain range-bound, with the focus on the actual evolution of energy prices and signals from Bailey’s subsequent press conference. If the Middle East situation does not deteriorate further, the market may gradually digest the range-bound nature of the scenario analysis, and GBP/USD may seek equilibrium around current levels. Over the longer term, if second-round inflation effects begin to emerge, policy may need to adjust moderately with support from the data. Conversely, if signs of slower economic growth strengthen, policy flexibility will provide a buffer for the path ahead. Overall market direction will continue to be shaped by the interaction of global energy dynamics, labour-market data and changes in financial conditions, keeping the outlook strongly data-dependent. On the upside, watch the two-month high of 1.3599 set on 17 April and the psychological 1.3600 area, followed by last week’s high near 1.3658. On the downside, focus on 1.3504, the 20-day moving average, and the 1.3450 level.

USD/JPY
USD/JPY swung sharply in volatile trading on Monday before stabilising near 157 yen per U.S. dollar, as the market remained alert to the risk of government intervention to support the currency. Last Thursday, after the yen broke below the key 160 level, it briefly rallied by 3% to 155.5 per dollar, although Japanese officials did not confirm any action. Traders continue to assess the possibility of further intervention, as Tokyo often uses periods of thin holiday liquidity to conduct multiple rounds of yen buying. The market is also considering the possibility of coordination between the United States and Japan to strengthen the currency. These moves took place against the backdrop of recent policy decisions from the Bank of Japan and the Federal Reserve. The Fed kept interest rates unchanged, preserving the U.S.-Japan rate differential, which continues to support the dollar and pressure the yen.

Data from the Bank of Japan suggest that authorities may have used around JPY 5.48 trillion, or roughly USD 35 billion, for FX operations. This is viewed as an official signal that the current exchange-rate level above 160 is not acceptable. In addition, as Japan’s Golden Week approaches, markets are worried that authorities may launch a second surprise intervention during a period of scarce liquidity. After touching a multi-year high of 160.7, USD/JPY came under what appeared to be forceful intervention by Japanese authorities and plunged to around 155.50. Although the pair rebounded to near 157 at the start of the week, the large bearish weekly candlestick has already damaged the previous one-way uptrend. Therefore, the downside target remains 155.55, last week’s low. A break below that level would point to another move lower toward the 200-day moving average at 154.116. Short-term resistance is initially seen around the 158.00 level, followed by the 50-day moving average at 158.64 and the 159.00 round-number level.

EUR/USD
The euro traded near USD 1.17 in early May as investors assessed Middle East tensions, new U.S. tariffs and rising expectations that the European Central Bank could raise rates as early as June. U.S. President Donald Trump announced plans to escort vessels stranded in the Persian Gulf through the Strait of Hormuz, while Iran warned that any U.S. intervention in the waterway would violate the ceasefire agreement. Trump also ordered the withdrawal of 5,000 troops from Germany, signalling a further reduction. In addition, he raised tariffs on EU cars and trucks to 25%, citing the bloc’s failure to comply with its trade agreement with Washington. Markets now price an 80% probability of a 25-basis-point ECB rate hike by June and expect at least two hikes this year. The ECB left rates unchanged last week but kept the door open for future adjustments, citing inflation risks and growth concerns. Officials Joachim Nagel and Madis Muller hinted that tightening could come in June, warning of stronger inflation and persistent price pressures.

EUR/USD is trading firmly around 1.1700 with a mildly bullish bias, as it remains above the 200-day simple moving average at 1.1676 and sits between key Fibonacci retracement levels of the latest swing. The pair is hovering just below the 50.0% retracement level at 1.1745, suggesting that upward momentum has slowed but has not yet reversed. The RSI is around 54, indicating that upside momentum remains constructive but is not overextended. On the upside, near-term resistance is at the 50.0% Fibonacci retracement level of 1.1745, followed by the psychological 1.1800 level, with further resistance at the April high of 1.1850. Initial support is provided by the 200-day simple moving average at 1.1676, followed by the 38.2% Fibonacci level at 1.1666. A deeper pullback would expose the 1.1600 round-number level.