Forex Today: Iran / Israel Stop Fighting, Stocks Rebound

Iran and Israel agree to stop exchange of fire, leading to a stronger rebound in stock markets and a fall in the price of crude oil.

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1. The shooting between Iran and Israel ended quickly after barely more than 12 hours as President Trump pressured both sides to stop. The Iranian regime may feel it made a good show of defending its proxy Hezbollah in Lebanon, while the Israeli government will feel it won a tactical victory as it defied a public demand by President Trump not to retaliate, and also continued to strike Hezbollah in Lebanon without any further Iranian fire despite Iran's threats that any attacks in Lebanon would mean renewed fire on Israel. The situation could flare up again, especially if Israel attacks Hezbollah in Beirut.
2. President Trump is back to talking up the prospect of a deal with Iran, in the form of a memorandum of understanding which would govern talks over a deal - and after more than two months since the war ended, this is all Trump has to show concerning a deal. Trump has publicly stated a deal with Iran is close no fewer than 37 times since the war ended. I believe Trump may get his MoU, but he will never get a "good" deal from the Iranian regime, and this will eventually impact crude oil and even the stock market. For now, markets prefer to believe there will be a deal and are rising after Friday's sharp drop following surprisingly strong US jobs data.
3. Crude Oil is still falling on the news that Iran and Israel have ceased firing at each other and is probably getting a tailwind from a general sense that a Memorandum of Understanding will be signed soon by Iran and the USA.
4. After reaching a 1-month high price, the US Dollar Index seems to have made a bearish reversal and is moving lower. Despite that, The USD/JPY currency pair is close to making a new long-term high price and will be closely watched by traders today, but with momentum against the Dollar so far over the short-term, this looks unlikely to happen today.
5. Crypto looks a little stronger, with Bitcoin potentially forming a bullish double bottom at $60k. This may encourage investors who believe in the long-term future of Bitcoin to be convinced this is the bullish reversal they have been waiting for. I am not convinced.
6. Precious metals are also showing some signs of bottoming, but they still look weak, with Gold and Silver showing less bullish price action than Bitcoin over the same time horizon.
7. There are again no high-impact data releases scheduled for today, so it may be a relatively quiet day in the market.

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