Forex Today: Markets Recover as Trump Backtracks on Iran

The USA / Iran confrontation has flared up again, with the USA bombing Iran for a second night as Iran fires on ships in the Strait of Hormuz. Yesterday saw President Trump call Iran's leadership "scum" and state that the ceasefire deal was over, although few took that very seriously. It did lead to WTI crude oil rising as high as $75 and to US stock markets and others selling off somewhat. However, we are now seeing a recovery against those moves, with stocks regaining most of their former losses, although crude oil remains quite elevated.

Japan's 10-year government bond yield reached its highest level in 30 years, raising concern about the fiscal establishment's ability to keep inflation under control. This could weaken the Yen, and we are seeing the Yen somewhat weaker today against several other currencies.

The USD/JPY currency pair has continued to hold up above 162 but may have made a bearish double top at the recent high which is fueling its current short-term decline. The Japanese Financial establishment is trying to hold back a tide and that is a hard thing for any central bank to achieve. It is easy to weaken your currency but not so easy to strengthen it. One approach for traders might be to wait for intervention to drive the price substantially lower, and then to go long here when the price starts rising - this would have been very successful after the last intervention. Alternatively, trend traders can buy the breakouts and control their risk - it is unlikely that the Yen could rise by more than 3 long-term daily ATRs in a day, or at least, not by much, so don't be too intimidated by these threats if you are using a wide stop loss. I am already long here, like most trend traders.

Since today's Tokyo open of the Forex market, the strongest major currency has been the New Zealand Dollar, while the weakest has been the Japanese Yen.

Precious metals such as Silver and Gold are seeing rises over the short-term within long-term bearish trends, especially Gold which might be making a significant first higher low on the daily chart, unlike Silver. Gold, notably, is still being held by a long-term descending trend line which currently sits at about $4,200. I do not short commodities, but if I did, I would be short of these two precious metals. Central banks are buying, notably in China, which might be helping to give a bit of a bid here.

Bitcoin is finding support just below $62,000 and looking short-term bullish. There is a long-term bearish trend, but the longer the price holds up above the recent low at about $58,000, the more likely it will be to test the key recent high near $65,000.