Caught Between Middle East Tensions and Central Bank Events | USD Corrects but Still Searching for Direction
■ Market Overview
The week opened with mild USD selling pressure.
A new proposal from Iran, reportedly brokered by Pakistan, was viewed positively by the market, temporarily easing risk concerns.
However, the proposal mainly focused on:
- Reopening the Strait of Hormuz
- Lifting maritime blockades
and did not include what the U.S. considers most critical:
abandoning nuclear developmentThis means a full ceasefire is still far from reality.
→ USD weakness remains only a correction, not a true reversal
■ FX Market Dynamics
- U.S. Dollar Index: 98.64 → 98.26
- USD/JPY: upside remains heavy
- EUR/USD: holding firm
→ Reversal of safe-haven USD buying remains the dominant move
■ Core Market Theme
“A market where hope and caution coexist”- Ceasefire expectations → USD selling
- Nuclear issue remains unresolved → USD buying
→ The market cannot commit to one direction
■ Key Focus (Top Priority)
- Reaction from President Donald Trump
- Meeting between Iran’s foreign minister and Vladimir Putin
- Future of the Strait of Hormuz
- This week’s major central bank meetings (mostly expected to hold rates)
→ A double catalyst week:
Middle East + Central Banks■ Scenario Outlook
① Ceasefire expectations improve
→ Oil declines
→ USD selling continues
② Trump takes a hardline stance
→ Geopolitical risk returns
→ Safe-haven USD buying comes back
③ Central banks sound more hawkish
→ Interest rate differentials return to focus
→ USD gets revalued higher
■ Strategy Points
- Be cautious chasing USD weakness
- Headlines remain the top priority
- Keep positions lighter ahead of central bank events
■ Summary
The current market is:
“A collision between Middle East optimism and reality”→ Even when USD corrects, it does not fully break down
→ The most important drivers now are:
Trump’s comments This week’s central bank stance
