Hey people!
Given the rising tensions between Israel and Iran, how do you see this affecting major currency pairs, especially safe havens like USD, JPY, or CHF? Are you adjusting your strategy?
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I noticed that XAUUSD was somewhat bullish (month high but not ATH) on the news when it first broke and since then has been trading in a tighter range than normal. If there’s no major change to the situation I see this continuing, once the “war” is over I expect a small crash/correction and then back to business as usual.
Probably the same for other “safe havens”.
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Initial forex reactions on Friday were muted, mostly continuations of what had been happening all week already. The markets had the weekend to gather reports and analyse what’s going on, and there’s no sign of panic movement of capital.
This week JPY has (continued to) fall, USD has started to rise and GBP, EUR and CHF have started to fall, but these moves are not massive and could equally be driven by the G7 conference etc. rather than Israel v’s Iran.
Oil is higher but the West is now less dependent on Middle East oil than it used to be so this might be a temporary blip. Gold is not much changed.
Iran has not delivered a convincing counter-strike. It is possible they don’t now have the resources and assets to do so, but they could be building an operation (I doubt it). Regime-change in Tehran is unlikely near-term but could be very significant on all markets.
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This sounds right to me.
They have almost no air-force, I think? A lot of missiles, but Israel has the “Dome” defence against those?
Maybe. Maybe I’m a little less convinced about that. But almost certainly you know more about it than I do. (I’m hoping that some time soon women might be able to become properly educated in such countries. Just disclosing my bias!).
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When tensions rise in the Middle East especially between major players like Israel and Iran the market usually shifts toward safe haven currencies. JPY and CHF often see demand in times like this and USD can also strengthen as global investors look for stability
I’m watching risk pairs like AUDJPY and USDCHF closely since they can show clear sentiment shifts. Gold also tends to spike in these scenarios
Gold fell back today on news of the ceasefire, to around 3300 and then seems to be moving back up, I’d expect it to settle around 3320-3350 for the rest of the week assuming it remains calm news-wise.
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USD is dropping in light of the ceasefire - but why?
Why for example is Usd/Jpy in decline on good risk news - surely Yen should be selling?
That’s the thing about FA - it lives in the now context - what is happening right now.
Pres Trump has been pressuring the Fed to lower rates, they have been resisting, recently quoting inflation risks re tariffs - as we know higher rates equates to higher USD, equally the reverse.
Tariff risks have settled down, but something has taken it’s place big time - oil price.
Again higher energy prices equals higher inflation etc etc.
That second risk has just been eliminated whilst the ceasefire remains.
Edit: lower inflation leaves the Fed with fewer excuses to resist Pres Trump’s pressure to reduce - even stocks are getting a whiff right now - Powell stating now that poss inflation from tariffs June/July/Aug - if nothing much then cut baby cut 
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