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• DJIA trades near 52,200 after an intraday run to just short of 52,600 met a semiconductor rout with nothing to do with Iran.
• Crude Oil drops around 7% on a weekend stand-down Washington partly attributes to running short of targets, with Tehran offering conditional silence rather than a signature.
• Wednesday's Federal Reserve decision still carries a hike tail above 35%, unchanged from last week despite the collapse in the war premium.

The Dow Jones Industrial Average trades near 52,200, up around 250 points, after a session that handed it the month's cleanest bullish catalyst and then took most of it back. The peace bid carried the index to just short of 52,600 before a semiconductor sell-off with Chinese fingerprints dragged it back to the 52,000 handle, with the late tape reclaiming half of that fade.

A pause is not peace

The United States and Iran stood down over the weekend after roughly two weeks of nightly strikes, and Crude Oil repriced hard, Brent falling around 7% to the $90.00 handle and West Texas Intermediate to near $84.00 after a look above $100.00 last week. Trump says the talks are making progress. Tehran has confirmed nothing beyond a reported willingness to hold fire for as long as Washington does.

The reason behind the pause matters more than the fact of it, and wire reporting attributes the halt in part to advisers warning the campaign was running short of worthwhile targets and drawing down munitions faster than the Pentagon finds comfortable. That is an inventory problem wearing a diplomatic suit. The physical evidence has not caught up either, with transit through Hormuz and the Bab al-Mandeb slowing again over the weekend while Yemen's Houthis kept claiming attacks on Saudi shipping.

This is the fourth de-escalation the tape has bought since April, after the truce, the May ceasefire and last month's peace framework, each of which broke within weeks. Four days ago the president was weighing an attack he described as bigger than anything that came before. Paying for peace and getting it are different transactions, and Crude Oil keeps relearning the difference.

The sell-off that had nothing to do with Iran

The peace bid ran instead into a supply chain story out of China, where reporting that domestic toolmakers have started mass producing homegrown deep ultraviolet lithography machines took more than 7% out of the dominant Western supplier and knocked around 3% off the benchmark semiconductor complex. Advanced Micro Devices (AMD) dropped 7%, Teradyne (TER) 5.9% and Micron (MU) 4%, erasing an early rally built on a Chinese memory maker's blockbuster Shanghai debut.

The divergence explains the day's scoreboard, with the S&P 500 and the Nasdaq Composite both lower while the Dow holds a gain of roughly half a percent. The insulation is mechanical rather than clever, because a price-weighted average gives Nvidia (NVDA) only a modest slice, so a chip rout costs this index far less than it costs a capitalisation-weighted benchmark.

What the Dow does own is the fuel bill, since the names that dominate the average burn energy rather than sell it. SpaceX (SPCX), trading near half its post-listing high and beneath its offer price for an eighth session, is the temperature reading from the other end of the risk spectrum. The average that spent July as a war shelter is now the cleanest way to own the peace.

The rates market declines the peace dividend

June durable goods orders, out at 12:30 GMT, rose 0.3% against a 1.6% consensus and a 4% contraction the month before, with orders excluding transportation up 0.6% and the nondefense capital goods ex aircraft line, the release's proxy for business investment, up 0.9%. The headline is a growth miss, not an inflation signal, and the front end ignored it entirely.

Wednesday's decision still carries a hike tail of 35.8%, unchanged from where futures pricing sat before Crude Oil surrendered 7% and last week's war premium came out of the barrel. Further out the curve trimmed only at the margin: at least one hike reads 80.3% by 16 September, 85.9% by 28 October and 91.0% by 9 December, with a 57.0% chance of two by then.

June's minutes rested the disinflation base case explicitly on Hormuz disruptions diminishing, and those disruptions have now diminished, at least for three days. The market's answer has been to leave Wednesday's hike odds untouched and shave a point or two off the autumn. Either traders do not believe the pause, or they have decided the inflation problem was never mostly about the barrel.

The calendar does the talking this week

The Federal Reserve decision lands Wednesday at 18:00 GMT, consensus a hold at 3.75%, no projections attached, press conference at 18:30. Thursday stacks the June Personal Consumption Expenditures price index at 12:30 GMT, core seen at 0.2% MoM and 3.3% YoY, against the first reading of second quarter Gross Domestic Product at 2.1% annualised and jobless claims at 204K after 187K.

Friday adds the second quarter Employment Cost Index at 0.8%, the Chicago Purchasing Managers Index at 56 and the Michigan survey, with one-year inflation expectations at 4.2% and the five-year at 3.3%. Microsoft (MSFT), Apple (AAPL) and Amazon (AMZN) all report from inside the index this week, Meta Platforms (META) reports from outside it, and Alphabet (GOOGL), which joined the average in late June, has already set a bar low enough to trip over.

Chart levels

Resistance: The session high just short of 52,600 is the ceiling the peace trade could not clear, and a daily close above it reopens the 52,800 area ahead of the record near 53,300.

Support: The 52,000 handle absorbed the afternoon fade and carries the tape now, with 51,800 beneath it and the rising 50-day Exponential Moving Average near 51,500 as the last defence, the level that held the war flush last week.

Bias: Bullish above 52,000. Two consecutive gains off the 51,500 area, a daily Stochastic Relative Strength Index near 18 and turning up, and a reclaimed 52,000 handle together describe a base rather than a top, and last week's bearish case expires on that reclaim. A daily close back beneath 51,800 revives it.

Dow Jones daily chart

• GBP/USD retreats from 1.3363 as risk sentiment turns defensive.
• Chipmaking headlines pressure Sterling as markets await Fed decision.
• BoE expected to hold rates despite July Oil-price shock.

The Pound Sterling retreats by 0.13% even though the Greenback is flat during the day, as risk appetite shifted sour on news that a Chinese state-backed company is producing chipmaking machines, prompting a sell-off in ASML, the Dutch-based company.  The GBP/USD trades at 1.3305, after reaching a high of 1.3363.

GBP/USD slips as chipmaking worries, Fed-BoE caution, UK political uncertainty weighed

The de-escalation of the Middle East conflict is a relief for major central banks, as Oil prices slide as the US paused attacks on Iran over the weekend. The US President Donald Trump warned of further military action if negotiations between Washington and Tehran fail. He said that attacks would be “very powerful.”

On Monday, the US economic docket featured Durable Goods Orders for June, which improved from -4% contraction to 0.3% MoM, missing estimates of 1.6% expansion. However, traders' focus will be on the Federal Reserve (Fed) monetary policy meeting, which is expected to keep rates unchanged, with odds at 60%. The chances of a 25-basis-point rate hike are slim, at about 40%, according to Prime Terminal data.

In the UK, the schedule was absent, but investors are also awaiting the Bank of England (BoE) monetary policy meeting. Here, investors are confident that the UK central bank will keep rates unchanged at 3.75% despite the jump in Oil prices in July.

Sterling would remain pressured as investors assess the intentions of the new government led by Prime Minister Andy Burnham.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3304, keeping a mild bearish bias as spot holds below the simple moving average cluster now aligned near 1.3367. The pair also remains under the broader downward resistance trend line projected from the 1.3465 break area, while the Relative Strength Index (14) around 43 suggests subdued upside momentum rather than outright selling capitulation.

On the topside, initial resistance is seen at the simple moving average zone around 1.3367, with a sustained break exposing the downtrend barrier linked to the 1.3465 region. On the downside, the next notable technical floor is the rising support trend line anchored near 1.3159, where buyers would be expected to regroup if bearish pressure extends.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• USD/CHF climbs to its highest level since June 2025, extending its advance for a sixth consecutive day.
• The Swiss Franc slips after Bloomberg reports the SNB may maintain zero interest rates through 2027.
• Markets await the Federal Reserve's interest rate decision on Wednesday.

USD/CHF climbs to fresh highs since June 2025 on Monday after Bloomberg reported that the Swiss National Bank (SNB) could keep its policy rate at zero until the end of 2027. The SNB later declined to comment on the report, according to Reuters. At the time of writing, the pair trades around 0.8187, extending its gains for a sixth consecutive day.

Swiss inflation remains subdued and comfortably within the SNB’s 0%-2% price-stability range. Elevated Oil prices since the US-Iran war began have increased near-term inflation risks, but the impact has been far more contained in Switzerland than in the United States.

The Bloomberg report noted that the outlook is based mainly on current inflation forecasts and assumes no major new shocks, citing people familiar with the thinking inside the central bank.

Diverging monetary policy expectations keep USD/CHF tilted to the upside in the near term. While the SNB is expected to keep rates at zero, traders increasingly expect the Federal Reserve (Fed) to raise interest rates later this year to curb inflation.

The Fed announces its monetary policy decision on Wednesday and is widely expected to leave interest rates unchanged at 3.50%-3.75%. However, traders still price in a 33% chance of an immediate hike, while the probability of a rate increase in September stands near 81%, according to the CME FedWatch Tool.

The wide interest-rate gap between the two countries favours the US Dollar (USD). Meanwhile, the Greenback has also emerged as the preferred safe-haven currency during the US-Iran war, while the SNB’s readiness to curb excessive strength in the Swiss Franc limits demand for the currency.

A temporary pause in attacks between the United States and Iran initially weighed on the US Dollar earlier in the day. However, the optimism faded as the prospects of a peace agreement appear slim.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 101.47, recovering from an intraday low of 101.12.

• The Japanese Yen strengthens against the US Dollar as tensions between the United States and Iran ease.
• Investors await this week's monetary policy decisions from the Federal Reserve and the Bank of Japan.
• US Durable Goods Orders disappoint expectations, limiting support for the US Dollar.

USD/JPY edges lower on Monday and trades around 163.70 at the time of writing, down 0.09% on the day, as the US Dollar (USD) comes under pressure from improving risk sentiment following the latest geopolitical developments. Market mood improved after Washington and Tehran confirmed they had paused attacks against each other, reviving hopes for renewed diplomatic efforts between the two countries.

The US Dollar's weakness is also reflected in the US Dollar Index (DXY), which remains in negative territory, while US equities are moving higher, highlighting a more favorable environment for risk assets.

Market participants are now turning their attention to this week's monetary policy decisions from the Federal Reserve (Fed), due on Wednesday, and the Bank of Japan (BoJ), scheduled for Friday. Both central banks are widely expected to leave interest rates unchanged. Investors will mainly focus on the tone of policymakers, after Fed Chair Kevin Warsh recently stated that forward guidance is not well suited to the current policy environment.

In Japan, investors continue to expect the BoJ to maintain a gradual tightening bias. According to a recent Reuters poll, a large majority of economists expect the central bank to deliver another interest rate hike by the end of the year, supporting expectations for a continued normalization of Japanese monetary policy.

US economic data released on Monday also provided only limited support for the Greenback. Durable Goods Orders increased by just 0.3% in June, well below market expectations of a 1.6% rise. Excluding transportation, orders rose 0.6%, while computers and electronic products made the strongest contribution to the increase.

The combination of easing geopolitical tensions, weaker-than-expected US economic data and caution ahead of the Fed and BoJ policy meetings is therefore keeping USD/JPY under modest pressure at the start of the week.

BoJ under pressure to turn more hawkish as Yen hovers near multi-decade lows

Analysts at MUFG note that the recent “drop in energy prices at the start of this week has brought some much-needed relief for Japanese policymakers and helped to slow upward momentum for USD/JPY which has held just below the 164.00-level since late last week.” They add that “market attention in the week ahead will be on how the BoJ responds to inflation pressures in Japan,” with investors focused on whether the central bank uses the upcoming meeting to shift guidance.

MUFG points out that “the BoJ are expected to leave rates on hold after hiking at the last meeting in June, but market participants will be watching closely to see if they provide any hawkish signals over future hikes.” The bank highlights a recent “Bloomberg” report suggesting “that the BoJ was open to a faster pace of rate hikes than every six months while adding that yen weakness was increasing upside inflation risks.” In their view, “without hawkish guidance, the yen is vulnerable to further weakness especially if the Fed delivers a hawkish policy surprise this week.”

Strategists at BNY similarly argue that “the BoJ is widely expected to leave policy unchanged, with guidance and updated projections the key focus for timing signals.” They flag that “Tokyo Consumer Price Index (CPI), retail sales and industrial production will provide the final assessment of economic conditions ahead of the meeting,” helping to shape the policy debate. BNY expects “the BoJ is expected to keep the target rate unchanged at 1.00%, but a hawkish message committing to further tightening is probably a matter of urgency as the JPY slides beyond four-decade lows.” They warn that “fears are growing over fiscal conditions as well in light of the recent budget, and the BoJ needs to signal some tightening in financial conditions to manage the risks arising from fiscal impulse.” Until the central bank “gets ahead of expectations, the JPY will struggle, especially as balance-of-payments risks resurface.”

• Gold opens with a bullish gap but trims gains as the US Dollar rebounds and Oil prices stabilize.
• Traders await the Fed’s interest rate decision on Wednesday and US PCE inflation data on Thursday.
• XAU/USD stays range-bound between $4,000 and $4,200, hovering near the 21-day SMA.

Gold (XAU/USD) opens the week with a bullish gap on Monday but struggles to build on its early advance as optimism over a temporary pause in attacks between the United States (US) and Iran fades and Oil prices recover from intraday lows. At the time of writing, XAU/USD trades around $4,073 after briefly climbing above $4,100, up 0.50% on the day.

US Ambassador to the United Nations Mike Waltz said President Donald Trump is giving negotiations some space while keeping all military options on the table. Tehran also said it would refrain from fresh attacks as long as Washington did the same.

Oil prices opened the week sharply lower on hopes that the pause in hostilities could ease supply risks. However, sellers quickly moved to the sidelines as the geopolitical situation remained fluid. Iranian Foreign Ministry spokesperson Esmaeil Baghaei said the situation in the Strait of Hormuz had not changed and that the strategic waterway remained closed.

West Texas Intermediate (WTI) trades near $82.70 per barrel, rebounding from an intraday low of $81.28, but remains down more than 7% on the day.

Gold’s reaction again shows how the metal has decoupled from its traditional safe-haven role since the US-Iran war began, with price action driven largely by the inflationary impact of higher Oil prices and their implications for Federal Reserve (Fed) monetary policy.

The Fed’s interest rate decision on Wednesday is the key risk event this week, alongside the US Personal Consumption Expenditures (PCE) inflation data on Thursday.

The central bank is expected to leave rates unchanged, but traders still price in a 33% chance of a hike, according to the CME FedWatch Tool. The probability of a rate increase in September stands near 79%.

The possibility of higher US interest rates remains a major headwind for the non-yielding metal, while the US Dollar continues to benefit from hawkish Fed expectations and the fragile Middle East situation.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 101.50, recovering from an intraday low of 101.12.

Strategists at OCBC note that “a hold accompanied by hawkish guidance would likely push expected rate hikes further out the curve without materially altering the roughly 55 [bps] of cumulative tightening priced in through mid-2027.” In their view, “in this scenario, the USD should remain supported.”

By contrast, OCBC cautions that “a decision to leave rates unchanged with little explanation could be interpreted as dovish and create confusion about the Fed's reaction function,” a misstep that “risks lifting long-end inflation breakevens, a development that would be negative for the USD.”

Technical analysis: XAU/USD consolidates near 21-day SMA

From a technical perspective, XAU/USD remains rangebound between $4,000 and $4,200, with prices fluctuating around the 21-day Simple Moving Average (SMA) at $4,068. The near-term outlook is neutral, although the broader bias stays bearish as the metal trades below the 50-day and 100-day SMAs at $4,221 and $4,469, respectively.

The Relative Strength Index (RSI) on the daily chart is at 47, leaning neutral, while the Moving Average Convergence Divergence (MACD) stays in positive territory, suggesting that downside momentum is limited even as the broader structure remains capped by overhead averages.

On the upside, the $4,200 psychological mark and the 50-day SMA at $4,221 form the initial resistance zone. A decisive break above this area could open the door toward the 100-day SMA at $4,468.

Initial support is seen at the 21-day SMA near $4,069, followed by the $4,000 level. A daily close below this level would expose deeper retracement, while holding above it would keep XAU/USD in a range, with bulls needing a clear move through $4,222 to regain control.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Commerzbank’s Charlie Lay notes Monetary Authority of Singapore (MAS) unexpectedly tightened policy for a second meeting, slightly increasing the Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) slope and stressing the move was smaller than April’s. He says MAS is signalling greater concern over inflation risks than growth, with stronger-than-expected H1 2026 growth and forecasts likely to be revised up, while USD/SGD only slipped modestly to around 1.2890.

Second consecutive MAS tightening step

"In a surprise move, the Monetary Authority of Singapore (MAS) tightened monetary policy for the second consecutive meeting. It increased the rate of appreciation of the SGD NEER policy band “very slightly”, with no changes to the centre or width of the band. Importantly, MAS said that the increase was smaller than the tightening in April."

"MAS could have easily left policy unchanged given that inflation remains relatively benign and energy prices have retreated from their April peaks."

"Its decision to act signals that MAS remains more concerned about the upside risks to inflation than the downside risks to growth."

"Growth was stronger-than-expected in H1 2026 at 6%. The official forecast is likely to be revised up from 2-4% currently."

"MAS maintained its headline and core inflation forecasts at 1.5-2.5% for 2026. USD/SGD fell only modestly to around 1.2890 following the announcement."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• AUD/USD trades near 0.6990 after failing to hold above 0.7000, although declining Oil prices limit the pair’s losses.
• Investors await RBA Governor Michele Bullock’s speech on Tuesday, followed by Australia’s June inflation report on Wednesday.
• The Fed is expected to keep rates at 3.50%–3.75% on Wednesday, while Chair Kevin Warsh’s remarks will guide the US Dollar’s next move.

AUD/USD retreats to 0.6990 on Monday, though still up on Friday's close, after briefly rising as high as 0.7011 during the Asian session as investors prepare for key Australian inflation data and the Federal Reserve’s interest-rate decision.

Market sentiment improved after a pause in hostilities between the United States (US) and Iran triggered a sharp decline in Oil prices and a relief rally across global stock and bond markets. West Texas Intermediate (WTI) Oil trades near $83.70 per barrel, falling more than 7% and easing concerns that elevated energy costs could generate additional inflationary pressure. The decline in Oil has also slightly reduced expectations of an immediate Fed rate increase, offering some support to risk-sensitive currencies such as the Australian Dollar.

On Tuesday, investors will monitor a speech from Reserve Bank of Australia Governor Michele Bullock for comments on inflation and the future path of interest rates. In the United States, the ADP Employment Change four-week average will also be released after previously falling to 16.5K. A stronger reading could support the US Dollar, while another decline may reinforce signs that employment growth is moderating.

Attention will then shift to Australia’s June Consumer Price Index on Wednesday. Headline CPI previously declined 0.7% MoM, while annual inflation stood at 4.0%. Trimmed Mean CPI last increased 0.4% MoM and 3.6% YoY, showing that underlying inflation remained elevated despite the decline in the headline measure. Hotter figures for June could strengthen expectations that the RBA will maintain restrictive policy and support the Aussie, while softer inflation could pressure AUD/USD.

The Federal Reserve (Fed) will announce its decision later on Wednesday following its July 28–29 meeting. The Fed has maintained its target range at 3.50%–3.75% since the beginning of the year. Although most analysts expect another hold, the decision is considered increasingly close following recent inflation and energy price spikes. The sharp pullback in Oil on Monday may reduce the urgency for a hike, but Chair Kevin Warsh could maintain a hawkish stance and leave the door open to future tightening.

US Personal Consumption Expenditures (PCE) inflation later in the week will provide another important indication of underlying inflation. The broader calendar also includes decisions from the Bank of England (BoE) on Thursday and the Bank of Japan (BoJ) on Friday .

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6988, holding between the rising 100-period Simple Moving Average (SMA) at 0.6969, which underpins the pair, and the 20-period SMA at 0.6990, which caps the upside. This configuration, together with a Relative Strength Index (RSI) reading near 49, suggests a broadly neutral tone, with price trapped in a tight range and intraday rallies meeting supply just overhead.

On the topside, initial resistance is aligned at the 20-period SMA around 0.6990, followed by the horizontal barrier at 0.6995, ahead of a denser cap near 0.7002 and then 0.7006. On the downside, immediate support emerges at 0.6984, where a horizontal level protects the latest consolidation lows, with the 100-period SMA at 0.6969 providing a deeper technical floor if sellers extend the pullback.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• USD/CAD rebounds from 1.4070 as the US Dollar recovers from its opening losses.
• USD/CAD holds above the 50-day and 100-day SMAs, keeping the near-term bias constructive.
• The RSI holds above 50, while an improving MACD points to fading downside pressure.

USD/CAD edges higher on Monday, paring earlier losses as the US Dollar (USD) rebounds after opening the week with a bearish gap. The Greenback initially weakened as a temporary pause in attacks between the United States (US) and Iran improved risk sentiment. At the time of writing, the pair trades around 1.4114 after bouncing from an intraday low of 1.4070.

Oil prices have erased most of last week’s gains in response to the pause, weighing on the commodity-linked Canadian Dollar (CAD). West Texas Intermediate (WTI) trades near $82.70 per barrel after hitting an intraday low of $81.28, but is still down more than 7% on the day.

Despite Monday’s decline, Oil prices remain elevated. However, the Loonie has received only limited support from higher Oil prices since the US-Iran war began, as USD/CAD remains driven mainly by US Dollar flows and monetary policy expectations amid heightened energy-driven inflation risks.

Markets see the Federal Reserve (Fed) as more likely to raise interest rates than the Bank of Canada (BoC). Against this backdrop, the near-term outlook for USD/CAD remains tilted to the upside, with technical indicators also pointing to easing selling pressure following the pullback from June’s high near 1.4250.

Technical analysis

On the daily chart, USD/CAD holds a constructive near-term bias as it trades above the 50-day and 100-day Simple Moving Averages (SMAs) at 1.4030 and 1.3883, respectively.

The pair is testing nearby horizontal resistance at 1.4120, while the Relative Strength Index (RSI) around 54 suggests neutral-to-firm momentum, and the Moving Average Convergence Divergence (MACD) indicator, still slightly negative but improving, hints at waning downside pressure.

A clear break above 1.4120 could open the door toward the June high near 1.4250. On the downside, the 50-day SMA near 1.4030 closely aligns with the psychological 1.4000 mark, making this area an important support zone. The 100-day SMA at 1.3883 would provide deeper support if selling pressure picks up.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

ING’s James Smith expects the Bank of England to keep rates on hold on 30 July and sees a prolonged pause extending through 2026. New forecasts are likely to show UK inflation peaking near 3%, below the 4% level seen as risky. ING argues Oil and natural gas prices would need to rise significantly further to justify a rate hike.

Prolonged hold view from ING

"The Bank of England is poised to keep rates on hold on 30 July despite a rise in energy prices. Expect new forecasts to show inflation peaking around 3% later this year. We think oil and natural gas prices would need to spike a fair bit further for the Bank to hike rates in September."

"The Bank’s updated forecasts are likely to show inflation fairly close to 3% in the second half of this year and into early next. And crucially, that’s well below the 4% threshold that the Bank has previously argued is statistically more likely to trigger second-round effects and a longer-lasting bout of price pressure."

"On that basis, we think energy prices would need to go a fair bit higher to convince more than the four hawks to vote for a hike. Oil prices back to US$120/bbl (from $90 today) – and Dutch TTF natural gas prices up around €80/MWh (from €58) – would take inflation above 4% and would likely trigger some modest tightening."

"Though it’s not difficult to see how that could happen if the Strait of Hormuz stays blocked throughout August, our base case is that the Bank stays on hold through 2026. We currently project two rate cuts from the spring of 2027, though this is contingent on there being no material fiscal stimulus at the Autumn Budget."

"But even then, there still appears to be a fairly clear dividing line between the hawks and doves. Just as we saw in the debate about rate cuts earlier this year, there are five officials, including Governor Andrew Bailey, who appear much less convinced that the economy is as susceptible to the sort of inflation wave we saw four years ago. And crucially, the recent data appears to back them up."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• WTI Oil falls by more than 7% after the United States and Iran paused military strikes over the weekend.
• Washington opens the door to potential negotiations with Tehran, temporarily easing supply concerns.
• Markets remain alert to supply disruption risks following Ansar Allah attacks on Saudi Oil facilities.

West Texas Intermediate (WTI) US Oil extends its decline on Monday, trading around $82.60 per barrel at the time of writing, down 7.4% on the day. Crude Oil opened the week with a sharp bearish gap after the United States (US) and Iran paused military strikes over the weekend, raising hopes of a de-escalation following two weeks of direct conflict.

The decline in Oil prices comes as investors reduce the geopolitical risk premium. The temporary truce between Washington and Tehran has fueled expectations that diplomatic talks could resume, potentially allowing commercial shipping to safely return through the Strait of Hormuz, a critical route for global Oil exports.

According to several media reports, the United States also halted its military campaign amid growing concerns over dwindling interceptor missile supplies and the limited number of remaining high-value targets in Iran. Chair of the Joint Chiefs of Staff General Dan Caine reportedly warned US President Donald Trump that continuing the campaign could significantly strain US military capabilities.

The US Ambassador to the United Nations stated that US forces remain ready to respond while adding that President Trump wants to leave room for potential negotiations. Meanwhile, a senior Iranian official, quoted by Reuters, said Tehran continues to follow an "attack for attack" policy, suggesting Iran will also suspend military operations as long as the United States refrains from launching new strikes.

Despite the temporary pause, energy markets remain cautious. Concerns over global Oil supplies have not completely disappeared after the Iran-backed Houthis claimed responsibility for recent attacks on Saudi Arabian Oil facilities along the Red Sea. These risks continue to limit the downside potential for Oil prices should geopolitical tensions flare up again.

Oil retreats as US-Iran pause tempers supply fears but Strait of Hormuz risks linger

Analysts at OCBC note that Oil prices have eased after recovering much of their June losses last week, as Iran signaled a pause in retaliatory strikes while the US appeared to halt further attacks. They argue that “the renewed decline in Oil prices brings developments closer to our base case that crude will gradually trend lower over time,” although they caution that “Oil could rebound at some point as the underlying issues of freedom of navigation through the Strait of Hormuz and Iran’s nuclear programme remain unresolved.”

ING analysts observe that “the price action in Oil this morning clearly reflects the market's desperation for positive news,” pointing out that after 13 days of strikes, “the US has held off on further strikes over the last [two] days, while Iran also paused retaliatory attacks.”

This brief recess has seen Brent “retreat aggressively, down more than 7% at one stage, briefly below US$90/bbl.” While they describe this as “the first tangible signal of de-escalation,” they add that “the reasons behind it are less clear,” with “little explanation from the US” and “no meaningful pickup in vessel flows through the Strait of Hormuz.” In their view, “we’re unlikely to see any recovery until there’s clarity on whether this de-escalation is more permanent and whether vessels can navigate the strait without fear of attack.”