The timeline of recent geopolitical events remains ambiguous, with a mix of dramatic military gestures and pre-emptive signals suggesting a stage-managed escalation. The U.S. conducted a high-profile bombing of Iranian nuclear sites, though reports hint the uranium was already relocated. Iran’s retaliatory strike on a U.S. base in Qatar also appeared heavily telegraphed. Regardless, a fragile ceasefire is now in place. Israel claims success, but the broader conflict spans beyond the latest 12-day episode. Global markets, relieved by de-escalation, have regained risk appetite, weakening the U.S. dollar and dragging down gold and oil prices sharply.

Asia Pacific Markets

The Japanese yen regained strength after a sharp dollar retreat. The greenback, which recently hit JPY148, slid to around JPY144.85 following declines in oil prices and steady U.S. Treasury yields. A break below JPY144.80 could pave the way to JPY144.40. Meanwhile, the Australian dollar recovered from an early drop below $0.6375 to climb above $0.6500. Momentum picked up as buyers stepped in late during the U.S. session. Expectations of another rate cut by the Reserve Bank of Australia, possibly reducing the benchmark to 3.60%, support further gains. Australia's inflation appears stable, with markets confident that easing will continue in the coming months.

European Markets

The euro advanced beyond $1.16, building on a strong reversal day. Reports of Qatar intercepting Iranian missiles aimed at a U.S. base contributed to this late-session surge. The euro managed to top recent highs, pushing slightly above $1.1620. Sentiment was further supported by improving German business expectations in the IFO survey, reaching their highest level since early 2022. The British pound also rebounded, having earlier fallen to a monthly low near $1.3370. A sharp rally pushed sterling above $1.3510, as dollar weakness spurred buying. Traders who had exited positions returned, lifting the pound toward a potential breakout beyond $1.3650.

American Markets

The U.S. Dollar Index faced a sharp downturn after touching a monthly high near 99.40. It reversed below 98.40 during the North American session and even dipped close to 98.00, nearing earlier lows around 97.60. Growing expectations of a Federal Reserve rate cut in July—backed by recent remarks from Governors Bowman and Waller—add to downward pressure. Chair Powell’s upcoming testimony could sound relatively hawkish, but the market is leaning toward a September cut. Meanwhile, U.S. trade data continues to be distorted by tariff effects, with a record current account deficit expected. Other indicators, such as housing and consumer sentiment, suggest growing economic fragility.