🛢️ Oil briefly jumped to extreme levels last week — with Brent touching above $126 — as tensions between the U.S. and Iran disrupted flows through the Strait of Hormuz. But the move didn’t last. Prices quickly pulled back toward the $105–$115 range as headlines suggested possible negotiations, easing some of the immediate fear.
Still, this doesn’t mean the problem is solved. OPEC+ is expected to increase output in June, but the real issue hasn’t changed. It’s not just about how much oil is produced — it’s about whether it can actually be delivered. If key routes like Hormuz remain unstable, more supply on paper doesn’t mean more supply in reality.
📰 That’s why this week isn’t just about headlines — it’s about how long this lasts. The longer oil stays high, the more pressure it puts on inflation, central banks, currencies, and stock markets. Stocks have held up so far, helped by strong earnings and AI optimism, but the ongoing U.S.–Iran situation is still a risk in the background.
So the market is heading into 4th–8th May with one key question:
📝 Is this just a short-term shock, or the start of something bigger?
That question affects every market. Oil is still the main driver. Gold is being pulled between fear and interest rates. NQ and ES are holding up, but under pressure. EURUSD is weak because Europe depends more on energy imports. USDJPY continues to reflect the strain of high oil and policy differences, with Japan already stepping in to support its currency.
This is the theme for the week ahead:
Oil is no longer just about energy — it’s now driving inflation, policy decisions, currencies, and overall market direction.
Now let’s break down what this means for each market.
🛢️ Oil: WTI & Brent
[Left] WTI (USOIL) & BRENT (UKOIL) [Right] Daily Chart
Last week showed how sensitive the market is. Brent briefly spiked above $126 when supply fears picked up, but the move didn’t hold. Prices pulled back as headlines suggested possible talks with Iran. Even so, the bigger picture hasn’t changed — there are still concerns around disrupted flows in the Gulf and how long this situation lasts.
For this week:
If diplomacy improves, oil could continue to ease
If disruption in the Strait of Hormuz continues, dips are likely to be bought
If tensions rise again, volatility can return quickly
The key point is simple:
Oil doesn’t need to keep rising sharply to impact markets.
It just needs to stay high long enough to bring inflation concerns back into focus.
⚜️ Gold: XAUUSD
Gold is not acting like a typical safe-haven right now.
Normally, gold rises during times of conflict. But this time, high oil prices are pushing inflation higher, which makes it harder for central banks to cut rates. That’s why gold struggled last week, even with geopolitical tension in the background.
For this week:
If fear increases, gold could move higher
If inflation and yields stay elevated, gold may remain under pressure
If oil falls on real progress in talks, gold could benefit from a weaker dollar and better rate-cut expectations
The key point is simple: Gold is no longer just reacting to fear.
It’s being pulled between fear and interest rates.
Lets take a look at how it translates into the charts
XAUUSD (Gold) Daily Chart
Rejection at key level: Price tapped the 50% of the range and clearly rejected → shifts momentum from neutral to bearish.
Structure turning lower: Lower highs since the rejection show sellers are gaining control.
Below key MAs: Price trading under shorter-term MAs → confirms weakening momentum.
Key downside draw: Bias is lower, with 4,333 (200MA) acting as the near-term draw, followed by March lows if selling continues.
As long as price remains below the 50% level, the path of least resistance is lower toward the 200MA and potentially deeper into March lows.
📈 Nasdaq (NQ) /S&P 500 (ES) Futures
Equities are still holding up, but the strength is starting to look more fragile.
The S&P 500 has bounced back strongly after the initial oil-driven selloff. Strong earnings, AI optimism, and a resilient economy have helped support the market. But the bigger risk hasn’t gone away — if oil stays high, inflation remains sticky, and expectations for rate cuts may need to be pushed back.
For this week:
If oil continues to ease, NQ/ES can hold their strength
If oil starts rising again, equities may struggle at current levels
Tech can stay supported by AI optimism, but macro pressure will matter more if energy stays elevated
Remember: The risk isn’t a sudden drop from one headline.
The risk is the market slowly realising that the backdrop has changed.
Now let’s see how price reflects this on the charts
[Left] Nasdaq Futures, S&P 500 Futures [Right] Daily Chart
Strong move up: Price rallied aggressively from the Weekly FVG → buyers in control.
Bullish structure: Resistance reclaimed and holding → supports continuation.
Price is now sitting around the 2–2.5 standard deviation zone, which is historically a statistical reversal area → increases the probability of a pause, pullback, or short-term reversal.
Trend remains bullish, but at these extended levels, it’s important to watch for signs of exhaustion or a pullback before continuation higher.
🇪🇺 EURUSD
EURUSD is being pulled in two directions: Europe’s energy problem and a strong dollar.
Europe relies heavily on imported energy, so when oil prices rise, it puts pressure on growth and consumers. It also makes things harder for the ECB. At the same time, the dollar stays supported if inflation remains high and the market expects fewer rate cuts from the Fed.
For this week:
If oil falls, the euro could recover
If oil rises, EURUSD will likely stay under pressure
Any new Trump tariff headlines on Europe could push EURUSD lower
In Short: EURUSD is being driven by weak energy in Europe and a strong dollar.
Let’s dive into the charts
EURUSD H4 Chart
H4 rejection: Price is rejecting the H4 supply zone → short-term weakness coming in.
Momentum slowing: Failure to hold higher suggests buyers are losing control at current levels.
Key support below: Draw is toward the Daily/H4 key level (green box) as a potential retracement area.
Higher timeframe context: Overall structure still leans bullish if that zone holds.
Short-term pullback likely into the green zone before any potential continuation higher.
🇯🇵 USDJPY
USDJPY may be one of the clearest macro charts right now.
Japan is dealing with a weak yen, high energy import costs, and growing pressure on policymakers. The yen strengthened briefly after suspected intervention, with officials warning they are ready to step in again. But intervention doesn’t fix the bigger problem if oil stays high and U.S. yields remain strong.
‼️ For this week:
If USDJPY moves back toward 160, intervention risk increases
If oil stays elevated, yen weakness is likely to continue
If risk sentiment worsens, the yen may get short-term support, but energy costs still weigh on it.
In simple terms: The market is now testing how far Japan is willing to defend its currency.
Let’s take a look at the technicals
USDJPY H4 Chart
H4 supply in focus: We are closely monitoring the H4 supply zone as a key technical level.
Macro confluence: The 160 area adds significance, as it’s where Japan intervention risk increases → strengthens the yen.
Rejection signs: Early weakness from this zone suggests sellers are stepping in.
Shift in momentum: Failure to hold above keeps short-term bias leaning bearish.
This H4 zone is critical — if it continues to hold, downside pressure can build as both technical and macro factors align.
🧩 Final Word
The week ahead is not about one asset — it’s about one chain reaction.
If oil stays elevated, inflation pressure remains. That keeps central banks cautious, supports the dollar, and makes life harder for equities and currencies. It’s all connected.
That’s the story traders need to watch from 4th–8th May.
Markets are no longer reacting to the initial shock. They are trying to understand how long it lasts. And that shift matters, because when duration becomes the focus, the bigger trend matters more than any single headline.
So this week, don’t just focus on where price moves.
Focus on what’s driving it: Is the market moving toward stability… or adjusting to a longer period of pressure?
Because that answer will shape everything else.
Until next week,
Stay Sharp, Stay Safe and Happy Trading.
— The UE Market Letter Team 👁️🗨️
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