Last week, markets tried to believe the worst was over.
📰 Oil crashed on Thursday, 17 April, after Iran said the Strait of Hormuz was open again. Brent settled at $90.38 and WTI at $83.85, both posting their biggest daily drops since 8 April. Gold pushed higher at the same time, with spot gold around $4,861 by Friday, 17 April, while Wall Street took the reopening story and ran with it — the S&P 500 closed at a record 7,126.06, and the Nasdaq at a record 24,468.48, its longest winning streak since 1992. The dollar softened, the euro climbed, and USDJPY pulled back as traders unwound part of the geopolitical panic they had been pricing in.
But by Sunday, 19 April, that calm already looked fragile.
Reports that shipping through the Strait of Hormuz had halted again after Iran reasserted control over the waterway, with major gaps still remaining in talks with the United States. Iran linked the renewed closure to the continued U.S. blockade of Iranian ports, while Donald Trump said progress had been made but there was still no final deal. That is the real backdrop for the week ahead: not peace, not a clean ceasefire, and not a market with certainty — just a market that bounced hard on relief and now has to decide whether that relief came too early.
That is why this week is not really about one headline. It is about whether markets were right to price de-escalation so aggressively. If Hormuz remains unstable, then oil stays at the centre. And once oil is back at the centre, everything else connects again: inflation, central banks, currencies, gold, and equities. One story, many markets.
📝 That is the lens for everything below. We are not just watching charts this week. We are watching whether oil disruption becomes temporary noise — or the start of a bigger inflation and policy problem again.
🛢️ OIL (WTI & Brent)
[Left] WTI (USOIL) & BRENT (UKOIL) [Right] Daily Chart
Last week showed just how emotional this market is right now. When traders believed Hormuz was reopening and a deal was getting closer, crude collapsed. But that move was built on confidence that supply disruption was fading. If Sunday’s developments are the start of renewed shipping stress rather than a brief setback, then oil can quickly reclaim its geopolitical premium.
Around 20% of global oil shipments normally move through Hormuz, which is why even partial disruption matters so much.
For the week ahead, oil is the key market to monitor because it decides the tone for everything else.
Bullish oil case: Hormuz remains unstable, tanker traffic stays disrupted, and traders rebuild a risk premium into both Brent and WTI. In that case, Brent likely stays the cleaner geopolitical benchmark because it reflects global seaborne supply risk more directly.
Bearish oil case: Talks resume, shipping normalises, and the market starts treating last week’s collapse as the beginning of a larger unwind in war premium.
What matters most: not whether there is one positive headline, but whether there is sustained proof that supply is safe again. One good headline can knock oil lower for a day. It takes much more than that to restore trust in a route this important.
The real message here is simple: if oil starts rising again, markets will stop celebrating diplomacy and start repricing inflation.
⚜️ XAUUSD — Gold
By Friday, 17 April, gold was already strong, helped by a weaker dollar and lower oil after the temporary Hormuz reopening story. Gold Spot was reported at $4,861.32, up more than 2% on the week, with analysts saying a softer oil and inflation backdrop revived hopes for future rate cuts. That is why gold rose even while risk sentiment improved — because lower oil briefly reduced one of the biggest arguments for higher-for-longer rates.
But this week is different. If Hormuz fears come back and oil starts climbing again, gold faces a more complicated setup.
Supportive for gold: renewed geopolitical stress, a softer dollar, and any move back into safe-haven positioning.
Less supportive for gold: if higher oil revives inflation fears and pushes markets to expect tighter policy for longer.
What that means in simple terms: gold can still stay firm, but it may not be a straight-line fear trade. It can rally on instability, then struggle if the market decides that inflation and yields are the bigger consequence.
So gold this week is not just a war chart. It is a chart of how the market ranks two fears: geopolitical risk, or sticky inflation. Let’s take a closer look at the charts.
[Left] XAUUSD (Gold) Daily Chart & H1 Chart [Right]
Price is sitting around the H4 order block (key support) while rejecting a daily key level above
Failure to hold → downside opens toward the 4,680 area
Holding above keeps short-term bullish structure intact
Market is compressing → break from this zone sets the next move
In short: this level decides whether gold corrects lower or pushes back toward highs.
📉📈 Nasdaq (NQ) /S&P 500 (ES) Futures
Equities ended last week with a very clear message: investors wanted to believe the crisis was moving out of the way.
[Left] Nasdaq Futures, S&P 500 Futures [Right] Daily Chart
The S&P 500 closed at a record 7,126.06 on Friday and the Nasdaq closed at a record 24,468.48, with the Nasdaq logging its 13th straight gain. The rally was helped by the drop in oil, because lower energy prices immediately reduce the pressure on margins, inflation, and rate expectations. Analysts also noted that airlines and consumer names jumped while energy stocks fell, which tells you exactly how the market interpreted the move: lower oil meant lower stress.
But this week, the challenge for NQ and ES is that the market may have run ahead of the news.
Why ES matters: the S&P reflects the broader “relief trade.” If oil stays calm, the market can keep defending the idea that the U.S. economy is resilient enough to absorb the shock.
Why NQ matters even more: the Nasdaq is more sensitive to yields and policy expectations. If oil pushes back up and rate-cut hopes get pushed out again, tech can feel that pressure faster.
Bullish case: traders decide last week’s rally was right, oil remains contained, and earnings plus U.S. resilience keep the bid alive.
Risk case: the market realises it priced a resolution before one was actually delivered, and the rally starts to look too optimistic for the geopolitical reality.
The important point for readers is this: stocks rallied because oil fell, not because the world suddenly became stable. That distinction matters a lot this week.
🇪🇺 EURUSD
EURUSD sits in an awkward position because Europe is one of the places most exposed to another energy shock.
The euro gained last week as the dollar weakened and traders pared back the war premium built into the greenback. Analysts reported the euro at $1.1789 on Friday after touching an eight-week high of $1.1848. But beneath that move, the story is more fragile. The ECB is openly discussing the inflation risks created by higher energy prices, while Christine Lagarde has warned that the Iran war poses risks to both euro zone growth and inflation. The IMF also said euro zone growth is now expected to slow to 1.1% in 2026, partly because Europe is especially vulnerable to higher imported energy costs.
That leaves EURUSD caught between two competing forces.
Supportive for EURUSD: a softer dollar if risk sentiment improves and markets keep unwinding safe-haven USD demand.
Negative for EURUSD: if oil climbs again, Europe’s energy vulnerability comes back into focus and growth fears hit the euro harder than the dollar.
Policy angle: the ECB is sounding cautious about rushing into an April move, but markets still see tightening by July as possible if energy inflation starts feeding into the broader outlook.
So the euro may look strong on the chart, but fundamentally it is still trading on a narrow bridge. If oil becomes a problem again, Europe feels that pressure quickly.
Let’s quickly look at the technicals.
EURUSD Daily Chart
Price has pushed into a key resistance / supply zone after a strong move higher
Current move looks extended → pullback into the 50% zone likely
Holding above the 0.5 keeps bullish continuation structure intact
Rejection here suggests short-term downside before any higher move
In short: expect a pullback first — then watch for continuation if structure holds.
🇯🇵 USDJPY
USDJPY remains one of the cleanest expressions of the battle between risk sentiment, U.S. rates, and Japanese policy caution.
The pair dropped back late last week as the dollar softened and traders stepped out of some defensive positioning, with Analysts reporting dollar/yen around 158.22 on Friday after earlier trading near 159.86. But the bigger story is that the Bank of Japan is still not giving the market a strong hawkish signal. According to Reuters, Governor Kazuo Ueda avoided hinting at an April rate hike, and markets sharply reduced expectations for one, with the chance of a move this month falling to around 10% after his comments. A separate Reuters poll still pointed to the next BOJ hike likely coming by June, but for now the immediate message is that the BOJ is cautious.
That creates a very important setup for the week ahead.
If risk sentiment improves again: USDJPY can find support because the yen tends to weaken when markets move back into carry and confidence.
If geopolitical stress returns hard: the yen can strengthen as traders cut risk, but the move may be less clean than usual because Japan’s rate backdrop is still soft.
What to watch: whether the market focuses more on safe-haven demand for yen, or on the still-wide rate gap between the U.S. and Japan. That tension is exactly why USDJPY remains volatile.
In simple terms, USDJPY is a fight between fear and yield. Last week, fear eased. This week, the market has to decide if that was justified.
Let’s take a look and see if the Technicals agree.
USDJPY Daily Chart
Price is holding above a key support zone → structure still bullish
Range forming near highs → momentum slowing
Break below support → shifts structure bearish
Holding keeps potential for continuation higher
In short: bullish for now, but this support is the line that holds it together.
🧩 Final Word
Last week, markets traded the idea that the conflict was moving toward a controlled ending.
This week begins with a reminder that they may have only been trading a pause.
Oil collapsed because traders believed Hormuz was opening, supply was stabilising, and diplomacy was gaining ground. Stocks surged because lower oil meant less inflation pressure. The dollar softened because some of the fear premium came out. Gold stayed supported because lower oil also revived hopes that central banks might not have to stay as tight for as long.
But now the story has changed again. Hormuz is back in question. The talks still have major gaps. Trump is still pushing for progress, but there is still no final agreement. And that means the market is back to the same core issue it has not fully solved yet: was last week a genuine turning point, or just an overconfident reaction to temporary calm?
That is why the week ahead still comes down to one thing: oil.
Because if oil stays contained, markets can keep believing in relief. But if oil starts rebuilding its risk premium, then everything else has to adjust again — inflation expectations, central bank pricing, equity strength, dollar direction, the euro’s resilience, and whether the yen can regain its safe-haven role.
Markets did not get certainty. They got a brief window to believe in it.
And this week, they may have to decide whether that belief was earned.
One story, many markets. Oil is still at the centre of it all.
Stay safe, and happy trading.
— The UE Market Letter Team 👁️🗨️
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