If you want to understand why every single market moved the way it did this past week, you only need three words: US–Iran ceasefire.
📰 Here's the short version of a very long story. Earlier this year, the US and Israel launched military operations against Iran. The Strait of Hormuz — a narrow waterway that carries roughly one-fifth of the world's oil and gas — was effectively shut down. Prices exploded. Markets panicked. Gold surged past $5,500. Stocks crashed. And the world held its breath.
But May flipped the script. Reports emerged this week that the US and Iran have "mostly agreed" to a 60-day memorandum of understanding that would pause hostilities, and potentially allow unrestricted shipping through the Strait of Hormuz. Markets responded immediately — and violently. Oil cratered. Stocks hit record highs. Gold drifted lower. The dollar wobbled. And currencies from Tokyo to Frankfurt were caught in the crossfire.
📝 But here's the critical part: the deal is not done. President Trump has not yet approved the deal, and Iranian state media said it has not been finalized. So everything you'll read below is built on hope — and hope, in markets, is both the most powerful fuel and the most dangerous one.
Note: US markets were closed Monday May 26 (Memorial Day) — four sessions did the work of five.
🛢️ Oil: WTI & Brent
[Left] WTI (USOIL) & BRENT (UKOIL) [Right] Daily Chart
The charts tell the story plainly. On the WTI daily, price has fallen sharply from its April highs above $115 all the way into the $86–88 demand zone — a level that previously acted as major support back in late February. Brent sits at ~$91, also testing a key level visible on the chart around the $91 area. Both are below their declining 20 & 50 moving averages, confirming the downtrend is firmly in control.
Brent posted its biggest monthly loss in six years — down nearly 19% in May, its worst month since the Covid-19 pandemic. The driver? Pure peace-deal optimism draining the war premium.
Every Rubio or Trump statement hinting at diplomacy sent prices sliding 3–5% in hours.
US military strikes mid-week in Iran briefly bounced prices — then hope crushed them again.
One senior analyst warned the reopening will "only be partial," with significant infrastructure damage, minefields, and tanker delays still to be resolved.
This week: WTI's $86–88 zone is critical. A confirmed ceasefire could break it lower toward $78. A deal collapse? Expect a violent spike back toward $96–100. Watch Trump's statements above all else — one post can move oil $5.
⚜️ Gold (XAUUSD)
The daily XAUUSD chart tells a clear story of distribution after peaking above $5,500 earlier this year.
Where we are: Price rejected the Order Block (OB) at $4,820 and has been grinding lower, recently finding support at the March lows around $4,377.
Key resistance: The green zone at $4,600–4,650 has flipped from support to resistance — the first ceiling bulls need to reclaim.
MA structure: Price is below the red and orange MAs — bearish. The blue 200MA at $4,377 is the last major support standing.
The bias: Sell the rally until price reclaims $4,820. Below that level, bears remain in control.
XAUUSD (Gold) Daily Chart
Gold remains well below May's peak at $4,772, having struggled as the Iran conflict boosted the dollar and pushed bond yields higher. And then came the data bombshell: April PCE inflation hit 3.8% — the highest since May 2023 — with core PCE at 3.3%, both far above the Fed's 2% target.
Gold is stuck. Peace optimism removes the fear premium. High inflation should help gold — but only if rates aren't going higher. Markets are now pricing in a possible Fed rate hike early next year, which kills the appeal of a non-yielding asset like gold.
This week: The $4,600–4,650 green zone is the battleground. A rejection there keeps the bearish trend intact toward $4,377 and below. Only a clear break and close above the OB at $4,820 would flip the narrative bullish. Until then, gold is in sell-the-rally mode.
📈 NQ / ES Futures: The "Pathological Optimism" Rally
S&P 500 (ES): Record Highs | Nasdaq (NQ): +8% in May
The S&P 500 closed at 7,519.12 — a new all-time high — while the Nasdaq gained 1.19% to close at 26,656 in Tuesday's session, also a record. The Nasdaq finished the entire month of May up approximately 8%.
[Left] Nasdaq Futures, S&P 500 Futures [Right] Daily Chart
The daily charts on both NQ and ES show a powerful recovery from the early May lows, rallying strongly off the green demand zones (28,200–28,500 on NQ, 7,300–7,360 on ES).
Current position: NQ is pushing into the -1 STD zone around 29,700–30,400, with ES pressing 7,595 — momentum is strong but the move is getting stretched.
Reversal watch zones: Our key retracement and reversal areas sit at the -2 to -2.5 STD levels — roughly 30,900–31,400 on NQ and 7,800–7,900 on ES.
The key rule: If price reaches those levels without a strong fundamental catalyst backing the move, that's where we'd expect bulls to run out of steam and a reversal to become likely.
What's driving this?
Tech euphoria: Micron Technology jumped 19% and topped $1 trillion in market capitalisation amid analyst bullishness, with UBS citing more than 100% upside potential. AI-linked chipmakers continue to be the engine of this rally.
Oil falling = inflation relief. Lower energy costs = potentially lower inflation ahead = less pressure on the Fed to hike.
War ending (maybe)? Markets are betting the Iran deal closes, supply chains normalise, and growth accelerates.
One Wall Street voice cut through the noise: investors are "pathologically optimistic" that the war will end and things will go back to how they were before — and there's a "tug of war" between that optimism and real economic data.
What does this mean for this week?
This is a market that wants to go higher but has a lot riding on political headlines it can't control.
Key risk: If the Iran deal falls through, expect a sharp reversal in both NQ and ES.
Key catalyst: The US Jobs Report (NFP) drops on Friday, June 6 — this is the single biggest data event of the week. A strong jobs number could actually hurt stocks if it suggests the Fed needs to keep rates high.
Also watch: ISM Manufacturing PMI (Monday June 2) and ADP jobs data (Wednesday June 4) — early signals for Friday's big number.
🇪🇺 EURUSD
The euro's recent struggle is less about European strength and more about dollar confusion. April's PCE came in at 3.8% — reducing the likelihood of any Fed pivot soon, keeping the dollar supported even as peace optimism briefly weakened it. Europe has its own headwinds — weak industrial output, energy dependence, and an economy that never fully escaped the shadow of the Iran war's supply shock. The ECB has remained cautious, and with no strong growth story to tell, markets see little reason to aggressively buy euros at current levels.
EURUSD H4 Chart
Where we are: Price topped out at the H4 Key Level (~1.1820), sold off hard to 1.1580–1.1600, and is now attempting to recover — currently testing the area around 1.1640 from below.
MA structure: The moving averages are mixed and compressing, suggesting consolidation rather than a clean directional trend — neither bulls nor bears have full control yet.
The bigger picture: The Daily Key Level sits well below at ~1.1413, meaning if dollar strength resumes, there is significant room to the downside.
What to watch: Reclaiming 1.1820 is the minimum requirement for bulls — without it, expect a return to 1.1580 and lower. The ECB on June 6 is the wildcard of the week — any dovish surprise sends this pair lower fast, while a hawkish hold could give the euro a short-term lift back toward 1.1820.
🇯🇵 USDJPY: Japan Is Running Out of Patience
The Japanese yen is quietly becoming one of the most politically charged trades in the world right now. It's been weakening steadily — and Japan's government is not happy.
Japan's Finance Minister Satsuki Katayama stated Friday that authorities are prepared to act against excessive volatility in the forex market, reaffirming the government's readiness to intervene if needed as the yen weakened toward the closely watched 160-per-dollar level.
Why is the yen weak? Simply: US interest rates are much higher than Japan's, so money flows to dollars. The Bank of Japan has been slow to raise rates — though Bank of Japan Governor Kazuo Ueda also warned this week about rising inflation risks tied to higher oil prices, though he stopped short of indicating whether the central bank may raise rates at its next meeting.
USDJPY H4 Chart
The H4 chart backs all of this up perfectly. After crashing from above 160 to ~155.50 in early May, USDJPY has ground steadily higher — all moving averages are now curling upward beneath price, confirming bullish momentum. Price is now pressing directly into the blue supply zone between 159.20 and 160.00, which lines up exactly with the H4 Key Level. The chart and the fundamentals are telling the same story — momentum is up, but the wall is right there.
What this means for this week:
The 160 level is the line in the sand. Get close to it and Japan may intervene (buy yen, sell dollars) — which would cause a very sharp, very fast move.
Watch for: Any BoJ or Japanese government statement — they're known to act without much warning.
Watch for: US dollar direction. A weaker dollar (if the ceasefire holds and inflation cools) would naturally lift the yen.
The base scenario for next week suggests a cautious decline in USD/JPY — selling looks preferable, especially while the market remains cautious around the 160.00 area.
🧩 Final Word
This past week, global markets made a very large bet on peace. Oil sold off 17–19%. Stocks hit records. The fear trade in gold faded. And currencies repositioned around a world that might — just might — be a little less dangerous than it was.
But let's be honest: that bet is sitting on a shaky foundation. One tweet from Trump, one missile from Iran, one rejection of terms — and the entire trade unwinds violently. Oil spikes back. Stocks gap down. Gold surges. The yen breaks 160.
The deeper story here is that the world's financial plumbing — oil flows through the Hormuz, rate decisions in Washington, supply chains across Asia — is more interconnected and more fragile than most people realise. When one pipe bursts, everything gets wet.
Trade the news. Manage your risk. And always remember:
In 2026, the biggest market mover isn't on a chart — it's on a negotiating table somewhere between Washington D.C. and Tehran.
Stay sharp. Stay informed. Stay Patient
and as always… Happy Trading!
— The UE Market Letter Team 👁️🗨️
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