Risk sentiment continues on the last trading day of the month

Markets remain shaky and investors cautious on the last trading day of the month, with volatility spiking and major assets flirting with key support levels. The prolonged Middle East conflict and elevated uncertainty are increasingly reflected in asset prices.

However, along with other risk assets, precious metals and stocks experienced an extended rebound, supported by signs that tensions are easing. U.S. President Donald Trump has indicated his willingness to address the Iran crisis without reopening the Strait of Hormuz, a crucial shipping route for the world's gas and oil supply. The Iranian military has consistently blocked this vital passage since the U.S. and Israel initiated military actions against Iran.

Dollar Index halts winning streak

The US dollar index (DXY), which measures the currency against six major peers, slightly retreated from fresh 10-month highs, giving back some gains made earlier this week as investors await fresh economic data and Federal Reserve policymakers' comments for clues on the interest rate path. Meanwhile, the EUR/USD rebounded above 1.1470 but showed signs of indecision during the early European session, oscillating between small gains and losses.

Gold holds marginal gains

Gold started the week on a positive note, maintaining modest gains through the early European session. Although there was a rebound, it is clear that traders remain undecided on where to go, which attracts abundant attention from speculators. For today, the traders and market participants will closely watch the US consumer confidence and JOLTS job openings reports. Additionally, US bond yields and broader risk sentiment will influence dollar dynamics and provide momentum for gold prices.

In conclusion, markets are expected to remain volatile today due to the closing of monthly and quarterly candles. Although overall market sentiment has improved slightly following Trump’s indication of a willingness to end the Iran conflict, markets typically respond positively to such headlines. However, the underlying uncertainty could lead to even more challenging conditions for markets in the coming weeks.

 

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