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Key Takeaways

• Global equity markets rallied as optimism over a potential U.S.-Iran peace agreement boosted risk appetite, driving a sharp pullback in oil prices and renewed buying in Asian and U.S. equities.
• Despite improving geopolitical sentiment, financial markets continue to price in a “higher for longer” interest-rate environment as sticky U.S. inflation and elevated bond yields reinforce expectations that the Federal Reserve may still tighten policy later this year.
• Asia Pacific markets were led by Japan’s strong equity surge and Singapore’s stronger-than-expected Q1 GDP growth. At the same time, policymakers across the region remain highly sensitive to ongoing energy supply disruptions tied to the Strait of Hormuz blockade.
• Chart of the day: Hang Seng Index’s potential short-term rebound remains in focus above the 25,267 key short-term support, with 25,850 acting as the upside trigger level.

Top Macro Headlines

• Imminent U.S.-Iran peace deal speculation sparks market turnaround: Global risk appetite surged following a wave of optimistic messaging from U.S. President Donald Trump and Secretary of State Marco Rubio, suggesting that an imminent peace deal between the United States and Iran may be approaching. The sudden diplomatic optimism triggered a swift reversal in stagflation fears.
• Iran downplays imminent pact, citing Hormuz specifics: Countering the initial wave of Washington optimism, Tehran issued a cautious statement clarifying that a possible memorandum of understanding does not yet contain critical specifics regarding the Strait of Hormuz, warning market participants that a comprehensive deal is not immediate.
• Japan eased market concerns over government finances: Japanese Prime Minister Takaichi said the government will finance its extra budget without increasing bond issuance on a calendar basis. The supplementary budget will total just over 3 trillion yen and may be submitted to parliament as early as next week, with energy subsidies expected to play a key role.
• Bank of Japan Deputy Governor Himino reaffirmed the BoJ’s rate hike path: Himino highlighted the central bank’s commitment to raising interest rates while warning that the timing of future hikes will depend on Middle East developments affecting Japan’s growth and inflation outlook.

Key Macro Themes

• Geopolitical “whiplash” and energy fragility: Cross-asset markets remain caught in a tug-of-war between speculative peace breakthroughs and physical supply realities. While optimistic traders are driving short-covering rallies, independent energy researchers warn that global oil inventories may reach critical levels by June, potentially sending crude prices above $150/barrel if the Hormuz blockade is not structurally resolved.
• The repricing of “higher for longer” into active tightening: Before the escalation of the Iran conflict, macro participants expected two to three Fed rate cuts in 2026. Following persistent inflation pressures, including headline CPI at 3.8% and core PCE expected at 3.3%, Fed funds futures have erased easing expectations and shifted toward pricing a possible Fed rate hike by December 2026.
• The trillion-dollar primary market liquidity drain: The combination of SpaceX’s massive $75 billion capital raise and a confidential draft IPO filing from OpenAI signals a structural shift in equity markets. This tech-driven listing boom may become a major test of public liquidity and investor risk appetite.

Global Market Impact (Last 24 Hours)

Equities: U.S. stock index futures pointed higher, buoyed by optimism surrounding the Trump-Iran memorandum. This followed a quiet Memorial Day closure in the U.S. and UK, where equity sentiment remained constructive despite persistent concerns over bond yields.

Fixed Income: Developed bond markets continue to face multi-speed pressures despite softer oil prices tied to the prospect of a U.S.-Iran peace deal. U.S. Treasuries remain deeply unanchored, with long-dated yields hovering near 2007 highs as the 30-year yield continues to hold near the 5% psychological level.

FX: The U.S. Dollar Index (DXY) weakened marginally as capital rotated out of safe-haven cash positions and back into risk-sensitive currencies, providing temporary relief for G10 and emerging market FX. AUD rose 0.7%, GBP gained 0.6%, and EUR advanced 0.4% against the USD on Monday, 25 May.

Commodities: Crude oil plunged sharply, with Brent briefly slipping below the critical $100/barrel threshold to hit a fresh two-week low as geopolitical war premium faded. Meanwhile, spot gold rebounded 1.3% as a softer U.S. dollar triggered a technical bounce, closing Monday at $4,570/oz while remaining below the 20-day moving average resistance at $4,602/oz.

Asia Pacific Impact

• Japanese equities explode to all-time highs: Tokyo led global markets with a major breakout, as the Nikkei surged 3% to a record high on expectations of a rapid resolution to the Middle East supply crisis. In today’s Asia session, some profit-taking emerged, with the Nikkei 225 slipping 0.4%, while other regional indices traded positively, including the Hang Seng Index (+0.2%), China A50 (+0.2%), and KOSPI (+3.4%).
• Singapore Q1 GDP blows past estimates: Supported by the regional AI infrastructure boom, Singapore posted Q1 GDP growth of 6.0% y/y, comfortably beating expectations. However, policymakers continue to face mixed prospects tied to ongoing Middle East maritime disruptions.
• Regional currency stabilization: Alongside the softer U.S. dollar, broader Asia FX markets strengthened, easing immediate balance-of-payments and capital flight concerns for energy-importing economies.

Top 4 Events to Watch Today

1. Japan Leading Economic Index Final (March) – 1:00 pm SGT
   Impact: USD/JPY, JPY crosses, Nikkei 225
2. Singapore Industrial Production (April) – 1:00 pm SGT
   Consensus: 12% y/y, previous: 10.1%
   Impact: USD/SGD, SGD crosses, STI
3. US Conference Board Consumer Confidence (May) – 10:00 pm SGT
   Impact: USD, U.S. stock indices
4. US-Iran peace deal news flow
   Impact: All asset classes

Chart of the Day – Short-Term Rebound in Hang Seng Index Above April Gap Support

Fig. 1: Hong Kong 33 CFD minor trend as of 26 May 2026 (Source: TradingView).

The recent 6.6% decline in the Hong Kong 33 CFD, a proxy for Hang Seng Index futures, from its intraday high of 26,642 has found support at the early April 2026 gap support level of 25,267.

In addition, the hourly RSI momentum indicator continues to display short-term bullish momentum conditions following a prior bullish divergence signal that emerged in oversold territory on 22 May 2026.

Watch the 25,267 key short-term pivotal support for a potential rebound. A break above 25,850, acting as the upside trigger, could expose the next intermediate resistances at 26,080 and 26,210.

On the other hand, an hourly close below 25,267 would invalidate the bullish scenario and expose the next intermediate supports at 24,890 and 24,606.

Key Highlights

• GBP/USD started a recovery wave above the 1.3400 resistance.
• A rising channel is forming with support at 1.3440 on the 4-hour chart.
• EUR/USD is struggling to clear the 1.1675 resistance zone.
• WTI crude oil prices dipped below the $96.50 support.

GBP/USD Technical Analysis

The British Pound found support near 1.3300 against the US Dollar. GBP/USD formed a base and started a steady increase above the 1.3380 resistance.

Looking at the 4-hour chart, the pair traded above the 50% Fib retracement level of the downward move from the 1.3653 swing high to the 1.3302 low. There is also a rising channel forming with support at 1.3440.

However, the pair is now facing hurdles near 1.3500, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour).

The next major resistance could be 1.3520 and the 61.8% Fib retracement level of the downward move from the 1.3653 swing high to the 1.3302 low. A close above 1.3520 could open doors for gains above 1.3550. In the stated case, the bulls could aim for a move to 1.3600.

If there is another decline, the pair could find bids near 1.3440. The first major support sits near the 1.3420 level. The next support could be 1.3400. A close below 1.3400 might initiate a drop to 1.3350. Any more losses might open the doors for a drop toward the 1.3300 zone.

Looking at EUR/USD, the pair is attempting to recover some losses but the bears are active below the 1.1675 resistance.

Upcoming Key Economic Events:

• US Housing Price Index for March 2026 (MoM) - Forecast +0.1%, versus 0% previous.

At first glance, Euro looks healthy this week. Dollar is falling, oil prices are collapsing, and risk appetite is roaring back as markets price the possibility of a US-Iran breakthrough and reopening of the Strait of Hormuz. But underneath the broad Dollar selloff, Euro is quietly losing two very important battles — one against Sterling, and another against Swiss Franc.

The fight against Sterling is fundamentally about growth credibility. Europe’s slowdown is looking uglier than Britain’s. Eurozone PMI Composite crashed to 47.5 in May, the weakest level in 31 months, with Services collapsing to 46.4 and Manufacturing momentum fading rapidly. The UK was weak too, with Composite slipping to 48.5, but the details matter enormously. British Manufacturing held at 53.7, the strongest reading in four years, while factory output improved to 52.4. In other words, Britain still looks like an economy slowing into a soft landing. The Eurozone increasingly looks like one drifting toward stagnation with inflation problems still unresolved.

Markets are beginning to reflect that divergence more aggressively in EUR/GBP. The cross is now back pressing the critical 0.8618 Fibonacci support zone, 38.2% retracement of 0.8821 (2024 low) to 0.8863 (2025 high).

A decisive break there would also push the cross firmly below 55 W EMA {now at 0.8649). That would strengthen the case that the entire rise from 0.8821 already topped at 0.8863 after rejection near the major 61.8% retracement of 0.9267 (2022 high) to 0.8821 at 0.8867. In that scenario, deeper losses toward 61.8% retracement of 0.8821 to 0.8863 at 0.8466 should follow.

The battle against Swiss Franc is completely different. Here, the problem is not growth — it is yields and oil. As markets increasingly price a de-escalation in the Middle East, oil prices are falling sharply and global bond yields are retreating. Ironically, the same “peace dividend” helping global equities is also strengthening CHF because lower yields reduce the carry advantage that had supported EUR/CHF.

Technically, EUR/CHF’s rejection at 55 D EMA (now at 0.9164) reinforces the near term bearish outlook. The rebound from 0.8979 should be complete at 0.9264, while the broader downtrend remains intact below the falling 55 W EMA and medium-term trendline resistance.

Retest of 0.8979 is likely next, and a firm break there would resume the broader decline from 0.9928, extending the long-term downtrend that began from the 2018 high at 1.2004.

Bank of Japan Deputy Governor Shinichi Himino delivered another reminder today that the central bank is still moving toward tighter policy, even as the Middle East crisis complicates the outlook for inflation, bond markets, and Japan’s economy. Himino acknowledged that global bond yields are rising because of “global concerns about inflation,” but stressed the BoJ will continue adjusting policy to achieve its inflation target “stably, sustainably.”

The most important signal for markets was that the BoJ has not abandoned its tightening bias despite the recent geopolitical turmoil. Himino said the central bank “will continue to raise policy rate” and adjust monetary accommodation according to economic and price conditions. However, he also made clear that policymakers are becoming increasingly sensitive to how oil prices and regional instability could affect Japan’s fragile recovery.

That caution was especially visible in his comments on future tightening pace and bond tapering plans. Himino said the BoJ would “consider timing and pace of adjustment while monitoring how Middle East developments affect Japan economy.” He also emphasized that policymakers are carefully reviewing bond market functionality while listening to market participants.

The Memorial Day session delivered a lot of positive news, creating a strong bullish outlook for the coming trading week.

The recent US-Iran draft agreement gave the broader market a major boost, and institutional investors are now expecting a formal deal to be reached during this final ceasefire extension.

A key outcome from these diplomatic talks is the growing expectation that the Strait of Hormuz will reopen within 30 days. This breakthrough triggered a sharp correction in energy markets, with WTI Crude Oil dropping 7% during the holiday session.

The US Dollar also fell alongside crude, as the war-related inflation premium and safe-haven demand quickly faded from the broader economic picture.

Cross-Asset Daily Performance, May 25, 2026 – Source: TradingView.

Although today’s price movements were dramatic, trading activity was lighter than usual because of global holiday closures.

Tomorrow, as traders return from the long weekend, expect much higher trading volumes and more decisive market moves as markets respond to this important geopolitical development.

Safe trades and keep your eyes on the news!

Daily FX Performance (16:14), May 25, 2026 – Courtesy of Finviz.

• WTI Oil is back to early May levels, when initial peace processes were announced, as Trump foreshadowed a reopening of the Strait of Hormuz in 30 days.
• Crude tumbles 7% in this low-volume session, with traders looking for confirmation from price and volume, but the narrative is positive for markets to start the week.
• Exploring an in-depth technical analysis of crude oil.

WTI Crude Oil is experiencing a concrete free-fall today, tumbling 7% and crashing right back down to early May levels.

The huge catalyst driving this violent downside action is President Trump’s blockbuster announcement foreshadowing a complete reopening of the critical Strait of Hormuz within the next 30 days.

Peace Deal odds for July 31 – Source: Polymarket. May 25, 2026.

Although this severe collapse is unfolding during a notably low-volume holiday trading session, traders are still looking to confirm the price action and volume.

Regardless, the overarching narrative provides an incredibly positive fundamental tailwind for broader financial markets to kick off the trading week.

While the headline alone is enough to severely drain the geopolitical risk premium from the energy sector, traders remain acutely aware of the complex physical realities on the ground.

Crude oil may only experience its true structural correction once the strait actually resumes normal maritime operations, and even then, existing supply droughts will inevitably create lagging effects before physical prices can fully normalize lower.

Nevertheless, this massive diplomatic breakthrough represents the most concrete, actionable news the market has received in over two months.

Looking at the explosive reactions across global assets as futures markets finally open to start the shortened week, traders active during this holiday session are treating this breakthrough as a profoundly pivotal turning point for the entire energy complex.

Now, let’s take a closer look at the technical analysis for WTI Crude to see if prices can continue to correct.

US Oil Intraday Timeframe Analysis

WTI 4H Chart and Technical Levels

WTI Oil 4H Chart – May 25, 2026. Source: TradingView.

WTI Crude has just broken its large triangle formation, which had held since early April and now points to more downside ahead.

The headlines just landed and traders will have to be critical of how serious the idea of a Hormuz reopening really is, but what is clear is that the dynamic in oil has changed.

Reaching a key support, long-term bearish momentum will be more probable if the action fails to rebound above the $96 level, the top of the momentum support.

WTI Technical Levels:

Resistance Levels

• $98 to $100 pivot — 4H 200-period MA, short-term bearish below
• $103.03 — 4H 50-period MA
• $106 to $108 — June 2022 resistance
• $109 — Triangle resistance
• 2022 and Monday highs: $117 to $120 — larger channel top

Support Levels

• Momentum support: $93 to $95 — testing, fully bearish below
• $90 — Psychological level
• $87 to $90 — Mini-support
• $85 — Micro support
• $82 — Friday 17 lows
• $78 to $80 — 2025 highs key support

1H Chart and Action Levels

WTI Oil 1H Chart – May 25, 2026. Source: TradingView.

A good sign for bears is that despite the oversold conditions, bulls have not surged back in to buy the dip for the first time, indicating a change in momentum.

With the 50-hour MA crossing below the 200-MA, expect more selling on pops rather than buying on dips.

This would be confirmed further if bulls fail to close tomorrow’s session above the $96 highs.

Breaching below $90 reopens the way toward $80 and lower.

Safe trades and keep your eyes on the news!

The dollar fell across the board at the start of the week, pressured by renewed risk sentiment on growing hopes of a deal between the US and Iran to reopen Hormuz strait and prevent deeper crisis on prolonged supply shortage.

Although the dollar opened with gap lower and dipped to 10-day low, the price remains within the near-term congestion ($98.79/$99.45), with top of thinning daily cloud, reinforced by daily Tenkan-sen ($98.80) providing so far sufficient headwinds to limit fresh bears.

Daily studies remain bullish overall, with south-heading indicators still in positive territory that signals potential scenario of consolidation / limited correction before broader bulls regain traction.

The notion is supported by quick changes of narrative about peace talks by President Trump, suggesting that optimism might be short lived and failure to reach a peace deal again would boost persisting uncertainty and provide fresh boost to safe-haven dollar.

On the other hand, lower liquidity on closure of US markets for holiday, contributes to slower and narrower moves on Monday that partially offsets negative impact on the US currency.

In anticipated negative scenario, dollar needs to clearly break below the floor of the recent range ($98.82) to generate initial bearish signal, which will need an extension below pivotal $98.50 zone (daily Kijun-sen / 50% retracement of $97.44/$99.48 upleg / daily cloud base) for confirmation.

Res: 99.04; 99.45; 99.75; 100.00; 100.26
Sup: 98.80; 98.50; 98.21; 97.92

S&P 500: ⬆️ Buy

• S&P 500 index broke resistance level 7525.00
• Likely to rise to resistance level 7700.00

S&P 500 index opened today with the upward gap which broke above the earlier resistance level 7525.00 – which stopped the previous minor impulse wave 3.

The breakout of the resistance level 7525.00 should accelerate the active impulse wave 5 of the sharp impulse wave (C) from March.

Given the overriding daily uptrend, S&P 500 index can be expected to rise to the next resistance level 7700.00.

Market Overview

The crypto market continues to fluctuate, returning for the third time this week to market capitalisation levels around $2.57T, although at the end of last week it dipped to $2.5T following an earlier surge to $2.7T in May. Over the past 24 hours, the top-performing coins have been Near Protocol (+7.3%), Internet Computer (+4.1%) and Toncoin (+3.4%). Uniswap has seen the biggest decline, falling by 1.6%, whilst Bitcoin Cash and Litecoin have each lost 1%.

Bitcoin fell to $74.3K on Saturday but was trading just above $77K by Monday. Its price movements remain very subdued, with no sharp spikes, and it continues to lag behind stock indices, which are climbing towards all-time highs. On the other hand, the trend of buying on dips is also clearly continuing. The 50-day moving average remains a support level, but buyers are wary of accelerating their purchases. They are likely somewhat put off by the lack of a ‘final capitulation’ in the leading cryptocurrency, which could have brought the bear market to an end.

News Background

Outflows from US spot Bitcoin ETFs have continued for a second week, following six weeks of inflows. According to SoSoValue, net weekly outflows from spot BTC ETFs rose to $1.26 billion, hitting their highest level since late January. Total inflows since the approval of Bitcoin ETFs in January 2024 have fallen to $57.08 billion (-2.2% for the week).

Outflows from US spot Ethereum ETFs have also persisted for two consecutive weeks. Net weekly outflows from ETH ETFs fell by $216 million. Total net inflows since the ETF’s launch in July 2024 have fallen to $11.62 billion (-1.8% week-on-week).

Weakening retail demand and outflows from crypto ETFs could be a ‘contrarian indicator’ signalling a buy signal for Bitcoin, according to Santiment.

Bitcoin miners remain cautious and are not yet showing confidence that the bear market phase is over, CryptoQuant notes. Miners continue to reduce their reserves of the leading cryptocurrency, as they do not yet see sufficient grounds for active BTC purchases.

The media corporation Trump Media and Technology Group transferred 2,650 bitcoins from the project’s crypto wallet to the Crypto.com exchange. The transaction suggests a desire to sell BTC, Arkham Intelligence speculated. The deal will be a loss-maker, as the average purchase price of the coins exceeded $118K.

Billionaire Mark Cuban has sold 80% of his bitcoin holdings and stated that he has lost faith in bitcoin as a safe-haven asset. According to him, he continues to hold Ethereum, placing more trust in this altcoin than in BTC.