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S&P 500: ⬆️ Buy

• S&P 500 reversed from support level 7200.00
• Likely to rise to resistance level 7400.00

S&P 500 index recently reversed up from the support level 7200.00 (former resistance from the end of April, acting as the support after it was broken earlier).

The support zone near the support level 7200.00 was strengthened by the 20-day moving average and by the support trendline of the daily up channel from March.

Given the strong daily uptrend, S&P 500 index can be expected to rise to the next resistance level 7400.00. (target price for the completion of the active impulse wave (5)).

• The markets are betting on a swift resolution to the US-Iran conflict.
• The fall in Brent and WTI prices is likely to be sharp but short-lived.

At the start of the week, the nearest Brent futures contract once again exceeded $113, hitting the ceiling formed since the start of the armed conflict in the Middle East following news that Iran had resumed attacks on the UAE’s energy infrastructure. However, on Wednesday, Brent crude fell by more than 10% intraday to $97, as the US announced the maintenance of the ceasefire and the conclusion of Operation Epic Fury. Donald Trump announced progress in negotiations with Tehran, and the latter noted that it was ready to strike a deal. This is a rather unusual turn of events, as we have almost become accustomed to a stream of contradictory statements.

Looking to the future, markets are taking the words at face value, viewing the figures as a snapshot of the past. But in any case, Iran’s attacks on Fujairah have sparked fires and threaten to reduce global supply by a further 1.9 million bpd. Global oil reserves are rapidly dwindling. And the US has found itself in a better position to catch a tailwind, having become the world’s largest oil exporter, with around 6 million bpd, surpassing Saudi Arabia. In theory, the figure could reach 10 million bpd, but in practice, the ceiling is much lower, around 6–7 million bpd.

Russia has also benefited from the crisis in the Middle East. Its average crude oil flows over the past four weeks have jumped to their highest levels since December. Export revenue reached $2.42 billion for the week ending 3 May, the highest since February 2022.

Washington’s optimistic rhetoric and its reluctance to escalate tensions are allowing markets to view a peace agreement between the US and Iran as the base case scenario. A rapid resumption of shipping will lead to a short-term surge in supply from tankers stranded in the Strait of Hormuz, pushing down the price of Brent and WTI.

However, the depletion of global stocks and the time required to repair the damaged infrastructure in the Gulf states suggest that oil is unlikely to fall back to the levels seen at the end of February – below $72 for Brent and $67 for WTI – by the end of the year. Under this scenario, international trade risks losing more than 0.5 percentage points of growth. The World Trade Organisation’s March forecasts suggest a slowdown in growth from 4.6% in 2025 to 1.9% in 2026, with a partial recovery to 2.6% in 2027.

Markets

Trading is extremely headline-driven today. This week’s build-up led markets to really pursue positive headlines for the first time since the cease-fire deadline was extended mid-April. US President Trump’s downplaying of Iranian missile and drone attacks against the UAE and his rapid pause to “Project Freedom” (helping navigate vessels through Hormuz) led markets into believing that something was cooking. An Axios report suggesting that the US and Iran were closing in on a one-page memo to end the war ignited a risk rally which pushed European equity indices initially more than 3% higher. The EuroStoxx50 approached the mid-April high in the process. Brent crude prices sank from $109/b to $97/b with core bond yield curves bull steepening. The difference between the intraday top and bottom for the EU 2y swap rate amounted to 13 bps. The US dollar faced a setback with EUR/USD moving from 1.1725 to an intraday top just shy of 1.18. It soon turned out that markets were again running ahead of themselves. It started with Iran downplaying the “US media campaign” with the US plan containing ambitious, unrealistic proposals. A threat by US President Trump to start bombing the country again, and at a much higher level than before, unless they agree to (US) terms came next. An Iranian spokesmen for the National Security and Foreign Policy Commission responded almost immediately by suggesting that violence will be met by violence. US President Trump later told the NY Post that it was too soon to prepare for an Iranian peace signing. Finally, some Pakistani sources sounded again more optimistic suggesting that a draft agreement is in place. It would set a timetable for upcoming negotiation rounds and setting a timetable for ending all hostile activities, including reopening Hormuz to international navigation. Unlike a few hours earlier, markets decided not to chase these latest headlines. At the time of writing, Brent crude trades back at $103/b and EUR/USD at 1.1750. The EMU swap rate curve still bear flattens but with daily changes varying between -9 bps (2-yr) and -3 bps (30-yr).

In other news, there was a strong though slightly below consensus US ADP employment report for the month of April. US firms added 109k jobs which was the first 100k+ outcome since January 2025. The report also showed that workers who changed jobs saw a 6.6% Y/Y pay increase with wage growth for those who kept their jobs was 4.4%. Today’s report validates last week’s hawkish hold by the Fed, putting the focus back (solely) on inflation for now. US Treasuries still rallied on the Axios reports, but underperform Bunds and Gilts. Daily changes on the US curve range between -7 bps (5-yr) and -5 bps (30-yr).

News & Views

Swedish inflation surprised to the downside in April. A monthly -0.6% drop fully offsets March’s same-sized increase. Details are not available yet but it’s assumed that a VAT decline (6% from 12%) for food has outweighed rising energy prices in the headline print. The annual reading halved to 0.8% from 1.6% to hit a five year low. Excluding energy, core inflation fell 0.6% m/m to stagnate on a yearly basis for the first time in three decades and missing the 0.4% bar. The central bank in its March meeting had outlined a scenario in which higher energy prices and the pass-through to other segments could warrant rate hikes, even if that comes at the cost of the economy. Today’s inflation numbers allow the Riksbank to bide some time given the rapidly changing geopolitical environment. Market optimism towards a US-Iran deal is overshadowing the data release. While money market pricing for Riksbank hikes dropped dramatically to just 60% in 2026H2 (vs 1.5 hike priced in just yesterday), the constructive risk sentiment tempers any losses for the Swedish krone. EUR/SEK stabilizes around 10.83.

Czech April CPI surprised to the upside (0.5% m/m, 2.5% y/y), driven mainly by energy and fuels (+2.3% m/m) amid faster-than-expected pass-through from utility pricing. Core dynamics were more mixed: services inflation remains elevated (+/-5%), and firmer non-energy goods prices may signal emerging second-round effects from higher oil, offset in part by ongoing food deflation. KBC Economics expects inflation to hover around 2.5% in coming months before edging toward 3% by year-end and higher in early 2027. Risks are skewed to the upside however, with the monetary policy outlook hinging on whether price pressures broaden further beyond energy. The central bank meets tomorrow and is bound to keep the policy rate steady for now, particularly in the light of the recent Gulf developments. EUR/CZK drops to 24.34 amid a benign risk backdrop.

Daily Pivots: (S1) 157.35; (P) 157.63; (R1) 158.18; More...

Intraday bias in USD/JPY remains on the downside. Fall from 160.71 would continue to 61.8% projection of 160.71 to 155.48 from 157.92 at 154.68. Firm break there will target 100% projection at 152.69. That would be close to key 152.25 cluster support (38.2% retracement of 139.87 to 160.71 at 152.74). For now, risk will stay on the downside as long as 157.92 resistance holds, in case of recovery.

In the bigger picture, for now, corrective pattern from 161.94 (2024 high) is still seen as completed at 139.87. Rise from there is seen as resuming the long term up trend. So, break of 161.94 is expected at a later stage to resume the long term up trend. However, sustained break of 55 W EMA (now at 154.01) will dampen this view and bring deeper fall back towards 139.87 to extend the pattern from 161.94.

Daily Pivots: (S1) 0.7813; (P) 0.7832; (R1) 0.7851; More….

Intraday bias is back on the downside with breach of 0.7774 support, and fall from 0.8041 could be resumption. Firm break of 61.8% projection of 0.8041 to 0.7774 from 0.7923 at 0.7758 will target 100% projection at 0.7656. On the upside, above 0.7847 minor resistance will turn bias neutral again.

In the bigger picture, rebound from 0.7603 medium term bottom is seen as correcting the fall from 0.9200 only. Rejection by 55 W EMA (now at 0.8042) will affirm this bearish case, and setup down trend resumption to 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382 at a later stage. Though, sustained break of 55 W EMA will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high).

Daily Pivots: (S1) 1.3508; (P) 1.3544; (R1) 1.3574; More...

GBP/USD is still staying below 1.3657 despite today's rebound. Intraday bias is remains neutral for the moment. With 1.3453 support intact, further rise is expected. On the upside, above 1.3657 will target 61.8% projection of 1.3158 to 1.3598 from 1.3453 at 1.3725 first. Firm break there will target a retest on 1.3867 high. However, break of 1.3453 will turn bias back to the downside for 1.3158 support instead.

In the bigger picture, current development suggests that price actions from 1.3867 are merely a corrective pattern within the broader up trend from 1.0351 (2022 low). With 1.3008 support intact, medium term bullishness is maintained and break of 1.3867 is in favor for a later stage, towards 1.4248 key resistance (2021 high).

Daily Pivots: (S1) 1.1674; (P) 1.1695; (R1) 1.1713; More….

EUR/USD is still bounded below 1.1848 resistance despite today's rebound. Intraday bias remains neutral at this point. With 1.1642 support intact, rise from 1.1408 is expected to continue. On the upside, firm break of 1.1848 will target 1.2081 high next. However, firm break of 1.1662 support will indicate the the rebound from 1.1408 has completed, and bring deeper decline back towards this low instead.

In the bigger picture, the strong support from 38.2% retracement of 1.0176 to 1.2081 at 1.1353 suggests that the pullback from 1.2081 is more likely a corrective move. Strong support was also found in 55 W EMA (now at 1.1537). Focus is back on 1.2 key cluster resistance level. Decisive break there will carry long term bullish implications. Nevertheless, break of 1.1408 support will revive the case of medium term bearish trend reversal.

Geopolitics is once again dominating global markets today, with investors rapidly shifting between optimism over a potential US-Iran peace framework and fears of renewed escalation. Earlier in the session, risk appetite improved sharply after reports suggested Washington and Tehran were nearing a one-page, 14-point memorandum of understanding designed to end the war and establish a framework for broader nuclear negotiations.

The initial reaction was significant. Brent crude briefly broke below the psychologically important $100 level as traders aggressively unwound part of the geopolitical risk premium built during weeks of conflict around the Strait of Hormuz. Dollar also came under broad selling pressure, while Gold rebounded strongly. The move was reinforced after a Pakistan government official reportedly said that the prospect of a proposal to end the war was “very likely” in the coming days, while Iran’s foreign ministry confirmed it was “evaluating” the US proposal.

However, market optimism turned into caution after US President Donald Trump sharply raised the stakes later in the day. In a Truth Social post, Trump warned that Iran would face bombing “at a much higher level and intensity than it was before” if Tehran rejected the deal. He simultaneously stated that the war “will be at an end” if Iran accepts the proposals and allows the Strait of Hormuz to reopen “to all.” The rhetoric effectively transformed the market narrative from de-escalation into a binary geopolitical outcome: either a comprehensive peace deal or a renewed escalation cycle.

That shift explains why the earlier market optimism became more restrained as the session progressed. Oil prices recovered part of their losses, while broader risk sentiment turned more cautious. Markets generally dislike uncertainty more than negative outcomes themselves, and Trump’s comments highlighted how fragile the current diplomatic momentum still is.

One key concern is the internal political structure inside Iran. While diplomats and the foreign ministry may be evaluating the proposal, the Islamic Revolutionary Guard Corps still controls much of the military infrastructure surrounding Hormuz, including missile batteries and fast-attack naval units. It is being questioned whether Iran’s diplomatic leadership can actually enforce a ceasefire if elements within the IRGC oppose the proposed framework.

The issue is particularly sensitive because some factions inside Iran could view a broad 14-point agreement as a strategic surrender rather than a negotiated settlement. That creates a significant “veto risk,” where even meaningful diplomatic progress may not guarantee operational de-escalation on the ground.

Another uncertainty surrounds Israel’s position. Any durable US-Iran arrangement has required at least tacit Israeli acceptance. If Israel remains publicly skeptical or openly critical of the proposed framework, traders may quickly reduce confidence that the agreement can stabilize the region sustainably.

For now, markets are clearly trying to price both possibilities simultaneously. Dollar remains the weakest major currency on the day, followed by Loonie and Swiss Franc, while Kiwi, Yen, and Aussie are outperforming on improved risk appetite and falling oil prices. But beneath the surface, while optimism exists, confidence remains conditional.

In Europe, at the time of writing, FTSE is up 2.24%. DAX is up 2.16%. CAC is up 3.11%. UK 10-year yield is down -0.103 at 4.961. Germany 10-year yield is down -0.065 at 2.999. Earlier in Asia, Japan was on holiday. Hong Kong HSI rose 1.22%. China Shanghai SSE rose 1.17%. Singapore Strait Times rose 0.14%.

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Brent Breaks Below $100 as US and Iran Near Peace MOU to End War

Oil markets are rapidly unwinding the war premium. Brent crude has fallen below $100 after reports that the US and Iran are nearing a peace memorandum to end the conflict and reopen a path toward nuclear negotiations. The geopolitical reversal is now aligning with a major technical breakdown in crude prices. Read More.

Will $80K Become Bitcoin’s New Floor and Trigger Another ETF Buying Wave?

Bitcoin’s break above $80K may be more than a psychological milestone. The rally is now being reinforced by improving technical momentum, record equity markets, and the potential for a fresh wave of ETF inflows. If $80K turns into support, the next move toward $85K could come quickly. Read More.

US ADP Jobs Growth Accelerates to 109k as Hiring Strengthens at Small and Large Firms

US hiring rebounded strongly in April. ADP private payrolls jumped well above expectations, led by gains in services and small businesses, while wage growth continued to cool modestly. The data point to a labor market that remains resilient without showing signs of renewed overheating. Read More.

Eurozone PPI Surges 3.4% mom as Energy Costs Drive Sharp Producer Inflation

Europe’s energy shock is rapidly feeding into industrial inflation. Eurozone producer prices surged in March as energy costs jumped more than 11%, while broader price pressures continued spreading through supply chains. The data raise fresh concerns about inflation pass-through into consumer prices. Read More.

Eurozone PMI Falls Into Contraction as Energy Shock Hits Services Hard

The Eurozone recovery is losing momentum fast. Services activity collapsed in April as soaring energy prices and travel disruption hit consumer-facing sectors, while inflation pressures surged to their strongest in three years. The data deepen the ECB’s policy dilemma as growth weakens and stagflation risks rise. Read More.

UK PMI Services Climbs to 52.7 as Inflation Signals Strengthen

UK services activity recovered in April, but inflation pressures are building again. Higher fuel and transport costs pushed business expenses sharply higher, while firms increasingly passed those costs onto customers through fuel surcharges. The rebound in growth may prove fragile as geopolitical tensions continue weighing on confidence. Read More.

NZ Labor Data Gives RBNZ Room to Stay on Hold

New Zealand’s labor market is stabilizing—but not overheating. Unemployment unexpectedly fell in Q1, yet wage growth remained subdued and participation slipped slightly. The combination eases pressure on the RBNZ to react aggressively to rising energy-driven inflation risks. Read More.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1674; (P) 1.1695; (R1) 1.1713; More….

EUR/USD is still bounded below 1.1848 resistance despite today's rebound. Intraday bias remains neutral at this point. With 1.1642 support intact, rise from 1.1408 is expected to continue. On the upside, firm break of 1.1848 will target 1.2081 high next. However, firm break of 1.1662 support will indicate the the rebound from 1.1408 has completed, and bring deeper decline back towards this low instead.

In the bigger picture, the strong support from 38.2% retracement of 1.0176 to 1.2081 at 1.1353 suggests that the pullback from 1.2081 is more likely a corrective move. Strong support was also found in 55 W EMA (now at 1.1537). Focus is back on 1.2 key cluster resistance level. Decisive break there will carry long term bullish implications. Nevertheless, break of 1.1408 support will revive the case of medium term bearish trend reversal.

Australian dollar rose 1.2% against its US counterpart on Wednesday and hit the highest since June 2022.

The rally was sparked by the media report signaling that US-Iran war might be near the end that revived demand for riskier assets.

Today’s advance broke about two-week consolidation range (0.7222/27) as well as above upper 20-d Bollinger band (0.7247), on track to generate fresh bullish signal on close above these levels.

Bullish daily studies (the latest contribution was formation of 30/55DMA bull-cross) contribute to improved fundamentals and expected to further lift the price.

Fresh acceleration hit initial target at 0.7271 (Fibo 123.6% projection of the rally from 0.6833), with sustained break here to expose 0.7322 (Fibo 138.2% projection).

Broken range tops reverted to support which should ideally contain and guard ascending 10DMA (0.7176).

Res: 0.7300; 0.7322; 0.7365; 0.7406.
Sup: 0.7221; 0.7176; 0.7154; 0.7105.