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AUD/USD is sitting on the edge of a cliff, and US inflation data may determine whether it falls.

Global markets have struggled to regain their footing after last week's selloff. Attempts to revive the AI trade have faded quickly, while concerns over persistent inflation and renewed US-Iran tensions continue to weigh on sentiment. The combination has created a fragile environment where investors are increasingly focused on one question: is inflation becoming a bigger problem again in the US?

Today's CPI report could provide the answer. Markets already expect headline inflation to jump from 3.8% to 4.2%, with core CPI rising from 2.8% to 2.9%. But the number that matters most may be 3%. If core inflation pushes above that threshold, investors could be forced to seriously consider the possibility that Fed would return tightening. Following last week's strong payrolls report, policymakers have little reason to worry about labor-market weakness. Inflation is now the main story.

That matters because the market's triple threat remains fully intact. AI valuation concerns continue to hang over equities. The Middle East conflict continues to threaten energy markets and inflation. And stronger inflation would reinforce higher-for-longer interest-rate expectations. Together, these forces create a difficult environment for risk-sensitive currencies.

Australian Dollar sits near the center of that storm. Traditionally, Aussie struggles when risk appetite deteriorates and Dollar strengthens. But the currency faces an additional challenge this time. Earlier this year, investors aggressively priced further RBA tightening as inflation remained stubbornly high. That narrative is now being reassessed.

The RBA has already delivered three consecutive rate hikes, taking the cash rate to 4.35%. Yet recent economic data have become noticeably softer. Employment indicators have weakened, consumer spending has lost momentum, and confidence measures remain subdued. While another hike later this year cannot be ruled out, the market is becoming increasingly skeptical that policymakers will need to do much more.

That shift is already visible. Major Australian banks including CBA and NAB now believe the tightening cycle is over, expecting rates to remain at 4.35% through the end of next year. This repricing has removed an important source of support for Aussie.

The problem is not that RBA has become dovish. Rather, markets previously expected far more tightening than now appears likely. As those expectations unwind, Australian Dollar has struggled to maintain upward momentum.

Technically, AUD/USD's fall from 0.7277 resumed after brief consolidations and intraday bias is back on the downside. Immediate focus is now on 100% projection of 0.7277 to 0.7076 from 0.7200 at 0.6999. Firm break there could prompt downside acceleration and target 161.8% projection at 0.6875, or even further to 0.6832 structural support before finding a bottom.

The market is already nervous. A hotter inflation reading could be the catalyst that turns caution into outright risk aversion—and AUD/USD into one of its clearest casualties.

Gold (XAU/USD) fell to 4,174 USD per troy ounce on Wednesday, reaching its lowest level since late March.

Pressure on the precious metal intensified following a new escalation of tensions in the Middle East. The US launched strikes against Iranian targets after reports that an American helicopter had been shot down. This latest development has once again raised doubts about the durability of the current truce and the prospects for a broader peace agreement.

Another key factor remains the situation surrounding the Strait of Hormuz. Ongoing disruptions to shipping through the region continue to constrain energy supplies and support elevated oil prices. These disruptions, in turn, are fuelling concerns that inflationary pressures across the global economy may persist for longer than expected.

Higher energy costs are prompting investors to reassess the monetary policy outlook for major central banks. Markets are increasingly pricing in a prolonged period of elevated interest rates and are no longer ruling out additional policy tightening if inflation remains stubbornly high.

Investor focus is now on upcoming US inflation data, which could provide important clues regarding the Federal Reserve’s next steps. The US dollar is also receiving support from strong labour market figures, which have reinforced expectations that the Fed could consider another interest rate increase before the end of the year.

As a result, the outlook for Gold (XAU/USD) remains broadly bearish.

Technical Analysis

On the H4 chart, XAU/USD is trading within a consolidation range around the 4,393 USD level before breaking lower and extending its decline to 4,175 USD. A corrective rebound towards 4,390 USD is possible in the near term, after which the market may resume its decline towards 4,238 USD, with scope for a further move to 4,088 USD.

The MACD indicator confirms the prevailing bearish momentum. Its signal line remains below the centre line and continues to point firmly downwards, although early signs of a potential reversal are emerging.

On the H1 chart, the market broke below the 4,270 USD level and moved lower towards 4,175 USD. A corrective recovery towards 4,329 USD, as a retest from below, is possible before another decline towards 4,088 USD. After that, a broader rebound towards 4,390 USD may develop.

The Stochastic oscillator supports this scenario. Its signal line remains below the 20 level but is beginning to turn upwards towards 80, indicating that a short-term corrective recovery may be gathering momentum.

Conclusion

Gold remains under significant pressure as geopolitical tensions, elevated energy prices, and expectations of prolonged restrictive monetary policy continue to support the US dollar. While technical indicators suggest a short-term corrective rebound, the broader outlook remains bearish unless market sentiment or inflation expectations change materially.

Hello traders. In this technical article we’re going to look at the Elliott Wave charts of  Bitcoin (BTCUSD)   published in members area of the website. As our members know, we have been calling for the decline in BTCUSD since last year. The crypto market has continued to trade lower as expected. The main target area has not been reached yet, and we believe further downside may be seen in the coming days.
In this discussion, we will break down the Elliott Wave forecast and present the target zone.

BTCUSD Elliott Wave 1  Hour  Chart 06.05.2026

The current view suggests Bitcoin is developing impulsive bearish sequences, with wave ((v)) of wave 3 (red) nearing completion.
As our members know, the typical target area for wave ((v)) is projected using the 1.236–1.618 inverse Fibonacci extension of wave ((iv)). In this case, that zone comes in at 60,555–55,992. From this area, we expect a corrective three-wave bounce before the downside trend resumes.

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Official trading strategy on How to trade 3, 7, or 11 swing and equal leg is explained in details in Educational Video, available for members viewing inside the membership area.

BTCUSD Elliott Wave 1  Hour  Chart 06.10.2026

Bitcoin found buyers in the 60,555–55,992 area and made a three-wave bounce as expected. The overall view remains unchanged, with only a minor adjustment in wave counting.
At this stage, we consider wave ((iv)) completed at 64,200. While price remains below that high, we expect further downside within wave ((v)).

We will use the same approach to project the wave ((v)) target zone, based on the 1.236–1.618 inverse Fibonacci extension of wave ((iv)), which comes in at 58,020–56,080.

Important note: Our analysis is not based on Elliott Wave in isolation. We perform detailed higher-time-frame cycle analysis, which shows an incomplete market structure. This is one of the key drivers of price action, along with correlation analysis and broader market context.

We also teach our members in live analysis sessions how to identify incomplete bullish and bearish sequences.  Even a  14-day trial,  is enough to noticeably improve your trading analysis and forecasting approach.

Keep in mind that market is dynamic and presented view could have changed in the mean time.  You can check most recent charts with target levels in the membership area of the site. Best instruments to trade are those having incomplete bullish or bearish swings sequences. We put them in Sequence Report and best among them are shown in the Live Trading Room

The euro is showing signs of a modest recovery following a sharp decline triggered by a strong US employment report and increased demand for safe-haven assets amid escalating geopolitical tensions in the Middle East. Robust Nonfarm Payrolls data confirmed the resilience of the US labour market, allowing the dollar to strengthen against most major peers and reinforcing expectations that the Federal Reserve will maintain a restrictive policy stance.

Investor attention today will be focused on the release of US inflation data. According to forecasts, annual consumer price growth may accelerate to 4.2% from 3.8% previously, while core inflation is expected to rise to 2.9% from 2.8%. Should the figures exceed expectations, markets may once again reassess the outlook for Federal Reserve rate cuts, providing additional support for the US dollar.

Another key event will be the Bank of Canada policy meeting. The central bank is widely expected to leave its benchmark interest rate unchanged at 2.25%, although market participants will be paying close attention to the accompanying statement and policymakers' comments regarding the future path of monetary policy. Any signals pointing towards further easing could weigh on the Canadian dollar and support gains in EUR/CAD.

EUR/USD

After breaking below the key support level at 1.1580 last week, EUR/USD buyers managed to push the pair back towards this area. Technical analysis suggests the pair may retest support near 1.1500. A break below this level followed by sustained trading underneath it could trigger a fresh bearish impulse, with initial downside targets in the 1.1400–1.1440 region. The bearish scenario would be invalidated by a decisive move back above 1.1580.

Key events for EUR/USD:

• Today at 12:30 (GMT+3): German 10-year government bond auction;
• Today at 15:30 (GMT+3): US Consumer Price Index (CPI);
• Tomorrow at 15:00 (GMT+3): Germany's seasonally unadjusted current account balance.

EUR/CAD

EUR/CAD is also undergoing a corrective recovery following its previous decline, although further direction will largely depend on the outcome of the Bank of Canada meeting and the market's reaction to US inflation data. Ahead of these releases, traders are likely to remain cautious, potentially encouraging consolidation around current levels.

Technical analysis points to range-bound trading within the 1.6030–1.6150 corridor. Price behaviour near these boundaries over the coming sessions may provide clearer signals regarding the pair's next directional move.

Key events for EUR/CAD:

• Today at 16:45 (GMT+3): Bank of Canada interest rate decision;
• Today at 17:30 (GMT+3): US crude oil inventories;
• Today at 17:30 (GMT+3): Bank of Canada press conference.

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Markets

Yesterday’s global market price action lacked a clear, unique narrative resulting in erratic-like trading throughout the session. Headlines on the conflict in the Middle-East/Iran again were far from consistent. President Trump announcing an end to (escalating) hostilities between Israel and Iran and hinting at a deal over the next days initially eased tensions. However, later in US dealings, headlines on the US responding to a reported Iran attack on a US helicopter once again illustrated the fragility of the ceasefire and persistent nervousness (and probably) mutual distrust on the way to a deal. This, together with lingering tech/AI uncertainty weighed on US equities. US indices closed mixed (Dow +0.17%, Nasdaq -0.97%) admittedly off the intraday lows, but the picture still looks fragile. (Nasdaq struggling not the fall below the 25.700 support area.) Interestingly, the headlines again had only limited impact on the oil price (Brent close near $91.5 p/b). In this context, the tentative risk-off also had no negative impact on bond markets. US yields even eased between 4.6 bps (5- & 10-y) and 3.9 bps (30-y). A $58 bln 3-y Treasury auction was ok, but with limited impact on the daily market dynamics. US eco data mostly were second tier (weak NFIB small business confidence), but with only limited impact on yield markets as they looked forward to today’s US CPI data. German yields in a similar move declined between 3.8 bps (2-y) and 0.2 bps (30-y). A mixed story for the dollar as well. After setting an intra-day low early in US dealings, the headlines on the helicopter incident and building risk-off reverted intraday USD-losses. DXY closed marginally lower in a daily perspective near 99.9. EUR/USD gained marginally, but off the intraday highs (close 1.1543). The yen struggles with USD/JPY holding a tight range north of USD/JPY 160.

Major Asian equity indices (Japan, China, Japan and South Korea) mostly trade in negative territory, but there are exceptions (Australia, India,…). US yields gain 1-2 bps. The dollar also eases slightly (DXY 99.9, EUR/USD 1.155). Aside from (often noisy) headlines on the developments in the Iran conflict, the market focus is on US May CPI inflation data. Consensus sees headline inflation at 0.5% M/M and 4.2 Y/Y and core at 0.3% M/M and 2.9% Y/Y, in line with our KBC model nowcast. A combination of last week’s strong US activity data and inflation moving even further away from the Fed inflation target probably will keep the debate on Fed tightening alive. In this context, a big negative surprise is probably needed to backtrack on the rise in US yields. In theory, this also should favour the dollar, especially if it would coincide with a more fragile risk sentiment (US triggering a global tightening of financial conditions?) Later today, a $39 bln 10-y US Treasury auction will be an interesting pointer for investor appetite for US bond with longer maturities.

News & Views

Chinese inflation came in below expectations in May with headline price pressures matching April’s 1.2% instead of accelerating to 1.3%. A core gauge decelerated to 1.1% from 1.2%. It marks a stark contrast with rising producer price inflation. May PPI shot up from 2.8% to 3.9%, the quickest since July 2022. Details showed intensifying pressures in mining, raw materials and manufacturing (i.e. the early stages of the supply chain), revealing the impact coming from the Iran war. But weak domestic demand is preventing companies from pass-through to the end-consumer, resulting in a muted CPI print. The latter was also heavily supported by gasoline prices (up 23.5% y/y) and travel prices (4.3%). Bloomberg calculated that without those, May CPI would have risen by just 0.5%. Food prices fell 1.7% and services inflation eased from 0.9% to 0.8%.

The Energy Information Administration (EIA) is projecting further record in US power consumption in 2026 and 2027 after already hitting its second straight annual record high in 2025. The surge is in large part driven by data centers dedicated to AI and cryptocurrency, the agency said. The EIA expects that the electricity demand increase in the commercial sector will cause it to outpace residential demand in 2026 in what would be the first time ever. The EIA also said that the share of power generation from coal will slide from 17% last year to 16% and 15% in 2026 and 2027. Natural gas’ share is expected to hold at 40% in 2026-2027, the same as in 2025. Renewable energy generation meanwhile will rise from 24% last year to 27% in 2027. Nuclear power fills the remaining gap (18%).

US PCE inflation has outstripped CPI inflation in recent months (in contrast to historical trends). This was especially the case for core inflation. The divergence is caused by important weight differences between PCE and CPI inflation. As CPI measures price changes directly paid for by consumers, housing and vehicle prices have a higher weight in CPI inflation. In contrast to CPI inflation, PCE inflation is broader and measures price changes of goods and services consumed (though not necessarily directly paid) by consumers. Items such as medical care services, financial services and software thus have higher weights. Especially the latter has seen high price rises in recent months. Looking ahead, core CPI & PCE inflation could continue to diverge as rent inflation is expected to moderate while software prices could accelerate further.

How high is US inflation? The answer to this question depends on who you ask. Consumers and market participants will typically refer to CPI inflation figures. This inflation gauge is used for inflation-linked contracts and for cost-of-living adjustment to reprice a.o. wages and social security adjustments. In contrast, policy makers, in particular the Federal Reserve, look at PCE inflation. To fulfill one part of its dual mandate, i.e. the price stability mandate, the Fed aims for PCE inflation to be around 2% over the longer run.

Methodological differences

There are important methodological differences between PCE and CPI inflation. CPI inflation measures average changes in prices directly paid by urban consumers. In contrast, PCE inflation measures price changes of goods and services consumed (though not necessarily directly paid) by consumers (both urban and rural ones). That is an important difference and results in important weight differences between PCE and CPI. Healthcare, which is often paid for by employers or by the government, has a much higher weight in PCE than CPI (see figure 1). The same is true for financial services, where CPI only includes out-of-pocket fees and commissions, while PCE also includes imputed costs for financial intermediation. Software also has a higher weight in the PCE, as many software subscriptions used by consumers are paid for by employers (e.g. Microsoft 365 subscriptions). In contrast, in the CPI index, goods and services that are directly paid for by consumers (e.g. rent and automobiles) carry a higher weight.

It is also important to note that the CPI calculations are mostly based on household surveys and retail price sampling (i.e. the Consumer Expenditure Survey), while the PCE relies more on business surveys and administrative data. This causes some underweights in the CPI basket as consumers frequently underestimate what they pay for certain items (e.g. software subscriptions).

Another important methodological difference is that CPI weights are only adjusted annually, while PCE weights are adjusted dynamically (based on consumer spending data) and thus change at every release. When the price of an item rises fast, customers tend to spend less on it, which lowers its weight in their spending basket. Given its dynamic weight adjustments, the PCE better captures this effect.

Partly because of this reason, PCE inflation tends to be lower than CPI inflation historically (see figure 2). Another reason is the rapid rise in housing costs, which far outstripped overall inflation in recent decades.

PCE outstripped CPI recently

Yet more recently, PCE inflation outstripped CPI inflation (see figure 3). In February, PCE inflation was 0.46 percentage point higher than CPI inflation. That gap disappeared in the next two months as both CPI & PCE inflation reached 3.8% in April. However, core PCE (at 3.3%) remained far higher than core CPI (at 2.7%). Indeed, the main reason why headline CPI caught up with headline PCE inflation was the sharp rise in energy inflation (which has a higher weight in CPI inflation).

So why is core PCE so much higher? The explanation again lies in weight differences. Some components with higher weight in PCE have accelerated recently. Software prices in particular have accelerated significantly, because of the current AI boom. In contrast, vehicle prices and rent (whose CPI weight is higher) have decelerated in recent years (see figure 4).

Will the divergence last?

Whether PCE inflation continues to outstrip CPI inflation is highly dependent on the war in Iran. Were the conflict to end soon (as indicated by oil futures), we can expect energy prices to drop. This would push CPI inflation down faster than PCE inflation. A longer closure of the Strait would have the opposite effect.

For core inflation, we can expect the divergence to last in the coming months. The AI boom seems to continue unabated, pushing up prices for IT-related items. Meanwhile, shelter inflation (by far the largest CPI component) is likely to moderate further in the months ahead as indicated by market rents. Higher vehicle prices (as indicated by forward-looking indicators) could provide some compensation, but are unlikely to close the gap.

In focus today

Focus today will be on inflation releases from the US, Norway and Denmark. These figures will set the tone ahead of the ECB monetary policy meeting tomorrow, as well as the Norges Bank and Fed decisions next week.

In the US, we forecast headline inflation at 0.6% m/m SA (4.3% y/y), slightly above consensus, and core at 0.3% m/m SA (2.9% y/y), in line with consensus. After the recent repricing higher in Treasury yields on the back of strong labour market data, an upside surprise could further strengthen the case for a Fed tightening bias.

In Norway, we expect core inflation to rise moderately to 3.3% y/y in May (April: 3.2%, cons.: 3.2%), in line with the Norges Bank's March MPR-estimate. If our forecast is correct, it should be completely neutral for the market expectations. In light of Norges Bank's determination to bring down inflation and inflation expectations, we must assume that the threshold for reacting to upside surprises is much lower than on the downside.

In Denmark, we expect an increase in May inflation figures to 1.9% y/y from 1.4% y/y in April, driven mainly by higher electricity prices and normalisation of summer house inflation. We will watch food prices closely after what appears to have been an extensive retail price war in May, and we have pencilled in flat food prices in a month that usually sees increases.

In Sweden, several interesting data points are released at 08:00 CET today. The April GDP indicator follows a strong March (+1.9% m/m), after weak January and February prints (-0.4% and -0.6% m/m). Household consumption is particularly important given key role households are expected to play in the Swedish recovery. Based on the historical relationship with retail sales, household consumption is expected to have increased in April. We also receive industrial order data but, given recent volatility, we place greater weight on the PVI production data also published today.

In line with consensus and market pricing, we expect Bank of Canada to leave policy rates unchanged at the interim monetary policy decision today. We expect a relatively neutral, wait-and-see stance amid the central bank facing continued uncertainty with regard to US-trade relations and the war in Iran at a point in time when domestic releases have painted a mildly disinflationary picture for the domestic economy.

Economic and market news

What happened overnight

In China, PPI increased 3.9% y/y in May (cons.: 3.8% y/y, April: 2.8%), marking a third consecutive monthly increase to its highest level since July 2022. The increase in PPI underline that China is becoming an inflationary force after three years of exporting deflation. CPI came in at 1.2% y/y (cons.: 1.3%, April: 1.2%), driven by rising gasoline and services prices. Food prices continued to drag, falling 1.7% y/y.

In the Israel-Iran war, Iran's Revolutionary Guards struck a US base in Jordan and 21 other Gulf targets in retaliation for US attacks near the Strait of Hormuz, which were themselves triggered by the alleged downing of a US helicopter. The escalation raises serious doubts over a peace deal and keep energy markets on edge.

What happened yesterday

In oil space, Brent crude briefly went below USD 90/bbl yesterday as US energy secretary Wright signalled that traffic through the strait of Hormuz was increasing. Oil prices later retraced to about USD 92/bbl and remain around this level this morning.

In Denmark, April foreign trade data showed total exports of goods and services rising 0.4% m/m SA (March: 8.6%), driven primarily by higher services exports. Imports fell slightly by 0.4% m/m SA (March: 4.0%), reflecting a drop in goods imports. Additionally, industrial production declined 1.1% in May, a sharp reversal from the revised 8.3% increase in April. Industrial production remains one of the more reliable indicators for GDP growth in Denmark.

In the US, the NFIB small business optimism index for May slipped to 95.3 (April: 95.9), the lowest level in more than a year. Firms reported rising uncertainty, with job openings and hiring plans falling notably to their lowest levels in six years.

Equities: Major equity indices were dragged lower yesterday, led by tech, which have had a rough spell since Friday down about 7%, despite the slight rebound on Monday. Global equities finished down 0.2%, having been almost 1.8% lower earlier in the day, in a significant roller-coaster session. Tech was the primary source of weakness, joined only by the energy sector, which was weighed down by lower oil prices. Asian markets traded lower overnight, with South Korea among the weakest performers. US equity futures are also pointing lower this morning.

FI and FX: Risk sentiment takes a hit as US and Iran conducts tit-for-tat escalation over the last 24 hours. Despite this, EUR/USD sits steady in the mid-1.15's and Brent crude edges closer to USD90/bbl. This morning brings interesting data releases out of both Norway and Sweden, with potential implications for the Scandi currencies. But the hottest release of the day is the US CPI, where we expect a slightly above-consensus print. Together with potential further escalation in the Middle East, this will likely set the today.

Silver (XAGUSD) is approaching a decisive test as price nears the March 23, 2026 low at $61.02. A break beneath this level could trigger a deeper decline, potentially extending toward the 100% measured move from the January 29, 2026 all‑time high. If the sequence unfolds without truncation, the projected target may reach as low as $38.70.

The decline from the March 2, 2026 high is developing as a double three corrective pattern. Wave ((W)) concluded at $61.02, while wave ((X)) terminated at $89.37. The subsequent wave ((Y)) is unfolding as another double three of lesser degree. From the peak of wave ((X)), wave A ended at $73.81, followed by a rally in wave B that reached $77.51. The market is now extending lower in wave C of (W), which is forming as a five‑wave impulse.

On the hourly chart, wave ((i)) of C ended at $71.75, while wave ((ii)) retraced higher to $77. Wave ((iii)) then drove price down to $66.13, and wave ((iv)) is proposed complete at $69.02. Near term, while price remains below $76.96, rallies are expected to fail in either three or seven swings. This structure suggests that silver retains considerable downside risk, with corrective rallies offering limited relief before the metal resumes lower.

Spot Silver (XAGUSD) 60-Minute Elliott Wave Chart

XAGUSD Elliott Wave Video:

https://www.youtube.com/watch?v=x6QIrOp6aBk

Key takeaways

• Technology stocks remain under pressure as the AI trade undergoes a valuation reset. Semiconductor shares led another volatile session, with investors rotating capital away from existing tech winners amid concerns over stretched valuations and a growing pipeline of mega-sized IPOs, including SpaceX and OpenAI.
• Geopolitical uncertainty continues to drive market sentiment. Renewed US-Iran tensions following President Trump’s comments reinforced concerns over energy security and global supply chains, keeping investors highly sensitive to geopolitical headlines.
• Central banks are increasingly focused on financial stability and currency defence. Bank Indonesia’s surprise rate hike and reports of a potential Bank of Japan taper pause highlight policymakers’ growing willingness to intervene amid mounting pressure on currencies and sovereign bond markets.
• Chart of the day: Gold (XAU/USD) looking to extend further potential losses below $4,100 with key short-term resistance at $4,268/285.

Chart of the day - Gold (XAU/USD) eyeing a bearish breakdown below $4,100

Fig. 1: Gold (XAU/USD) minor trend as of 10 Jun 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.

Gold (XAU/USD) has extended its losses by 2% in today’s Asia session to trade at an intraday level of $4,174, just a whisker away from the 23 March 2026 medium-term swing low of $4,100. Given that the price action of gold (XAU/USD) is firmly entrenched below the 20-day, 50-day, and 200-day moving averages, its medium-term downtrend from the 29 January 2026 all-time high remains intact (see Fig. 1).

Watch the $4,268/285 key short-term pivotal resistance to hold, as it maintains the ongoing minor bearish impulsive down move sequence, exposing the next intermediate supports at $4,187/167 and $4,100. Breaking below $4,100 may see a further deceleration towards $4,032 next in the first step.

However, a clearance with an hourly close above $4,285 negates the bearish tone, opening the door for another minor corrective rebound to retest the next intermediate resistance at $4,373/394 in the first instance.

Top macro headlines

• Global tech rout intensifies as chipmakers tumble 9%: A heavy wave of selling battered technology sectors worldwide on Tuesday. The semiconductor gauge (SOX), which had initially attempted a fragile bounce, fell 9% intraday before trimming losses to 1.9% at the close on Tuesday, dragging the Nasdaq 100 down 1.1% and erasing prior efforts to scale back toward recent peaks.
• US-Iran friction spikes over helicopter strike: Hopes for a quick resolution to Middle East geopolitical conflicts faded after U.S. President Donald Trump publicly declared that the United States must actively respond to an Iranian attack on an American helicopter. The comments triggered immediate volatility across commodities and energy equities.
• Mega-cap tech IPO pipeline crowds public liquidity: Capital desks note that extreme equity volatility is being exacerbated by a massive pipeline of new tech listings. Following news that SpaceX’s landmark initial public offering is drawing extensive institutional oversubscription, OpenAI has formally filed a confidential U.S. IPO registration, aiming to chase rivals Anthropic and SpaceX toward historic multi-billion- and trillion-dollar public valuations.
• Bank of Indonesia taps emergency controls via surprise hike: In regional foreign exchange management, Bank Indonesia delivered an unannounced, surprise interest rate hike early Tuesday. The emergency monetary intervention successfully arrested a historic slide in the Indonesian Rupiah, triggering a strong short-covering bounce. The IDR extended its gains in today’s Asia session by 0.8% to trade at 17,990 per US dollar.
• Bank of Japan reportedly mulls taper pause: Fixed-income desks reacted aggressively to circulating reports that the Bank of Japan is actively considering a temporary pause or deceleration of its previously signalled bond-buying taper. The news triggered an immediate localised rally in Japanese Government Bonds (JGBs), the 10-year JGB yield dipped by 3 bps on Tuesday to close at 2.68%, still holding above its 50-day moving average at around 2.55%.

Key macro themes

• The great funding drainage and valuation recalibration: The intensifying rotation out of richly priced technology names is evolving beyond a simple narrative shift. Institutional desks are increasingly highlighting a fundamental funding dilemma across global equities. With SpaceX seeking a massive $75 billion capital raise, Anthropic progressing through its listing path, and OpenAI targeting a public valuation of up to $1 trillion, large institutional allocators are being forced to trim existing liquid technology winners to make way for these massive generational private-market entries. This liquidity drain is actively structuring a ceiling on near-term public tech momentum.
• Geopolitical spillover into supply chain assets: Global markets continue to trade within a hyper-reactive geopolitical premium structure. While temporary halts in direct Israel-Iran strikes initially gave risk assets a brief window to capture a "dip-buying" bounce early in the Asian session, the subsequent U.S. rhetoric surrounding direct Iranian operations quickly reinforced the fragile baseline of global energy networks and shipping routes. The resulting cross-asset landscape remains structurally pinned to headlines, preventing standard macroeconomic or corporate fundamentals from asserting sustained price authority.
• Central banks locked in maximum-smoothing interventions: Emerging and developed monetary authorities across the Asia-Pacific region are navigating severe ceilings on currency depreciation. The surprise interest rate action out of Jakarta and the tactical JGB policy floating from Tokyo demonstrate that regional policymakers have reached structural boundaries where the absolute defence of financial stability supersedes long-term tightening blueprints. This interventionist posture is keeping sovereign yield curves highly compressed and prone to violent intraday gaps.

Global markets impact (last 24 hours)

Equities: The S&P 500 closed down 0.3%, while the tech-concentrated Nasdaq 100 plunged 1.1% as semiconductor giants lost 1.9%. The Dow Jones Industrial Average finished slightly higher, with a meagre 0.2% gain on Tuesday, insulated by a deep institutional rotation into defensive, value-oriented blue chips. In today’s Asia session, the S&P 500 and Nasdaq 100 E-mini futures extended their losses by 0.3% and 0.4%.

Fixed Income: U.S. sovereign debt caught a mild haven bid on the back of Trump’s Middle East remarks, pushing the benchmark 10-year Treasury yield down 5 bps to 4.52%, still above its 20-day moving average at 4.52%, ahead of today’s highly watched US CPI release.

FX: The US Dollar Index finished little changed. The euro remained stable at $1.1544, while the British pound climbed 0.3% to finish at $1.3379. The Japanese yen grinded lower by 0.1% towards the prior intervention zone, closing at 160.36 per US dollar. The risk-sensitive Aussie continued its descent by 0.3% to hit a 2-month low of 0.7028 against the greenback.

Commodities: WTI crude oil slumped 2.8% to close at $88.71/bbl, paring its sharpest intraday drop late in the session amid geopolitical updates. Safe-haven liquidation hit precious metals, pushing spot gold down 1.6% to settle at $4,260/oz.

Asia Pacific impact

• Equity rebound thwarted by US tech contagion: While Asian indices like Japan's Nikkei 225 bounced 2.2% on Tuesday, overnight weakness in US technology stocks triggered a negative feedback loop into Asian bourses today. Almost a sea of red at the start of today’s Asia session; Nikkei 225 (-1.9%), KOSPI (-5.1%), Hang Seng Index (-1.1%), China A50 (-0.3%), CSI 300 (-1%), and STI (-1%), while Australia’s ASX 200 managed to buck the trend with a minor gain of 0.1%.
• Indonesian rupiah rebounds on shock rate action: The Indonesian Rupiah emerged as a top regional outperformer, rallying sharply against the U.S. dollar after Bank Indonesia executed a surprise, emergency rate hike to defend its capital account against persistent capital flight and ongoing emerging market macro pressures.
• JGBs catch a wave of re-buying capital: Japanese Government Bonds rallied aggressively, driving domestic yields lower following formal reports indicating that the Bank of Japan is actively leaning toward a pause in its sovereign bond-purchase tapering program to stave off broader debt network illiquidity.

Top 5 events to watch today

1. US Core Inflation Rate (May) - 8:30 pm SGT (consensus: 2.9% y/y Apr: 2.8% y/y) Impact: All asset classes
2. BoC Interest Rate Decision - 9:45 pm SGT (consensus: 2.25%/unchanged) Impact: USD/CAD, CAD crosses
3. EIA Weekly Crude Oil Inventories Report -10.30 pm SGT Impact: WTI and Brent crude
4. SpaceX Pre-IPO Bookbuilding Adjustments Impact: US stock indices
5. US-Iran developments over peace deal negotiations Impact: All asset classes

Gold's selloff accelerated again as fresh headlines from the Middle East suggest the US and Iran are moving further away from a peace deal rather than closer to one. With the Strait of Hormuz still constrained and energy markets facing prolonged disruption, investors continue to focus on the inflation fallout. Persistent fears of higher-for-longer interest rates have pushed Gold toward the critical $4,000 support zone. It is now make-or-break time for the metal.

The United States launched targeted airstrikes against Iran after the downing of a US Army Apache helicopter over the Strait of Hormuz, marking a significant escalation in the conflict and further reducing the likelihood of a near-term US-Iran agreement. Yet oil prices have remained surprisingly contained, with Brent holding around the $92-$93 area rather than surging back toward $100. Oil, markets appear to be treating the situation as an extension of an existing "status quo" rather than the start of a new crisis.

What investors have not accepted is the inflation fallout. Every additional week of disruption keeps energy prices elevated and reinforces expectations that central banks will need to maintain restrictive policy settings for longer. That is the force driving Gold lower. The market focused on what the conflict means for inflation, interest rates and yields.

The technical damage has been substantial. Gold has already reached 100% projection of 4,773.50 to 4,366.22 from 4,595.14 at 4,187.86 on downward acceleration. With 4,366.22 now firmly acting as resistance, sellers remain in control and the next downside target stands at 161.8% projection at 3,936.16 . Momentum suggests that a test of the key $4,000 area is no longer a question of if, but when.

That is where the story becomes interesting. The area around $4,000 is not just another psychological level. It is one of the most heavily reinforced support zones on the chart. The March low sits at 4,098.45. There is 38.2% retracement of 1,614.60 (2022 low) to 5,598.38 at 4,076.57. Structural support comes in at 3,997.73. Together, they form a cluster that is likely to attract intense attention from both buyers and sellers.

The critical question is whether the current macro environment is strong enough to force a sustained break lower. While markets are increasingly pricing tightening from ECB and potentially Fed, the broader economy is showing signs of slowing. This is not a replay of 2022 when central banks were forced into an aggressive inflation-fighting campaign. It is a stagflationary environment where policymakers have limited room to keep raising rates before growth begins to buckle.

Unless the global economy is heading into a much more aggressive tightening cycle than currently anticipated, $4,000 should ultimately hold as the floor of this correction.

If $4,000 fails decisively, however, the narrative changes completely. The market would no longer be debating how deep the correction becomes. It would be debating whether the entire uptrend from the 2022 lows is undergoing a major reversal, with 50% retracement of 1,614.60 to 5,598.38 at 3,606.49 emerging as the next major downside objective.