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2026-05-25 21:59:57
[US Dollar Declines, Oil Prices Fall Below $100, Hormuz Agreement Expectations Dominate Market Trends] ⑴ On Monday, international oil prices fell below $100 per barrel as the market hoped for an agreement to resume navigation in the Strait of Hormuz. The US dollar subsequently weakened against major currencies, despite both the US and Iran downplaying the possibility of a short-term agreement. Market liquidity was thin due to holidays in the US, UK, and many parts of Europe. ⑵ The US dollar fell 0.2% against the Japanese yen to 158.91, the euro rose 0.33% to 1.1641, the pound rose 0.55% to 1.3499, and the Australian and New Zealand dollars rose 0.58% and 0.5% respectively. The US dollar index fell approximately 0.3% to 98.969. ⑶ Strategists at the Commonwealth Bank of Australia pointed out that if a peace agreement is ultimately reached, the US dollar will weaken for a period, but "once the shock subsides," the dollar will strengthen again due to the better fundamentals of the US compared to other major currencies. (4) From a trading psychology perspective, the US stance was inconsistent over the weekend: on Saturday, it stated that the memorandum had been "basically agreed upon," while on Sunday, it stated that the blockade of Iranian ships would be "fully effective" until the agreement was signed. Pepperstone's research director stated that the market has become accustomed to patience regarding substantial breakthroughs, but generally believes the baseline scenario for an agreement remains solid. If Brent crude oil falls towards $90, a decline in short-term inflation expectations would revitalize risk assets. The market is currently focused on Tuesday's US ADP employment report and Thursday's Eurozone confidence survey.
