Global financial markets open Tuesday with mild optimism as earlier risk aversion linked to United States–Iran tensions eases, while traders stay cautious ahead of fresh signals and the next round of talks expected Thursday. U.S. Vice President JD Vance indicates meaningful progress in negotiations, noting a deal had come close before stalling, which improves sentiment even as uncertainty remains.
Diplomatic efforts in the Middle East support this improved tone. High-level United States–Iran discussions in Islamabad, facilitated by Pakistan and lasting over 20 hours, nearly produced a framework agreement before late disagreements halted progress. Despite no final deal, both sides are willing to continue talks. Reports from Associated Press (AP) and Reuters suggest negotiations could resume soon, with JD Vance maintaining that a broader agreement is still achievable.
Attention also extends to Israel–Lebanon tensions, where U.S. Secretary of State Marco Rubio is set to engage in preparatory talks involving Hezbollah. Allianz Trade’s head of economic research, Ana Boata, warns that if the conflict persists, recession risks could rise later in the year (the US fall season). Reflecting caution, U.S. Treasury Secretary Scott Bessent supports a “wait-and-see” stance from the Federal Reserve (Fed) on interest rates. Chicago Federal Reserve (Chicago Fed) President Austan Goolsbee views oil-related pressures as temporary, though this assessment is debated.
Recent U.S. data shows March existing home sales at 3.98 million compared to 4.06 million expected and 4.09 million previously, indicating softer housing activity.
The U.S. Dollar Index (DXY) falls to a six-week low after seven consecutive declines, helping EURUSD, GBPUSD, and USDJPY recover earlier losses. Gold prices move slightly higher, oil pauses, and Asia-Pacific equities edge up despite limited momentum as Wall Street closes positive. The Australian Dollar against the US Dollar (AUDUSD) weakens on soft data, while the New Zealand Dollar against the US Dollar (NZDUSD) and the US Dollar against the Canadian Dollar (USDCAD) strengthen against the Greenback. Cryptocurrencies Bitcoin (BTC) and Ethereum (ETH) retreat after strong gains in the previous session.
EURUSD rises to a six-week high early Tuesday, supported by U.S. Dollar weakness, optimism from Hungary’s election outcome, hawkish European Central Bank (ECB) signals, and slightly improved global market sentiment. ECB policymaker Boris Vujčić adds that energy prices remain close to baseline projections, helping ease concerns about the energy crisis.
GBPUSD climbs to its highest level since late February, marking a seventh straight daily gain, mainly driven by the weaker USD. That said, data from the British Retail Consortium (BRC) shows retail sales improving, with like-for-like sales up 3.1% year-on-year and total sales rising 3.6%, largely due to early Easter demand, although underlying consumer spending stays weak because of higher fuel costs.
USDJPY records its first daily decline in four sessions after pulling back from a one-week high, mainly pressured by overall U.S. Dollar weakness, hawkish signals from Japanese officials, and improving market sentiment ahead of key events.
Japan’s Finance Minister Satsuki Katayama confirms she will attend meetings of the Group of Seven (G7), Group of Twenty (G20), International Monetary Fund (IMF), and World Bank in Washington from April 15, with discussions centred on global financial conditions and energy trends, though no new policy signals were provided.
Despite broad U.S. Dollar weakness, AUDUSD moves lower, while NZDUSD extends gains, and USDCAD continues its decline. The AUDUSD drop is driven by mixed signals from Australia and China.
Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser maintains a hawkish stance, warning that inflation remains high and stagflation risks persist, indicating that further rate hikes may be needed to bring the Consumer Price Index (CPI) back to target.
Economic data reflects uneven conditions. Australia’s National Australia Bank (NAB) business confidence index falls sharply to -29 from 0, while business conditions remain steady at +6, weighing on the Australian Dollar (AUD) and New Zealand Dollar (NZD). China’s trade data shows exports rising 2.5% year-on-year versus 8.6% expected, while imports surge 27.8% compared to 11.2%, narrowing the trade surplus and signalling strong domestic demand but weaker external momentum.
In Canada, Prime Minister Mark Carney secures a parliamentary majority, strengthening his position during ongoing trade tensions with the United States. At the same time, Canada’s February building permits decline 8.4% against a 2.1% expected drop, following a previous increase of 4.8%.
Oil prices eased after an early-week upside gap as improving diplomatic hopes ease immediate supply risks around the Strait of Hormuz, although uncertainty persists due to Iran’s nuclear programme and ongoing sanctions.
U.S. Energy Secretary Chris Wright says oil prices may peak in the coming weeks as shipping activity through the Strait of Hormuz improves. The International Energy Agency (IEA) indicates it is ready to release more reserves if required, following a record 400-million-barrel release, including 172 million from the Strategic Petroleum Reserve (SPR). IEA Executive Director Fatih Birol confirms that further action remains possible if conditions worsen.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) reports output fell by 7.7 million barrels per day (mbpd) in March. OPEC+ production averages 35.06 mbpd, reflecting disruption linked to the Iran conflict, while demand forecasts for 2026 and 2027 remain largely unchanged, highlighting resilience despite rising prices.
Gold rebounds from early-week losses and posts mild gains, supported by cautious optimism and a weaker U.S. Dollar, with buyers testing resistance at the 50-day Exponential Moving Average (EMA) near $4,780.
Asia-Pacific equity markets show stabilising sentiment, with Japanese and South Korean stocks trading close to pre-conflict levels. The improvement follows gains in United States (U.S.) equities and a positive close for major U.S. indices. In the technology sector, Alphabet Inc. (Google, GOOGL) rises 0.24%, Microsoft Corporation (MSFT) advances 1.76%, and Oracle Corporation (ORCL) surges 7.25%, while Micron Technology (MU) falls 2.12%, highlighting continued weakness in semiconductors.
Meanwhile, Bitcoin (BTC) and Ethereum (ETH) edge lower with limited upside momentum, as the post-Monday rally cools amid a lack of fresh catalysts in the digital asset market.
Speeches from Reserve Bank of New Zealand (RBNZ), European Central Bank (ECB), and Bank of England (BoE) officials will join key United States (U.S.) data releases, including Producer Price Index (PPI), ADP Employment Change, and the NFIB Business Optimism Index, shaping Tuesday’s economic calendar. Market attention also remains on U.S.–Iran negotiations expected Thursday, along with global efforts to manage energy supply risks tied to the Strait of Hormuz.
The U.S. Dollar (USD) remains under pressure despite mixed sentiment, largely driven by weaker data. Any further deterioration in economic indicators could add downside pressure on the Greenback, although fears of a wider Iran conflict and potential supply shocks may limit additional USD losses.
If the USD weakens further, major currencies, cryptocurrencies, and commodities could see support. Gold may extend its recovery from earlier losses, while crude oil is likely to stay firm amid ongoing uncertainty linked to Iran, the Strait of Hormuz, and Lebanon tensions. At the same time, Bitcoin (BTC) and equities are expected to trade in a mixed range unless corporate earnings provide a stronger direction.
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