A dramatic escalation of geopolitical tensions in the Middle East puts bond investors in a dilemma. In normal circumstances, investors would rush into US Treasuries, pushing prices higher and yields lower, in a classic flight to safety. Not this time.
EUR/USD extends its slide after closing deep in negative territory on Monday and closes in on 1.1600. The risk-averse market atmosphere could make it difficult for the pair to stage a rebound, despite technically oversold conditions.
The EUR/USD exchange rate tumbled this week as the US dollar rose amid the ongoing crisis in the Middle East. It also retreated as concerns about the European economy rose.
The AUD/USD pair remained in a narrow range this week as the war in the Middle East. It was trading at 0.7077 on Tuesday, down slightly from the year-to-date high of 0.7147. Focus will remain on the new developments in the Middle East, upcoming US jobs data, and Australian GDP report.
Gold is finding renewed bids in Asian trades on Tuesday, making another attempt to regain the $5,400 level amid persistent demand for safe-haven assets as the Iran war extends.
The short-term outlook for EUR/USD has been consistently deteriorating since the rejection from yearly peaks near the 1.2100 hurdle recorded in late January. The continuation of ongogin leg lower threatens to breach below its critical 200-day SMA in the 1.1660 region.