A Cautious Start to May (05.04.2026)

Global financial markets opened May with currently being driven by a complex interplay of geopolitical tensions, monetary policy expectations, and evolving investor sentiment. 

The euro climbed back above $1.17 on firm ECB guidance and persistent inflation concerns. Sterling also pushed toward multi-month highs on a steady Bank of England stance, while the Japanese yen stabilized after suspected intervention. In commodities, gold held above $4,600 as geopolitical risks and central bank demand provided support, while silver advanced on signs of easing tensions in the Middle East. Despite this recovery in risk sentiment, energy-driven inflation and shifting rate expectations continue to shape market direction.

Euro Rebounds Above $1.17

The euro climbed past $1.17 in early May, bouncing back as markets weighed the ECB’s latest policy signals against surging energy costs. While interest rates remained unchanged, President Christine Lagarde noted a unanimous decision despite active debates regarding future hikes. Persistent inflation risks and hawkish warnings from officials have intensified expectations for upcoming tightening. Market pricing now anticipates several rate increases throughout 2026, with the initial move potentially arriving as soon as July to combat worsening price dynamics.

For EUR/USD, the initial resistance is seen at 1.1760, while the closest support is positioned at 1.1690.

Gold Holds Above $4,600

Gold prices stayed firm above $4,600 as markets weighed geopolitical tensions against potential diplomatic progress between the U.S. and Iran. Although high energy costs sustain inflation fears and hawkish central bank outlooks, the metal remains under its previous peaks. Strong support persists, however, due to steady central bank acquisitions throughout the first quarter, preventing a deeper slide in the asset.

First resistance is seen at $4650, with initial support near $4580.

Yen Stabilizes Following Intervention

The Japanese yen settled near 157 per dollar this Monday after last week’s sharp rally, largely fueled by suspected government intervention. Traders are staying alert for further official action, as Japanese authorities often step in during periods of extreme volatility. This recent recovery followed a drop past the critical 160 threshold. Despite these efforts, the yen faces ongoing pressure because of the wide interest rate gap between the United States and Japan, which continues to favor the dollar.

Initial resistance stands at 157.90, while the first support is located at 156.80.

Sterling Hits Multi-Month Highs

The British pound climbed to nearly $1.35, marking its strongest performance since mid-February. This rally followed the Bank of England’s decision to maintain interest rates at 3.75%, a move supported by a nearly unanimous vote. Governor Andrew Bailey characterized the stance as an "active hold," signaling that the committee remains vigilant regarding inflation. With surging oil prices creating fresh economic uncertainty, policymakers are closely tracking energy-driven costs, suggesting that the door remains open for future adjustments if price pressures fail to subside.

From a technical view, resistance stands near 1.3630, with support around 1.3540.

Silver Gains on Diplomatic Progress

Silver climbed above $75 this Monday, continuing a two-day rally as Middle East tensions showed signs of cooling. Sentiment improved after news that civilian vessels would be escorted through the Strait of Hormuz, potentially easing trade disruptions. Furthermore, Iran’s review of the latest U.S. diplomatic proposals has increased hopes for a peaceful resolution. While silver remains well below its conflict peaks due to its industrial nature, recent price stability indicates a market shift from defensive positioning toward a period of cautious optimism.

From a technical view, resistance stands near $76.70 while support is located around $73.80.