Dollar Steadies Amid Diplomacy Hopes (03.05.2026)

The dollar index stabilized near 98.8 Thursday as a reported U.S. submarine sinking of an Iranian warship near Sri Lanka and the sixth day of the U.S.–Israeli campaign fueled fears of a prolonged, inflationary conflict.

Markets stabilized as tentative signs of diplomatic outreach in the Middle East softened the U.S. dollar and supported global assets. The euro rebounded toward $1.165 after reports that Iran may be open to peace discussions, while the Japanese yen strengthened as inflation fears eased alongside the weaker dollar.

Precious metals continued to attract demand, with gold extending its recovery above $5,170 and silver approaching $85 amid ongoing geopolitical uncertainty and naval clashes in the region. Sterling also regained ground from recent lows as investors reassessed the potential economic impact of prolonged energy disruptions and central bank policy responses.

Euro Recovers Toward $1.165

The euro climbed to approximately $1.165, reclaiming some early-week losses as the U.S. dollar softened following reports that Iran might be open to discussing peace terms. The New York Times noted that Iranian intelligence officials indirectly reached out to the CIA shortly after recent strikes began, though Israeli officials reportedly suggested Washington ignore the overture. Despite this bounce, the euro stays near six-week lows as Middle East instability and high energy costs persist. February data confirmed sticky inflation at 1.9% and core inflation at 2.4%, both exceeding market forecasts.

For EUR/USD, the initial resistance is seen at 1.1670, while the closest support is positioned at 1.1580.

Yen Strengthens Past 157

The Japanese yen appreciated beyond 157 per dollar on Thursday, extending gains as the U.S. dollar retreated on hopes of cooling Middle East tensions. Although the conflict has entered its sixth day, market anxiety regarding inflation has moderated. This shift follows the Trump administration's assurances regarding the safety of commercial shipping in the Gulf. The combination of easing price pressures and a softer Dollar has provided a much-needed lift for the yen.

Technically, resistance stands near 157.60, while support is firm at 156.40.

Gold Hits $5,170 as Tensions Grow

Gold prices rose to approximately $5,170 per ounce on Thursday, extending a recovery as investors sought safety amid a widening Middle East conflict. Now in its sixth day, the war saw U.S. and Israeli forces launch heavy strikes across Iran, while Tehran targeted regional energy facilities. The naval incident that President Trump and defense officials cited as a major blow to Iranian naval capabilities has played a big role in gold’s price.

Gold sees support near $5230, while resistance is around $5080.

Pound Recovers Toward $1.338

The British pound climbed to approximately $1.338, reclaiming ground after touching three-month lows earlier this week. This recovery follows a softening U.S. dollar, spurred by reports that Iran may be open to discussing an end to the conflict. Israeli officials have reportedly urged Washington to remain cautious. Meanwhile, investors continue to assess how elevated energy costs might steer the Bank of England toward a more hawkish policy path.

From a technical view, support stands near 1.3280, with resistance around 1.3450.

Silver Nears $85 Amid Naval Conflict

Silver prices approached $85 per ounce on Thursday, securing a second day of gains as geopolitical unrest and a weaker dollar fueled metal demand. The U.S.-Israeli campaign against Iran, now in its sixth day, remains a major market concern. Heightened volatility followed reports of the naval incident. Silver remains supported by the broader uncertainty surrounding the conflict’s duration.

From a technical view, resistance stands near $86.80 while support is located around $81.50.