Week’s Optimism Starts to Fade (05.28.2026)

Recent military developments in Iran weakened confidence in a near-term diplomatic breakthrough.

Precious metals and currencies reacted differently to the changing outlook, with gold and silver extending their declines while the euro and pound lost momentum against the US dollar.

Inflation concerns remained tied closely to energy markets and the future of the Strait of Hormuz. ECB officials maintained a firm stance on interest rates despite ongoing negotiations, reinforcing expectations that borrowing costs could stay restrictive for longer.

The yen weakened toward levels previously associated with official intervention, while attention turned to possible evidence of large-scale support operations by Tokyo authorities.

Euro Rally Hits a Speed Bump

The euro fell 0.3% to around 1.1590 against the US dollar during Thursday’s Asian session as investors adjusted expectations for future ECB policy moves. Markets now wait for the ECB deposit rate to rise to 2.6% by December, slightly above the current 2% level but below last week’s 2.75% outlook, while pricing in an 80% probability of a rate hike next month.

ECB official Isabel Schnabel also stated that the central bank should proceed with a June rate increase even if a peace agreement is reached, citing the lasting impact of high energy prices.

For EUR/USD, the initial resistance is seen at 1.1630, while the closest support is positioned at 1.1540.

Gold Cracks Below a Major Level

Bullion prices extended their decline, falling under the $4,400 level as fresh military developments in Iran reduced optimism surrounding a potential diplomatic agreement.

Persistent disagreements over Tehran’s nuclear program and its demands to maintain influence over the Strait of Hormuz continued to support inflation fears and expectations of tighter monetary policy.

First resistance is seen at $4450, with initial support near $4340.

Tokyo Watches the 160 Line Again

The Japanese yen weakened to around 159.5 against the US dollar, falling to its lowest level in four weeks and moving closer to the 160 threshold that reportedly triggered intervention by Japanese authorities last month.

Attention has shifted to upcoming finance ministry data that could confirm currency market intervention, with some analysts estimating Tokyo may have spent as much as 10 trillion yen to support the yen.

Initial resistance stands at 159.50, while the first support is located at 158.20.

Sterling Moves into Consolidation

The British pound held near $1.344 as optimism over a potential US-Iran peace agreement continued to provide support despite recent military strikes and uncertainty surrounding the Strait of Hormuz. Expectations for additional Bank of England rate hikes also eased.

From a technical view, resistance stands near 1.3450, with support around 1.3360.

Silver’s Downtrend Continues

Silver prices extended their decline toward the $73 level.

Recent military action and persistent disagreements over the Strait of Hormuz and Iran’s nuclear activities kept inflation concerns elevated and reinforced expectations that central banks could maintain tighter monetary policy for longer.

From a technical view, resistance stands near $75.70 while support is located around $71.