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Tensions Flare Anew in the Middle East; Risk Appetite Dampened as U.S. Stocks Halt Winning Streak

(By ATFX Analyst Team)

Key Takeaways

Gulf Tensions Rise as Iran Attacks Kuwait: The assault has intensified concerns over stalled U.S.-Iran peace talks, leading to a drop in U.S. equities and a rise in crude oil prices.

Fed Beige Book Highlights Growth: The Federal Reserve’s Beige Book noted continued economic expansion, with energy costs from the Middle East driving inflation. May ADP employment surged by 122,000, suggesting more rate hikes may be coming.

Key Focus Today: Eyes are on Eurozone April Retail Sales, expected to decline to -0.3%, indicating potential stagnation. Later, U.S. Initial Jobless Claims are forecast at 213,000, indicating ongoing labor market resilience.

Global Market Review 04/06/2026

U.S. equities fell from record highs on Wednesday as rising oil prices and escalating tensions in the Middle East fueled inflation fears, prompting investors to take profits. The S&P 500 dropped 0.7%, the Nasdaq Composite slid 0.9%, and the Dow Jones fell 1.2%. Strong employment data increased rate-hike expectations, boosting the U.S. Dollar Index to its highest level since April 7. Meanwhile, spot gold fell by over 1%, and crude oil prices rose for the third consecutive session amid renewed regional hostilities.

Key Events Today:

  • 13:00 RBA Gov Bullock Speech ***
  • 16:00 ECB President Lagarde Speech ***
  • 17:00 EU Retail Sales MoM APR **
  • 20:30 US Initial Jobless Claims ***

June 5th

  • 17:00 EU GDP 3rd Est Q1 **
  • 20:30 US Non Farm Payrolls MAY ***
  • 20:30 US Unemployment Rate MAY ***
  • 20:30 CA Unemployment Rate MAY **

Markets Analysis 04/06/2026

  • Resistance: 1.1631 / 1.1644
  • Support: 1.1576 / 1.1564

Market Review: EUR/USD declined as the US Dollar rebounded and tensions in the Middle East escalated, dropping below 1.1600. This occurred despite stronger-than-expected Eurozone PPI and hawkish comments from ECB policymakers.

Analyst View: With EUR/USD hitting a four-day low and the 10-day Moving Average acting as resistance, a move below 1.1600 today may prompt it to seek support at last week’s lows.

Bias: Short-term Bearish

  • Resistance: 1.3460 / 1.3485
  • Support: 1.3357 / 1.3333

Market Review: The strengthening US Dollar caused GBP/USD to drop toward 1.3400, exacerbated by a decline in the UK Services PMI, resulting in the largest single-day decline in over a week.

Analyst View: Under pressure from the 20-day MA, the pair broke below the 10-day MA. The focus is on whether the 1.3400 level can provide support; if not, it may continue to decline toward last week’s lows.

Bias: Short-term Bearish

  • Resistance: 160.08 / 160.41
  • Support: 159.73 / 159.39

Market Review: USD/JPY hit the critical 160.00 level yesterday, leading to warnings from Japanese authorities about potential intervention. After reaching a low of 159.37, it recovered to close higher, buoyed by geopolitical tensions in the Middle East.

Analyst View: Following yesterday’s reversal, the pair gave back some ground this morning. With 160.00 serving as a tough barrier, the exchange rate is likely to continue to test and consolidate within its upper range.

Bias: High-level Consolidation

  • Resistance: 96.47 / 98.38
  • Support: 92.65 / 90.28

Market Review: Oil prices rose for a third consecutive day, reaching a one-week high amid renewed tensions in the Middle East and uncertainty over peace talks. The focus remains on potential escalation in the region.

Analyst View: Crude oil touched its 20-day moving average but did not break through, facing slight downward pressure. Prices are likely to fluctuate between $93 and $97 as market participants await further geopolitical developments.

Bias: Range-bound Trading

  • Resistance: 4508 / 4542
  • Support: 4427 / 4400

  • Resistance: 74.59 / 75.27
  • Support: 72.43 / 71.74

Market Review: Strong U.S. employment data has raised expectations for a Federal Reserve rate hike, while tensions in the Middle East have fueled inflation concerns, causing gold to drop to a four-day low below $4,450 before a slight rebound.

Analyst View: Despite the recent bounce, gold prices have struggled to hold above the 10-day Moving Average this week. They appear to be consolidating within a lower range, with support near $4,400 vulnerable to a potential retest.

Bias: Short-term Bearish

  • Resistance: 50972 / 51126
  • Support: 50598 / 50475

Market Review: A new wave of strikes in the Gulf has undermined hopes for a U.S.-Iran peace deal, raising inflation concerns amid rising crude prices. All major U.S. stock indices closed lower yesterday, with the Dow losing over 600 points.

Analyst View: The Dow fell steadily, closing at intraday lows. Its ability to bounce from these lows, which align with the 10-day MA, will be crucial for maintaining its recent strength.

Bias: High-level Consolidation

  • Resistance: 30790 / 30919
  • Support: 30365 / 30234

Market Review: Mega-cap tech stocks generally declined overnight due to reduced market risk appetite, while memory chip stocks rose. As a result, Nasdaq ended its winning streak and fell from record highs.

Analyst View: Nasdaq reached another intraday record high before closing lower, indicating a mild decline. The index remains within its upper territory, suggesting today’s price action will trend toward consolidation.

Bias: High-level Consolidation

  • Resistance: 64955/67606
  • Support: 60728/58042

Bitcoin is experiencing its steepest sell-off since late February, reaching new lows amid rising geopolitical tensions and a record 11 consecutive days of outflows from U.S. spot Bitcoin ETFs.

Analyst View: BTC/USD has fallen over three days, hitting its lowest level since February 6, with critical support around $60,100 and the key $60,000 level as the ultimate test for price stability.

Bias: Depressed at Lows

Enjoy trading! The content is for reference only. Please ensure that you understand the risk.

About the author

Martin Lam

 

Martin Lam is ATFX Chief Analyst for Asia Pacific, with over 20 years of experience in global forex and investment markets. He holds a degree in Finance and Economics from Deakin University and has held senior roles at leading FX brokerage firms.

More from Martin Lam

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.

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