Stocks rally, oil prices retreat and the dollar weakens as markets turn optimistic on possible US-Iran peace deal expectations.

Risk-On Sentiment Returns as Stocks Rally and Oil Prices Retreat on US-Iran Peace Deal Expectations

Global markets shifted toward a more optimistic tone on Friday as easing fears surrounding the US-Iran conflict helped boost equities, weaken the US dollar, and pressure oil prices lower.

Investor sentiment improved after reports suggested progress in mediated peace negotiations between Washington and Tehran. The reduced fear of immediate military escalation helped support risk appetite across global markets, with stocks rallying sharply while safe-haven demand for the US dollar eased slightly.

Meanwhile, oil prices retreated below the recent highs above $100, while gold stabilized after heavy selling pressure earlier in the week. Traders are now closely monitoring geopolitical headlines despite the absence of major economic events in today’s calendar.

Support and Resistance Snap Shot

Currencies/Forex

Forex markets traded with a mild risk-on tone as the US dollar weakened slightly following optimism surrounding potential US-Iran peace negotiations.

The softer dollar helped support major currencies including the euro, pound, Australian dollar, and New Zealand dollar. However, markets remain cautious as geopolitical uncertainty has not fully disappeared.

EURUSD

EURUSD recovered modestly as easing safe-haven demand pressured the dollar lower.

The pair continues benefiting from improved risk sentiment and softer Treasury yield momentum.

GBPUSD

GBPUSD strengthened as broader dollar weakness supported the pound.

The pair also remains sensitive to upcoming UK inflation and growth expectations.

AUDUSD

AUDUSD gained ground as improved global risk appetite supported commodity-linked currencies.

The Australian dollar also continues benefiting from improving sentiment around China and global trade conditions.

NZDUSD

NZDUSD traded higher as traders rotated back into higher-risk currencies amid improving market sentiment.

USDCAD

USDCAD remained elevated despite falling oil prices.

Normally, weaker oil pressures the Canadian dollar, while broader USD strength earlier in the week continues supporting the pair.

USDJPY

USDJPY remains near multi-year highs as interest rate differentials continue favoring the US dollar despite today’s mild pullback.

USDCHF

USDCHF traded cautiously as safe-haven demand eased slightly amid improving geopolitical sentiment.

Crypto/Bitcoin

Bitcoin rebounded toward 77,630 as improving market sentiment encouraged traders back into risk assets.

The broader crypto market also benefited from:

• Softer USD momentum
• Improving equity sentiment
• Reduced immediate geopolitical fears

However, volatility remains elevated across digital assets.

Gold

Gold stabilized near 4,525 after suffering heavy selling pressure earlier this week.

Although geopolitical uncertainty typically supports gold prices, easing fears of immediate escalation between the US and Iran reduced safe-haven demand.

Additionally:

• Strong Treasury yields
• Higher-for-longer Fed expectations
• Elevated real yields

continue limiting aggressive upside momentum in precious metals.

Stocks/Equities

US equities traded strongly higher as investors reacted positively to improving US-Iran peace deal expectations.

Markets also welcomed:

• Falling oil prices
• Reduced geopolitical fears
• Softer USD momentum
• Strong investor risk appetite

NAS100

The NAS100 rallied strongly as traders returned to growth and technology stocks.

US30

The Dow Jones climbed to fresh record highs as investors rotated back into equities amid improving market confidence.

SP500

The SP500 remained strongly bullish as broad market optimism supported equities across multiple sectors.

Geopolitics

Geopolitical headlines continue driving market volatility.

Recent developments include:

• US Secretary of State Marco Rubio signaling “some good signs” from Iran peace negotiations
• Trump maintaining that “other options” remain available if talks fail
• Iran’s IRGC monitoring increased activity through the Strait of Hormuz
• Israeli strikes in southern Lebanon increasing regional tensions
• Republicans struggling to secure votes regarding Trump’s Iran war authority

Despite improving peace hopes, traders remain cautious as risks of renewed escalation still exist.

Economic Calendar

There are no major high-impact economic releases scheduled today.

As a result, markets are expected to remain highly sensitive to:

• Geopolitical headlines
• Bond yield movements
• Oil price fluctuations
• Federal Reserve expectations

Why Markets Turned Risk-On Today

Stocks Rally

Investors returned to equities as fears of immediate military escalation eased.

Oil Prices Retreat

Oil prices pulled back as traders reduced geopolitical risk premiums tied to the Middle East conflict.

USD Weakens

Safe-haven demand for the US dollar softened as broader market sentiment improved.

Gold Stabilizes

Gold found temporary support after heavy selling earlier in the week.

Final Outlook

Global markets remain highly sensitive to geopolitical developments surrounding Iran and the Middle East.

For now:

• Stocks remain optimistic
• Oil prices are easing
• The dollar is softer
• Risk appetite has improved

However, traders remain cautious because any renewed escalation in the region could quickly reverse current market sentiment.

Current Market Bias

• USD → Mild Bearish
• Oil → Bearish
• Gold → Neutral/Bearish
• EURUSD → Bullish
• GBPUSD → Bullish
• AUDUSD → Bullish
• NZDUSD → Bullish
• Stocks → Bullish
• Bitcoin → Bullish
• USDJPY → Bullis

Reviewed by Alex Kanyi

Head of Compliance | TraderFactor

“This report is for general information only. Trading involves significant risk. Seek independent advice before acting on any content.”

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 Last Updated: May 2026

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