Tech Rebound and Diplomacy Fuel Broad Global Market Rally

The euro traded in a narrow range above the 1.1600 mark during Thursday’s early Asian session, with EUR/USD hovering near 1.1625 as investors weighed renewed geopolitical tensions and a more hawkish outlook from the US Federal Reserve.

Market sentiment remained cautious after US President Donald Trump said negotiations with Iran were entering their final phase, while warning that military action could follow if an agreement is not reached. In response, Iranian President Masoud Pezeshkian rejected suggestions that Tehran was prepared to concede, warning that any strikes would trigger retaliation extending beyond the Middle East.

Rising uncertainty surrounding US-Iran relations supported demand for safe-haven assets, underpinning the US Dollar and limiting upside momentum for the euro.

The greenback also drew support from the Federal Reserve’s latest policy signals. Minutes from the Fed’s April meeting, released Wednesday, showed that several policymakers believe further interest rate increases may be required if inflation remains stubbornly above the central bank’s 2% target.

Investors are now awaiting the release of preliminary May Purchasing Managers’ Index (PMI) data from the Eurozone, Germany, and the United States later on Thursday for further direction on global economic activity.

Gold prices edged lower early on Thursday as the US Dollar remained supported by persistent geopolitical tensions and expectations that the Federal Reserve could keep interest rates higher for longer.

The decline came as investors reacted to the Federal Reserve’s latest meeting minutes, which reinforced expectations for tighter monetary policy.

Minutes from the Fed’s April 28–29 meeting showed that most policymakers believe additional policy tightening may be necessary if inflation continues to remain above the central bank’s 2% target. Officials also highlighted upside risks to inflation and warned that ongoing conflict in the Middle East could complicate the future policy outlook.

The hawkish tone helped keep the US Dollar near a six-week high, reducing demand for non-yielding assets such as gold.

However, losses in bullion were limited as traders remained cautious amid uncertainty surrounding negotiations between the United States and Iran. US President Donald Trump said discussions with Tehran had entered the “final stages,” while Vice President JD Vance also expressed optimism that Iran was willing to reach an agreement. The comments initially improved market sentiment and weighed on the dollar, offering temporary support to gold prices.

Ongoing tensions in the Middle East continue to support safe-haven demand, helping to prevent a sharper decline in gold prices even as the stronger dollar caps broader upside momentum.

Oil prices moved higher during Thursday’s Asian trading session as geopolitical tensions in the Middle East continued to support concerns over global supply disruptions.

The gains followed comments from US President Donald Trump, who said Washington was prepared to launch strikes against Iran if negotiations over a peace agreement fail.

At the same time, Trump indicated that the US was willing to delay further military action for several days, citing ongoing diplomatic discussions with Tehran. Iranian state media also reported that officials were reviewing Washington’s latest response to Iran’s peace proposal, adding to mixed signals surrounding the conflict.

Oil markets recovered after suffering two consecutive sessions of losses, with prices having dropped sharply on Wednesday after earlier indications of progress in US-Iran negotiations raised hopes for de-escalation. However, Trump later warned that the situation remained “right on the borderline,” reviving fears of renewed conflict and potential supply disruptions.

The Strait of Hormuz remains a major focal point for energy markets, as roughly 20% of global oil supplies pass through the channel. Although reports indicated that two Chinese oil tankers successfully crossed the strait on Wednesday, overall shipping activity remains well below normal levels, sustaining concerns over restricted supply flows.

Additional support for oil prices came from the latest US inventory data, which showed a much larger-than-expected drawdown in crude stockpiles. According to figures released Wednesday, US crude inventories fell by 7.9 million barrels in the week ending May 15, significantly exceeding market expectations for a 2.9 million-barrel decline.

US stocks rallied on Wednesday as investors looked ahead to highly anticipated quarterly results from AI chip giant Nvidia, while easing Treasury yields and renewed optimism surrounding US-Iran negotiations also boosted market sentiment.

Investor focus remained firmly on Nvidia’s earnings release after the closing bell, with markets viewing the results as a key test for the broader artificial intelligence trade that has powered Wall Street’s rally over the past several years.

Since the rapid expansion of AI technologies in late 2022, Nvidia has become the dominant supplier of advanced graphics processing units (GPUs) used in artificial intelligence systems. The company’s market value has surged to more than $5 trillion, making its earnings reports among the most closely watched events on Wall Street.

Federal Reserve meeting minutes released Wednesday reinforced the view that policymakers remain concerned about inflation. Minutes from the Fed’s April meeting showed that a majority of officials believe further interest rate increases could become necessary if inflation remains persistently above the central bank’s 2% target.

Recent economic data has highlighted the inflationary impact of higher oil prices, with both consumer and producer price growth accelerating in recent months. Markets currently expect the Fed to keep rates unchanged through most of this year, although expectations for possible tightening later in the year have increased.

Attention also remained on developments in the Middle East after President Donald Trump said the US was in the “final stages” of negotiations with Iran. Reports suggesting potential diplomatic progress helped improve investor sentiment and pushed oil prices lower during the session. Trump also stated earlier this week that he had delayed additional military action against Iran following requests from Gulf nations.

Among individual stocks, Target fell 3.9% despite reporting better-than-expected quarterly earnings and raising its full-year sales outlook, as investors focused on warnings about rising costs and tougher comparisons ahead.