Yen at 4-Decade Low, US Tech Recovers Ahead of Nike Earnings

The EUR/USD pair traded lower during Tuesday’s early Asian session, with the euro weakening against the US dollar as traders reduce expectations for further European Central Bank (ECB) rate hikes this year.

ECB President Christine Lagarde said during the opening of the central bank’s annual retreat on Monday that Europe has become more resilient to external economic shocks, supported by a stronger financial framework and progress in the green transition.

Lagarde also noted that geopolitical tensions could ease if a peace agreement is reached, although she stressed that such an outcome remains uncertain. Policymakers continue to assess whether additional monetary tightening is required.

Market expectations for future ECB rate increases have declined as energy prices fall. Meanwhile, expectations for the US interest rate outlook have moved higher, with markets now pricing in nearly a 60% chance of a Federal Reserve rate hike by September, according to the CME FedWatch tool.

Investors will closely watch upcoming US labor market data, including the ADP employment report and Nonfarm Payrolls (NFP) figures, for further clues on the Fed’s policy direction. Strong employment data could support the US dollar and create additional pressure on the EUR/USD pair.

Gold  is attempting a mild rebound after falling to its lowest level since November 2025 during Tuesday’s Asian session, though the precious metal remains under pressure for a second consecutive day. A broadly stronger US dollar, rising expectations for Federal Reserve rate hikes, and renewed geopolitical uncertainty continue to weigh on bullion.

The US dollar has attracted fresh buying interest as uncertainty surrounding US-Iran relations has increased demand for safe-haven assets. Mixed signals from ongoing talks between Washington and Tehran have kept geopolitical risks elevated, limiting the dollar’s recent decline from its highest level since May 2025 and adding pressure on gold prices.

Reports indicated that the US and Iran had agreed to de-escalate tensions following recent exchanges of strikes near the Strait of Hormuz, although both sides accused each other of breaching the ceasefire. US President Donald Trump also stated on Truth Social that Iran had requested a meeting, which was expected to take place in Doha, Qatar. However, Iranian Deputy Foreign Minister Kazem Gharibabadi denied that technical discussions were scheduled for the week, keeping uncertainty around the situation intact.

Renewed concerns over potential inflationary pressures from geopolitical tensions, combined with a more hawkish Federal Reserve outlook, have strengthened expectations for higher US interest rates.

Additional pressure on precious metals came from a sharp decline in the Japanese yen, which dropped to a fresh four-decade low against the US dollar. Traders are now awaiting key US economic releases, including the Conference Board’s Consumer Confidence Index and JOLTS Job Openings data, for further direction.

Oil prices moved slightly lower in early Asian trading on Tuesday as investors balanced optimism over potential renewed US-Iran negotiations with ongoing concerns about possible supply disruptions following recent military exchanges between the two countries.

Oil markets remain cautious after Washington and Tehran exchanged fresh attacks over the weekend, keeping attention focused on the Strait of Hormuz. Sentiment was briefly supported by US President Donald Trump’s announcement that the two sides would hold peace talks in Doha on Tuesday, although uncertainty remains as Tehran has yet to confirm its participation in further discussions.

Iran’s Deputy Foreign Minister Kazem Gharibabadi said the country would continue efforts to jointly manage maritime traffic through the Strait of Hormuz, even if Oman decides not to take part. The comments added to uncertainty surrounding the future operation of the strategically important waterway.

Oil prices closed higher on Monday after rebounding from last week’s sharp decline, although both Brent and WTI remain more than 9% below recent highs after falling back toward levels seen before tensions between the US, Israel, and Iran escalated.

The Strait of Hormuz remains a major focus for energy markets, as the waterway handles roughly one-fifth of global crude oil and liquefied natural gas shipments.

US stocks started the holiday-shortened trading week on a positive note Monday, supported by a strong rebound in technology and communication services shares after both sectors suffered steep losses last week.

Technology remained a key focus for investors, while renewed geopolitical concerns also influenced market sentiment after fresh military exchanges between the US and Iran over the weekend pushed oil prices higher. Tensions eased somewhat after US President Donald Trump said Iran had requested a meeting with Washington in Qatar.

Investors are now looking ahead to Thursday’s May jobs report for further signals on the Federal Reserve’s monetary policy outlook. Technology and communication services shares recovered after being oversold following last week’s declines, although market breadth remained mixed, with declining stocks slightly outnumbering gainers and several sectors still under pressure.

Among individual stocks, Alphabet gained 4.89% as the company officially began trading as a member of the Dow Jones Industrial Average, replacing Verizon. The move marks Alphabet’s inclusion in one of the most closely followed US stock indexes, which tracks 30 major companies across various industries.

Palantir Technologies rose 2.5% after announcing a strategic partnership with Nvidia to deploy open artificial intelligence models in secure government environments.