The US dollar stabilized during Tuesday’s trading, as markets await developments in the war related to Iran, while the Japanese yen maintained its stability in quiet trading, following sharp gains last week amid suspicions of intervention from Tokyo to support it.

The ceasefire in the Middle East has come under renewed doubt after the United States and Iran launched new attacks as part of the conflict over control of the Strait of Hormuz, amid conflicting reports about ship movements through the strait in recent days.

The dollar index, which measures the performance of the US currency against a basket of six major currencies, held steady at 98.44 points, after rising by 0.3% on Monday. The euro stood at $1.1691, while the British pound recorded $1.3538.

Jane Foley said: “I think the market is well aware that the flow of news can change very quickly, and that things could move in either direction, which is why we are seeing a state of anticipation and caution.”

Meanwhile, the Australian dollar edged lower after the central bank raised interest rates, as expected, for the third consecutive meeting in an attempt to curb inflation, recording $0.7154 in its latest trading, down by 0.18% during the day.

The central bank sharply raised its inflation forecasts, while lowering its projections for economic growth and employment, due to the global energy price shock.

Matt Simpson said that the Reserve Bank of Australia adopted a hawkish stance, but is still leaving the door open for the possibility of one or two additional interest rate hikes by December.

Traders closely monitor the yen

The yen recorded 157.19 against the dollar, near its strongest levels in two months, after a wave of sharp gains since Thursday, when sources reported that Japanese authorities intervened in the currency market to halt a sharp decline in the currency.

Data last week showed that Tokyo spent about $35 billion to support the yen, although analysts believe that this move is unlikely to provide long-term support for the currency.

The yen has struggled for years, affected by extremely low interest rates in Japan and the widening gap with higher-yielding advanced economies, in addition to growing fiscal concerns, while the energy shock resulting from the war has increased pressure on it.

Deepali Bhargava said that the suspected intervention only reset the dollar/yen trading range in the short term, without changing the structural pressures driving the selling of the yen.

A temporary rise in the yen on Monday sparked speculation of new intervention from Japan, especially after official warnings last week during the “Golden Week” holiday.

Charu Chanana said that markets are aware of the political sensitivity of the 160 level against the dollar, meaning that limited moves in thin trading could lead to large short-covering operations.

She added: “In the near term, the dollar/yen pair may remain volatile within a broader range between 155 and 160, with the possibility of authorities intervening to prevent a clear break of the 160 level rather than seeking to permanently reverse the yen’s direction.”

The fate of the yen is also linked to oil prices and the speed of the end of the war in the Middle East.

Vasu Menon said: “A lot depends on oil prices, and if they rise or remain at elevated levels, the yen could come under pressure again.”

Gold prices rose in the European market on Tuesday for the first time in the past three days, beginning to recover from a five-week low, supported by active buying from lower levels and by the current slowdown in oil prices in global markets.

Starting today, a series of important data on the US labor market will be released, which will provide strong clues about the path of Federal Reserve interest rates throughout this year.

Price Overview

Gold prices today: Gold prices rose by 0.8% to $4,560.64, from the opening level of $4,523.51, and recorded a low of $4,513.70.

At settlement on Monday, gold prices lost 1.95%, marking the second consecutive daily loss, and recorded a five-week low at $4,501.08 per ounce, due to rising oil prices and renewed tensions in the Strait of Hormuz.

Global oil prices

Oil prices in global markets fell on Tuesday by an average of 1.5%, retreating from their highest levels in several weeks, due to corrective activity and profit-taking, in addition to easing tensions between the United States and Iran in the Strait of Hormuz.

Tensions escalated on Monday between the United States and Iran over control of the waters of the Arabian Gulf, as the US military announced it had destroyed six small Iranian boats and intercepted cruise missiles and Iranian drones, while the Iranian military confirmed targeting a US frigate with missiles in the Strait of Hormuz.

US President Donald Trump issued a strong warning to Iran if naval vessels were fired upon while protecting navigation, while Iran confirmed it would not allow US ships to pass through the Strait of Hormuz.

Starting Monday, Trump launched a naval operation aimed at breaking the Iranian blockade imposed on the Strait of Hormuz and escorting stranded ships to exit.

US interest rates

Minneapolis Federal Reserve Bank President Neel Kashkari stated that the longer the war with Iran continues, the greater the risks of rising inflation and economic damage, which limits the central bank’s ability to provide guidance on interest rate policy at the present time.

Chicago Federal Reserve Bank President Austan Goolsbee said on Saturday, after the recent “bad” price data, that caution is needed regarding cutting interest rates until inflation begins to decline.

According to the CME Group’s FedWatch tool: pricing for the probability of keeping US interest rates unchanged at the June meeting has stabilized at 96%, while pricing for the probability of cutting interest rates by about 25 basis points stands at 4%.

In order to reprice those probabilities, traders are closely monitoring the release of a series of very important data on the US labor market.

Later today, US job openings at the end of March will be released, on Wednesday private sector employment data for May will be issued, on Thursday weekly jobless claims will be released, and on Friday the May jobs report will be published.

Gold performance outlook

Financial markets strategist Ilya Spivak said that prices appear to be stabilizing somewhat after the return of what is known as “war trade” in the markets, which led to a decline in gold prices on Monday.

SPDR Fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Monday for the second consecutive day, with the total remaining at 1,035.77 metric tons, which is the lowest level since October 16, 2025.

The euro declined in the European market on Tuesday against a basket of global currencies, extending its losses for the third consecutive day against the US dollar, as investors continued to focus on buying the US currency as the best alternative investment, amid escalating tensions between the United States and Iran in the Strait of Hormuz.

Amid elevated pricing of the chances of raising European interest rates in June, markets later today await an important speech by European Central Bank President Christine Lagarde, which may include further signals about the path of monetary policy in the eurozone during this year.

Price Overview

The euro exchange rate today: The euro fell against the dollar by 0.1% to $1.1677, from the day’s opening price at $1.1687, and recorded a high of $1.1694.

The euro ended Monday’s trading down by about 0.3% against the dollar, marking its second consecutive daily loss, due to escalating military tensions between the United States and Iran in the Strait of Hormuz.

The US dollar

The dollar index rose on Tuesday by 0.1%, extending its gains for the third consecutive session, reflecting the continued rise of the US currency levels against a basket of major and secondary currencies.

This rise comes as investors continue to focus on buying the US dollar as a safe haven, amid escalating tensions between the United States and Iran over control of the Strait of Hormuz, which may lead to renewed military confrontations and increases uncertainty in global markets.

Hormuz tensions

Tensions escalated between the United States and Iran over control of the waters of the Arabian Gulf, as the US military announced it had destroyed six small Iranian boats and intercepted cruise missiles and Iranian drones, while the Iranian military confirmed targeting a US frigate with missiles in the Strait of Hormuz.

US President Donald Trump issued a strong warning to Iran if naval vessels were fired upon while protecting navigation, while Iran confirmed it would not allow US ships to pass through the Strait of Hormuz.

Starting Monday, Trump launched a naval operation aimed at breaking the Iranian blockade imposed on the Strait of Hormuz and escorting stranded ships to exit.

European interest rates

Money markets’ pricing of the probability that the European Central Bank will raise European interest rates by about 25 basis points in June is currently stable around 55%.

In order to reprice the above probabilities, investors are awaiting the release of more economic data in the eurozone on inflation, unemployment, and wages levels.

At 12:30 GMT, European Central Bank President Christine Lagarde will deliver an important speech at the opening of a conference in Frankfurt, which may include further signals about inflation developments in the eurozone and interest rate expectations in the coming period.

The Australian dollar declined in the Asian market on Tuesday against a basket of global currencies, continuing its losses for a second consecutive day against its U.S. counterpart. The currency moved further away from its four-year high as correction and profit-taking operations persisted.

These operations currently outweigh the impact of the Reserve Bank of Australia’s (RBA) monetary policy decisions, which included raising interest rates to their highest level since 2024, marking the third consecutive increase in Australian rates.

Investors are awaiting the upcoming press conference by RBA Governor Michele Bullock for further clues regarding the bank’s continued normalization of monetary policy and the potential for another rate hike in June.

Price Overview

* Australian Dollar Exchange Rate Today: The Australian dollar fell against the U.S. dollar by 0.2% to (0.7153), from an opening price of (0.7167), after recording a session high of (0.7173).

* The Australian dollar ended Monday's trading down 0.5% against the U.S. dollar—its first loss in three days—due to profit-taking after hitting a four-year high of 72.28 cents in the previous session.

Reserve Bank of Australia Decision

In line with expectations, the RBA Monetary Policy Committee decided on Tuesday to raise the benchmark interest rate by 25 basis points to 4.35%, the highest level since December 2024.

Key details from the meeting:

* Vote Count: Eight board members voted in favor of the increase, while one member voted against, reflecting a strong consensus within the bank to continue monetary tightening.

* Inflation Drivers: The bank attributed the decision to persistent inflation, which reached 4.6% in March. This was driven primarily by a spike in fuel prices resulting from the war in the Middle East and supply disruptions in the Strait of Hormuz.

* Economic Outlook: The RBA warned that inflation will remain above the 2-3% target range for longer than previously anticipated, requiring proactive measures to prevent these expectations from becoming entrenched in the economy.

* Geopolitical Impact: The bank noted that the ongoing naval blockade and the closure of the Strait of Hormuz represent the greatest current challenge to the Australian economy, leading to increased transport and production costs.

* Data Trends: The RBA emphasized that a wide range of data from recent months shows that inflationary pressures significantly increased in the second half of 2025.

Interest Rate Forecast

* Market pricing for the probability of the RBA raising interest rates by another 25 basis points in June is currently stable around 75%.

* Investors are closely monitoring upcoming data on inflation, unemployment, and wages in Australia to refine these expectations.

* Governor Michele Bullock is scheduled to speak shortly in a press conference to discuss the monetary policy decisions and recent economic developments in further detail.