The US Dollar (USD) experienced a pullback against several major currencies on Tuesday, following a de-escalation of hostilities between Iran and Israel. The USD/CAD pair halted its four-day winning streak, retreating from a two-month high of 1.39613 to trade around 1.3940 during European hours, as safe-haven demand for the US Dollar eased after both countries agreed to halt mutual attacks [1]. Similarly, USD/CHF posted marginal losses, stalling below the 0.8000 psychological level, though downside attempts remained contained above 0.7965, keeping the pair steady at two-month highs [2].
The easing of geopolitical tensions triggered a moderate risk appetite, weighing on the safe-haven US Dollar [1][2]. However, uncertainty persists, as Israeli military officials issued evacuation warnings for Tyre, Lebanon, and Prime Minister Benjamin Netanyahu stated that the conflict with Iran and Hezbollah 'has not yet ended,' despite Iran confirming it had ceased strikes against Israel [1].
Strong US Nonfarm Payrolls data released last week fueled inflation fears and heightened expectations of Federal Reserve rate hikes. According to the CME FedWatch tool, the probability of a December quarter-point rate hike increased to 43%, up from 14% a month ago [1]. Investors are now awaiting the US Consumer Price Index (CPI) release on Wednesday and Producer Price Index (PPI) data on Thursday to gauge the Fed's next move [1][2]. Technical analysis for USD/CHF indicates a bullish trend, with the pair trading at 0.7970 and maintaining upside momentum above key moving averages [2].
In the commodities market, silver (XAG/USD) extended its gains for a second consecutive day, trading around $68.60 per troy ounce during European hours. Despite this, silver maintains a bearish near-term bias, holding below both the nine-day and 50-day Exponential Moving Averages (EMAs), with the 14-day Relative Strength Index (RSI) near 36, indicating subdued momentum and ongoing downside pressure [3]. Silver prices may fall toward a nearly six-month low at $61.01, while resistance lies at the nine-day EMA of $71.63 and the 50-day EMA at $75.91 [3].
Looking ahead, the Canadian International Merchandise Trade data and the Bank of Canada's policy decision, expected to keep rates unchanged at 2.25%, are in focus for further market direction [1].
CONCLUSION
The US Dollar's retreat from recent highs reflects easing geopolitical tensions in the Middle East, though lingering uncertainty and strong US economic data continue to influence market sentiment. While risk appetite has improved, traders remain cautious ahead of key US inflation data and central bank decisions. Silver's modest gains are tempered by a bearish technical outlook, highlighting ongoing market uncertainty.