Over the weekend, the United States and Iran exchanged attacks near the Strait of Hormuz, a critical passage responsible for nearly 20% of global energy supply, raising concerns about potential disruptions to energy flows and the impact on global markets [1][2]. Iran's Foreign Minister Abbas Araghchi asserted that responsibility for the Strait lies solely with Tehran and warned that any attempts to bypass its preferred route would lead to 'tension and escalation' [1][2]. However, both nations subsequently agreed to a ceasefire and scheduled talks in Oman for Tuesday [1][2].
The silver market reacted negatively to these developments, with XAG/USD trading almost 1% lower at around $58.60 during the European session on Monday [1]. The price remains well below the 20-day exponential moving average (EMA) at $65.37, indicating a bearish near-term bias, while the Relative Strength Index (RSI) at 31.85 hovers just above oversold territory [1]. If silver falls below the June 24 low of $55.63, it could extend its decline toward the psychological level of $50 [1]. Since the onset of the Middle East war, silver has underperformed as higher oil prices have contributed to global inflationary pressures [1].
In currency markets, the Indian Rupee (INR) opened flat against the US Dollar (USD), with the USD/INR pair trading around 94.35 as investors awaited the outcome of the US-Iran talks in Oman [2]. Market participants expressed concern that renewed conflict could push oil prices higher, negatively impacting currencies of oil-importing economies like India [2]. The USD/INR pair remains in a bearish near-term tone, trading below the 20-period EMA at 94.7980 and within a Descending Triangle formation [2].
Investors are also closely watching upcoming US economic data, particularly the Nonfarm Payrolls (NFP) report for June, which will be released on Thursday [1][2]. The outcome is expected to provide fresh cues regarding the Federal Reserve's monetary policy outlook [1][2]. According to the CME FedWatch tool, the probability of at least one Fed rate hike this year is nearly 90% [2]. Additional focus will be on the US ISM Manufacturing and Services PMI, ADP Employment Change for June, and JOLTS Job Openings for May [2].
CONCLUSION
The US-Iran ceasefire and upcoming talks have temporarily eased market fears of a major energy supply disruption, but both silver and the Indian Rupee remain under pressure due to lingering geopolitical risks and inflation concerns. Investors are now turning their attention to key US economic data releases, which are expected to influence the Federal Reserve's policy direction and further impact global markets.