Global financial markets experienced significant moves as hopes for a US-Iran peace deal and progress toward reopening the Strait of Hormuz drove a sharp shift in risk sentiment. Silver (XAG/USD) rallied beyond $80.00, reaching fresh three-week highs and gaining approximately 10% over the last two days, buoyed by lower US Treasury yields and a pullback in oil prices. The rally was attributed to a combination of risk-on sentiment, a weaker US Dollar, and easing bets on further US Federal Reserve rate hikes, with technical indicators suggesting the rally may be overextended as the 4-hour RSI approached 80 and the MACD remained positive and rising. Resistance is noted at $80.70, with further upside toward April's peak above $83.00, while support lies at $76.70 and $72.15 [1].
Oil and gas prices fell sharply as Iran considered a new US proposal that could gradually reopen the Strait of Hormuz and ease supply risks. Brent crude dropped below $100 per barrel, trading at $96 at one point, before stabilizing around $100 after an 8% decline in the previous session. The US proposal reportedly includes a memorandum that could lead to the gradual reopening of Hormuz and the lifting of US restrictions on Iranian ports, with Iran expected to respond in the coming days. US commercial crude inventories fell by 2.3 million barrels last week, slightly below expectations, while exports dropped by 1.7 million barrels week-on-week. Analysts at ING note that energy markets remain highly sensitive to US-Iran headlines, with the potential for renewed volatility if negotiations stall [3].
The Euro (EUR) strengthened against the US Dollar (USD), trading at 1.1765, supported by optimism over the US-Iran peace process and better-than-expected Eurozone macroeconomic data. Eurozone retail sales edged down by 0.1% in March, outperforming the expected 0.3% decline, while German factory orders surged by 5% in March, well above the 1% forecast. The Euro also benefited from lower oil prices and positive sentiment around the potential reopening of the Strait of Hormuz. Technical analysis indicates resistance for EUR/USD at 1.1790-1.1800, with bullish momentum supported by an RSI near 65 and a widening MACD histogram [2].
Societe Generale economists highlighted that the recent energy shock has pushed Euro area headline inflation from 1.9% year-on-year in February to 3.0% in April, primarily due to the rapid pass-through from higher Brent prices to fuel costs. They estimate that fuel prices have added about 1.1 percentage points to headline inflation since February. Assuming the Strait of Hormuz gradually reopens, the fuel price effect is likely to have peaked in April. However, indirect and second-round effects are expected to push headline inflation to around 3.5% and core inflation to 2.6% year-on-year by early 2027, with risks remaining if economic growth slows materially [4].
CONCLUSION
Markets responded strongly to developments in the US-Iran peace process, with silver rallying, oil prices dropping, and the Euro gaining on improved sentiment and robust Eurozone data. While the energy shock has driven inflation higher in the Euro area, analysts expect some relief if the Strait of Hormuz reopens, though inflationary pressures may persist into 2027. Overall, the event has had a high market impact, with continued sensitivity to geopolitical headlines.