The escalation of tensions between Israel and Iran has bolstered the strength of the US dollar in trading on Tuesday. The conflict in the Middle East could potentially escalate further as President Donald Trump reportedly considers military action against Iran.
In a previous post, President Trump claimed to know the exact location where Iran’s Supreme Leader Ayatollah Ali Khamenei is “hiding”.
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“He’s an easy target, but he’s safe there. We won’t kill him, at least not for now,” Trump stated in his post on a social platform, as reported by CNBC.
US officials have indicated that attacking Iran is among the numerous options available to Trump. As a result, the market is currently on standby for clarity regarding Trump’s next steps, which will influence trading activities on Wednesday (June 18, 2025).
GOLD
Gold prices (XAUUSD) fluctuated within the range of $3,366 to $3,403 per troy ounce before closing Tuesday’s trading at $3,388.11 per troy ounce. Compared to Monday’s closing price, Gold saw an increase of less than $3.
Despite the potential widening of the Israel-Iran conflict following the consideration of US involvement, Gold has not performed strongly. Market participants are currently favoring the US dollar, resulting in Gold’s typically soaring price moving sideways instead.
Traders are now eagerly awaiting confirmation on whether the US will indeed engage in strikes against Iran. Additionally, they are looking forward to the monetary policy announcement from the Federal Reserve early Thursday morning.
However, given its status as a safe haven asset, the ongoing uncertainty is still expected to create a positive sentiment toward Gold.
OIL
Oil prices (CLS10) surged by $3.92 to reach $75.38 per barrel during Tuesday’s trading session. The prospect of US military action against Iran raises the risk of a larger military conflict, potentially disrupting Oil supplies from the Middle East.
This speculation led to a significant increase in Oil prices on Tuesday, which is likely to carry positive sentiment into the European trading session.
EURUSD
The EURUSD pair fell by 860 points (86 pips) to 1.14778 during Tuesday’s trading. The possibility of the US becoming involved in the Israel-Iran war has created negative sentiment among traders, benefiting the US dollar as a safe haven asset.
This sentiment is expected to continue influencing the EURUSD movements in the European trading session.
GBPUSD
The strengthening of the US dollar caused the GBPUSD pair to drop by 1,532 points (153.2 pips) during Tuesday’s session, nearing its lowest point in the past month.
In the European trading session, the UK is set to release consumer inflation data (CPI) at 13:00 WIB. Forecasts from Trading Central indicate that the CPI for May will grow at 3.5% year-on-year (YoY), consistent with the previous month’s growth. Meanwhile, core CPI is projected to grow by 3.8% YoY, matching April’s growth.
If the actual data comes in lower than forecasted, there is a potential for further pressure on GBPUSD.
USDJPY
The USDJPY pair increased by 436 points (43.6 pips) to 145.212 during Tuesday’s trading. The fluctuations in this currency pair are influenced not only by the Israel-Iran conflict but also by the Bank of Japan (BoJ) maintaining interest rates at 0.5% and slowing the pace of bond purchasing reduction.
The BoJ’s policy has imparted a positive sentiment towards the yen, given earlier uncertainty surrounding a halt in the reduction of bond purchases, indicating that the central bank would keep its bond buying steady without a decrease. This had previously weakened the yen, but the BoJ now affirms that the reduction will continue at a more gradual pace.
In addition, Japanese data today showed a 1.7% decrease in exports (YoY) for May. Despite the decline, this is better than the forecasted -4% YoY from Trading Central, which provides a positive sentiment for the yen. Thus, USDJPY may face pressure during the European trading session.
Nasdaq
The Nasdaq composite index fell by 211 points to 21,724 during Tuesday’s trading due to a worsening sentiment among investors following Trump’s military considerations regarding Iran.
This sentiment is expected to continue impacting the Nasdaq in the European trading session.
