Risk Appetite Improves as Iran Peace Hopes Weigh on Dollar and Lift FX Markets | 7th May 2026
Risk Appetite Improves
Forex markets are maintaining a risk-on tone today as optimism surrounding a potential US–Iran peace agreement continues to weaken the US Dollar and support higher-yielding and risk-sensitive currencies. The Australian and New Zealand Dollars are gaining traction, EUR/USD is holding near multi-week highs, while commodity-linked currencies remain mixed as falling crude oil prices offset broader improvements in market sentiment.
AUD/USD Forecast
Current Price and Context
The Australian Dollar (AUD/USD) is recovering recent losses following the release of Trade Balance data, with improving sentiment helping the pair stabilize. Price action reflects renewed buying interest amid softer USD conditions.
Key Drivers
• Geopolitical Risks: Iran peace hopes are improving overall market sentiment and reducing demand for safe-haven assets.
• US Economic Data: Softer USD conditions are supporting AUD recovery.
• Trade Policy: Positive trade data supports confidence in the Australian economy.
• Monetary Policy: Stable RBA expectations support gradual upside.
Technical Outlook
• Trend: Mildly bullish.
• Resistance: 0.7050
• Support: 0.6950
• Forecast: Further upside likely if risk appetite remains strong.
Sentiment and Catalysts
• Market Sentiment: Bullish.
• Catalysts: Trade data and USD direction.
AUD/JPY Forecast
Current Price and Context
AUD/JPY is trading above the 113.00 level, maintaining bullish momentum as risk appetite improves across global markets. Price action remains supported above key technical averages.
• Trade Policy: Stable Asia-Pacific trade outlook supports AUD demand.
• Monetary Policy: Divergence between RBA and BoJ continues to favor AUD/JPY upside.
Technical Outlook
• Trend: Bullish.
• Resistance: 114.50
• Support: 112.00
• Forecast: Near-term outlook favors continued upside while above support.
Sentiment and Catalysts
• Market Sentiment: Bullish.
• Catalysts: Risk sentiment and geopolitical developments.
EUR/USD Forecast
Current Price and Context
EUR/USD is trading above the mid-1.1700 region and remains close to a two-week high as peace hopes surrounding US–Iran negotiations undermine the US Dollar. Price action reflects broad USD softness.
Key Drivers
• Geopolitical Risks: Improved geopolitical sentiment is weakening safe-haven demand for USD.
• US Economic Data: Softer Dollar conditions are supporting EUR/USD upside.
• FOMC Outcome: Stable Fed expectations are limiting USD strength.
• Trade Policy: Stable Eurozone outlook continues to support the Euro.
• Monetary Policy: ECB stability contrasts with fading USD momentum.
Technical Outlook
• Trend: Bullish.
• Resistance: 1.1800
• Support: 1.1680
• Forecast: Continued upside likely while USD remains weak.
Sentiment and Catalysts
• Market Sentiment: Bullish.
• Catalysts: US Dollar movement and geopolitical developments.
USD/CAD Forecast
Current Price and Context
USD/CAD remains relatively flat as falling crude oil prices offset broader USD weakness. Price action reflects balanced pressure between softer USD conditions and weaker energy markets.
Key Drivers
• Geopolitical Risks: Easing tensions are reducing safe-haven demand for USD.
• US Economic Data: Softer USD conditions are limiting upside in the pair.
• FOMC Outcome: Neutral Fed expectations support consolidation.
• Trade Policy: Falling crude oil prices are weighing on the Canadian Dollar.
• Monetary Policy: Balanced outlook between Fed and Bank of Canada.
Technical Outlook
• Trend: Sideways.
• Resistance: 1.3650
• Support: 1.3500
• Forecast: Range-bound movement likely while oil prices remain weak.
Sentiment and Catalysts
• Market Sentiment: Neutral.
• Catalysts: Oil prices and USD direction.
NZD/USD Forecast
Current Price and Context
NZD/USD is trading above the 0.5950 level, gaining traction as improving geopolitical sentiment weakens the US Dollar. Price action reflects stronger demand for risk-sensitive currencies.
Key Drivers
• Geopolitical Risks: Iran peace deal hopes are supporting global risk appetite.
• US Economic Data: Softer USD conditions continue to support NZD/USD gains.
• Trade Policy: Stable regional trade outlook supports NZD demand.
• Monetary Policy: Balanced policy outlook supports gradual upside.
Technical Outlook
• Trend: Bullish.
• Resistance: 0.6000
• Support: 0.5900
• Forecast: Further upside possible if risk sentiment remains positive.
Sentiment and Catalysts
• Market Sentiment: Bullish.
• Catalysts: USD weakness and geopolitical updates.
Wrap-Up
Forex markets remain tilted toward a risk-on environment as improving optimism around a potential US–Iran peace agreement continues to weaken the US Dollar and support major risk-sensitive currencies, while traders monitor whether easing geopolitical tensions can sustain the current bullish momentum across FX markets despite softer oil prices.
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