Conflicting peace narratives ahead of April labor data – North American Mid-Week Market Update

• Mid-Week review where we dive into the major developments for North American and global Markets
• Markets continue to extend ceaselessly with Stock Market bulls unfazed by early week ceasefire disruptions
• A path towards a diplomatic solution seems to be coming close, and Tech is continuing its powerful breakout along with cryptos

Log in to our mid-week North American Markets overview, where we examine current themes in North America and provide an overview of index and currency performance.

Global markets continue to extend their massive rallies ceaselessly, with stock market bulls remaining completely unfazed by early-week ceasefire disruptions.

A path toward a definitive diplomatic solution in the Middle East finally seems to be coming into view, notably allowing the technology sector and cryptocurrencies to continue their powerful breakouts.

Now ten weeks into the conflict, the path to the resumption of vital maritime traffic in the Strait of Hormuz is slowly taking shape.

The Iranian navy recently issued its first optimistic statement, suggesting that safe and stable transit through the strait will soon be possible as military threats recede.

This acted as a geopolitical relief, which is why WTI Crude Oil finally plunged below the $100 mark after stubbornly holding above for almost two weeks, dropping sharply into the low $90 (although consequently rebounding).

However, the diplomatic road remains somewhat unclear; there is still significant back-and-forth.

Iranian officials dismissed some proposed US terms as an “American wish,” and President Trump sought to temper immediate expectations for peace – A confusion that caused stocks to give up a portion of their early Wednesday pre-trading gains, keeping traders on their toes ahead of the gigantic labor market report (US NFP) coming up on Friday.

Stepping back, the overarching picture is surprisingly confirming to be bullish.

Stock markets have already surged between 10% and 20% from their war lows, more than erasing the entirety of their conflict-driven losses.

A massive wave of record corporate earnings acted as a major upside surprise. Combined with aggressive short-covering and a highly resilient US economy that has sustained the geopolitical shock exceptionally well, market bulls found everything they needed to keep pushing equities higher.

Traders are also getting prepared for next week's much anticipated Trump-Xi meeting; a boon for Market sentiment as the war situation shouldn't get much worse before the event.

Meanwhile, the US Dollar’s trajectory tells the story of fading fear.

After attempting a technical bounce from a recent double-bottom formation, the rapidly easing geopolitical narrative forced the reserve currency to capitulate, ultimately sinking to fresh two-month lows as the global risk-on trade dominates.

The data released throughout the past week continues to show a healthy economy, between still growing PMIs and Job openings slightly beating expectations – Consumer confidence is slowly recovering despite the rising Petrol prices, as the demand side seems to slowly accept the waves of inflation; not a good sign for Monetary policymakers.

Let's dive right into our Mid-Week North American Markets recap.

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The rise in Nasdaq and US Equities is now spreading globally, with European, Asian and Canadian Markets now recovering from their routs.

The TSX is still quite a laggard in recent action, with its performance somewhat dampened by a stronger Canadian dollar and local dynamics.

While the US Dollar took a beating in the early Wednesday morning, just wicking a two-month lows, the price action quickly rebounded a could now be forming a triple bottom.

The fact that it reacted to the upper bound of the bear channel opened the path to concrete new lows but the morning rebound is now confusing the picture.

Overall, it seems that traders really will need to see clear developments to move the needle – Keep a close eye on the channel for breakouts or lack thereof.

Levels to place on your DXY charts:

Resistance Levels

• 98.50 to 98.70 War Pivot (short-term bullish above)
• 98.420 4H 50-period MA and Channel top
• 99.00 4H 200-period MA
• 99.30 to 99.50 Resistance
• 100.00 to 100.50 Main resistance and Range highs
• War Highs 100.544 (Double Top)

Support Levels

• 98.00 Major Support
• Support 97.40 to 97.60 (triple bottom)
• 2025 Lows Major support 96.50 to 97.00

The USD took a large hit throughout the latter part of the past week, with Stock Markets and FX interventions from the Ministry of Japan taking turns on the Reserve currency.

Looking at the large reversal during the Wednesday morning however, the story is not over for the Dollar, close to unchanged against the CAD and European currencies since last Monday.

The Canadian Dollar was a net winner throughout the past week, supported by the stronger Crude Oil prices, but Market performance is always relative.

As hopes for a resolution came back strong, the Loonie lost some ground and is still easing against most majors, particularly the JPY, NZD and CHF.

USD/CAD is reaching the lows of its range in this week's action and could be subject to a large reversal if the pattern remains.

In case you missed it, the pair has maintained a 4,000 pip range since the beginning of the year – Bulls will look to confirm above 1.36320 (4H 50-period MA).

Levels to place on your USD/CAD charts:

Resistance Levels:

• 1.3630 to 1.3660 Key Support now Pivot (4H 50-period MA)
• 1.3720 – 1.3750 Resistance
• 1.38 mini-Resistance +/- 150 pips
• 1.39 to 1.3925 Support turned resistance (range highs)

Support Levels:

• 1.3550 Main 2025 Support (Range Lows)
• 1.35 Key Psychological Support
• End-January Lows 1.34820

The North American calendar will be packed in the coming sessions.

Friday will welcome the high-tier Non-Farm Payrolls, where participants have been focusing on the Unemployment Rate more than the headline number itself due to new BLS adjustments – So keep your eyes on this potential large mover.

Not mentioning the key speeches and appearances from Fed speakers (including Williams on Thursday afternoon), Traders will be getting ready for quintessential inflation data early next week, with the CPI (Tuesday) and PPI (Wednesday) combo release.

Safe Trades!

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