Israel Strikes Iran: Markets Seek Safe Haven as Central Banks Take Center Stage | Weekly Analysis (June 16-20, 2025)

Market Sentiment Overview

Geopolitical tensions exploded as Israel launched “Operation Rising Lion,” targeting Iran’s nuclear facilities, triggering massive safe-haven flows. Gold surged above $3,400 to near all-time highs while the Dollar plunged to multi-year lows at 97.60 – its lowest since March 2022. Despite favorable US inflation data (CPI 2.4% vs 2.5% expected), markets remain risk-off ahead of a crucial central bank week featuring the Fed, BoE, BoJ, and multiple other policy decisions. The S&P 500 rallied on Oracle’s 13% surge, but geopolitical concerns dominate sentiment.

Currencies

USD Index: Collapse to Multi-Year Lows (98.00)

Current Trend: Strongly Bearish Market Sentiment:Very Negative

The Dollar suffered its fifth consecutive monthly decline, plummeting over 11% from January peaks as the USDX crashed below 98.00 for the first time since March 2022. The “Sell America” theme intensified following softer-than-expected inflation data (CPI 2.4% vs 2.5% expected, core both at 0.1% vs 0.2% expected), reviving Fed dovish expectations. US-China trade talks in London provided temporary optimism but failed to halt Dollar weakness. Technical indicators show bearish momentum with RSI near 39. Key support at 97.60 (Friday’s low), with deeper targets at 95.13 and 94.62 from 2022. Fed meeting Wednesday remains crucial for direction.

Resistance: 99.35; 100.37

Support: 97.02; 96.00

EUR/USD: Breaks Above 1.1600 to Multi-Year Highs (1.1650)

Current Trend: Strongly Bullish Market Sentiment: Very Positive

EUR/USD surged past 1.1600 for the second consecutive week, hitting fresh multi-year highs as Dollar weakness accelerated. The Euro capitalized on broad USD selling despite ongoing trade uncertainties. The pair’s advance reflects both Dollar weakness and relative ECB stability following last week’s hawkish cut. Technical momentum remains strongly bullish with no significant resistance until 1.1800-1.1900 levels. Key support now at 1.1600 (former resistance), with the bullish trend firmly intact.

Resistance: 1.1639; 1.1724

Support: 1.1470; 1.1377

GBP/USD: New 39-Month Highs Above 1.3600 (1.3635)

Current Trend: Strongly Bullish Market Sentiment: Positive

GBP/USD refreshed 39-month highs near 1.3635, maintaining its bullish undertone for the third consecutive week. The Pound benefited from broad Dollar weakness and favorable UK fundamentals. However, Friday’s geopolitical tensions triggered some profit-taking as risk-off sentiment weighed on higher-yielding currencies. The Bull Pennant pattern remains intact on daily charts, suggesting potential for further gains once geopolitical concerns ease. BoE meeting Thursday will be crucial, with rates expected to hold at 4.25%. Support at 1.3600, resistance at 1.3700.

Resistance: 1.3673; 1.3823

Support: 1.3481; 1.3350

Stocks

S&P 500: Oracle Rally Drives Gains Despite Tensions (6,045.26)

Current Trend: Cautiously Bullish Market Sentiment: Mixed

The S&P 500 gained 0.38% on Thursday, reaching 6,045.26 and trading less than 2% from all-time highs. Oracle’s spectacular 13% surge following strong Q4 results and 70% cloud infrastructure growth outlook for fiscal 2026 lifted tech sentiment. The favorable inflation report initially supported markets, but geopolitical tensions from Israel’s Iran strikes created late-week volatility. Nasdaq (+0.24%) and Dow (+0.24%) showed modest gains. Communication services and technology sectors led, while safe-haven flows increased toward week’s end.

Resistance: 6053.30; 6137.40

Support: 5869.14; 5781.79

Oracle (ORCL): Cloud Growth Powers 13% Surge

Current Trend: Strongly Bullish Market Sentiment: Very Positive

Oracle shares exploded 13% after reporting better-than-expected Q4 results and projecting sustained AI-driven demand. CEO Safra Catz’s guidance for 70% cloud infrastructure revenue growth in fiscal 2026 highlighted the company’s strong positioning in the AI boom. The rally lifted broader tech stocks and contributed significantly to the S&P 500’s gains, demonstrating investor appetite for AI-leveraged cloud services companies.

Resistance: 220.00; 226.00

Support: 195.67; 189.54

Tesla (TSLA): Political Drama Continues

Current Trend: Under Pressure Market Sentiment: Negative

Tesla remains under pressure from the ongoing Trump-Musk political feud, though specific weekly performance data wasn’t provided. The company faces continued uncertainty from government contract threats and the broader political instability affecting Musk’s business empire. Geopolitical tensions add another layer of complexity to the stock’s outlook.

Resistance: 345.16; 363.22

Support: 309.00; 291.75

Commodities

WTI Crude Oil: Bulls Test Key Breakout Zone (65.80)

Current Trend: Bullish Market Sentiment: Positive

WTI crude surged over 20.9% from yearly lows, testing pivotal resistance at 65.62-66.31 (2020 swing high/2023 close low). The rally gained momentum from supply disruptions and seasonal demand, with oil posting its second consecutive weekly advance (+9.6% month-to-date). Key resistance at 65.62-66.31 needs to be breached for broader reversal confirmation. Next targets at 68.58-70.65 (200-day MA), with critical resistance at 70.95-71.90. Support at 62.70, with broader bullish invalidation at 60.77-61.45.

Resistance: 76.23; 80.15

Support: 70.28; 66.37

Gold: Geopolitical Premium Drives Near All-Time Highs (3,420)

Current Trend: Strongly Bullish Market Sentiment: Very Positive

Gold exploded above $3,400 to near all-time highs following Israel’s “Operation Rising Lion” strikes on Iran’s nuclear facilities. The precious metal capitalized on massive safe-haven flows, broader Dollar weakness, and softer US inflation data. Iran’s threats of “very heavy price” retaliation for Israel and the US maintain elevated geopolitical premiums. Technical outlook shows strong bullish momentum with potential for new all-time highs above $3,450. Support at $3,350, with the uptrend firmly established.

Resistance: 3499.95; 3632.57

Support: 3380.57; 3241.87

Central Bank Calendar & Key Events (June 16–20, 2025)

Major Central Bank Meetings

• Tuesday: Bank of Japan (0.50% expected hold)
• Wednesday: Federal Reserve (4.25%-4.50% expected hold, dot plot crucial)
• Wednesday: Riksbank (2.25% expected), Bank Indonesia (5.50% expected)
• Thursday: Bank of England (4.25% expected hold), SNB (0.25% expected), Norges Bank (4.50%), CBRT (44.00% expected cut from 46.00%)
• Friday: People’s Bank of China (3.00%-3.50% expected)

Critical Economic Releases

• Monday: NY Empire State Manufacturing Index
• Tuesday: US Retail Sales (key growth indicator)
• Wednesday: Fed Decision & Dot Plot, UK CPI Inflation, US Jobless Claims
• Thursday: Juneteenth Holiday (US markets closed), UK Retail Sales
• Friday: Philly Fed Manufacturing, CB Leading Index

Geopolitical Risk Factors

• Israel-Iran Conflict: Escalation potential following nuclear facility strikes
• US-China Trade: Framework agreement implementation details
• Trump-Musk Feud: Ongoing government contract implications

Week Ahead Outlook

The Fed’s Wednesday decision dominates the week, with markets pricing increased dovish expectations following softer inflation data. The dot plot revision will be crucial – any indication of additional rate cuts could further pressure the Dollar. However, geopolitical tensions from Israel’s Iran strikes create significant risk-off potential that could support the Dollar as a safe haven despite domestic dovish pressures.

Oil’s breakout attempt above $65.62-66.31 resistance and Gold’s push toward new all-time highs remain key technical themes. Central bank divergence becomes critical as the Fed potentially turns more dovish while the BoE maintains hawkishness.

Risk management is essential given the volatile mix of dovish Fed expectations, escalating Middle East tensions, and multiple central bank decisions across the week. The Juneteenth holiday on Thursday limits US market activity, potentially amplifying volatility in thin trading conditions.