Middle East Ceasefire Sparks Rally: S&P 500 Hits All-Time High as Dollar Plunges | Markets Review June 30 – July 4, 2025

Market Sentiment Overview

Markets surged following Trump’s announcement of an Iran-Israel ceasefire, ending over two weeks of military escalation. The S&P 500 and NASDAQ hit new all-time highs (6,170 and 20,273, respectively) despite rising PCE inflation (2.7% core vs 2.6% expected). Dollar weakness accelerated as Trump threatened to replace Fed Chair Powell by September or October, undermining central bank independence. Oil collapsed over 12% in its largest weekly drop since March 2023, while EUR/USD soared to nearly four-year highs above 1.1750. Risk-on sentiment dominated as geopolitical tensions eased dramatically.

Currencies

USD Index: Deep Breakdown Below 97.00 Support (96.83)

Current Trend: Strongly Bearish Market Sentiment: Very Negative

The USDX has broken decisively below the psychological 97.00 level, trading at 96.83 and confirming the technical breakdown. The chart shows price trading well below the declining 20-day moving average with bearish momentum accelerating. Trump’s threats to replace Fed Chair Powell by September/October have undermined central bank independence, while the Iran-Israel ceasefire eliminated safe-haven demand. The RSI remains deeply oversold but shows no signs of bullish divergence. The fifth consecutive monthly decline (-12% from January peaks) appears far from over.

Potential Resistance: 97.51, 98.56

Potential Support: 96.21, 95.10

EUR/USD: Explosive Breakout to Multi-Year Highs (1.1721)

Current Trend: Explosively Bullish Market Sentiment: Very Positive

EUR/USD has achieved a stunning breakout above all moving averages, trading at 1.1721 near the week’s peak of 1.1754. The chart displays a perfect ascending trend line from early 2025 lows, with price accelerating above upper Bollinger Bands. The stochastic oscillator shows extreme overbought conditions but with continued bullish momentum. Strong volume confirms the breakout above the 1.1670 resistance zone. The Dollar collapse has opened the door for a test of the 1.1800+ area. ECB’s hawkish stance versus Fed dovishness supports continued divergence.

Potential Resistance: 1.1815, 1.1908

Potential Support: 1.1605, 1.1524

GBP/USD: Parabolic Rise to Three-Year Highs (1.3716)

Current Trend: Parabolic Bullish Market Sentiment: Euphoric

GBP/USD exhibits parabolic movement at 1.3716, having broken through multiple resistance levels with unprecedented momentum. The chart shows the price well above all moving averages, with the 20-day MA trending sharply higher. The ascending channel from January lows remains intact with room for extension toward 1.3800+. Technical indicators remain bullish despite extreme overbought readings. The breakout above 1.3650 resistance has opened the next target zone. Sterling’s outperformance reflects both Dollar weakness and relative BoE hawkishness.

Potential Resistance: 1.3793, 1.3886

Potential Support: 1.3617, 1.3514

Stocks

S&P 500: New All-Time High with Room for Extension (6,168.15)

Current Trend: Explosively Bullish Market Sentiment: Euphoric

The S&P 500 achieved a decisive breakout to new all-time highs at 6,168.15, surpassing the February peak with strong momentum. The chart shows price accelerating above the ascending trend line from October 2024 lows, with all moving averages trending sharply higher. The RSI remains in bullish territory without extreme overbought warnings. Volume patterns confirm the breakout above 6,147 resistance. UBS raised year-end targets to 6,200, but technical momentum suggests potential for the 6,270 level. The ceasefire-driven risk-on rally overwhelmed inflation concerns (PCE 2.7% core).

Potential Resistance: 6,269.82, 6,436.66

Potential Support: 6,068.36, 5,895.23

NASDAQ 100: Also Achieves New Record High (22,524.8)

Current Trend: Strongly Bullish Market Sentiment: Very Positive

The NASDAQ 100 joined the record-breaking party at 22,524.8, displaying similar parabolic characteristics to the S&P 500. The tech-heavy index shows strong momentum above all moving averages, with the 20-day MA trending aggressively higher. Growth stocks benefited from declining yields and improved risk appetite following geopolitical de-escalation. The index cleared previous resistance around 22,000 with conviction, opening the path toward 23,000+ targets.

Potential Resistance: 23,002.4, 23,609.7

Potential Support: 22,111.7, 21,558.3

Nike (NKE): Spectacular Recovery Continues (72.07)

Current Trend: Explosive Recovery Market Sentiment: Very Positive

Nike’s dramatic reversal story continues at 72.07, having posted a massive 14% surge Friday following its earnings beat. The chart shows a spectacular V-shaped recovery from the 53-55 lows, with price now trading above the 20-day moving average for the first time in months. The breakout above 70.00 resistance confirms the technical reversal thesis. Volume expansion validates the move higher. Despite tariff headwinds ($1 billion cost increase), the market focused on operational improvements and beat-and-raise potential.

Potential Resistance: 74.92, 78.61

Potential Support: 68.73, 64.99

Commodities

WTI Crude Oil: Sharp Decline from Geopolitical Premium Loss (66.17)

Current Trend: Bearish Market Sentiment: Negative

WTI crude shows the dramatic impact of geopolitical premium evaporation, trading at 66.17 after collapsing from Monday’s 76.44 high. The chart displays a sharp reversal candle formation with price falling back below the 20-day moving average. The Iran-Israel ceasefire eliminated supply disruption fears, with Goldman Sachs noting only 4% probability of Strait of Hormuz closure. Despite the decline, the price holds above the 63.65 support level. OPEC’s planned 411,000 bpd increase in July adds fundamental pressure. Technical indicators suggest further downside toward the 60-69 trading range.

Potential Resistance: 68.47, 71.95

Potential Support: 63.65, 60.17

Gold: Paradoxical Decline Despite Dollar Weakness (3,274.92)

Current Trend: Bearish Market Sentiment: Negative

Gold presents a fascinating technical picture at 3,274.92, declining despite massive Dollar weakness as risk-on sentiment dominates. The chart shows price breaking below the ascending trend line from early 2025, with the 20-day moving average beginning to flatten. The stochastic oscillator has turned lower from overbought levels. The ceasefire announcement triggered rotation from safe havens into risk assets, overriding the typical inverse Dollar correlation. Price approaches the critical 3,200 support zone, with a break potentially targeting deeper levels.

Potential Resistance: 3,354.17, 3,439.93

Potential Support: 3,199.82, 3,116.21

Key Events This Week (June 30 – July 4, 2025)

Critical Economic Releases

• Monday: Germany Retail Sales, Preliminary HICP; ECB Forum Begins in Sintra
• Tuesday: Eurozone CPI (crucial for ECB policy), US ISM Manufacturing PMI, JOLTS Job Openings; Powell-Bailey Panel at ECB Forum
• Wednesday: US ADP Employment Report, China Official PMIs
• Thursday: US Nonfarm Payrolls (week’s highlight), Unemployment Rate, ISM Services PMI, Japan Tankan Survey
• Friday: Independence Day Holiday (US markets closed)

Central Bank Focus

• ECB Forum in Sintra: Powell, Lagarde, Bailey joint appearances
• Fed Independence Crisis: Trump replacement threats for Powell
• Policy Divergence: ECB hawkish vs Fed increasingly dovish

Geopolitical Developments

• Iran-Israel Ceasefire: Holding despite minor violations
• Trade Deadline Approaches: July 9 EU tariff deadline looms
• China Deal Progress: Framework reportedly finalized

Week Ahead Outlook

Thursday’s NFP report dominates the holiday-shortened week, with markets expecting around 150,000 additions. However, political pressure on the Fed may matter more than data, as Trump’s replacement threats undermine central bank credibility. The ECB Forum provides crucial central banker interactions, particularly the Powell-Bailey panel on Tuesday.

Oil’s dramatic reversal following the ceasefire suggests geopolitical premiums can disappear as quickly as they appear. Equity markets show euphoric sentiment with new highs despite inflation concerns, indicating the ceasefire effect overwhelms fundamental worries.

The Dollar’s multi-year breakdown accelerates amid Fed independence concerns, while EUR/USD’s surge toward 1.1800 and GBP/USD’s rally past 1.3750 suggest further upside potential. Risk management remains crucial despite the celebratory mood, as geopolitical situations can reverse rapidly, and inflation pressures persist despite market optimism.