Fawad Razaqzada

After a long and eventful first half of the year dominated by the US-Israel war on Iran and Trump's constant flip-flopping, the last thing investors, and frankly anyone else, needed with the summer holidays approaching was a return of the same geopolitical environment. Unfortunately, it looks like we could be heading back to that. Crude oil has spiked over the last couple of sessions having just returned to pre-war levels just a few days ago, while European indices such as the DAX and Ibex were nursing losses of 2-3% at the time of writing.

Crude oil spiked as escalating US-Iran tensions triggered a risk-off selloff in global equities and the Euro.

The EUR/USD edged only slightly lower, showing surprising resilience for now while European equity markets took the brunt of the sell-off, as tensions

EUR/USD outlook remains uncertain as renewed US-Iran tensions sends oil higher

Things have become noticeably more complicated after the latest escalation between the US and Iran reignited concerns over global energy supplies. While the initial market reaction was relatively contained in US equities and foreign exchange, the sharp rise in crude oil cannot be ignored – and hasn't been ignored by European investors. Brent's return towards the $80-a-barrel mark has the potential to reshape the macro narrative if prices remain elevated, putting the S&P 500 outlook on a potentially bearish course.

Brent’s return towards the $80-a-barrel mark has the potential to reshape the macro narrative if prices remain elevated, putting the S&P 500 outlook on a potentially bearish course.

Geopolitical tensions and rising oil prices are clouding the S&P 500 outlook as inflation risks resurface.

The pound has ben strengthening all week, and despite a renewed flare-up in geopolitical tensions between the US and Iran, which pushed crude oil prices sharply higher, the cable has barely flinched. But if the situation deteriorates, and oil prices remain elevated for longer, this will prompt investors to reassess the outlook for US monetary policy, which, in turn, could negatively impact the GBP/USD forecast. For now, side-ways trading is likely to dominate the agenda, with the US dollar likely to find dip buyers ahead of US CPI next week.

The EUR/USD ended the week on the back foot, surrendering its earlier poise during Friday's session.

The EUR/USD ended the week on the back foot, surrendering its earlier poise during Friday’s session. Looking ahead, US CPU is among the key data highlights.