Middle East Ceasefire Impact on Safe-Haven Assets

A temporary two-week ceasefire between the US and Iran, brokered by Pakistan, has significantly impacted safe-haven demand across financial markets. Gold prices edged lower below $4,750 as the precious metal retreated amid reduced geopolitical tensions. The USD/JPY pair tested the 158.00 level after falling approximately 0.66% from session highs near 160.00, as the ceasefire sapped safe-haven demand for the Japanese Yen.

Risk Asset Rally Following Geopolitical De-escalation

Risk-sensitive currencies experienced notable gains following the Middle East conflict de-escalation. The NZD/USD pair rallied sharply above 0.5800, boosted by both the ceasefire news and hawkish remarks from RBNZ Governor Anna Breman. GBP/USD surged more than 1% to reach session highs near 1.3485 following the ceasefire announcement. The Australian Dollar also extended gains against the Japanese Yen, driven by improved risk appetite amid the two-week pause in hostilities.

Market Fragility and Cautious Trading Sentiment

Despite initial euphoria, markets are showing signs of fragile sentiment as the temporary nature of the ceasefire creates uncertainty. The AUD/USD pair stalled below 0.7100 after giving back a portion of Wednesday's sharp rally, settling around 0.7050. The NZD/USD is trading with a cautious tone around 0.5830 as USD demand returns amid ongoing geopolitical noise and uncertainty over the sustainability of the ceasefire.