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Crude oil bulls wait for opportunity as Fed official warns inflation is 'heading towards the red'
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market Analysis]: Fed officials warn that inflation is "going red", and crude oil bulls are waiting for opportunities." Hope this helps you! The original content is as follows:
On April 7, during the Asian market on Tuesday, spot gold was trading around US$4,660 per ounce. The price of gold fell slightly on Monday. Although Trump once again threatened that if an agreement is not reached by Tuesday, Iran will "taste like hell", Iran seeks a lasting ceasefire plan and resists the crisis. At the same time, Iran put forward a ten-point peace road map to lift the blockade in exchange for a ceasefire; U.S. crude oil traded around $112.76 per barrel. Oil prices rose in volatile trading on Monday. The market focused on returning from the holidays, reacting to the postponement of non-agricultural employment last Friday, and paying attention to the latest developments in the situation in Iran. Trump said that Iran's bridge power plant could be destroyed in four hours.
The U.S. dollar index held steady on Monday as traders weighed escalation in Iran against hopes for a ceasefire ahead of Trump's latest deadline to reopen the Strait of Hormuz. Trump threatened in an Easter Sunday post to hit Iranian power plants and bridges if the strait was not reopened, but media said negotiators were making a last-ditch effort and investors were assessing the possibility of a ceasefire.
The U.S. dollar index was at 100 in late trading, the euro was at $1.1542, and the pound was at $1.324. The yen fell to 159.71 against the US dollar, approaching the 160 mark and a 21-month low; Japanese officials issued tough warnings, but geopolitical turmoil supported demand for safe-haven dollars, and the market was skeptical of substantive intervention. Speculative yen short positions reached US$5.7 billion, the highest since July 2024. The blockade of the Strait of Hormuz has heightened concerns about stagflation, and traders now don't expect the Federal Reserve to cut interest rates until the second half of 2027, www.xmtraders.compared with two rate cuts in 2026 at the beginning of the year. The Australian dollar rose 0.49% to $0.692, still hovering near two-month lows.
Asia CityField
Japanese Finance Minister Satsuki Katayama said on Tuesday that the finance ministers and central bank governors of the Group of Seven (G7) nations agreed that oil price fluctuations have led to high volatility in the financial and foreign exchange markets.
U.S. President Donald Trump has about 20 hours to either surrender to Iran or his allies will return to the Paleolithic era, an adviser to Iranian Speaker Mohammad Bagher Ghalibaf said on Tuesday. The adviser stressed that Iran would not back down.
A spokesman for Iran’s Supreme Joint Military www.xmtraders.command called Trump’s threat “delusional.” He added that these threats could not make up for America's "shame and humiliation" in the region.
US Market
US President Donald Trump said the latest US ceasefire proposal against Iran is "not good enough", ahead of his deadline for Iran to either reopen the Strait of Hormuz or face a major attack on its civilian infrastructure, www.xmtraders.comBC reported on Monday.
When asked at a White House press conference whether his war with Iran was ending or escalating, Trump responded: "I can't tell you."
Trump also said that Iran "could be defeated overnight, and that could be tomorrow night," while reiterating that he would attack Iran's energy and transportation infrastructure at 20:00 ET on Tuesday if the strait is not reopened.
Iran rejected the proposal and called for a permanent end to the war, state media reported.
A spokesman for Iran's Supreme Joint Military www.xmtraders.command called Trump's threats "delusional," adding that they could not make up for the United States' "shame and humiliation" in the region.
U.S. inflation risks have intensified again, with Federal Reserve officials warning that as oil shocks and tariffs continue to impact the economy, price pressures will no longer ease but will rise. Austan Goolsby said in a joint interview that inflation was now "heading towards the red", underscoring a shift to a more permanent and worrying dynamic.
Goolsby described the outlook as "at least orange...recently turning from orange to red," pointing to higher gasoline prices and what he called a new stagflationary shock on top of existing pressures. He noted that tariff-driven price increases that had been expected to weaken "have not gone away," adding to concerns that inflation could remain high.
Beth Hammack also expressed concern, stressing that inflation has been above target for five years and has been mostly "sideways" for the past two years. She described the current situation as "bright orange", underscoring the ongoing price pressure that is unquenchable.
On the labor market front, however, both officials noted relative stability. Hammack said the unemployment rate of nearly 4.3% is close to full employment and described the situation as a "fragile balance" between yellow and green. Goolsby was more cautious, giving the bill a "yellow" rating, noting that the environment was "low hiring, low firings" driven by uncertainty, but not enough to force policy easing.
The color framework used here provides a simple guide for Gurby and Hammack's thinking: green indicates the economy is on track, yellow represents a cautious balance, orange indicates heightened concern, and red indicates conditions that may be out of control. As inflation moves from orange to red, while the labor market remains trending toward yellow, the Fed faces a clear imbalance - rising price risks but insufficient employment slack to support easing.
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