MUFG analysts see growing downside risks for the Turkish Lira (TRY) versus the US Dollar (USD) as domestic politics and an energy-driven terms-of-trade shock strain Turkey’s external position.

The US Dollar (USD) regains some composure on Tuesday, rapidly reversing Monday’s downtick against the backdrop of persistent uncertainty around the US-Iran peace deal and the reopening of the Strait of Hormuz.

United States 2-Year Note Auction increased to 4.071% from previous 3.812%

The British Pound (GBP) weakens against the US Dollar (USD) on Tuesday as traders reassess ongoing US-Iran negotiations following renewed US military action in southern Iran. At the time of writing, GBP/USD is trading around 1.3444, down nearly 0.43% on the day.

The Dow Jones Industrial Average (DJIA) is the odd one out following a long weekend, and that should bother anyone leaning into this rally.

Societe Generale analysts examine a low‑probability but severe scenario where the Strait of Hormuz stays shut through 2026, forcing Brent toward and potentially above $200/bbl to trigger sufficient demand destruction.

The Euro loses ground during the North American session amid rising tensions in the Middle East, as the US and Iran exchanged fire near the Strait of Hormuz, while negotiations continued. At the time of writing, the EUR/USD trades at 1.1622, down 0.15%.

TD Securities’ US Economic Outlook suggests a higher-for-longer Federal Reserve stance that is typically supportive for the US Dollar. The bank sees stagflationary risks from the Iran conflict, elevated Oil prices, and stressed supply chains keeping inflation high and preventing rate cuts in 2026.

USD/CAD reverses earlier intraday gains on Tuesday, with the Canadian Dollar (CAD) drawing support from rising Oil prices and offsetting broader US Dollar (USD) strength. At the time of writing, the pair is trading around 1.3800 after hitting an intraday high near 1.3821 earlier in the day.

Worldcoin (WLD) extends its recovery near the supply threshold at $0.40 at the time of writing on Tuesday, as demand for the Artificial Intelligence (AI) token broadly increases.

BNP Paribas expects Japan’s GDP growth to slow to 0.5% in 2026 from 1.1% in 2025 as higher inflation and production costs weigh on activity. The Bank of Japan is projected to continue normalising policy, with a 25 bp hike in Q2 2026 and a terminal rate of 2.0% by end-2027.

Scotiabank analysts Shaun Osborne and Eric Theoret note that the Canadian Dollar (CAD) is steady against the US Dollar (USD) near 1.3800, with fair value for USD/CAD estimated at 1.3672. They highlight that technicals are showing a stalled rally near the 200-day moving average.

MUFG's strategists flag the Reserve Bank of New Zealand (RBNZ) as a key event risk, with markets expecting no move this week but assigning a meaningful probability to a July rate hike.

United States Dallas Fed Manufacturing Business Index increased to 0.4 in May from previous -2.3

Societe Generale’s Kit Juckes notes that the Euro (EUR) has shown limited reaction to comments from Isabel Schnabel about a June European Central Bank (ECB) rate hike, even as markets price in more tightening.

Rabobank strategists Jane Foley and Molly Schwartz note that speculative US Dollar (USD) positioning has slipped into net short territory for the first time since early March, after safe-haven flows linked to the Iran war had previously supported the Dollar.

TD Securities economists Oscar Munoz and Eli Nir expect the Fed to drop its easing bias in June and keep rates on hold through 2026, citing hawkish FOMC momentum, firm inflation and a stabilized labor market. Cuts are not expected to resume until 2027.

US consumer sentiment loses some momentum in May, as the Conference Board’s Consumer Confidence Index recedes to 93.1 from April’s 93.8 (revised from 92.8).

BNY reports that BoJ Deputy Governor Ryozo Himino signaled continued consideration of further rate hikes, with timing dependent on how Middle East conflict impacts Japan’s economy and inflation.

MUFG analysts argue that the Australian Dollar’s strong run versus the US Dollar is losing momentum. They highlight limited further upside for AUD/USD as global risk appetite cools, China slows and Reserve Bank of Australia (RBA) policy takes a backseat to rising US yields.

Brown Brothers Harriman's (BBH) Elias Haddad notes EUR/USD is consolidating above 1.1600 with resistance at 1.1682, near the 200-day moving average, as European Central Bank's (ECB) Schnabel signals a June rate hike.

Silver (XAG/USD) trades on the back foot on Tuesday, pressured by a firmer US Dollar (USD) and hawkish Federal Reserve (Fed) expectations amid ongoing tensions in the Middle East. At the time of writing, XAG/USD is trading around $76.43, down nearly 2.0% on the day.

Societe Generale analysts Kunal Kundu and Galvin Chia argue that India faces rising inflation and external risks as higher Oil prices and a weaker Rupee (INR) interact.

BNP Paribas expects the United Kingdom economy to slow in 2026, with growth at 0.7% after 1.4% in 2025 and renewed inflation pressures from the Iran conflict. Monetary policy is projected to tighten by 50 basis points in 2026, keeping 10-year gilt yields elevated.

BNY’s Bob Savage highlights that the New Zealand Dollar enters the upcoming RBNZ meeting on a weak footing, with a notable lack of recent flows and a large NZD outflow linked to unrolled swap positions.

MUFG analysts note the US Dollar’s mixed performance as markets reassess Fed policy amid stronger inflation data and rising yields. They highlight the 2-year Treasury yield hitting new highs and see scope for further upside in US rates.

United States S&P/Case-Shiller Home Price Indices (YoY) came in at 0.8%, below expectations (1%) in March