Weekly update: A better fundamental route ahead of April US NFP

Global markets continue to extend their massive rallies ceaselessly, with stock market bulls remaining completely unfazed by early-week ceasefire disruptions.¹

A path toward a definitive diplomatic solution in the Middle East finally seems to be coming into view, notably allowing the technology sector and cryptocurrencies to continue their powerful breakouts.²

Now ten weeks into the conflict, the path to the resumption of vital maritime traffic in the Strait of Hormuz is slowly taking shape.

The Iranian navy recently issued its first optimistic statement, suggesting that safe and stable transit through the strait will soon be possible as military threats recede.³

This provided geopolitical relief, which is why WTI Crude Oil finally plunged below the $100 mark after stubbornly holding above it for almost two weeks, dropping sharply into the low $90s (though it subsequently rebounded).

However, the diplomatic road remains somewhat unclear; there is still significant back-and-forth.

Iranian officials dismissed some proposed US terms as an “American wish,”⁴ and President Trump sought to temper immediate expectations for peace – A confusion that caused stocks to give up a portion of their early Wednesday pre-open gains⁵, keeping traders on their toes ahead of the gigantic labour market report (US NFP) coming up on Friday.

Stepping back, the overarching picture is surprisingly bullish. Stock markets have already surged by 10% to 20% from their war lows⁶, more than erasing all their conflict-driven losses.

A massive wave of record corporate earnings acted as a major upside surprise⁷. Combined with aggressive short-covering⁸ and a highly resilient US economy that has sustained the geopolitical shock quite well, market bulls found what they wanted to keep pushing equities higher.

Traders are also preparing for next week's much-anticipated Trump-Xi meeting⁹, a boon for market sentiment, as the war situation shouldn't get much worse before the event.

Meanwhile, the US Dollar’s trajectory tells the story of fading fear.

After attempting a technical bounce from a recent double-bottom formation, the rapidly easing geopolitical narrative forced the reserve currency to capitulate, ultimately sinking to fresh two-month lows¹⁰ as the global risk-on trade dominates.

The data released throughout the past week continues to show a healthy economy, with still growing PMIs and Job openings slightly beating expectations¹¹ – Consumer confidence is slowly recovering¹² despite the rising Petrol prices, as the demand side seems to slowly accept the waves of inflation; not a good sign for Monetary policymakers.

Let's dive right into our Mid-Week North American Markets recap.

USD/CAD is approaching the lows of its 1.550 to 1.3950 range this week and is currently reversing higher.

In case you missed it, the pair has maintained a 4,000 pip consolidation since the beginning of the year.

Resistance levels

• 1.3630 to 1.3660 Key pivot (4H 50-period MA)
• 1.3720 – 1.3750 resistance
• 1.38 mini-resistance +/- 150 pips
• 1.3950 mini-resistance (range highs and recent top)

Support levels

• 1.3550 main 2025 support (range lows)
• 1.35 psychological support
• End-January lows 1.34820

The USD took a large hit throughout the latter part of the past week, with Stock Markets and FX interventions from the Ministry of Japan taking turns on the Reserve currency.

Looking at the large reversal during Wednesday morning, however, the story is not over for the Dollar, close to unchanged against the CAD and European currencies since last Monday.

Footnotes:

¹https://www.aljazeera.com/news/2026/5/5/uae-intercepts-missiles-and-drones-for-second-day

²https://www.marketpulse.com/markets/btc-80k-eth-breakout-more-incoming/

³https://investinglive.com/news/iranian-navy-talks-up-possible-safe-transit-through-strait-of-hormuz-as-us-threats-recede-20260506/

⁴https://ca.news.yahoo.com/senior-iran-mp-says-axios-132711217.html

⁵https://investinglive.com/news/stocks-are-giving-up-some-of-the-pre-market-gains-20260506/

⁶https://www.wsj.com/finance/stocks/oil-falls-risk-sentiment-rises-as-u-s-avoids-iran-escalation-a802b6f1

⁷https://www.theglobeandmail.com/business/article-stunning-us-profit-strength-ignites-stocks-charge-to-record-peaks/

⁸https://realinvestmentadvice.com/resources/blog/short-covering-rally-or-correction-over/

⁹https://www.reuters.com/world/china/trump-xi-likely-discuss-taiwan-next-week-us-says-2026-05-05/

¹⁰https://www.fxstreet.com/analysis/the-dollar-gets-ambushed-overnight-202605061300

¹¹https://ca.investing.com/news/economic-indicators/jolts-job-openings-exceed-forecasts-signaling-steady-labor-demand-93CH-4609572

¹²https://www.conference-board.org/topics/consumer-confidence/