How Financial Markets Are Reacting to the Escalation in the Middle East

The exchange of strikes between Iran and Israel continues. However, judging by the behaviour of various assets, market participants do not appear to expect further escalation:

→ Oil prices are falling. Monday’s candlestick on the XBR/USD chart closed significantly below the opening level.
→ Safe-haven assets are also retreating: the Swiss franc weakened during Monday’s U.S. session, while a bearish candle formed on the daily XAU/USD chart.

Equity markets, too, have largely held their ground.

The S&P 500 index (US SPX 500 mini on FXOpen) climbed on Monday (A→B) following reports of potential talks between Iran and the U.S. However, it pulled back (B→C) after the U.S. President urged citizens to evacuate Tehran.

Technical Analysis of the E-Mini S&P 500 Chart

News of Israeli strikes on targets inside Iran led to a bearish breakout from the rising channel (marked with a red arrow), though the downward move failed to gain traction.

At present, the S&P 500 chart (US SPX 500 mini on FXOpen) shows the formation of an ascending triangle — a signal of temporary balance between supply and demand.

Still, given the elevated geopolitical uncertainty, this balance remains fragile. It could be disrupted by:
→ Further developments in the Iran–Israel conflict (notably, Donald Trump left the G7 summit early due to the situation in the Middle East);
→ U.S. retail sales data, due today at 15:30 GMT+3.

It is possible that the S&P 500 may soon attempt to break out of the triangle, potentially triggering a new directional trend.

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