There’s not much going on so far in European morning trade apart from a slight retracement to the Friday moves in gold and bond yields. Major currencies are not much changed while oil is also flattish, with stocks hanging on to tentative gains for now. S&P 500 futures are up 0.2% while European indices are mostly little changed.

The price action so far on the session has been rather sideways and that speaks to the lack of conviction upon the return from the weekend.

As much as tensions surrounding the Israel-Hamas conflict aren’t getting much worse, there’s still much uncertainty in the region at the moment. And that is likely keeping traders on edge for now.

We’ll have to see what Wall Street makes of this later today but as mentioned earlier, the longer we go without any major escalation in the developments in the Middle East, that is every minute that markets will start to breathe a bit easier to step out of the shelter since Friday i.e. adding confidence to the unwinding of the risk-off flows.

This article was written by Justin Low at www.forexlive.com.