Big Tech Slumps as Wall Street Braces for Jobs Friday

The EUR/USD pair continues to trade close to the 1.1500 level on Monday, as persistent risk aversion supports the US Dollar and limits upside momentum for the Euro.

Investor sentiment remains fragile amid growing expectations that the conflict in the Middle East could become prolonged. Elevated oil prices are adding further pressure on the Eurozone economy, which is heavily reliant on energy imports.

Recent remarks from Donald Trump describing Iranian leadership as “very reasonable” have had little impact on market sentiment. Instead, concerns are mounting over the involvement of the Iran-backed Houthis, which could escalate tensions and threaten key oil shipping routes such as the Bab el-Mandeb Strait.

Against this backdrop, any attempts by the Euro to recover are likely to remain subdued. The EUR/USD pair is on track to end March down approximately 2.5%, marking its weakest monthly performance since July of last year.

On the macroeconomic front, traders will closely monitor Eurozone confidence indicators and Germany’s Harmonized Index of Consumer Prices (HICP) for further direction during the European session. Later in the day, attention will shift to remarks from Jerome Powell, who is scheduled to speak at Harvard University, potentially providing fresh insights into the Federal Reserve’s policy outlook.

Gold prices maintain a modest upward bias above the $4,500 level at the start of the week, supported by a slightly weaker US Dollar, though broader conditions continue to limit the metal’s upside potential.

The pullback in the US Dollar Index, which measures the Greenback against a basket of major currencies, has provided some near-term support for the precious metal. However, expectations of persistently high global interest rates are likely to cap further gains, given gold’s non-yielding nature.

Market participants increasingly expect major central banks to maintain a hawkish stance as surging energy prices—driven by escalating geopolitical tensions—continue to stoke inflation concerns. These fears intensified following reports that the US could consider a ground operation in Iran, alongside the growing involvement of the Iran-backed Houthis. The group has launched missile and drone attacks on Israel within a short timeframe and signaled the possibility of further strikes, opening an additional front in an already expanding conflict.

This escalation raises concerns about disruptions to key global trade routes, particularly around the Bab el-Mandeb Strait and the Strait of Hormuz. Any sustained disruption in these corridors could keep oil prices elevated and reinforce inflationary pressures worldwide.

On the macroeconomic front, the Organisation for Economic Co-operation and Development (OECD) has revised its US inflation forecast higher, now projecting headline inflation at 4.2%—well above both its previous estimate and the Federal Reserve’s 2.7% outlook.

Oil prices rallied sharply on Monday after Yemen’s Iran-backed Houthi group launched attacks on Israel over the weekend, raising fears of a broader and more prolonged conflict in the Middle East.

Markets remain on edge as ongoing hostilities between the United States, Israel, and Iran show little sign of easing. Tehran has indicated it is prepared for the possibility of a US ground operation, while Washington has increased its military presence in the region.

Comments from Donald Trump suggesting that negotiations with Iran were progressing had limited impact on oil markets, with traders instead focusing on the escalating security risks.

The Iran-aligned Houthi movement announced it had launched multiple missile strikes against Israel and warned of further attacks. Their entry into the conflict has heightened concerns about a widening war, particularly given their ability to target shipping routes in the Red Sea. Attention is increasingly shifting to critical maritime chokepoints, including the Bab el-Mandeb Strait, which is vital for global trade flows.

The conflict has already had a significant impact on global oil supply. Iranian actions have effectively restricted access through the Strait of Hormuz, a crucial passage that accounts for roughly 20% of global oil consumption.

Despite the rising tensions, diplomatic efforts remain in focus. Speaking to reporters, Donald Trump said a potential agreement with Iran could be reached soon, though he acknowledged uncertainty around the outcome.

U.S. stocks closed sharply lower on Friday, with major indices extending losses as escalating tensions in the Middle East continued to weigh heavily on investor sentiment.

Wall Street remains under pressure as uncertainty persists over the trajectory of the conflict between the United States and Iran. Hopes for a diplomatic breakthrough have faded, with continued military activity suggesting no immediate de-escalation.

Ongoing clashes between Israel and Iran, combined with increased U.S. military deployment in the region, continue to fuel market volatility. Concerns are also mounting over potential disruptions to global energy supply, particularly through the Strait of Hormuz.

The disruption to oil flows has pushed energy prices higher, increasing concerns about inflation and complicating the outlook for monetary policy. The continued closure of the Strait of Hormuz—which handles around 20% of global oil supply—remains a key risk factor.

Data from the University of Michigan showed consumer sentiment weakening in March, alongside a sharp increase in inflation expectations.

Higher Treasury yields and a stronger US Dollar continue to weigh on equities, while safe-haven assets remain supported. Market direction will likely depend on geopolitical developments, particularly any progress toward easing tensions and restoring stability to key global trade routes.