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31/03/2026 - 07:16 UTCThe USDX retreated from its year-to-date peaks during Monday’s session, closing up 0.21% as the market navigated a complex web of geopolitical signals. The Greenback faced some selling pressure following reports that President Trump might be open to ending the military campaign in Iran even if the Strait of Hormuz remains partially restricted. This headline triggered a temporary turnaround in risk sentiment, leading to a corrective pullback in Treasury yields. However, the downside remained limited as the U.S. continues to deploy additional assets to the region, and traders remain wary of the President's warning that massive strikes on energy infrastructure are still an option if negotiations stall.
Gold capitalized on the modest dollar retracement, advancing 1.46% to trade in the $4,560–$4,565 range. The bullion found support as the slight easing of "safe-haven" dollar demand allowed for a corrective recovery from recent lows. Despite this bounce, gains for the non-yielding metal continue to be capped by a hawkish monetary outlook, with investors increasingly pricing in a potential Federal Reserve rate hike by the end of 2026. While the lack of direct dialogue between the U.S. and Iran provides a geopolitical floor for the metal, the prospect of "higher-for-longer" global interest rates remains a significant headwind for sustained upward momentum.
WTI Oil prices surged 3.32% on Monday, pushing back toward the $101.40 level as supply risks intensified despite mixed diplomatic messages. While rumors of potential negotiations and the passage of several tankers through the Strait of Hormuz provided brief relief, the overall environment remains highly volatile. The entry of Houthi forces into the conflict—marked by strikes on Israel and threats to the Bab el-Mandeb Strait—has introduced a new front in the regional war. Combined with reports of an Iranian attack on a desalination plant in Kuwait and the looming threat of a U.S. seizure of Kharg Island, the energy market continues to price in a substantial "war premium" as supply stability remains under threat.
Wall Street ended Monday's session mostly lower as an initial intraday rebound lost momentum, leaving the US 500 almost unchanged and the US Tech 100 shedding 0.36%. Despite the decline, the Dow Jones Industrial Average managed a marginal gain of 0.61%, technically exiting correction territory. Market sentiment remains fragile following a brutal week that saw major indices drop nearly 10% from recent record highs. Analysts suggest the brief intraday recovery was likely driven by algorithmic "dip-buying" rather than a fundamental shift in the geopolitical or economic landscape.
Asian equity markets displayed a mixed performance on Tuesday, concluding a difficult month characterized by deep regional declines stemming from the ongoing Middle East conflict. While U.S. equity futures saw a relief rally following reports that the war in Iran could end without a forced reopening of the Strait of Hormuz, Asian investors remained cautious. The prospect of a prolonged closure of this vital waterway continues to threaten regional energy supplies, weighing heavily on sentiment across the continent.
Major benchmarks in South Korea and Japan emerged as the primary underperformers for March, as both regions grappled with a significant retreat in heavyweight technology and semiconductor stocks. Japanese indices are on track for monthly losses exceeding 9%, further pressured by persistent signals of potential interest rate hikes from the Bank of Japan.In mainland China, the China SSE and China SZSE edged lower alongside the Hong Kong 50, despite positive manufacturing and non-manufacturing PMI data that signaled an unexpected improvement in business activity. Although the Chinese economy is viewed as relatively resilient to energy shocks, domestic markets are still expected to close March with losses.
The week ahead focuses on critical US labor and consumer data, Key releases include Tuesday's Canadian GDP and JOLTS Job Openings, followed mid-week by ADP Employment, Retail Sales, and the ISM Manufacturing PMI. The week culminates in Friday’s Non-Farm Payrolls (NFP) and Unemployment Rate report, providing a definitive look at global economic health.
The EUR/USD pair extended its decline on Monday as broad-based strength in the US Dollar continued to weigh on the Euro.
The Greenback remains supported by a risk-off sentiment fueled by ongoing geopolitical tensions in the Middle East, particularly the conflict involving the United States, Israel, and Iran. The resulting surge in oil prices has further bolstered the US Dollar, as crude oil—priced in USD—tends to drive increased demand for the currency when prices rise.
At the same time, bond yields across both the United States and Europe have been edging lower as market participants reassess the monetary policy outlook. While higher oil prices initially raised expectations of further interest rate hikes to combat inflation, attention has shifted toward the potential drag on economic growth. As a result, traders are scaling back earlier bets on additional tightening.
In the US, expectations have moved toward a prolonged pause in interest rates, with markets increasingly anticipating that the Federal Reserve will keep borrowing costs unchanged through 2026. The near term, maintaining downward pressure on EUR/USD.
In the Eurozone, rate hike expectations have also been tempered. The region’s economic sensitivity to higher energy costs, due to its reliance on imports, has reduced the likelihood of an imminent policy move in April.
On the data front, preliminary inflation figures from Germany for March indicated a renewed uptick in price pressures, raising expectations that broader Eurozone inflation data—due Tuesday—could show a similar trend.
Looking ahead, market participants will closely monitor key US economic releases this week, including the ISM Manufacturing PMI and the Nonfarm Payrolls report, for further direction on the currency pair.
Gold prices extended their advance for a third consecutive session on Tuesday, climbing to their highest level in more than a week during the Asian trading hours.
Market sentiment shifted following reports that US President Donald Trump may be open to winding down military operations against Iran, even if the Strait of Hormuz remains partially restricted. The development triggered a corrective decline in crude oil prices, easing inflation concerns and putting downward pressure on US Treasury yields. This, in turn, prompted profit-taking in the US Dollar and provided support for the non-yielding metal.
Despite these developments, geopolitical risks remain elevated. Iran has reportedly shown little willingness to engage in direct negotiations with Washington, underscoring the fragility of diplomatic progress. At the same time, continued US military deployments in the region highlight persistent tensions, tempering expectations for a swift resolution. These factors could lend renewed support to oil prices and keep inflation risks alive.
Looking ahead, investor attention will turn to key US economic releases, including JOLTS job openings data and the Conference Board’s Consumer Confidence Index, as well as remarks from Federal Open Market Committee (FOMC) officials. These factors are expected to influence the trajectory of the US Dollar and, by extension, Gold prices.
Oil prices climbed for a fourth consecutive session on Tuesday, driven by mounting concerns over supply disruptions linked to the escalating conflict in the Middle East. Both major benchmarks are on track for their strongest monthly gains in years, supported by tightening global supply conditions.
The rally has been fueled primarily by Iran’s effective closure of the Strait of Hormuz—a critical chokepoint through which roughly one-fifth of global oil supply and significant volumes of liquefied natural gas typically pass.
Further exacerbating supply concerns, reports emerged of an attack on a fully loaded Kuwaiti oil tanker near Dubai, raising fears over the security of maritime energy routes and the potential for environmental damage. The incident underscores the growing risks to seaborne oil flows as the conflict intensifies.
Tensions have also spread beyond the Persian Gulf. Over the weekend, Iran-aligned Houthi forces in Yemen reportedly launched missile strikes toward Israel, heightening concerns about possible disruptions to the Bab el-Mandeb Strait. This strategic passage connects the Red Sea to the Gulf of Aden and is a vital corridor for shipments traveling between Asia and Europe via the Suez Canal.
On the geopolitical front, US President Donald Trump reiterated a hardline stance, warning that Washington could target Iran’s energy infrastructure if the Strait of Hormuz is not reopened. Despite the rhetoric, US officials indicated that diplomatic discussions with Tehran are ongoing, though progress remains uncertain.
US equities closed mostly lower on Monday, as an early-session rebound lost momentum amid persistent geopolitical uncertainty and cautious investor sentiment. A sharp sell-off in bonds showed signs of easing following reassuring comments from Federal Reserve Chair Jerome Powell.
The ongoing conflict in the Middle East remained a central focus for markets, with conflicting signals surrounding potential peace negotiations between the United States and Iran continuing to unsettle investors.
Investor sentiment has been weighed down by escalating tensions in the Middle East, particularly after a surge in oil prices since late February raised concerns about renewed inflationary pressures.
Meanwhile, reports suggest the US is considering additional military options, including a potential ground operation in Iran, while troop deployments in the region continue to expand. Tehran has warned it would respond forcefully to any escalation.
Although oil prices have recently pulled back slightly after sharp gains, markets remain highly sensitive to geopolitical headlines. The evolving situation is expected to continue driving volatility across asset classes in the near term.
Despite near-term risks, some analysts view the recent pullback in equities as a potential opportunity, noting that valuations have become more attractive after the correction. However, sentiment remains fragile, with investors likely to stay cautious until there is greater clarity on both the geopolitical and macroeconomic outlook
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