Weekly Preview: FOMC Minutes, GDP & Inflation Numbers To Provide Clarity On Rates

The EUR/USD pair traded modestly higher during Monday’s early European session, hovering near the 1.1520 level. The Euro gained ground against the US Dollar amid cautious optimism surrounding ongoing discussions over a possible ceasefire between the United States and Iran.

Reports indicate that US and Iranian officials, alongside regional mediators, are exploring the framework for a potential 45-day ceasefire agreement. While negotiations are ongoing, sources suggest that the likelihood of a breakthrough within the next 48 hours remains limited. Meanwhile, US President Donald Trump has extended the decision deadline to Tuesday evening.

Market participants are also awaiting the release of the US ISM Services Purchasing Managers Index (PMI) for March, due later in the day, which could provide fresh direction for the Dollar.

Recent data showed that US labor market conditions remained relatively stable in March. However, economists caution that prolonged geopolitical tensions in the Middle East could weigh on business confidence and hiring activity in the near term.

On the European side, supportive rhetoric from European Central Bank policymakers continues to underpin the Euro. ECB officials, including President Christine Lagarde, have reiterated their commitment to maintaining a restrictive monetary policy stance until inflation sustainably returns to the 2% target.

Gold prices started the week on a softer note but managed to recover from the $4,600 level during Monday’s Asian session. Despite the rebound, bullish momentum remains limited as broader macroeconomic forces continue to cap gains in the precious metal.

Support for Gold emerged amid reports that the United States, Iran, and regional mediators are discussing the framework for a potential 45-day ceasefire. The development has slightly pressured the US Dollar, providing short-term relief for the non-yielding asset.

However, expectations of persistently high global interest rates continue to weigh on Gold. Investors increasingly believe that elevated energy prices—driven by ongoing geopolitical tensions—could reignite inflation, prompting major central banks, including the Federal Reserve, to maintain a hawkish policy stance for longer.

Crude oil prices climbed to a near four-week high following renewed geopolitical risks. US President Donald Trump warned of potential strikes on Iranian infrastructure if the Strait of Hormuz is not reopened, while Iranian officials signaled conditional willingness to resume transit through the key shipping route. Additional threats targeting the Bab el-Mandeb Strait have further heightened concerns over global supply disruptions, keeping energy markets supported.

Meanwhile, strong US Nonfarm Payrolls data released reinforced the view of a resilient labor market, strengthening expectations that the Federal Reserve will keep rates elevated. This outlook continues to underpin the US Dollar, limiting the upside potential for Gold.

Attention now turns to the upcoming US ISM Services PMI release, which could provide fresh direction, particularly in a session marked by thinner liquidity due to the Easter Monday holiday in several major markets.

Oil prices moved higher during Monday’s Asian session, building on strong gains from the previous trading day as investors closely monitored escalating tensions surrounding Iran and the critical Strait of Hormuz.

Market sentiment remains firmly driven by geopolitical developments. US President Donald Trump has set a Tuesday deadline for Iran to reopen the Strait of Hormuz, a vital artery for global oil shipments. Over the weekend, Trump escalated rhetoric, warning of significant consequences if tanker traffic is not restored.

Iranian officials responded by signaling that transit through the strait could resume, but only under conditions that include compensation for war-related damages. The standoff has heightened concerns of prolonged disruption in the Gulf, where shipping activity has already been severely constrained in recent weeks.

On the supply side, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to increase output by 206,000 barrels per day starting in May. However, traders remain skeptical about the immediate impact of the additional supply, citing logistical and geopolitical challenges that could delay its entry into the market.

Rising crude prices are also amplifying inflation concerns, as sustained increases in energy costs are likely to ripple across transportation, manufacturing, and consumer sectors globally—particularly if disruptions in the Strait of Hormuz persist.

U.S. equity index futures were relatively stable heading into Monday, as investors continued to assess last week’s developments, including escalating geopolitical tensions and stronger-than-expected U.S. labor market data. Market participants remain cautious, with risk appetite fluctuating in response to incoming headlines and macroeconomic signals.

However, markets remained sensitive to geopolitical developments. Remarks from U.S. President Donald Trump late last week, warning of further escalation if Iran failed to reopen the Strait of Hormuz, contributed to heightened volatility across global markets. The situation continues to inject uncertainty into investor sentiment, particularly given its implications for global energy supply.

On Friday, attention turned to the U.S. nonfarm payrolls report, which surprised to the upside and highlighted continued resilience in the labor market. The stronger data reinforced expectations that the Federal Reserve may keep interest rates higher for longer, supporting the U.S. Dollar and weighing on broader risk sentiment. Treasury yields also edged higher following the release, reflecting a repricing of rate expectations.

At the start of the new week, market sentiment remains mixed. While optimism around a potential U.S.–Iran ceasefire has provided some support to risk assets, elevated oil prices and persistent geopolitical uncertainty continue to limit upside momentum for equities. Defensive positioning has increased slightly as investors hedge against further shocks.

Looking ahead, investors will closely monitor further developments in the Middle East, as well as upcoming economic data, for clearer direction on the Federal Reserve’s policy path. With liquidity still relatively thin following the holiday period, markets may remain prone to heightened volatility in the near term. Any signs of de-escalation or shifts in monetary policy expectations could act as key catalysts for the next directional move in equities.