Bitcoin is heading for a weekly loss as escalating tensions in the Middle East continue to weigh on risk appetite, with the cryptocurrency falling over 4% to around $66,000 after a brief rally. The downturn has been driven by a shift from oil shock concerns to rising interest rate pressures, as the conflict between the U.S., Israel, and Iran dampens expectations for near-term monetary easing.
Additional pressure came from a $14 billion options expiry that triggered significant liquidations, while investors increasingly moved into the U.S. dollar amid geopolitical uncertainty and rising Treasury yields. Elevated oil prices and inflation concerns have further reduced the appeal of non-yielding assets like Bitcoin.
Despite the bearish sentiment, some analysts view the pullback as a temporary reset rather than a fundamental breakdown, maintaining optimistic long-term targets. However, the technical outlook remains fragile, with key support levels under threat and potential for deeper declines if they are breached.
Meanwhile, the broader crypto market also weakened, with Ether, XRP, Solana, Cardano, and Dogecoin all posting notable losses. Until geopolitical tensions ease, Bitcoin is expected to remain volatile and largely influenced by macroeconomic and bond market developments rather than internal crypto factors.
The U.S. dollar climbed on Friday, putting it on track for its strongest monthly performance since July 2025, as investors turned to the currency for safety amid ongoing uncertainty surrounding the Iran conflict. The U.S. Dollar Index rose 0.3% to 100.18 and is up 2.6% so far in March, marking its biggest monthly gain in months.
Demand for the dollar has been supported not only by its safe-haven appeal but also by expectations that interest rates may stay higher for longer, driven by rising energy prices and inflation pressures. Markets have largely abandoned expectations of rate cuts from the Federal Reserve, with some even pricing in potential rate hikes. At the same time, investors have been selling bonds, pushing U.S. Treasury yields higher, with the 10-year yield reaching its highest level since July.
Analysts suggest the dollar’s strength is also rooted in fundamentals, particularly the U.S.’s lower reliance on imported oil compared to other regions, making it more resilient to energy price shocks. In contrast, Europe and parts of Asia remain more vulnerable to disruptions caused by the conflict.
Meanwhile, escalating tensions in the Middle East weighed on risk assets, while oil prices surged above $110 per barrel. Despite extending a deadline for Iran to reopen the Strait of Hormuz, U.S. President Donald Trump’s move did little to calm markets, especially as reports emerged of Israeli strikes on Iranian infrastructure, which Tehran said contradicted ongoing diplomatic timelines.
In currency markets, the euro and British pound weakened against the dollar, while the Japanese yen fell to around 160 per dollar, nearing levels that could prompt government intervention. Analysts expect the conflict may be short-lived, but warn that prolonged tensions could keep energy prices elevated and continue to pressure global markets, particularly currencies of energy-importing economies.
Bitcoin declined on Friday, capping a subdued week as heightened risk aversion tied to the Iran conflict and the looming $14 billion options expiry kept traders cautious on cryptocurrencies.
The world’s largest digital asset dropped 1.9% to $68,739.5 by 02:18 ET (06:18 GMT), putting it on track for a weekly loss of about 0.3%.
Conflicting signals surrounding the U.S.-Israel conflict involving Iran dampened Bitcoin’s earlier momentum, particularly as Washington and Tehran issued mixed messages about the prospects for a ceasefire.
Bitcoin is approaching a $14 billion options expiry on Friday, with most open positions set to settle on the Deribit exchange.
Market attention is firmly on potential price volatility before and after the expiry, particularly against the backdrop of heightened uncertainty driven by the Iran conflict.
According to Bloomberg, the “maximum pain” level—where the most options would expire worthless—is around $75,000. Large institutional players may try to steer prices toward this level to minimize payouts to option holders.
However, as contracts roll off, hedging activity in the near term is expected to decline, potentially leaving Bitcoin more vulnerable to external shocks, especially geopolitical tensions in the Middle East.
Although Bitcoin initially gained following the onset of the conflict nearly a month ago, it has struggled to break past the $75,000 mark. This comes after the cryptocurrency had already fallen by as much as 50% from its late-2025 peak near $126,000.
Much of the recent upward movement may also have been driven by hedging flows ahead of the options expiry.
Crypto price today
Cryptocurrency markets broadly moved lower on Friday, weighed down by mixed signals on a possible de-escalation in the Iran conflict, although prices stayed above their weekly lows.
Ether, the second-largest digital asset, fell 2.6% to $2,066.74, while XRP declined 1.7% to $1.3628. Solana and Cardano each dropped more than 3%, with BNB down about 1%.
Among memecoins, Dogecoin slipped 0.7%, while $TRUMP lost 1.1%.
Market sentiment improved slightly after U.S. President Donald Trump extended the deadline for potential strikes on Iran’s key energy infrastructure and signaled that talks with Tehran were ongoing.
Still, Iran said it was reviewing a 15-point ceasefire proposal from Washington and dismissed the prospect of direct negotiations.
Overall, the conflict showed few clear signs of easing as it entered its fifth consecutive week.
Cuba seeks Vatican help to ease the U.S. oil embargo, the Washington Post reports.
Cuban officials have asked the Vatican to help convince the administration of U.S. President Donald Trump to relax its oil embargo, raising the issue in high-level meetings with Vatican representatives, including Pope Leo, the Washington Post reported Friday, citing sources familiar with the discussions.
Reuters said it could not immediately confirm the report, and the Vatican, the White House, and the Cuban government did not respond to requests for comment.
Havana and Washington began talks earlier this month as the embargo intensifies economic pressures on the Communist-led country, with some reports indicating the Trump administration may be aiming to remove President Miguel Díaz-Canel from power.
Oil edges higher but is still on track for its first weekly drop since the Iran conflict began.
Oil prices rose on Friday but were still set for their first weekly decline since February 9, after U.S. President Donald Trump extended a pause on strikes against Iran’s energy facilities. Despite the temporary restraint, investors remain cautious about the chances of a ceasefire in the month-long conflict.
Brent crude climbed $1.87 (1.73%) to $109.88 a barrel, while U.S. West Texas Intermediate (WTI) gained $1.57 (1.66%) to $96.05. Even so, both benchmarks were down on the week, with Brent slipping 2.1% and WTI losing 2.3%, though they have surged sharply since the conflict began.
Analysts noted that oil markets are being driven more by the potential duration of the war than short-term headlines, warning that any damage to infrastructure or prolonged fighting could push prices significantly higher. Trump has extended a deadline to April 6 for Iran to reopen the Strait of Hormuz or face further action, while the U.S. continues to build up military presence in the region and considers targeting key Iranian oil assets.
Iran has rejected a U.S. proposal relayed via Pakistan, calling it unfair. Meanwhile, the conflict has removed around 11 million barrels per day from global supply, worsening an already tight market. Analysts say prices could fall quickly if tensions ease, but remain elevated overall—or even spike to $200—if the war drags on into late June, as countries increasingly draw on reserves and adjust demand.
Bank of America expects the U.S. dollar to strengthen further in the second quarter.
Bank of America expects the U.S. dollar to stay strong in the near term, supported by elevated energy prices and shifting expectations around central bank policy. The bank has upgraded its FX outlook, now projecting EUR/USD at 1.14 and USD/JPY at 160 by the end of Q2, reflecting continued short-term dollar strength.
This revision comes as markets reassess the impact of the Middle East energy shock, with high oil prices and ongoing uncertainty boosting demand for the greenback. According to BofA strategists led by John Shin, rising energy costs and increasingly hawkish central banks—particularly the Federal Reserve—have played a key role in lifting the dollar.
The conflict in Iran has also reshaped currency outlooks, with the dollar likely to gain further, especially against currencies of energy-importing economies. BofA’s commodities team now expects Brent crude to average around $80 in 2026, reinforcing inflationary pressures.
Meanwhile, expectations for central bank policy have shifted, with markets pricing in modest Fed tightening and multiple rate hikes from other G10 central banks. Whether these hikes materialize will be crucial for FX movements in the coming months.
BofA now sees dollar strength extending into Q2 rather than being confined to Q1, although it still anticipates a gradual weakening later in 2026 as energy markets stabilize. Longer term, the bank forecasts EUR/USD rising to 1.20 by year-end.
However, risks remain tied to the trajectory of the energy shock—prolonged disruption could drive further dollar gains, while a quicker resolution may lead to a pullback as geopolitical risk premiums fade.
U.S. Treasury plans to place Donald Trump’s signature on new dollar bills, breaking a 165-year tradition.
U.S. paper currency will begin carrying President Donald Trump’s signature this summer, marking the first time a sitting president has signed American banknotes, according to the Treasury Department. The change, tied to the 250th anniversary of U.S. independence, also ends a 165-year tradition by removing the U.S. treasurer’s signature from the bills.
The first redesigned $100 notes—featuring Trump’s signature alongside Treasury Secretary Scott Bessent—are set to be printed in June, with other denominations to follow. Existing notes bearing the signatures of former Treasury Secretary Janet Yellen and Treasurer Lynn Malerba will remain in circulation for now.
Malerba will be the last treasurer to appear on U.S. currency, ending a practice that dates back to 1861. The update is part of broader efforts by the Trump administration to place the president’s name and likeness on national symbols, including a newly approved commemorative coin.
While the signatures will change, the overall design of U.S. banknotes will remain largely the same. Officials noted the Treasury has legal authority to adjust currency features, provided key elements—such as “In God We Trust” and portraits of deceased individuals—are preserved.
In our previous update, we noted that the S&P 500’s year-to-date performance had closely followed midterm election-year seasonality. When combined with our Elliott Wave analysis, we concluded that:
The decline was likely to bottom around $6,490 ± 10
A countertrend rally would begin once that low was in place, potentially reaching about $6,900 ± 100
This would likely be followed by another pullback, at minimum retracing 38.2% of the rally from the April low
As of now, the index appears to have behaved largely in line with that outlook. It bottomed on Friday at $6,473—just 7 points below the projected zone—and has since rebounded by roughly 2%.
However, given that the market seems to be undergoing a fourth-wave correction comparable in scale to the 2022 second-wave decline, it’s unlikely that such a modest pullback represents the entire correction. Elliott Wave theory suggests corrections typically unfold in at least three waves (a, b, and c).
As a result, while not impossible, it is unlikely that the correction has already completed. More plausibly, the red Wave A within the broader black Wave 4 has now formed its low.
Figure 1. Intermediate-term Elliott Wave count for the S&P 500 (SPX) since April 2025.
Because we prioritize what’s most probable rather than merely possible, we rely on a weight-of-the-evidence approach. In addition to seasonality, we assess a range of market breadth indicators.
Here, the McClellan Oscillator for the S&P 500 shows a higher low between the March 13 and March 20 price lows (see Figure 2). This indicates that fewer stocks were involved in the latest decline—a condition known as positive divergence (green dotted arrow), which is typically a bullish signal.
Moreover, the indicator had fallen to levels last seen during the April 2025 crash low, pointing to deeply oversold market breadth. Much like a stretched rubber band nearing its limit, such conditions often precede a rebound—another constructive signal for the market.
Figure 2. McClellan Oscillator for the S&P 500 since April 2025.
The second breadth indicator we analyze is the cumulative Advance–Decline line for the S&P 500 (SPX A/D), shown in Figure 3. So far, it has continued to hold above its upward-sloping blue dotted trendline from the April lows (black arrows), which is a constructive sign.
Earlier in 2025, a negative divergence between the index and the A/D line signaled the February–April correction (solid red and green arrows). In contrast, no such divergence has appeared recently. Instead, the A/D line has been rising while the index has been largely flat (dotted red and green arrows within the black box).
Moreover, the A/D line has now broken above its downtrend line that had been in place since early March (green arrow), adding another bullish indication.
Figure 3. Cumulative Advance–Decline (A/D) line for the S&P 500 since October 2025.
In summary, while price action remains the ultimate arbiter, key market breadth indicators are broadly supportive of a bullish outlook. At the same time, the index found a low precisely within the zone projected by our Elliott Wave and Fibonacci analysis.
As long as prices hold above Friday’s low, we anticipate the B-wave rebound to extend toward the $6,900 ± 100 area. However, if that level fails to hold, the next meaningful support lies in the mid-6,300s, where buyers may look to reestablish control.
Since fighting with Iran erupted on Feb. 28, energy stocks have stood out as some of the few consistent winners for bullish investors—until a social media post from President Trump triggered a drop in oil prices, dragging energy shares down with it. The episode underscored how fragile markets are right now, where even a single headline can spark sharp swings.
That’s why recent remarks from Chevron CEO Mike Wirth carry weight. He warned that markets may be underestimating the impact of potential supply disruptions, particularly if Iran closes the Strait of Hormuz—a key route that typically handles about 20% of global oil flows . According to Wirth, pricing is being driven more by perception than solid information, even as investors are flooded with conflicting data.
Still, his view shouldn’t be dismissed as self-serving. With decades of operational experience in volatile regions like Venezuela, Wirth understands how deeply disruptions can affect supply chains—and how long it can take for markets to stabilize again.
As a result, even if oil avoids extreme scenarios—such as the $200-per-barrel projections floated by some analysts—consumers may still face elevated fuel prices for an extended period. For investors who missed the initial rally, opportunities may still exist, particularly across different segments of the energy sector.
Big Oil Momentum: Chevron at the Forefront in a Supply-Constrained Market
Among major oil companies, Chevron stands out as a top pick. Its stock (CVX) has surged nearly 33% in 2026, breaking out of a multi-year range that had held since 2022.
Much of this rally followed U.S. military actions in Venezuela, where Chevron uniquely maintains operations among international oil firms.
That said, investors may question whether the stock is vulnerable to a pullback if tensions in the Strait of Hormuz ease. Currently, CVX trades about 11% above its average analyst price target. Still, those targets are being revised upward, with the most optimistic call from Piper Sandler lifting its target to $242 from $179.
Over the past three years, Chevron has delivered roughly 50% total returns—modest for growth-focused investors, but notable given its reputation as a reliable dividend payer. Even after its recent rally, the stock offers a 3.5% yield, reinforcing its appeal as a blend of income and stability.
Refining Edge: Valero Benefits from Volatility and Expanding Margins
While Chevron represents upstream exposure, Valero Energy provides a different angle—pure refining. This makes it well-positioned even in volatile oil markets.
Unlike producers, refiners profit from the “crack spread,” or the gap between crude input costs and refined product prices. Supply disruptions that hurt producers can actually boost refining margins.
Valero, the world’s largest independent refiner, operates 15 facilities across North America and the U.K., giving it both scale and flexibility—especially valuable if supply routes shift due to geopolitical risks.
Its stock (VLO) has climbed over 45% in 2026, now trading about 20% above consensus targets. While somewhat extended, analysts continue to raise expectations. Meanwhile, investors benefit from a dividend yield near 2%, offering a mix of cyclical upside and income.
Midstream Stability: Enbridge Delivers Income with Volume-Driven Growth
Another way to play the energy rally is through midstream operators like Enbridge, which function more like toll collectors for oil and gas flows.
These companies earn fees based on volume rather than commodity prices—and volumes are currently near record highs in early 2026.
Enbridge is one of the largest pipeline operators in North America, with over 18,000 miles of infrastructure, transporting roughly 30% of the region’s crude oil and about 20% of U.S. natural gas demand.
Over the past three years, ENB has returned around 80%, highlighting the consistency of midstream performance. With a consensus price target implying nearly 20% upside and a dividend yield around 5.1%, Enbridge offers a compelling combination of steady income and moderate growth.
The dollar’s strength since the onset of the war is not surprising, but it is often misunderstood. The Dollar Index has climbed about 1.8% this month, following a smaller 0.65% gain in February after a 1.35% drop in January. Since hostilities began, the dollar has risen against all G10 currencies, with most—except the Canadian dollar and sterling—falling more than 1.5%. While this appears to reflect broad strength, it is equally a function of positioning, leverage, and rising US interest rates.
Reassessing Safe-Haven Flows
Two main forces are behind the dollar’s advance. The first is mechanical: short covering. For months, investors had used the dollar as a funding currency, borrowing cheaply in USD to invest in higher-yielding assets like Latin American bonds. When those risk trades reversed, positions were unwound and dollars were bought back, creating the illusion of safe-haven demand.
A similar process occurred among foreign investors in US equities. Many had hedged their dollar exposure while financing the US current account deficit. As US stocks declined, these investors sold equities and unwound dollar hedges—or found themselves over-hedged and adjusted accordingly. In both cases, the resulting demand for dollars was structural rather than discretionary.
The second driver is more traditional safe-haven demand. War reduces risk appetite, and with the US now a major energy producer, some investors view its economy as relatively shielded from oil shocks. While this argument holds some merit, it is likely to be less durable than the effects of positioning adjustments.
The Role of US Interest Rates
What is less widely recognized is how sharply US interest rates have risen, and how central this has been to the dollar’s strength. Since the war began, the two-year Treasury yield has increased by about 53 basis points, while the ten-year yield is up roughly 45 basis points. Although interest rate differentials typically matter, in the near term, the sheer rise in US rates appears to be a more decisive factor—especially as these increases are driven by inflation fears and supply shocks rather than optimism about growth.
Fed Expectations Shift
Expectations for Federal Reserve policy have also changed. Before the conflict, markets had fully priced in two rate cuts this year, with some probability of a third. Even after some repricing, at least one cut was still anticipated. However, while the Fed’s official statement had limited impact, Chair Powell’s press conference reshaped expectations. He downplayed projections showing stronger growth alongside steady unemployment and reiterated a cautious rate outlook.
Powell also acknowledged the Fed’s constraints, noting that missing inflation targets has become common and that the war complicates both inflation control and employment objectives.
Inflation Pressures Build
Meanwhile, rising fuel prices are shifting the political and economic landscape. Gasoline prices have increased daily since the war began, adding about $1 per gallon and pushing the national average close to $4. Grocery prices are also beginning to rise. This type of inflation is immediately felt by consumers and generates political pressure far more quickly than broader economic indicators.
Powell’s description of labor market “stability” also warrants scrutiny, given the loss of 92,000 jobs in February. He acknowledged that immigration policies are constraining labor force growth—adding to the effects of tariffs and war in limiting the Fed’s ability to cut rates as aggressively as desired.
Powell further emphasized his intention to remain Fed Chair until a successor is confirmed and indicated he would not step down from his governor role during any ongoing investigation, framing this as a defense of institutional independence.
Technical Outlook
From a technical perspective, the Dollar Index peaked near 100.50 on March 13 and has since found support just below 99.00, trading around its 20-day moving average. Momentum indicators suggest some consolidation may be ahead. However, positioning is not yet extreme—euro longs have dropped sharply, and yen shorts have increased—indicating the adjustment process may not be complete, especially amid lingering geopolitical uncertainty.
Outlook
The dollar is supported by both war-related demand and higher interest rates, but both factors depend on how the conflict evolves. The recently announced five-day pause is being met with skepticism, and risks of escalation remain, particularly with increased US military presence and speculation around strategic targets like Iran’s Kharg Island.
Until there is greater clarity, the dollar is likely to remain supported. However, once uncertainty fades, any reversal could unfold quickly—as has been seen in similar episodes before.
Bitcoin edged higher on Wednesday, staying above $71,000 as improving risk sentiment—driven by hopes of easing Middle East tensions—supported markets, even as Iran pushed back against a proposed U.S. ceasefire.
The leading cryptocurrency rose about 1.1% to $71,129.8 by late trading, recovering after briefly slipping below $70,000 earlier in the week when escalating conflict triggered a broader risk-off move.
Mixed signals from Washington and Tehran kept uncertainty elevated. President Donald Trump said the U.S. was in active discussions with Iran and suggested progress toward a deal, while reports pointed to a 15-point U.S. proposal aimed at ending the conflict. However, Iranian officials denied any formal negotiations, rejecting the ceasefire idea and instead calling for a complete end to the war, alongside conditions such as halting all attacks and securing recognition of its authority over the Strait of Hormuz.
Despite these contradictions, optimism over potential de-escalation weighed on oil prices, easing supply concerns and helping lift overall risk appetite—factors that have increasingly influenced Bitcoin’s price movements. The cryptocurrency’s earlier decline coincided with a surge in crude, highlighting its sensitivity to geopolitical and energy market shifts.
Even amid volatility, Bitcoin has shown resilience around the $70,000 mark, supported by ongoing institutional demand and improving liquidity.
In the U.K., the government announced new political funding rules, including caps on overseas donations and a ban on cryptocurrency contributions until proper regulations are in place—a move that could impact parties like Reform U.K., which had previously embraced bitcoin donations.
Elsewhere in crypto markets, most altcoins traded higher. Ethereum rose 1% to $2,166.45, XRP added 0.2%, while Solana and Cardano gained between 1.1% and 1.7%. Dogecoin also climbed 1.5%.
Oil prices inched up as Iran considers the U.S. plan to end the conflict.
Oil prices in Asia inched up on Thursday as mixed signals over Middle East de-escalation kept markets cautious, while Iran considered a U.S. proposal to end the conflict.
By 20:31 ET (00:31 GMT), May Brent crude rose 0.8% to $103.02 per barrel and WTI crude gained 1% to $91.20, after both benchmarks dropped more than 2% in the previous session.
Traders assessed tentative diplomatic developments from Tehran, where authorities are said to be reviewing a U.S.-supported plan to stop the fighting. Although Iran has yet to accept the proposal, it has not rejected it outright, fueling guarded optimism for easing tensions.
However, uncertainty remains high. Tehran has denied direct talks with Washington and signaled that major disagreements persist, leaving markets uneasy and price moves relatively muted.
Crude has seen sharp swings in recent weeks as the conflict disrupted supply flows from the Gulf, a key global oil hub. Earlier this month, Brent surged past $119 per barrel on concerns over potential supply outages.
The Strait of Hormuz—through which about one-fifth of global oil passes—remains a critical risk point, with any disruption likely to drive prices higher.
On Wednesday, prices fell as reports of possible negotiations eased some geopolitical risk premium. Meanwhile, investors are monitoring Washington’s stance, as officials warn of tougher action if Iran fails to engage, adding further uncertainty to the outlook.
Gold holds steady as markets weigh conflicting signals over potential de-escalation between the U.S. and Iran.
Gold prices were mostly stable in Asian trading on Thursday as investors navigated mixed signals surrounding the Iran conflict, while Tehran continued to assess a U.S. proposal to end the war.
Spot gold edged up 0.1% to $4,509.06 an ounce by 22:57 ET (02:57 GMT), while U.S. gold futures declined 1.1% to $4,536.10.
Bullion had recovered earlier in the week, climbing back above $4,500 after a sharp pullback, supported by a weaker dollar and cautious optimism over potential U.S.-Iran diplomacy.
Still, gains were limited as uncertainty persisted. Iran is reviewing a U.S.-backed plan to halt hostilities, but unclear signals on whether talks will advance have kept investors wary.
Although Tehran has not formally accepted the proposal, it has avoided rejecting it outright, fueling guarded hopes for de-escalation. At the same time, Iran has denied direct negotiations with Washington and emphasized that key differences remain unresolved, leaving markets uneasy.
The U.S. has also warned of tougher action if Iran fails to engage constructively, adding another layer of tension.
Gold—traditionally a safe-haven asset—has shown unusual volatility in recent weeks. Prices dropped sharply earlier this month despite rising geopolitical risks, as expectations of prolonged high interest rates and a stronger dollar weighed on demand.
Movements in oil prices have also influenced sentiment. Rising crude has heightened inflation concerns, reinforcing expectations that central banks may keep rates elevated, which tends to pressure non-yielding assets like gold.
Wider financial markets reflected a cautious tone, with investors seeking clearer direction on both geopolitical developments and global monetary policy.
Among other precious metals, silver gained 0.1% to $71.32 an ounce, while platinum slipped 0.6% to $1,918.60.
The U.S. dollar rose slightly on Wednesday, rebounding from earlier losses as hopes for Middle East de-escalation faded after Iran rejected a U.S. ceasefire proposal.
At 17:45 ET (21:45 GMT), the U.S. Dollar Index—tracking the greenback against six major currencies—gained 0.2% to 99.62.
The United States has put forward a ceasefire proposal.
While there is some optimism that Washington and Tehran may be exploring ways to end the conflict, markets remain cautious as both sides continue to offer conflicting accounts of how negotiations are progressing.
Reportedly eager to find an exit from the war, President Donald Trump has backed a U.S. proposal outlining a 15-point peace plan to Iran. The plan not only calls for Tehran to dismantle its primary nuclear facilities but also urges the reopening of the Strait of Hormuz — a critical shipping route south of Iran that has been largely shut to tanker traffic in recent weeks. This disruption has pushed energy prices higher and raised concerns about global inflation.
According to Thierry Wizman, global FX and rates strategist at Macquarie, investor optimism was revived by news that the U.S. had presented concrete terms to Iran. However, he cautioned that a ceasefire is unlikely in the near term. Instead, the U.S. may escalate military pressure over the next couple of weeks to push Iran toward meaningful concessions, with major combat potentially reaching a turning point by mid-April. He described the situation as entering a third phase — one defined by both negotiation and conflict, rather than purely one or the other.
Wizman added that the possibility of renewed negotiations signals a more critical stage in the U.S.-Iran conflict. Initially driven by diplomacy, then by direct confrontation, the situation may now evolve into a blend of both. While this dual-track approach could help stabilize market sentiment compared to outright war, it also carries the risk of sharper downside if it fails to deliver lasting stability and security.
Iran has pushed back against the proposal.
On Wednesday morning, the Fars News Agency reported that Tehran does not accept a ceasefire, emphasizing that it seeks a complete end to the conflict rather than a temporary halt in fighting.
Later, Press TV stated that Iran would not allow the United States to dictate when the war should end, citing a senior political figure. According to the report, the official outlined five key demands from Tehran, including a full cessation of attacks as well as international recognition and guarantees of Iran’s authority over the Strait of Hormuz.
However, Axios later cited a U.S. official saying Washington had not received any formal communication from Iran rejecting the ceasefire plan.
Iranian Foreign Minister Abbas Araghchi also denied that negotiations with the U.S. were taking place, according to Reuters. While acknowledging that messages were being passed through intermediaries, he stressed that such exchanges should not be interpreted as formal talks.
In the energy market, Brent crude — the global benchmark — briefly dipped below $100 per barrel on Wednesday, though it remains significantly higher than the roughly $70 level seen before the conflict began in late February.
Rising concerns over energy-driven inflation have strengthened expectations that central banks worldwide may need to adopt a more hawkish policy stance. In Germany, ECB President Christine Lagarde indicated that further tightening could be justified even if the inflation spike proves temporary.
The euro and yen edged higher on Wednesday, while sterling drew attention following the latest UK inflation figures.
The euro saw a slight uptick, with EUR/USD hovering around 1.1560. At the same time, the Japanese yen strengthened, pushing USD/JPY down to 159.33.
Sterling remained largely flat, trading near 1.3365 against the dollar, but came into focus after the release of new consumer inflation data. The UK’s consumer price index rose 3% year-on-year in March, unchanged from February. Notably, the data does not yet reflect the impact of rising oil prices triggered by the Middle East conflict.
According to Sanjay Raja, chief UK economist at Deutsche Bank, the UK’s disinflation trend may be approaching a pause. He noted that February’s inflation reading is already outdated, as households and businesses are beginning to feel the effects of the Iran conflict, particularly through higher fuel costs. Further increases in fuel prices are expected, and even if the conflict ends quickly, energy bills — including electricity and gas — could still climb by double digits over the summer.
Gold is trying to stabilize, bolstered by a softer U.S. dollar and easing oil prices, as geopolitical tensions show signs of temporary relief. The recovery has pushed bullion toward the mid-$4,500s, suggesting the market is regaining balance after a recent sharp repricing.
The gold-to-silver ratio is drifting back toward the mid-60s, after dipping closer to 60 earlier in the week. This indicates relative strength in gold, while silver remains more sensitive to cyclical trends. Flows remain defensive, rather than shifting toward higher-beta exposure.
The context is key. Gold is emerging from a period where geopolitical stress failed to generate sustained demand. The prior repricing was driven by inflation expectations and policy positioning: energy-driven inflation reinforced bets on tighter monetary policy, strengthened the dollar, and increased the cost of holding non-yielding assets. This environment diverted capital away from bullion precisely when it would normally attract flows.
That dynamic still shapes the market. Gold is trading in a system where inflation, interest rates, and liquidity guide flows. As long as macro stress influences policy expectations, the market remains biased away from passive safe-haven accumulation.
From Macro Shock to Policy Transmission
Recent price action illustrates how macro shocks propagate. Geopolitical tensions and energy disruptions fed directly into inflation expectations, reinforcing the view that central banks might maintain restrictive conditions longer. This tightened financial conditions through both rates and a stronger dollar.
The current stabilization reflects a partial release of that pressure. A softer dollar and lower oil have eased the immediate inflation impulse, letting gold recover. The adjustment is mechanical—driven by easing inputs—without changing the broader framework guiding capital allocation.
Markets in this phase continuously reprice the balance between inflation risk and policy response. Gold follows this process rather than leading it. Until the transmission mechanism shifts away from inflation-driven tightening, rallies develop in a constrained environment, with selective liquidity and limited momentum.
The Renko Structure: Damage First, Stabilization Second
The Renko structure highlights the sequence clearly. Gold’s advance into the upper $4,500s reached an exhaustion zone just below $4,600, where upward momentum faded and supply returned. The subsequent pullback pierced the upper structure, removing the previous layer of support.
Gold is currently pivoting near $4,560, which now acts as a reference point within a rebalanced range rather than a springboard. Just below, $4,550–$4,551 offers the first structural support; a break here would reopen the path toward $4,525, where the structure becomes fragile and reactive.
Upside resistance begins at $4,575, the zone where the prior rebound failed, making it a test of market acceptance. Above that, the low $4,580s congestion band is the next checkpoint before the broader ceiling below $4,600, where sellers previously regained control.
The structure reflects a market stabilizing after lost momentum. Stabilization has formed, but directional strength has yet to reemerge.
Internal Conditions Show Compression
ECRO is at zero, signaling full compression: prior downside momentum is exhausted, and the current recovery has not generated a new expansion phase. Price is consolidating within defined boundaries as liquidity seeks alignment. Momentum indicators confirm the market has moved from active movement into controlled stabilization, limiting extensions beyond key levels without confirmation from broader flows.
What Needs to Change for a Stronger Move
A sustained rally requires continuity: maintaining the pivot near $4,560, reclaiming the upper barrier, and transforming it into acceptance. This would rebuild structure above prior rejection zones, signaling buyer commitment. Without this, rallies remain constrained, leaving the market exposed to renewed resistance at each layer.
Gold’s challenge lies in the environment rather than the metal itself. Inflation, interest rates, and liquidity continue to govern how demand translates into flows. Until that balance shifts, directional moves will struggle to sustain.
Final Read
Gold has exited active selling pressure and entered a stabilization phase. Both price structure and internal indicators reflect recalibration. Control has not yet returned. Compression dominates, keeping price within a range while direction remains unresolved. The next move will depend on flows re-establishing continuity above previously rejected levels.
Stabilization is present; leadership is still absent.
Oil dropping below $95 signals that the market is easing its worst-case fears, though the underlying structural risks remain. Gold’s rally points to a dovish policy interpretation, with traders anticipating a gentler rate path rather than outright risk hedging. Equities are following signs of easing inflation, yet the system remains fragile and sensitive to headlines.
Light at the End of the Tunnel
Asian traders woke to what feels like a soft glow at the tunnel’s end.
Oil has slipped below $95, equities are rising, yields are easing, and the dollar is softening as Washington’s diplomatic push starts to feel less like theatre and more like a path markets can tentatively follow. A 30-day ceasefire is no longer just a line in a briefing note—it’s starting to look like a trackable reality.
But this is still glow, not full daylight.
Crude’s decline reflects the market dimming emergency lighting, not declaring the room safe. Traders are beginning to believe the fire may be contained. The panic premium is being dialed down, not switched off. And that subtlety is where trades live or die.
The underlying system remains fragile. The Strait of Hormuz is still the key conduit for global energy flows, flickering under geopolitical tension. Confidence isn’t restored by proposals; it returns when flows run smoothly, insurance risks normalize, and barrels shed their geopolitical premium.
For now, the market follows the beam rather than stepping fully into the open.
Equities lean into it: S&P futures rise as lower oil feeds softer inflation expectations, easing central bank pressure and reopening the risk door. This is expectation-driven, not confirmation-driven.
Bond markets move cautiously. Yields edging lower show traders shading their views rather than rewriting them. The dollar eases as hedges trim slightly; risk isn’t gone, just loosened.
Gold, meanwhile, is stepping further into the light. It rallies not out of fear but in forward pricing—anticipating a softer policy path as oil slips and inflation pressures ease. Bullion is accumulating because markets see central banks nudged closer to a pivot.
This is the tell: when gold rises alongside equities and softer yields, the market isn’t just trading risk—it’s trading policy.
And yet, the barrel still holds the switch.
Even below $95, oil remains the power source for the macro grid. Diplomacy can dim the lights, but full power returns only when the physical system stabilizes. Gains won’t unwind because of negotiations; they unwind when supply chains flow, inventories rebuild, and disruption is no longer priced as baseline.
We’re not there yet.
What we see is the market cautiously walking toward the light: sentiment improving, volatility compressing, risk returning in measured doses. But the wiring underneath remains exposed.
The tunnel is visible. The way forward is clearer. But until that light becomes open sky, every step carries the risk of the switch being flipped back.
Most currency pairs are expected to trade in a range. The Dollar Index may stay within 98–101, while the Euro has broken above 1.16 and could extend to 1.1650–1.17 before pulling back. EURINR has surged due to Euro strength and Rupee weakness, potentially testing 110 before dipping. EURJPY may hold between 182–185, and USDJPY within 157–160. USDCNY remains stable in the 6.88–6.92 range. The Aussie and Pound may trade in 0.69–0.72 and 1.32–1.35 ranges, respectively. USDINR is likely to decline toward 93.25–93.00, with upside capped near 94.
US Treasury yields remain elevated but stable, with support limiting downside and preserving the broader uptrend. A short-term dip or consolidation is possible before yields resume their upward move. German yields may see a corrective decline before continuing higher. The 10-year GoI yield is trending up, with intermediate resistance suggesting a temporary dip before further rise.
Global equities have rebounded on easing Middle East tensions, though key resistance levels cap gains. The Dow has recovered but remains at risk of falling toward 45,000 while below 47,000. DAX has surpassed 23,000 but needs a break above 23,500 to sustain an uptrend; otherwise, it may slip toward 22,000. Nifty failed near 22,950 and requires a move above 23,000 to target 23,500–24,000, else downside toward 22,000 remains. Nikkei is gaining but stays bearish under 54,000, with potential to drop toward 50,000–48,000. Shanghai may extend gains to 4,000–4,100.
Crude oil is easing on reduced geopolitical tensions. Brent may decline to $90–$85 if it breaks $95, and WTI could fall to $82–$80 if it holds below $90–$88. Precious metals have rebounded: Gold may rise toward $4,800–$5,000 and Silver toward $78–$80. Copper remains weak under $5.70, potentially falling toward $5.00. Natural Gas is nearing support at $2.80, likely trading in a $2.80–$3.30 range if support holds.
Bitcoin ticked down on Tuesday, giving back some of the previous session’s gains as investors weighed the chances of easing tensions in the U.S.-Israel conflict with Iran. The крупнейшая cryptocurrency slipped 0.4% to $70,475.6 by late afternoon trading.
According to Arthur Azizov of B2 Ventures, markets remain highly uncertain and need time to stabilize. He noted a growing perception that traditional assets are becoming more speculative than crypto—an unsettling signal for investors.
Reports suggest potential de-escalation underway
Reports after the U.S. market close suggested possible de-escalation efforts. Israeli Channel 12 said U.S. envoy Steve Witkoff and Jared Kushner were exploring a ceasefire framework alongside a 15-point negotiation plan, while The New York Times indicated Washington had already sent a proposal to Iran. Earlier, President Donald Trump said strikes on Iran’s energy sector were being delayed following what he called productive talks. However, Iranian officials denied any negotiations, and conflicting headlines kept markets on edge, with oil prices rebounding sharply.
Investors remain concerned that prolonged high oil prices could fuel global inflation and prompt tighter monetary policy, which typically weighs on non-yielding, risk-sensitive assets like Bitcoin and gold. Still, Bitcoin has held up better than gold since the conflict began, with the latter pressured by profit-taking after hitting record highs.
Bernstein says Bitcoin has likely hit its bottom
Bernstein analysts believe Bitcoin has already bottomed and is poised to move higher. They argue the recent pullback reflects a reset in sentiment rather than weakening fundamentals, noting the absence of systemic stress seen in previous downturns. The firm also highlighted Bitcoin’s roughly 25% outperformance versus gold since late February, reinforcing its appeal as a portable, censorship-resistant asset during geopolitical uncertainty.
Bernstein maintained an “outperform” rating and a $450 price target on Strategy, describing it as a high-beta proxy for Bitcoin exposure with a resilient balance sheet. The company, chaired by Michael Saylor, holds about 3.6% of total Bitcoin supply, worth around $53.5 billion.
Across the broader crypto market, prices mostly declined alongside Bitcoin. Ethereum edged down to $2,153.02, XRP fell 1.2%, and Solana dropped 1.1%, while Cardano rose 1.7%. Among memecoins, Dogecoin gained 0.4% and $TRUMP climbed 3.3%.
Gold rises on softer dollar, lower oil after U.S. proposal.
Gold surged more than 2% during Asian trading on Wednesday, driven by falling oil prices and a softer U.S. dollar. Hopes of a potential Middle East ceasefire eased inflation concerns, increasing the appeal of the metal.
Spot gold rose 2.3% to $4,577.55 per ounce, while U.S. gold futures climbed 4% to $4,611.70.
The move came as reports emerged that the United States had proposed a 15-point plan to Iran aimed at ending the conflict. President Donald Trump said negotiations were ongoing and noted that Iran appeared willing to reach a deal. However, Iranian officials denied any talks, underscoring continued uncertainty.
Oil prices dropped sharply after earlier gains fueled by supply disruption fears, with Brent crude slipping below $100 per barrel. This decline helped ease inflation expectations, reducing pressure on central banks to maintain high interest rates.
Lower energy prices also weighed on bond yields and the dollar—factors that typically support gold, which does not yield interest. The U.S. Dollar Index slipped 0.2% in early trading.
Gold had recently been under pressure due to rising oil prices and bond yields, which strengthened the dollar and triggered a broader selloff in precious metals.
Despite the rebound, analysts warned that volatility is likely to continue, as markets remain highly sensitive to developments in the Middle East.
Elsewhere, silver jumped 3.3% to $73.60 per ounce, and platinum rose 2.2% to $1,977.60.
Oil drops on Middle East ceasefire hopes.
Oil prices dropped about 4% on Wednesday as hopes of a potential ceasefire in the Middle East raised expectations that supply disruptions from the region could ease. The decline followed reports that the U.S. had delivered a 15-point proposal to Iran aimed at ending the conflict.
Brent crude fell $4.89 (4.7%) to $99.60 per barrel, after hitting a low of $97.57. U.S. West Texas Intermediate (WTI) slipped $3.54 (3.8%) to $88.81, touching as low as $86.72. This came after both benchmarks had surged nearly 5% in the previous session before trimming gains amid volatile trading.
Analysts said growing optimism over a ceasefire, along with profit-taking, pressured prices. However, uncertainty over whether negotiations will succeed continues to limit further declines.
U.S. President Donald Trump stated that progress was being made in talks with Iran, while sources confirmed Washington had sent a detailed settlement plan. Reports also suggested the U.S. is pushing for a temporary ceasefire to facilitate discussions, including measures such as curbing Iran’s nuclear program and reopening the Strait of Hormuz.
Despite this, some analysts remain cautious, warning that Middle East developments will continue to drive price swings in the near term.
The conflict has severely disrupted oil and LNG shipments through the Strait of Hormuz—responsible for roughly one-fifth of global supply—creating what the International Energy Agency has described as an unprecedented supply shock.
Even if a ceasefire is reached and flows resume, experts say it is unclear how quickly production will fully recover, especially without confidence in a lasting agreement.
Meanwhile, diplomatic efforts continue, with Pakistan offering to host negotiations, and Iran indicating that non-hostile vessels may pass through the Strait if coordinated with its authorities. Still, military activity in the region persists, and the U.S. is reportedly preparing to deploy additional troops.
To offset disruptions, Saudi Arabia has ramped up exports via its Red Sea Yanbu port to nearly 4 million barrels per day.
In the U.S., inventory data added further pressure to prices, with crude stocks rising by 2.35 million barrels, gasoline up 528,000 barrels, and distillates increasing by 1.39 million barrels last week, according to industry estimates.
The dollar climbed on Tuesday, recovering from the previous session’s decline as uncertainty surrounding U.S.–Iran peace negotiations dampened sentiment and boosted demand for safe-haven assets.
The greenback showed little response to an unverified media report released after the Wall Street close, which suggested a potential ceasefire between the two countries.
As of 17:49 ET (21:49 GMT), the U.S. Dollar Index—measuring the currency against a basket of six major peers—rose 0.3% to 99.23.
Dollar rebounds amid persistent uncertainty
The dollar regained ground as uncertainty continued to dominate market sentiment. On Monday, Donald Trump stated that he would postpone potential strikes on Iran’s energy facilities for five days following what he described as “very positive and productive” discussions aimed at ending the nearly month-long conflict. His remarks initially pressured the dollar, pushing it to its lowest level in almost two weeks.
However, sentiment shifted on Tuesday as conflicting media reports emerged regarding developments in the Middle East. Iran’s parliamentary speaker dismissed Trump’s claims, accusing him of fabricating the talks to calm volatile financial markets.
Later, Trump told reporters that negotiations were still underway and asserted that Iran had agreed to forgo developing nuclear weapons. He also noted that U.S. Secretary of State Marco Rubio and Vice President JD Vance were involved in the discussions.
Following the close of Wall Street, Israel’s Channel 12 reported that U.S. Middle East envoy Steve Witkoff and businessman Jared Kushner were working on a framework to establish a ceasefire and initiate negotiations based on a 15-point plan. Meanwhile, The New York Times reported that the U.S. had already delivered a proposal to Iran aimed at ending the conflict.
Despite these developments, hostilities in the Middle East continue, with the Strait of Hormuz—a crucial passage south of Iran through which roughly 20% of global oil supply flows—effectively closed. The strait remains a major flashpoint, as the risk of Iranian attacks on vessels threatens to disrupt vital energy shipments, particularly to key Asian importers.
Analysts at ING noted that the dollar remains highly sensitive to evolving headlines surrounding the conflict. They added that markets are closely watching for signals—especially from Iran—on whether meaningful ceasefire negotiations could begin. Until clearer progress emerges, any sustained rally in risk assets or significant decline in the dollar is likely to remain limited.
Euro and sterling steady; yen in spotlight after Japan inflation data
The euro and British pound remained largely stable on Tuesday, with EUR/USD edging slightly higher to 1.1607 and GBP/USD ticking up to 1.3409.
Meanwhile, the dollar posted modest gains against the Japanese yen after fresh data showed Japan’s inflation slowed more than expected in February. Core inflation dropped below the central bank’s target for the first time in four years, reinforcing expectations that the Bank of Japan may adopt a more cautious approach toward further monetary tightening.
Analysts at ING noted that the central bank is likely to look past the recent slowdown in inflation and instead focus on potential upside risks to prices.
They added that strong wage negotiation outcomes and firmer-than-expected PMI readings could still support the case for an interest rate hike as early as April. However, the exact timing remains uncertain and may depend on evolving geopolitical developments, particularly in the Middle East.
Bitcoin surged on Monday as investor appetite for risk improved amid hopes of easing tensions in the Middle East.
Donald Trump highlighted “productive” discussions with Iran and announced that the U.S. would delay planned strikes on Iranian energy facilities for five days. Following these remarks, Bitcoin climbed 4.5% to $70,947.6 after previously trading lower.
However, Iran’s Fars News Agency denied any form of communication with the U.S., stating that no direct or indirect talks had taken place. The report also suggested that Washington’s decision to postpone strikes came after Iran warned it would retaliate by targeting energy infrastructure across West Asia.
Donald Trump highlights “productive” talks, raising hopes for a potential end to the conflict.
Donald Trump claimed that the U.S. had held “productive” discussions with Iran, suggesting a potential path toward ending the conflict. In a social media post, he said both sides had made progress toward a “complete and total resolution” and announced a five-day delay in planned strikes on Iran’s energy infrastructure.
However, officials in Tehran denied that any talks had taken place. Iran’s foreign ministry reiterated that its stance on the Strait of Hormuz and the conditions for ending the conflict remain unchanged.
Reports from The Wall Street Journal, citing Fars News Agency, also stated there had been no direct or indirect communication between the two sides. According to Fars, the U.S. decision to hold off on strikes came after Iran warned it would retaliate by targeting similar infrastructure across West Asia.
Trump later told reporters that the discussions had gone very well and that there was a strong possibility of reaching an agreement, though he emphasized that no outcome was guaranteed.
Meanwhile, Justin Wolfers from the University of Michigan highlighted the uncertainty facing financial markets—whether to trust U.S. statements about negotiations or Iran’s denials.
Earlier, Trump had warned that Iran must reopen the Strait of Hormuz within 48 hours or face military action. In response, Tehran threatened to shut down the waterway entirely and target key energy and water infrastructure in Gulf countries if attacked.
Bitcoin outperforms gold as geopolitical tensions and interest rate concerns weigh more heavily on the precious metal.
Bitcoin has outperformed gold and other precious metals this month since the conflict began, with bullion attracting limited demand despite rising geopolitical tensions.
Bitcoin has gained nearly 6% in March, while spot gold has dropped around 17%. The precious metal came under pressure after hitting a record high in late January, triggering profit-taking and a broader unwinding of long positions.
Even with the escalation involving Iran, gold failed to see strong safe-haven inflows, as concerns over persistent inflation and higher interest rates outweighed its appeal. In contrast, Bitcoin benefited from improving U.S. regulatory sentiment and renewed buying interest after previously falling as much as 50% from its October peak.
However, on a year-to-date basis, gold still leads, rising about 2% compared to Bitcoin’s roughly 19% decline.
Across the broader crypto market, gains followed Bitcoin’s move higher after Donald Trump’s announcement. Ethereum climbed 5.6%, while XRP rose 4.3%. Other major tokens including BNB, Solana, and Cardano also posted gains, alongside memecoins like Dogecoin.
Gold prices continued to decline for a tenth consecutive session during Asian trading on Tuesday, as Iran denied engaging in talks with the U.S. following Donald Trump’s decision to delay further strikes on Iranian energy facilities.
Spot gold dropped 1.3% to $4,351.28 per ounce, while U.S. gold futures fell 0.3% to $4,399.59. The postponement of military action by Washington helped ease broader market tensions and led to a sharp decline in oil prices, allowing gold to recover slightly in the previous session.
Trump had earlier delayed plans to target Iran’s power grid, citing “productive” discussions, but Mohammad Baqer Qalibaf dismissed these claims, stating that no such talks had occurred—adding uncertainty to the situation.
Despite typically being seen as a safe-haven asset, gold has struggled amid shifting macroeconomic expectations. Rising energy costs have fueled concerns about persistent inflation, prompting investors to scale back expectations of interest rate cuts.
As a result, central banks—including the Federal Reserve—are now expected to maintain higher interest rates for longer, which tends to pressure gold prices since it does not generate interest.
Other precious metals also declined, with silver falling 1.5% and platinum slipping 0.3%.
The U.S. dollar declined on Monday, giving up earlier gains as investors reacted to President Donald Trump’s remarks about “productive” discussions with Iran. By 17:15 ET (21:15 GMT), the dollar index—measuring the greenback against six major currencies—had dropped 0.5% to 99.13.
Optimism over easing tensions spreads across global markets.
Hopes of easing tensions spread across global markets. Wall Street posted strong gains, while oil prices plunged after Trump decided to delay missile strikes on key Iranian infrastructure, citing progress in talks with Tehran. In a social media update, he said discussions aimed at achieving a “complete and total resolution” to the conflict.
Trump noted that, based on the positive tone of the talks—which are expected to continue—he had ordered the Pentagon to postpone any military action against Iranian energy facilities for five days. However, Iranian state media denied that any direct negotiations had taken place with the U.S. Officials in Tehran maintained their stance on the Strait of Hormuz and reiterated that their conditions for ending the conflict remain unchanged.
Reports from the The Wall Street Journal, citing Iran’s Fars news agency, also indicated there had been no communication between the two sides. According to Fars, the U.S. decision to step back from targeting Iranian energy sites followed warnings from Iran about potential retaliation across West Asia.
Speaking to reporters, Trump said the talks had gone “very well” and suggested there was a serious chance of reaching an agreement, though he stopped short of making any guarantees.
Market analysts expressed uncertainty over how to interpret the situation. David Morrison from Trade Nation noted that the developments add volatility to trading, especially given the high stakes involved. He also suggested that the lack of clearly defined war objectives may allow the U.S. to step back while claiming success—though Iran has framed the move as a retreat following its warnings.
The euro, pound, and yen showed little movement.
In currency markets, the euro and pound showed little movement, while the yen remained steady. European markets ended higher, supported by optimism that reduced tensions could stabilize energy supplies. This is particularly important for Europe, which depends heavily on oil and gas from the Middle East.
Disruptions to the Strait of Hormuz—through which about 20% of global energy supply passes—as well as attacks on gas infrastructure in Qatar, have recently weighed on the region. Meanwhile, Japan’s currency has also been pressured by rising oil prices, as the country relies on crude imports passing through the same route.
This week, markets will be closely watching developments in the Iran conflict, movements in oil prices, and changes in global government bond yields.
Ondas is recommended as a buy for traders who are comfortable with high-risk, high-reward situations, especially with earnings approaching.
PDD is suggested as a sell because its slowing growth and looming regulatory challenges likely outweigh any short-term upside, particularly ahead of its fourth‑quarter earnings release.
U.S. stocks fell sharply on Friday, with the S&P 500 ending at a six-month low, as tensions in the Middle East pushed oil prices higher, fueling concerns about inflation and the likelihood of rising interest rates.
The major U.S. stock indexes recorded their fourth consecutive week of losses. The Dow Jones Industrial Average fell 2.1%, the S&P 500 dropped 1.9%, the Nasdaq Composite slid 2.1%, and the Russell 2000 lost 1.7%.
Since the outbreak of the Iran conflict on February 28, the S&P 500 has declined 5.4%, the Nasdaq is down 4.5%, and the Dow has fallen nearly 7%. All three benchmarks are trading below their 200-day moving averages, highlighting the recent weakening of market sentiment.
In the coming week, attention will continue to focus on oil prices, global bond yields, and developments in Iran.
U.S. economic releases are expected to be relatively light, with reports on manufacturing, services activity, and initial jobless claims scheduled for the week ahead.
Notable companies such as Carnival and Chewy are scheduled to release their earnings this week.
Additionally, a major energy conference in Houston, featuring leading executives from the global industry, may capture Wall Street’s focus.
Below, I outline one stock recommended for purchase and one to consider selling for the week of Monday, March 23, through Friday, March 27.
Recommended Buy: Ondas
Ondas, a company specializing in private wireless networks and drone solutions, is scheduled to report its latest earnings this week. The firm is active in high-growth areas such as industrial automation and critical infrastructure, sectors that are rapidly embracing advanced wireless technologies.
Ondas will release its Q4 results on Wednesday, with a conference call set for 8:00 AM ET. Based on options market activity, investors are anticipating a potential move of roughly ±10% in ONDS shares following the announcement.
Ondas has already released updated preliminary results, reporting Q4 revenue of $29.1 million to $30.1 million—exceeding prior guidance of $27–$29 million—driven by strong demand in defense, homeland security, and critical infrastructure applications.
The company anticipates Q4 net income between $82.9 million and $83.4 million, with full-year net income projected at $50.4 million to $50.9 million, surpassing earlier estimates.
Management also reaffirmed its ambitious 2026 revenue target of $170–$180 million (excluding potential acquisitions), backed by a growing backlog and recent defense contract wins, including border protection systems and counter-drone solutions.
ONDS recently traded near $10, closing at $10.06 on Friday, following a pullback accompanied by strong trading volume. After an extraordinary one-year rally of roughly +1,300%, Ondas is now consolidating within a high-volatility symmetrical triangle. The stock is trading between $9.50 (rising support, aligned with the 50% Fibonacci retracement) and $11.50 (falling resistance), with the triangle nearly 80% complete.
This technical pattern indicates potential for a favorable earnings-driven move if the final results align with preliminary figures and guidance remains intact.
Trade Setup:
Entry: $9.95 – $10.25
Target: $12.00 (~20% potential gain)
Stop-Loss: $9.35 (~6.5% risk)
Recommended Sell: PDD
In contrast, PDD Holdings, the parent company of Pinduoduo and Temu, heads into earnings week amid a pronounced downtrend. Despite strong growth in recent years, PDD faces increasing headwinds, including intensifying competition in China’s e-commerce market and rising global regulatory scrutiny, which could weigh on investor sentiment.
The company is scheduled to report its fourth-quarter results before the market opens on Wednesday. Options markets imply a potential ±6% move in the stock following the earnings release, highlighting the risk of an earnings miss.
Analysts expect year-over-year growth in both EPS and revenue, but recent quarters have fallen short, and the company faces broader challenges.
Temu’s rapid international expansion has driven up marketing expenses, potentially weighing on profitability. Additionally, PDD operates in a tightly regulated environment in both China and overseas, with recent scrutiny on data privacy and trade practices posing further risks.
Against this backdrop, even strong revenue results may not reassure investors if management provides cautious guidance or commentary, or if margins are pressured by ongoing subsidies and high marketing costs.
PDD has dropped nearly 25% over the past year, closing at $96.19 on Friday. The stock recently broke below key multi-month support at $97.00, signaling a textbook bearish breakdown.
Technical indicators reinforce the downtrend: the price is trading below all major moving averages (20-, 50-, and 200-day), the SuperTrend is red at $106.42, and the Ichimoku Cloud confirms a bearish outlook, with the next potential support zone around $90–$92.
Trade Setup:
Entry: Near current levels (~$96)
Target: $87 (~9.5% potential gain)
Stop-Loss: $102 (~6.2% risk)
Disclaimer: This content is for informational purposes only and should not be considered financial advice. Always perform your own due diligence before making investment decisions.
Bitcoin trades just under $68,000 on Monday, marking a decline of more than 6% compared to last week.
Ethereum has broken below a key support level, raising the risk of a deeper pullback.
XRP continues its downward trend, recording seven straight bearish candles.
Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) remain under pressure on Monday after posting weekly losses of over 6%, 5%, and 4%, respectively. BTC has fallen below the $68,000 mark, while ETH and XRP are trading beneath key support levels. The three leading cryptocurrencies are beginning to show signs of weakness following these breakdowns, suggesting the potential for a deeper correction in the days ahead.
Bitcoin shows early signs of bearish momentum
Bitcoin is trading around $68,000 on Monday, with short-term sentiment tilting slightly bearish. The price continues to stay below the upper boundary of its channel near $72,600 while finding support around $65,900, indicating that sellers remain active during rallies within the current downward structure. Additionally, daily closes are still well below the 50-day and 100-day Exponential Moving Averages (EMAs), which lie between $72,000 and $78,000, reinforcing the view that the market is undergoing a corrective phase within a broader range.
Momentum has weakened, with the Relative Strength Index (RSI) on the daily chart dropping toward the mid-40s, while the Moving Average Convergence Divergence (MACD) remains below its signal line and continues drifting toward the zero level—both signaling fading bullish strength after the rejection above $72,000.
On the upside, immediate resistance is seen near the recent swing high around $69,000, followed by the channel ceiling just below $72,600. This area is further reinforced by the 50-day Exponential Moving Average, creating a strong supply zone. A daily close above this confluence would be required to neutralize the current bearish bias and pave the way for a move toward $73,500 and higher.
To the downside, key support lies near the channel base around $65,900. A breakdown below this level could open the door to $64,000 and then $62,500, where previous demand zones and the lower boundary of the recent range may draw in buyers.
Ethereum deepens its pullback after failing to hold key support
Ethereum is trading around $2,048 on Monday, with the short-term outlook remaining mildly bearish as price stays below the channel ceiling near $2,148. The asset continues to trade well under the 50-day and 100-day EMAs, positioned around $2,200 and $2,470, highlighting persistent downside pressure after the recent rebound failed to hold above $2,100.
Momentum indicators point to further weakness. The Relative Strength Index (RSI) on the daily chart has eased to around 45, reflecting fading bullish strength, while the Moving Average Convergence Divergence (MACD) has crossed below its signal line and turned negative, signaling increasing selling pressure.
On the upside, initial resistance is located near the channel top around $2,148, reinforced by the 23.6% Fibonacci retracement of the move from $1,747.80 to $3,402.89 at $2,138. A decisive daily close above this zone could open the path toward the 38.2% retracement at $2,380, which aligns with the 50-day EMA and would help weaken the current bearish structure.
On the downside, immediate support is seen at the $2,000 level, followed by the channel base and a key horizontal floor near $1,747. A break below this region would likely accelerate the broader decline, paving the way for a deeper move within the prevailing downtrend.
XRP records seven straight bearish sessions
XRP is trading below $1.39 as of Monday, continuing to move within a descending parallel channel that originated from the $2.83 peak. The price remains closer to the lower boundary near $1.09 than the upper limit around $1.90, keeping the broader outlook firmly bearish. Daily closes also sit well beneath the 50-day and 100-day EMAs, positioned between $1.49 and $1.67, reinforcing persistent downside pressure as rebounds struggle to test these dynamic resistance levels.
Momentum indicators reflect weakening strength. The Relative Strength Index (RSI) has slipped to around 43, staying below the midpoint and signaling subdued bullish momentum after the recent attempt to rise toward $1.54. Meanwhile, the Moving Average Convergence Divergence (MACD) is trending toward the zero line, with the MACD line converging toward its signal line and a shrinking positive histogram—both suggesting fading upside momentum within the broader downtrend.
On the downside, initial support is located near $1.30, a prior horizontal level that acts as the last meaningful cushion before the channel floor around $1.09. A break below this area could trigger a deeper decline within the prevailing bearish structure.
To the upside, immediate resistance appears near the recent swing high around $1.45, followed by the psychological $1.50 level, where selling pressure aligns with the descending 50-day EMA. A daily close above this zone would be necessary to target the channel’s upper boundary near $1.90, which also coincides with a key long-term resistance level and would be critical in reversing the medium-term bearish bias.
Gold remains firmly under bearish pressure for another week, kicking off Monday with the yellow metal once again eyeing a test of the $4,300 level. The decline is driven by ongoing Middle East tensions, higher US Treasury yields, and a stronger US dollar.
Fundamental Analysis
Gold has fallen around 3% in Monday’s Asian session, building on last week’s decline of over 10% as key support levels continue to give way.
Gold: Escalating Gulf conflict lifts USD
Selling pressure on Gold remains relentless, with the metal weighed down by renewed strength in the US dollar and rising US Treasury yields as tensions in the Middle East enter a more intense phase.
Gold is facing a dual headwind, losing its appeal as a safe-haven asset while the US dollar strengthens in its role as the world’s primary reserve currency, making dollar-denominated bullion less attractive for foreign investors.
At the same time, the latest escalation in the conflict has reignited fears of energy supply disruptions and rising inflation, increasing expectations of global interest rate hikes. This has pushed US Treasury yields higher, further pressuring non-yielding assets like Gold.
International Energy Agency (IEA) chief Fatih Birol warned that global oil supply losses could reach 11 million barrels per day—surpassing the shocks of 1973 and 1979 combined.
Markets were further unsettled as tensions between the United States and Iran intensified, with threats exchanged over the Strait of Hormuz and potential strikes on civilian and energy infrastructure, while Israel signaled plans for extended military operations.
Israel’s military confirmed it has launched a large-scale wave of strikes targeting infrastructure in Tehran. Meanwhile, reports suggest the US is considering a ground operation aimed at seizing Iran’s Kharg Island.
If the confrontation between the US and Iran escalates further, broader market sell-offs could accelerate, potentially forcing investors to liquidate Gold positions to cover losses in other assets.
That said, Gold may see a temporary bounce if a technical rebound emerges, as the daily Relative Strength Index (RSI) remains deeply oversold, below the 30 threshold.
Technical Analysis
The near-term outlook has shifted bearish as price breaks decisively below both the 21-day and 50-day Simple Moving Averages (SMAs), signaling a disruption of the prior uptrend structure. The 21-day SMA has turned lower and now acts as immediate resistance near $5,035, while the 50-day SMA, flattening around $4,970, further reinforces downside pressure.
Despite this pullback, the asset continues to trade well above the upward-sloping 100-day and 200-day SMAs, located near $4,610 and $4,095 respectively, suggesting the current move remains a sharp correction within a broader bullish trend. Meanwhile, the Relative Strength Index (RSI) has dropped to 26, entering oversold territory and indicating stretched bearish momentum.
In the short term, resistance is seen at the former breakdown zone around $4,650, followed by stronger resistance at the 21-day SMA near $5,035. A daily close above this level would be required to signal a potential stabilization and could open the door for a move toward the 50-day SMA near $4,970, helping to ease immediate downside risks.
On the downside, immediate support lies around $4,360. A break below this level would expose the psychological $4,300 area, where the rising 100-day SMA may attract dip-buying interest. Failure to hold this zone would shift focus toward the 200-day SMA near $4,095, which remains a critical support level for maintaining the longer-term bullish structure.
The euro climbed during the week, testing the 1.16 level as both central banks tied to this pair held their meetings. However, the key takeaway is that the Federal Reserve is likely to stay more hawkish than previously expected, increasing the chances that the US dollar will remain stronger for an extended period.
In fact, by Friday, even though the ECB had sounded somewhat more hawkish than expected, there were already signs of a shift in tone, with ECB member Villeroy indicating that a rate cut cannot be ruled out.
Ongoing concerns over energy in the European Union also add downside risk—if energy issues persist, economic growth could slow. As a result, the euro may remain under pressure, with any short-term rallies likely to face selling pressure.
Silver (XAG/USD)
Silver prices dropped sharply over the week as rising U.S. interest rates weighed on the market, and that trend is likely to continue. As the week comes to a close, the focus is on holding above the $70 level—a key round number that carries strong psychological importance and is being closely watched by traders.
If the market breaks below this support level, it could trigger significant selling pressure, potentially driving prices toward $65, and over the longer term, even down to $50.
Overall, this is a market that may be hard to navigate, and it’s unlikely to see consistent upward momentum unless U.S. interest rates begin to stabilize.
Gold (XAU/USD)
The gold market is likely to behave similarly to silver, with the key difference being its safe-haven appeal. Because of that, gold may outperform silver—and frankly, that’s what I expect to happen.
That said, outperformance is relative, and this week’s candlestick looks quite weak. I’d be watching the 4,500 level closely, with the 4,400 area below it acting as additional support.
Any rally from here is likely to face selling pressure sooner or later, with 5,000 serving as a near-term ceiling. It’s only when U.S. interest rates fall meaningfully that gold can resume a stronger upward move. Still, looking at the longer-term charts, gold could drop another 1,000 and remain within a broader uptrend.
BTC/USD
Bitcoin initially attempted a breakout during the week but is having trouble holding above the 72,000 level. Still, it remains within a formation that suggests a possible reversal, although—like other markets—the outcome will largely depend on U.S. interest rates.
If interest rates remain exceptionally high, it’s hard to see Bitcoin—being a high-risk asset—performing strongly in that environment.
That said, I’m not expecting Bitcoin to collapse, but any upward move is likely to be gradual rather than sharp. If the trend is positive, it will probably be more of a slow grind higher than a rapid rally.
GBP/USD
The British pound climbed over the week, reaching up to test the key 1.35 level before pulling back. Overall, the market is likely to remain quite volatile, with the 1.3250 level acting as a support zone.
It seems that traders are continuing to sell the British pound whenever signs of exhaustion appear, especially as ongoing energy concerns in the United Kingdom weigh on sentiment.
There is a strong possibility that the US dollar could strengthen against the pound, pushing this pair lower. If the price falls below the 1.32 level, it may head toward the 200-week EMA, which is currently around 1.30. I have little interest in buying the pound at the moment, even though it may still perform better than several of its peers against the US dollar.
USD/CHF
The US dollar is trading choppily against the Swiss franc, hovering around the 0.79 level. If the price manages to break above this week’s high, it could pave the way for a move toward the 0.81 level.
If the price breaks below this week’s low, the market could decline toward the 0.77 level. Overall, this is likely to remain a choppy and noisy environment.
With US interest rates rising, the market tends to favor safe-haven flows, while the Swiss National Bank may step in if the franc strengthens excessively. Given these opposing forces, I expect the pair to eventually move higher.
NASDAQ 100
The Nasdaq 100 attempted to move higher during the week but encountered resistance around the 25,000 level. After reversing and showing weakness, the market now appears to be testing the 23,800 level.
Given this situation, the market appears vulnerable to a deeper downside move. The 50-week EMA sits near the 23,800 level, and a break below that could trigger significant selling pressure. While short-term bounces may occur, a sustained move above 25,000 would be needed for buyers to regain control and target higher levels. For now, elevated interest rates continue to weigh on overall risk sentiment.
DAX
In Germany, the DAX initially attempted to rally but has since broken down decisively, appearing to lose key support. Rising German interest rates, combined with a broader risk-off environment and ongoing energy challenges across Europe, continue to heavily influence the market’s direction.
With liquefied natural gas and oil continuing to pose challenges, this market will likely need time to establish support at lower levels. Before that happens, however, it could potentially decline toward the 20,000 mark.
For years, financial elites have brushed off gold as an unproductive asset—an inert yellow metal that generates no income and seems out of place in a fast-moving, digital economy. But by 2026, that long-standing view is beginning to lose credibility.
As the image of the “almighty U.S. dollar” starts to crack under the weight of a federal deficit exceeding $38 trillion—and still rising uncontrollably—gold is no longer just a hedge. It is increasingly seen as a primary escape route from a global era of fiscal excess.
The strongest argument for gold today doesn’t lie in consumer demand like jewelry, but in central bank behavior. Since the freezing of Russian reserves in 2022 following its invasion of Ukraine, a clear message has emerged. Many countries, especially in the Global South and BRICS+, are growing wary of holding U.S. Treasury assets that can be restricted or liquidated instantly.
This shift goes beyond simple de-dollarization—it signals a deep, structural reallocation of global capital. When central banks accumulate gold at record levels, they are not chasing short-term gains; they are securing financial independence. Gold stands apart as the only major asset that is not someone else’s liability.
Meanwhile, sovereign debt dynamics have moved from troubling to almost absurd. With debt-to-GDP ratios at extreme levels, major economies are stuck in a dilemma: raising interest rates enough to curb inflation risks making their debt burdens unmanageable.
As a result, real interest rates are likely to remain low or even negative—conditions that have historically favored gold. When inflation erodes the returns of supposedly “safe” government bonds, gold’s lack of yield becomes far less of a disadvantage and even appealing.
There’s a certain irony in this moment. As technology enables the creation of endless digital assets and AI-generated content, tangible assets like gold are gaining renewed appeal among both institutional and individual investors. Governments can expand debt or issue digital currencies at will, and AI can produce limitless synthetic content—but gold remains constrained by physical reality.
It cannot be created out of thin air. Annual mine production increases global supply by only about 1.5% to 2%, and the total amount of gold ever mined—around 212,000 tons—would fill just a few Olympic-sized swimming pools.
In a world marked by uncertainty, where even truth feels scarce, investors are gravitating toward something real—an asset that requires human effort, heavy machinery, and time to produce, and one that has consistently preserved value throughout history.
The bullish case for gold is not based solely on doomsday fears. It reflects a deeper issue: the erosion of sound financial systems, manageable debt levels, and trust in institutions. As that trust weakens, gold tends to rise.
At roughly $5,060 per ounce, gold’s recent performance—illustrated through instruments like SPDR Gold Shares (GLD)—shows a powerful surge, supported by strong volume and capital inflows. This movement suggests more than simple hedging; it indicates a strategic shift toward safeguarding wealth against potential systemic shocks.
Interestingly, while technical analysts might interpret the chart as signaling a sell, such a view overlooks a key imbalance: even the largest corporations, despite their substantial cash reserves, are dwarfed by the scale of global sovereign debt.
The scale of the debt-versus-gold imbalance is striking. Companies in the S&P 500 collectively hold an estimated $2.5 to $3 trillion in cash and equivalents, according to J.P. Morgan. While that figure appears substantial, it represents just about 5% of the total debt owed by the G7 economies.
The G7—comprising the United States, Canada, the United Kingdom, France, Germany, Italy, and Japan, along with the broader European Union—sits at the center of the global financial system. The U.S. alone, with an economy valued at roughly $30–32 trillion, accounts for about 26% of global GDP, which the IMF estimates at $123.6 trillion in 2026.
Yet the U.S. national debt has climbed to $38.87 trillion as of March 2026 and continues to grow at a pace of around $7 billion per day. At this trajectory, it is expected to surpass $40 trillion within the year.
This has pushed the U.S. debt-to-GDP ratio to approximately 123%, meaning federal debt exceeds the size of the entire economy by 23%. Such levels are near post–World War II highs and far above historical norms—an indication of growing fiscal strain. Despite this, there appears to be little political momentum to curb spending, with policymakers instead signaling further expansion.
Looking beyond the U.S., the broader picture is equally concerning. Combined sovereign debt across G7 nations now stands at roughly $65 trillion, with no coordinated effort to rein in deficits or reduce spending.
If this trajectory continues, the long-term consequences for fiat currencies could be severe. A system increasingly burdened by unsustainable debt risks eventual disruption, potentially leading to a profound global financial reset. In such a scenario, gold could continue its upward trajectory, with projections pointing toward $6,000 per ounce as a plausible next milestone.
The US dollar weakened over the week, with the US Dollar Index (DXY) falling back below the 100 mark to around 99.60 by Friday, after a midweek boost following the Federal Reserve’s decision to keep interest rates unchanged at 3.50%–3.75%. Meanwhile, the conflict in Iran has entered its third week, and the Strait of Hormuz remains effectively shut, keeping oil prices elevated. Reports of the Pentagon sending thousands more Marines to the region point to a prolonged standoff. At the same time, Fed Chair Jerome Powell warned that inflationary pressures may still build further.
EUR/USD is hovering around the 1.1550 level after hitting new lows for 2026 earlier in the week, despite the European Central Bank’s hawkish stance, with markets now assigning an 85% chance of a rate hike this year.
GBP/USD is trading near 1.3330 after the Bank of England kept rates unchanged on Thursday but hinted that further tightening could be necessary if energy-led inflation continues.
USD/JPY is holding close to 159.30, with the yen gaining support as the Bank of Japan signaled a return to policy normalization.
AUD/USD is sitting around 0.7010 following a second straight rate hike from the Reserve Bank of Australia, though broader risk-off sentiment is still weighing on the currency.
West Texas Intermediate (WTI) crude is near $98 per barrel, close to weekly highs, after Israeli Prime Minister Benjamin Netanyahu indicated efforts to reopen the Strait of Hormuz.
Gold dropped sharply to $4,583 amid a heavy selloff driven by rising Treasury yields and forced liquidations of leveraged positions, overwhelming any safe-haven demand linked to the conflict.
Upcoming economic outlook: Key voices to watch
Monday, March 23:
ECB’s Escrivá
ECB’s Cipollone
ECB’s Lane.
Tuesday, March 24:
RBNZ’s Breman
ECB’s Kocher
ECB’s Sleijpen
ECB’s Cipollone
ECB’s Nagel
ECB’s Lane
Fed’s Barr
Wednesday, March 25:
ECB’s President Lagarde
ECB’s Lane
BoE’s Greene
Fed’s Miran
Thursday, March 26:
ECB’s De Guindos
BoE’s Breeden
BoE’s Greene
BoE’s Taylor
Fed’s Cook
Fed’s Miran
Fed’s Jefferson
Fed’s Logan
Fed’s Barr
Friday, March 27:
Fed’s Daly
Fed’s Paulson
ECB’s Schnabel
Saturday, March 28:
ECB’s Cipollone
These scheduled speeches and appearances from central bank officials across the European Central Bank, Federal Reserve, Bank of England, and Reserve Bank of New Zealand will be closely watched for signals on inflation, interest rates, and policy direction amid ongoing global uncertainty.
Key economic data and central bank signals shaping policy outlook
Monday, March 23:
Eurozone March Consumer Confidence (Preliminary)
Australia March S&P Global PMIs (Preliminary)
Japan February Consumer Price Index
Tuesday, March 24:
Eurozone March HCOB PMIs (Preliminary)
UK March S&P Global PMIs (Preliminary)
US ADP Employment Change
US Q4 Nonfarm Productivity & Unit Labor Costs
US March S&P Global PMIs (Preliminary)
Bank of Japan Monetary Policy Meeting Minutes
Wednesday, March 25:
Australia February Consumer Price Index
United Kingdom Inflation Data (CPI, PPI, RPI)
Switzerland March ZEW Expectations Survey
Germany March IFO Business Climate
Swiss National Bank Quarterly Bulletin (Q1)
Thursday, March 26:
Germany April GfK Consumer Confidence
Eurozone Q4 Gross Domestic Product
Deutsche Bundesbank Monthly Report
US Initial Jobless Claims
New Zealand March ANZ–Roy Morgan Consumer Confidence
Friday, March 27:
UK March Consumer Confidence
UK February Retail Sales
Eurozone March Harmonized Index of Consumer Prices (Preliminary)
US March Michigan Consumer Sentiment & Inflation Expectations
This packed calendar of releases across major economies—alongside guidance from institutions like the European Central Bank, Federal Reserve, and Bank of England—will play a crucial role in shaping expectations for interest rates, inflation trends, and overall monetary policy direction in the near term.
Donald Trump on Saturday warned that the United States would “obliterate” Iran’s power plants if Tehran fails to fully reopen the Strait of Hormuz within 48 hours—marking a sharp escalation just a day after suggesting the war might wind down. Posting on social media, Trump set a firm deadline and threatened to begin strikes with Iran’s largest facilities, signaling a potential expansion of U.S. targets to include civilian infrastructure.
The near shutdown of the strait—through which roughly one-fifth of global oil and LNG supplies pass—has already disrupted shipping and driven energy prices sharply higher, with European gas prices jumping as much as 35% last week. In response, Iran’s Khatam al-Anbiya warned it would retaliate against U.S. energy, IT, and desalination infrastructure across the region if attacked.
Tensions intensified further after Iran struck Qatar’s Ras Laffan Industrial City—a key global LNG hub—causing damage expected to take years to repair. Meanwhile, the conflict has expanded militarily, with Iran reportedly launching long-range missiles for the first time, including strikes targeting the U.S.-British base at Diego Garcia, raising concerns about threats extending as far as Europe.
The war, now in its fourth week, has killed more than 2,000 people and continues to escalate unpredictably. Trump’s shifting rhetoric—from de-escalation to issuing a 48-hour ultimatum—has left allies uncertain, while rising energy costs and inflation are increasing domestic pressure in the U.S. ahead of upcoming elections.
On the ground, fighting continues between Iran and Israel. Iranian missile strikes hit southern Israeli cities, injuring dozens, while Israeli forces carried out retaliatory strikes in Tehran. Israeli Prime Minister Benjamin Netanyahu vowed to continue military operations, describing the situation as a critical moment in the country’s fight for its future.
The U.S. President, Donald Trump, intensified his administration’s military stance on Saturday by giving Tehran a 48-hour deadline to fully reopen the Strait of Hormuz. In a social media post, he warned that if Iran failed to eliminate threats to the vital waterway, it would face the “obliteration” of its power infrastructure, with a particular focus on its largest power plants.
This move comes after weeks of maritime disruption that have effectively brought shipping to a standstill in the world’s most critical oil chokepoint, where roughly 20% of global crude oil and liquefied natural gas (LNG) typically passes.
Strategic infrastructure in focus
The latest warning from Donald Trump signals a shift in targeting strategy, expanding beyond military assets to include Iran’s domestic power grid in an effort to maximize pressure on its leadership.
Trump also pushed back against claims that the U.S. has fallen short of its initial objectives, asserting that the campaign is “weeks ahead of schedule” and has already significantly weakened Iran’s naval and air capabilities.
While the White House has indicated that Tehran may be open to negotiations, the President has publicly ruled out talks for now, instead insisting on the unconditional reopening of the Strait of Hormuz.
A strike on Iran’s power plants would likely have consequences far beyond energy shortages at home. Such a move would point to a broader disruption of regional industrial capacity, making any diplomatic resolution increasingly difficult to achieve.
The “Hormuz chokepoint” and market volatility
The effective shutdown of the Strait of Hormuz has unleashed a major shock to global energy supply, as tanker movements have nearly halted and key Persian Gulf producers have been forced to cut output.
The 48-hour deadline set by Donald Trump has injected fresh urgency into global commodities markets. If no change occurs before it expires, a potential shift toward targeting civilian energy infrastructure could significantly alter the region’s risk premium for the rest of 2026.
War, oil shocks, and market turbulence would typically create ideal conditions for gold to rally—yet prices have declined sharply. The explanation isn’t about a lack of fear, but rather the underlying mechanics of global reserve flows.
For years, the narrative was straightforward: gold and silver climbed as investors sought protection from loose monetary policy, fiscal imbalances, and a weakening dollar. Central banks—from Beijing to Riyadh—were steadily shifting away from U.S. Treasuries and into bullion, reinforcing a strong long-term bullish case for precious metals.
Then, within just three weeks, the trend reversed sharply. Gold dropped 14%, while silver plunged an even steeper 28%. On the surface, the timing seems counterintuitive. Global conflict is intensifying, oil markets are under stress, and volatility is rising. Although the dollar has strengthened after hitting multi-year lows, these conditions would typically support precious metals. Yet instead of rallying, they are falling sharply.
The explanation, once understood, is both surprising and illuminating: gold is no longer trading as a traditional “safe-haven” asset. Instead, it is responding to global reserve flows—and at the moment, those flows are moving in reverse.
A Decade of Currency Dilution
To understand gold’s long-term rise, it’s essential to recognize the two key drivers behind its bull case. The first is monetary debasement. Since the 2008 financial crisis—intensifying during the pandemic—central banks across developed economies have expanded their balance sheets on an unprecedented scale. Money supply has outpaced economic output, real interest rates have turned negative, and inflation has ultimately followed.
In such an environment, hard assets—especially gold and silver—offered something increasingly rare: a store of value that cannot be created at will. Both institutional and retail investors funneled capital into precious metals as protection against the gradual erosion of purchasing power. The logic was straightforward: if fiat currencies are being diluted, hold assets that cannot be.
“Gold evolved from a traditional safe haven into a preferred reserve asset—a structural shift that changed both the profile of buyers and their motivations.”
The second pillar supporting gold’s rise was de-dollarization. The 2022 move by Washington and Brussels to freeze Russia’s foreign reserves sent a clear signal to surplus nations worldwide: dollar-based assets, including Treasuries, carry political risk. Gold, by contrast, does not.
The reaction was both rapid and unprecedented. Central banks—particularly across the Global South and the Gulf—accelerated gold purchases to levels not seen in decades. Countries such as Saudi Arabia, the UAE, Kuwait, and China emerged as major buyers. This was not speculative demand, but a strategic shift in sovereign asset allocation—reducing reliance on the dollar and increasing exposure to an asset with no counterparty risk.
The Hormuz Shock
The conflict with Iran—particularly the blockade of the Strait of Hormuz—has rapidly disrupted this dynamic. As a critical artery of the global oil market, roughly 20% of the world’s petroleum flows through the strait each day. When that passage is constrained, the impact goes beyond higher oil prices—it directly squeezes the revenue streams of the very countries that had been the most consistent marginal buyers of gold.
Saudi Arabia, the UAE, and Kuwait manage their sovereign wealth and reserves largely through petrodollar surpluses. When oil revenues fall sharply—as they do when a critical shipping route is disrupted—those surpluses shrink or vanish. The consequence is clear: the marginal buyer of gold steps back, or in some cases becomes a forced seller, liquidating assets to meet domestic fiscal needs.
China introduces an additional layer of pressure. As the world’s largest oil importer, it is now facing a meaningful terms-of-trade shock. Slower economic growth translates into reduced trade surpluses, which in turn limits reserve accumulation. With fewer reserves being built, demand weakens for gold—the preferred alternative reserve asset.
Why Silver Is Falling More Sharply
Silver’s decline has been nearly twice as severe as gold’s, reflecting its dual role. Unlike gold, which is primarily a monetary asset, silver is heavily tied to industrial demand—electronics, solar panels, electric vehicles, and semiconductors account for roughly half of its usage.
When global growth expectations deteriorate quickly, industrial demand contracts just as rapidly. As a result, silver is hit on two fronts: declining reserve demand and weakening industrial consumption. The same slowdown that compresses Gulf surpluses also dampens manufacturing activity, amplifying the downside.
The Paradox of Geopolitical Precious Metals
The common belief that gold thrives during geopolitical turmoil is not incorrect—but it is incomplete. Gold performs best in crises where capital seeks safety and liquidity flows toward hard assets. The current Iran-related shock, however, is different: it disrupts the underlying flow of global capital that has been supporting gold’s long-term rally.
This is the core paradox. Gold is not responding to headlines—it is reacting to balance sheets, particularly the weakening financial positions of sovereign buyers that have driven demand in recent years. Fear is abundant, but in this case, it is not the primary driver of price action.
“In the short term, gold follows liquidity and reserve flows—not headlines or fear. The long-term bull case remains intact, but the marginal buyer has stepped away.”
Momentum, Retail, and the Unwind
Prior to the conflict, precious metals had increasingly taken on the characteristics of momentum trades. Although the underlying drivers—monetary debasement, de-dollarization, and central bank demand—remained intact, they also drew in a more speculative wave of capital. Retail investors, propelled by sustained price gains, social media influence, ETF inflows, and commission-free trading, rapidly piled into gold and silver.
Gold ETFs experienced some of their strongest inflows in the months leading up to the conflict, while silver—more affordable and volatile—became a favorite among momentum-driven traders seeking outsized returns.
This backdrop helps explain the severity of the current selloff. When prices are supported not only by fundamentals but also by a momentum premium, reversals tend to be abrupt. As that premium unwinds, selling pressure intensifies. Notably, the Gold Trust ETF has just posted its largest monthly outflow since April 2013, highlighting how quickly market sentiment can reverse.
The same investors who drove prices higher often operate with tight stop-losses, leverage, and short investment horizons. As the trend reversed, this momentum-driven crowd unwound positions just as quickly as it had built them, magnifying the decline far beyond what fundamentals alone would justify. The Hormuz shock may have sparked the selloff, but the real accelerant was the excess speculation that had built up during the rally.
Outlook: The Structural Case Remains—For Now
Nothing in the current environment fundamentally undermines the long-term case for gold. Monetary debasement persists, and de-dollarization remains a gradual, multi-decade shift rather than a short-term trade. Central banks are unlikely to abandon gold accumulation strategies due to temporary revenue pressures. As conditions stabilize—oil flows normalize, China regains momentum, and GCC surpluses recover—the structural demand for gold is likely to return.
However, markets do not operate on long-term narratives in the near term. They respond to immediate flows—who is buying and who is selling right now. At present, the key marginal buyers are facing financial constraints. More than any geopolitical storyline, this explains gold’s decline in an environment that would typically support higher prices.
For investors, the takeaway is both humbling and instructive: understanding an asset’s long-term drivers does not guarantee insight into its short-term movements. Gold may remain a form of sound money, but like all assets, it is still influenced by shifts in global liquidity—and at the moment, that liquidity is receding.
Every few months, headlines claim the U.S. dollar’s dominance as the world’s reserve currency is ending. Arguments often cite China selling Treasuries, central banks stockpiling gold, BRICS creating a new monetary system, or the 2022 sanctions that froze $300 billion of Russia’s reserves—suggesting that dollar-denominated assets are no longer “safe” and that the supposedly risk-free asset has become a weapon.
Yet the data tells a different, more important story—one often overlooked by investors chasing simple narratives, exposing the risk of being badly misled.
The Numbers Don’t Support a “Flight from the Dollar”
Foreign holdings of U.S. Treasury securities hit a record $9.4 trillion in December 2025, up from $8.7 trillion the previous year—an increase of over $700 billion, or about 8%. Since 2020, foreign holdings have grown from roughly $7.1 trillion, a gain of more than $2.3 trillion. Rather than fleeing, foreign investors are buying U.S. dollar assets at an accelerating pace.
From November 2024 to November 2025, the UK, Belgium, and Japan were the top buyers of U.S. debt, each purchasing over $115 billion. The UK led the pack, boosting its holdings by around $150 billion in just one year. Belgium, which hosts Euroclear—the world’s largest international central securities depository—recorded a 26% increase in its U.S. Treasury holdings, the highest percentage gain among major holders.
China, on the other hand, trimmed its U.S. Treasury holdings by about $86 billion during the same period. However, the reported TIC figure of $683 billion understates China’s true exposure, since it only counts securities held in U.S. custody. A substantial and increasing portion of China’s Treasury holdings is actually custodied through European intermediaries—mainly the Belgian and Luxembourg accounts that have been expanding so rapidly.
As highlighted previously:
“This isn’t a conspiracy—it’s simply financial plumbing. China relies on Belgium for custodial purposes not only to reduce geopolitical risk but also because Euroclear Bank, located there, sits at the center of cross-border settlement and collateral management. Similarly, Clearstream in Luxembourg serves the same global institutional clients. For central banks or state institutions seeking to hold large Treasury portfolios with flexible settlement and collateral options, these hubs provide crucial operational infrastructure.”
The Real Story: Debt Holders and Custody, Not the Dollar
The critical issue isn’t whether the U.S. dollar is losing its reserve status—it’s about who holds U.S. debt and where it is custodied.
Foreign official (central bank) holdings peaked at around $4.1 trillion in 2020 and have since declined to roughly $3.7–$3.8 trillion. Official institutions have been net sellers since 2021, with rolling twelve-month outflows of approximately $107 billion. This trend reflects risk management decisions by central banks, especially after the 2022 freeze of Russian reserve assets, which highlighted the importance of jurisdiction, legal frameworks, and operational controls in custody arrangements.
Yet private foreign investors—banks, asset managers, hedge funds, sovereign wealth funds, and corporate treasuries—have more than offset the decline in official holdings. In 2023, private foreign holdings surpassed official holdings for the first time and now stand near $5.7 trillion, an 80% increase since 2020. This is not de-dollarization but “de-officialization”: dollars continue to flow, but through different channels.
Custody Migration: Sanctions, Regulation, and Infrastructure
The key shift is in where Treasuries are held, not whether. Post-2022 sanctions accelerated migration of custody from New York-based institutions to European clearinghouses like Euroclear and Clearstream. Euroclear’s assets under custody exceeded €43 trillion in 2025, with turnover rising 20% year-over-year to €1,390 trillion—evidence of a growing, not declining, business.
While sanctions are part of the story, regulatory arbitrage is an even bigger driver. The SEC’s December 2023 mandate requiring central clearing of Treasury cash and repo transactions (compliance by December 2026 and June 2027) represents a massive structural change, potentially bringing $4 trillion in daily transactions under FICC’s central clearing. Combined with Basel III capital charges, Dodd-Frank derivatives margining, and post-trade transparency rules, the incentives to custody and trade Treasuries through European platforms rather than DTCC are substantial, independent of geopolitical concerns.
The 2022 freeze of Russian assets, held at Euroclear (~€185 billion), sent a strong signal that Western-custodied assets can be seized under extreme circumstances. Yet ironically, shifting custody from New York to Brussels doesn’t escape Western sanctions—it simply moves jurisdictional risk from U.S. law to Belgian and EU law, while still leveraging Euroclear’s robust operational infrastructure.
Gold’s Signal Matters—It Complements, Doesn’t Replace, Other Indicators
Central bank gold buying has been remarkable. Looking at tonnage—which removes price effects and shows actual physical accumulation—the trend is clear. Excluding the U.S., central bank gold reserves rose from about 24,800 tonnes in 2005 to 31,282 tonnes in 2024, a 26% increase (or roughly 1.3% annually) over two decades. However, this growth was uneven: from 2005 to 2021, central banks added only around 200 tonnes per year on average, a modest 0.8% annual increase.
Between 2022 and 2024, net gold purchases jumped to roughly 1,055 tonnes per year, representing a 3.7% annual growth rate. Remarkably, over half of the total twenty-year accumulation happened during just these three years. That said, purchase activity has since begun to slow.
Advocates of de-dollarization often cite this chart as “proof” of the dollar’s decline. Yet the data contains a fundamental paradox that few commentators address.
Gold is bought, sold, and settled using U.S. dollars.
The LBMA, the center of wholesale physical gold trading, publishes its benchmark price twice daily in U.S. dollars per troy ounce. Similarly, COMEX futures, which drive price discovery, are quoted and settled in U.S. dollars. When central banks like the PBoC, Reserve Bank of India, or National Bank of Poland buy gold, the transactions are denominated in dollars, cleared through dollar-based infrastructure, and the asset’s value is marked in dollars. Even the Shanghai Gold Exchange, which quotes prices in renminbi, effectively tracks the dollar-denominated LBMA benchmark adjusted for the USD/CNY rate.
This creates a fundamental paradox for the de-dollarization narrative. When a central bank sells $10 billion in U.S. Treasuries to buy $10 billion in gold, it has not meaningfully reduced dollar exposure. It has merely swapped one dollar-denominated asset (Treasuries, with counterparty risk, yield, and maturity) for another (gold, with no counterparty risk, yield, or maturity). While the gold itself is physically non-dollar, its acquisition, valuation, and future liquidation all involve dollars.
Central banks are not de-dollarizing—they are de-risking within the dollar system, moving from assets that could be frozen or sanctioned to assets that cannot. This distinction is crucial: gold accumulation does not weaken the dollar’s role as the global unit of account. Every tonne of gold purchased flows through dollar-denominated clearing infrastructure.
The proper framing is “gold vs. Treasuries”, not “gold vs. the dollar.” Gold is a rotation within the dollar ecosystem, shifting from an asset with counterparty risk to one without.
Even with this accumulation, gold remains a fraction of total holdings. Excluding the U.S., central bank gold is worth about $2.4 trillion, below the $3.7–$3.8 trillion in official Treasury holdings and far smaller than the $9.4 trillion in total foreign Treasury holdings. No central bank is abandoning Treasuries wholesale. For example, the PBoC still holds at least $684 billion in reported Treasuries (likely much more via intermediaries) versus roughly $200 billion in gold. Even the most aggressive gold-buying central banks are pursuing marginal diversification, not substitution.
In reality, central banks are accumulating gold incrementally as a hedge against potential dollar weaponization. However, none are selling off their Treasury holdings en masse to fund these purchases. Gold and Treasuries function as complementary assets within a diversification strategy, not as substitutes in a supposed currency battle.
The Real Story: A Five-Layer Shift in Global Dollar Dynamics
Custody Migration, Not Asset Flight – U.S. Treasuries are relocating from New York-based custody to European clearinghouses. This shift is primarily a hedge against regulatory and sanctions risks. Importantly, these assets remain U.S. dollar-denominated obligations, leaving the dollar’s role as the global unit of account intact.
Official-to-Private Rotation – Central banks are trimming their holdings, while private foreign investors—hedge funds, asset managers, and banks—are increasingly buying U.S. debt. The marginal buyer of Treasuries is no longer the PBoC or Bank of Japan, but private investors seeking yield and collateral.
Share Erosion Despite Nominal Growth – Foreign ownership as a percentage of total U.S. debt has dropped from roughly 49% in 2008 to 32% in 2024. Yet in absolute terms, holdings have reached record levels. Because the U.S. continues to issue debt faster than foreign investors can buy it, domestic entities—like the Fed, banks, and money market funds—must absorb the difference.
Gold as Insurance, Not Replacement – Central banks are accumulating gold at the fastest rate in decades as a hedge against geopolitical risks, including sanctions. This is prudent portfolio diversification, not a strategic move against the dollar.
Regulatory Fragmentation – U.S. market structure changes—mandatory clearing, capital charges, and transparency rules—are encouraging Treasury trading and custody offshore. This is largely a self-inflicted structural shift, potentially posing a bigger long-term risk to U.S. financial primacy than Chinese gold purchases.
The Bottom Line
The narrative of de-dollarization is largely factually incorrect, yet it reflects a genuine shift in sentiment. The dollar is not collapsing—foreign demand for U.S. Treasuries remains at record levels. What is changing is the infrastructure through which the world accesses dollar assets. This shift isn’t driven by adversaries trying to dismantle the system, but by participants aiming to shield themselves from political and regulatory risks.
The world isn’t abandoning the dollar—it is hedging against those who control it. This distinction is crucial for investors in positioning portfolios and for policymakers considering the long-term impact of using the dollar as a geopolitical tool.
The U.S. labor market is weakening, reducing the flow of passive dollars into the stock market. Both labor supply and demand are declining simultaneously.
Supply-Side Pressures:
Immigration into the U.S. has fallen from roughly 2 million annually since 2020 to near zero today.
Demographics are slowing population growth: from 1.8% post-WWII to 0.5% currently.
Aging population: Over 4.1 million Baby Boomers are turning 65 each year from 2024–2027 (~11,200 daily).
Labor Force Participation Rate (LFPR) peaked at 66% with baby boomers, remained stable from 1990–2008, and has now fallen to 62%.
Demand-Side Pressures:
AI adoption is suppressing hiring, with estimates of 200–300k job losses in 2025 alone.
U.S. bonds’ 40-year bull market has ended; persistent inflation (>2% for 5 years) and $2T annual deficits are fueling a $39T national debt. Higher yields on debt suppress business formation and expansion.
The result: employment growth has stalled. January 2025 had 170.7M workers; today it’s 170.4M. Fewer employed individuals mean less money flowing into 401(k)s and the stock market, reversing trends seen over past decades.
Recent Economic Highlights:
U.S. spent $11.3B in the first week of the Iran war.
Home foreclosures rose for the 12th consecutive month in February (+20% YoY).
Private credit default rate climbed to 9.2%, exceeding 2008 crisis levels. Q4 GDP revised down to 0.7% from 1.4% estimate (Q3 was 4.4%).
Fed added $18B in base money supply last week.
January core PCE inflation: 3.1% (well above 2% target); headline: 2.8%. Post-Iran war, energy price spikes will likely push headline higher.
February PPI: 3.4% YoY; core PPI: 3.9% YoY (rising from January’s 2.9%/3.4%).
The Fed did not cut rates in March, and future rate reductions are unlikely as inflation remains elevated. War-related energy price spikes further complicate monetary stimulus.
Market Valuations:
The stock market is historically expensive, with Total Market Cap/GDP at 220% (vs. 50% in 1975–1990).
Geopolitical Outlook:
Low probability scenario: Iran surrenders enriched uranium and reopens the Strait of Hormuz in exchange for bombing cessation—unlikely due to U.S. and Israel demanding regime change.
More probable: war scales down over weeks, partial shipping resumes, oil prices moderate to ~$80/barrel. This scenario limits aggressive market shorts but allows portfolio hedges against stagflation.
Investment Strategy:
Favor precious metals, energy, and defensive stocks.
Short rate-sensitive stocks and bonds.
Stagflation makes buy-and-hold 60/40 portfolios risky; active management through inflation/deflation cycles is a better approach.
Bitcoin held above $70,000 on Friday after dipping below $69,000 the previous day, ending a nearly two-week winning streak as risk assets faced pressure.
Initially unaffected by the Middle East conflict, cryptocurrencies have recently felt the impact of rising oil prices, while cautious central bank commentary suggesting sustained higher interest rates also weighed on sentiment. By 18:17 ET (22:17 GMT), Bitcoin was up 1% at $70,843.9, having hit a low of $68,814.4 on Thursday.
Analyst Iliya Kalchev of Nexo Dispatch noted that $70,000 is a key level—holding it could stabilize prices and relieve pressure on leveraged positions, while a break could open the path to the next support zone. On-chain data show long-term holders are selling less, indicating a slowdown in distribution. However, miners remain a vulnerable segment, and overall on-chain activity is down, with trading shifting toward derivatives and ETFs, making price discovery more influenced by macro factors than direct demand.
Equities and other risk assets have been hit hard this week amid escalating Middle East tensions, dragging crypto down with them. Reports indicate the U.S. is exploring troop options in Iran. CBS News reported that Pentagon officials have detailed plans for potential ground deployments, while Reuters noted additional Marines and sailors are being sent to the region.
Oil prices surged, with Brent crude reaching $119 on Thursday, after Israel attacked Iran’s South Pars gas field and Tehran retaliated against regional energy infrastructure. Although the U.S. and allies have sought to ease supply concerns near the Strait of Hormuz, Treasury Secretary Scott Bessent indicated sanctioned Iranian oil already at sea may be allowed into markets, and further Strategic Petroleum Reserve releases remain possible. Israeli Prime Minister Benjamin Netanyahu also pledged to refrain from further strikes on Iranian energy sites.
Federal Reserve signals also influenced crypto sentiment. While the Fed kept rates unchanged, higher energy costs fueling inflation expectations pushed back the timing of potential rate cuts. The European Central Bank and Bank of England similarly maintained rates, taking a wait-and-see approach amid the Middle East crisis.
Most altcoins mirrored Bitcoin’s recovery. Ethereum gained 1% to $2,160, XRP fell slightly to $1.4483, Solana rose 1.4%, Cardano edged up 0.2%, and Dogecoin climbed 1.5%.
On Saturday, Israel struck targets in Iran and Beirut as the U.S. sent thousands more Marines to the Middle East. President Donald Trump criticized NATO allies as “cowards” for hesitating to help reopen the Strait of Hormuz.
Since the U.S. and Israel began attacks on Iran on February 28, over 2,000 people have died, and Americans are growing concerned the conflict could expand further in its fourth week. Israel said it targeted Hezbollah in Beirut while intensifying airstrikes against Iran-backed militias, marking the deadliest spillover since Hezbollah fired on Israel on March 2. Israel also launched new attacks on Tehran.
Key energy infrastructure in Iran and the Gulf has been hit, pushing oil prices up 50%, prompting companies like United Airlines to cut planned flights by 5% due to expected prolonged high fuel costs. The Strait of Hormuz, critical for a fifth of global oil and LNG, is largely closed to shipping. Allies have pledged “appropriate efforts” to ensure safe passage, but Germany and France insist fighting must stop first. Iran indicated it will allow Japanese-related vessels to pass.
To ease supply, the U.S. will temporarily waive sanctions to sell 140 million barrels of Iranian oil stranded by the conflict. In Beirut, Israel issued evacuation warnings before its attacks; over 1,000 people have been killed and more than a million displaced.
Israel launched multiple airstrikes on Tehran and central Iran, while Iran fired missiles in retaliation. As Muslims celebrated Eid al-Fitr and Iranians observed Nowruz, Iran’s Supreme Leader Mojtaba Khamenei praised unity and resistance, raising questions about his condition following the death of his father, Ayatollah Ali Khamenei, in the early days of the war.
The U.S. plans to deploy 2,500 Marines with the amphibious ship Boxer, though the mission remains unclear. Polls show nearly two-thirds of Americans expect a large-scale U.S. ground war, yet only 7% support it. No decision has been made on deploying troops into Iran, though potential targets could include Iran’s coast or Kharg Island oil facilities. Trump has said the U.S. is close to achieving its goals of weakening Iran’s military and halting its nuclear ambitions and may scale back military operations.
Dollar posts a weekly drop as policymakers adopt a cautious stance due to the ongoing Iran war.
The U.S. dollar held steady on Friday but remained below multi-month highs and was set for a weekly decline, as investors weighed the future of U.S. interest rates amid the ongoing war in Iran. The US Dollar Index, tracking the greenback against six major currencies, rose 0.3% to 99.50 but fell 0.9% for the week.
EUR/USD slipped 0.2% to 1.1570 and GBP/USD dropped 0.7% to 1.3338, both aiming for weekly gains, while USD/JPY gained 0.9% to 159.21. Rising oil prices, driven by attacks on Middle East energy infrastructure and disruption of key shipping routes, have fueled expectations that global central banks may tighten monetary policy to counter renewed inflation risks, boosting demand for the dollar since the conflict began in late February.
The Federal Reserve left interest rates unchanged this week, citing uncertainty around U.S.-Israeli actions in Iran, though it maintained projections for potential rate cuts later this year. This positions the Fed as the only major central bank not expected to hike rates in 2026, in contrast to the European Central Bank’s more hawkish stance. JPMorgan analysts noted the stark difference, highlighting that early hikes could risk repeating past policy errors, though market expectations still tilt toward some rate increases this year.
Brent crude prices fell from a recent $119 per barrel spike after President Donald Trump sought to calm markets, pledging to resolve the crisis without deploying ground troops—though Pentagon planning and additional troop deployments suggest contingency preparations. The White House is also exploring measures to ease energy market pressures, including potentially lifting sanctions on Iranian oil, while requesting $200 billion in funding for the conflict.
The pound falls as rising oil prices counteract a hawkish signal from the Bank of England.
Sterling fell on Friday as higher oil prices pressured sentiment, but the pound remained on track for a weekly gain following a hawkish surprise from the Bank of England that revised UK rate expectations. At 12:52 GMT, GBP/USD was down 0.3% at $1.34, partially reversing Thursday’s 1.31% jump, with the currency up 1.2% for the week.
EUR/GBP was largely unchanged, as hawkish signals from both the ECB and BoE offset each other. EUR/USD slipped 0.2% to 1.15, pulling back from Thursday’s 1.2% rally, as the dollar found tentative support despite the ECB’s April rate hike guidance.
On Thursday, the BoE voted unanimously 9-0 to keep rates on hold, surprising markets that had expected some members to favour a cut. Dovish MPC member Swati Dhingra even discussed possible hikes to manage inflation. Traders quickly repriced expectations, now anticipating around 80 basis points of tightening by year-end, though ING cautioned this may be excessive given weaker conditions for second-round inflation than in 2022.
Oil continued to drive markets, with Brent volatile amid the Iran conflict and Strait of Hormuz concerns. ING strategist Francesco Pesole noted that while the hawkish BoE stance provided some support for sterling, commodity prices and geopolitical developments remained the dominant market influences. ING retains a bullish view on EUR/GBP, targeting 0.88 by end-Q2, factoring in May local elections and potential future BoE cuts.
Gold prices continue to drift lower after breaking the 50-day moving average. Traditionally a safe haven in times of uncertainty, the “fog of war” now keeps gold in focus. I plan to maintain my sizable gold position, supported by strong projected sales and earnings from my gold stocks. Other commodities are also soft, reflecting fears of slower global growth.
Geopolitical tensions remain high. On Wednesday, President Trump warned that if Iran continues targeting Gulf energy infrastructure, the U.S. would strike the South Pars Gas Field with unprecedented force. Until hostilities subside and shipping resumes through the Strait of Hormuz, energy-driven inflation is likely to persist.
The March Producer Price Index (PPI) report added to concerns. Wholesale food and energy prices are expected to rise sharply due to the Iran conflict and the Strait of Hormuz closure. In February, the PPI rose 0.7% month-on-month and 3.4% year-on-year, with wholesale food up 2.4% and energy 2.3%. Prices for final demand goods rose 1.1%, and wholesale service costs increased 0.5%.
The FOMC highlighted labor market weakness, noting that job gains remain low. Fed Chairman Jerome Powell emphasized that the private sector is not creating sufficient jobs. The “dot plot” signals one expected interest rate cut, though some FOMC members anticipate more. The statement avoided calling war-related inflation transitory, instead noting that the Middle East’s impact on the U.S. economy is “uncertain,” while economic activity continues at a solid pace and inflation remains elevated.
The housing market showed weakness as well. January new home sales fell 17.6% to an annual pace of 587,000—the slowest since 2022—likely influenced by severe winter weather. Sales plunged nearly 45% in the Northeast and about 34% in the Midwest. A sluggish housing market is expected to weigh on GDP growth.
On the tech side, data center demand remains strong. Micron Technology (MU) reported a 196.3% year-on-year revenue jump to $23.86 billion in its latest quarter, while earnings soared 682.1% to $12.20 per share from $1.20 a year ago. The company beat revenue expectations by 21.7% and earnings by 38.6%, underscoring robust demand for fast memory chips.
The market is taking a breather on recent headlines, but the fundamental energy system is still disrupted, constrained, and far from normal. Interruptions in LNG and damage to infrastructure have turned what might have been a temporary flow shock into a long-term supply issue, likely keeping both oil and LNG prices elevated. Current relief rallies are fueled by short-term positioning and changing narratives rather than a lasting recovery, making this market one to trade actively rather than commit to for the long term.
The market is taking a breather. Netanyahu’s comments—talking about securing the Strait and neutralizing Iran’s nuclear and missile capabilities—have soothed sentiment, suggesting the conflict might burn out sooner than feared. But even if the geopolitical chapter closes, the energy system doesn’t reset instantly. Repairing refineries, export terminals, and LNG infrastructure takes time, and confidence in shipping lanes cannot be rebuilt with statements alone. Brent remains above $105; calm on the surface, but the underlying disruption persists.
Oil dipped, sparking reflex rallies in equities, bonds, and volatility, as markets embraced the idea that the Strait might reopen and Iran’s enrichment and missile capacities are weakened. Relief rallies are thus more about positioning than a lasting recovery. Traders are playing the tape, not committing to the story.
The Gulf’s energy infrastructure has been directly hit. LNG outages aren’t temporary—they’re structural, keeping prices elevated even after headlines fade. The IRGC still has enough capability to cause damage, so the market remains tight. Brent dropping below $90 next month seems overly optimistic; elevated oil prices could persist for months.
Equities face a dilemma: hoping for normalization while input costs remain high and central banks stay firm. The bounce from lows is likely headline-driven short covering, not genuine repricing of risk.
Complicating matters, traders are entering one of the largest options expiries ever. With narratives unstable, any headline can trigger outsized moves as positioning resets in real time. Oil charts reflect this chaos: Brent spiked toward $119 on export rumors, then fell below $110 when denied, then drifted lower again on de-escalation headlines. It’s a market still on edge.
Yes, volatility eased, and the market can breathe for now. But the barrel remembers the fire, and the underlying disruptions remain.
What would happen if the U.S. stopped exporting WTI and Brent crude became available only through bids?
Yesterday, the Brent-WTI spread was the headline, and it set the tone for a conversation I had with a few veteran oil traders just before Washington denied any plans to ban U.S. crude exports. These are the people who’ve seen enough market cycles to distinguish a normal move from a market that’s beginning to think. As we ran through tail-risk scenarios, the discussion drifted into territory that felt increasingly uncomfortable.
This wasn’t the usual chatter about positioning, freight, or refinery runs. It was the kind of conversation where the scenario branches began to converge on outcomes that felt plausible—but alarming. I’m not sharing this to shock anyone, but it’s worth understanding what was being analyzed in the world of constant motion we call capital markets. The Brent-WTI blowout wasn’t just a price swing; it was the market quietly testing what could happen if the system itself started to fragment.
On the surface, it looked like a classic geopolitical squeeze: Middle East disruptions lifted Brent, while rising U.S. output weighed on WTI. Beneath the surface, though, a more structural concern emerged. What if the U.S. pulled back—by limiting exports or scaling down its role as the security backstop keeping energy flowing? The mechanics were simple but severe. WTI, being inland, depends on pipelines, storage, and export capacity. Brent, by contrast, is seaborne and priced assuming secure transit. As long as U.S. exports flowed, the arbitrage held, helping balance the global market. But if that valve closed even partially, the market effectively split in two.
Inside the U.S., crude would back up, storage would fill, refinery constraints would bite, and WTI would be forced to clear at a deeper discount. Outside the U.S., the opposite occurred: removing a few million barrels of flexible exports from a system already strained by Middle East risk made every waterborne barrel more valuable. Brent didn’t just rise from lost supply—it repriced the risk of getting oil from point A to point B. Layer in talk of U.S. troop withdrawals and reduced global security commitments, and the market started pricing something far more structural. This wasn’t about barrels alone; it was about the security architecture that enabled their movement.
Here’s where the real asymmetry appeared: the U.S. risked sitting on cheap, trapped crude, while Europe and Asia were forced into a bidding war for mobile supply at a time when mobility was less reliable. Asia felt it first through direct dependence on Middle East flows, Europe through prices and products—but both ended up paying for a world where oil wasn’t just produced, it was contested. The Brent-WTI spread ceased to be a simple arbitrage signal and became a stress indicator for a market increasingly pricing a disconnect between where oil sits and where it can actually go.
In that scenario, oil stops trading like a commodity and starts trading like a map of power: Brent becomes insured crude, WTI becomes stranded crude, and the rest of the world pays a premium for access.
The Dollar Index eased alongside falling crude prices as the U.S. indicated it may allow Iranian oil shipments to ease pressure on prices. The index remains volatile in the 99–101 range. EUR/USD is trending toward 1.16 but could retreat to 1.14. EUR/INR has moved higher as anticipated and may test 108 before pausing. EUR/JPY is likely to stay within 182–185, while USD/JPY has declined below 160 and may trade between 157–160 in the near term. USDCNY remains bullish above 6.85, targeting 6.90–6.95. AUD/USD and GBP/USD can trade within 0.69–0.72 and 1.3250–1.35, respectively. USD/INR may open higher, though surpassing 93 today is uncertain; yesterday’s NDF spike to 93.35 has corrected to 92.89–92.90.
U.S. Treasury yields have pulled back sharply from recent highs, with further near-term dips possible before resuming an upward trend. German yields also fell, maintaining the expected corrective dip, after which a rebound may follow. The ECB kept rates unchanged, citing high inflation and a slowing economy amid ongoing conflict. India’s 10-year G-Sec closed bullishly, with more upside possible if immediate resistance is broken.
Global equities remain under pressure. The Dow is falling toward 46,000, as expected. DAX rebounded from support near 22,700 and could reach 23,500–23,700 while holding this level. Nifty turned sharply bearish with a gap down; a break below 23,000 may push it toward 22,750–22,500. Nikkei continues to decline and may fall to 50,000–48,000 below 56,000. Shanghai is testing 4,000 support, with a potential drop to 3,950–3,900 in the coming weeks.
Crude remains volatile but supported above key levels. Brent may rebound to $110–$120 if it stays above $100, while WTI could rise toward $100–$104 above $90. Precious metals remain weak: gold may fall to $4,400–$4,200 after breaking below $4,800, and silver could slide to $65–$60 below $70. Copper continues to weaken toward $5.25–$5.00. Natural gas is inching higher, potentially reaching $3.50 in the coming weeks.
Buying oil in Asia or jet fuel in Europe right now comes at record prices. Physical markets—where oil is traded as cargo on ships, railcars, or in storage—have surged faster than futures markets, as refiners and traders scramble to fill the massive supply gap caused by the U.S.-Israeli conflict with Iran.
The disruption, triggered by attacks on oil and gas facilities across the Middle East, is the largest ever in global energy, with Iran restricting traffic through the Strait of Hormuz, a key route for 20% of the world’s oil. Dennis Kissler of BOK Financial warned that even if the strait reopens, logistics challenges will delay a supply recovery.
Oil, gas, and refined products are vital for transport, shipping, and manufacturing, so supply shocks can heavily impact economies and demand for months or even years. Gulf production cuts and export halts have removed roughly 12 million barrels per day—about 12% of global daily demand—which are hard to replace, according to Petro-Logistics.
Physical Market Spike While futures prices have risen steadily since late February, physical cargo prices have surged even more. Brent crude briefly hit $119 per barrel, later settling near $109, while Middle East Dubai crude reached a record $166.80. Goldman Sachs predicts Brent could surpass its 2008 peak of $147.50 if outages continue. European and African crude cargoes hit $120, and even previously discounted Russian barrels now exceed $100.
The Mediterranean market, calm until early this week, has risen as expectations for a quick Hormuz reopening fade. David Jorbenaze of ICIS noted that spot price differentials reveal a much tighter market than headline prices suggest.
Seeking Sour Crude Refiners are turning to substitutes for Middle Eastern medium-density, high-sulphur “sour” crude. Russian Urals crude, long discounted due to sanctions, recently traded above Brent in India for the first time. Norwegian Johan Sverdrup crude reached an $11.30 premium to Brent. U.S. crude prices rose, with Mars Sour in the Gulf of Mexico hitting $107.53, about $6 above U.S. crude, reflecting its similarity to Middle Eastern oil.
Transport fuels have climbed even higher: European jet fuel hit around $220 per barrel, diesel exceeded $200, and Asian gasoil margins topped $60 per barrel. Measures such as the IEA’s release of 400 million strategic barrels and U.S. sanction waivers for Russian oil may not suffice. As Jorbenaze emphasized, “The market ultimately runs on barrels moving, not barrels being announced.”
Oil slips as the U.S. and allies move to ease supply constraints and reopen the Strait of Hormuz.
Oil prices dipped on Friday as European nations and Japan offered to help secure safe shipping through the Strait of Hormuz, while the U.S. outlined measures to boost supply.
U.S. Treasury Secretary Scott Bessent indicated sanctions on Iranian oil stuck on tankers could soon be lifted, and further releases from the U.S. Strategic Petroleum Reserve were possible. Brent fell $1.36 (1.3%) to $107.29 a barrel, and West Texas Intermediate (WTI) dropped $1.92 (2.0%) to $94.22.
Despite Friday’s decline, Brent is on track for a nearly 4% weekly gain after Iran targeted Gulf energy facilities, forcing production cuts. WTI, however, is set for its first weekly drop in five weeks, down more than 4%.
Markets eased some “war premiums” as world leaders signaled restraint, though analysts warn that full recovery of tanker logistics through Hormuz could take time. Any new attacks or disruptions could push prices higher, while diplomatic engagement may limit spikes and unwind the war premium.
Britain, France, Germany, Italy, the Netherlands, and Japan issued a joint statement offering assistance to ensure safe passage through Hormuz, which handles 20% of global oil and LNG flows.
U.S. President Donald Trump reportedly told Israeli Prime Minister Netanyahu not to strike Iranian energy facilities again. Meanwhile, North Dakota plans to increase crude output as wells restart and winter restrictions lift, though the pace will depend on oil prices and existing budgets.
On Thursday, Bitcoin briefly fell below $70,000 as investors weighed central bank decisions and rising tensions in the Middle East. The cryptocurrency declined 1.2% to $70,437.1 by 17:48 ET (21:48 GMT), bouncing back from a session low of $68,814.4, after trading above $74,000 in the previous session and touching near $76,000 earlier in the week.
Pressure on digital assets rose after major central banks—including the Fed, ECB, and Bank of England—kept interest rates steady but signaled ongoing inflation risks, especially from energy markets. Policymakers cautioned that surging oil prices could complicate disinflation and delay potential rate cuts. Traders subsequently priced out expectations of rate cuts this year, with the CME FedWatch tool showing none. The Fed also revised its 2026 inflation forecast up to 2.7% from 2.4%, partly reflecting higher oil prices.
The Bank of Japan maintained rates as well, warning that developments in the Middle East and crude oil markets could influence its inflation trajectory. Oil prices initially spiked toward $120 a barrel following Iran’s attacks on regional energy facilities but later reversed after Israel claimed Iran had lost the capability to enrich uranium or produce ballistic missiles.
Cryptocurrencies, increasingly sensitive to macroeconomic trends, faced pressure as higher oil prices boosted bond yields and strengthened the dollar. U.S. stocks also closed lower amid Middle East conflict concerns and soft housing data.
Altcoins mirrored Bitcoin’s decline: Ethereum fell 2.6% to $2,147.41, XRP dropped 1% to $1.4524, Solana slid 1.6%, Cardano lost 2.6%, and Dogecoin dipped 2%.
The U.S. dollar has remained a favored safe-haven asset since late February, when the U.S. and Israel launched attacks on Iran. Investors have priced in the expectation of prolonged higher interest rates due to inflationary pressures from surging oil prices, which typically strengthen the dollar.
Market sentiment was largely negative on Thursday after oil and gas prices jumped again following attacks on energy facilities in the Middle East. Iran’s South Pars gas field—the world’s largest natural gas deposit—was targeted, prompting Tehran to retaliate against sites in Gulf countries, including Qatar and Saudi Arabia.
Israeli Prime Minister Benjamin Netanyahu told reporters that Israel acted alone in the South Pars strike and that U.S. President Donald Trump had requested no similar actions in the future. Netanyahu added that Iran no longer possesses the capacity to enrich uranium or produce ballistic missiles, which caused oil prices to retreat.
“We are winning, and Iran is being decimated,” Netanyahu stated.
Federal Reserve holds rates steady
On Wednesday, the Federal Reserve kept its key policy rate unchanged, as expected. The Fed’s updated projections raised the 2026 inflation forecast, partly due to rising oil prices. Fed Chair Jerome Powell emphasized uncertainty over the war’s impact on inflation and the U.S. economy, noting repeatedly, “I’m not certain. I’m uncertain.”
JPMorgan economist Michael Feroli observed that Powell seems to be giving little weight to current forecasts and mentioned that this would have been a round where the Summary of Economic Projections could have been skipped, similar to March 2020. Regarding future rate hikes, Powell reiterated that no option is off the table, though it is not expected to be the baseline for most of the monetary policy committee.
Euro, pound, and yen rise after central bank decisions
On Thursday, both the European Central Bank (ECB) and the Bank of England (BoE) held policy rates steady, mirroring the Fed. The ECB described the Middle East conflict’s impact on inflation and growth as “uncertain,” while the BoE warned that higher oil prices would push up household fuel and utility costs and indirectly affect business expenses.
EUR/USD rose 1.2% to 1.1586, and GBP/USD climbed 1.3% to 1.3429. Deutsche Bank’s Sanjay Raja noted that the BoE’s Monetary Policy Committee voted unanimously 9-0 to pause, reflecting the scale of the energy shock and potential inflationary pressures.
The Bank of Japan also kept rates unchanged, as expected. USD/JPY fell 1.3% to 157.67. Only one board member, Hajime Takata, opposed the decision, advocating a 25-basis-point hike. Japan relies heavily on Middle Eastern energy imports, and although slowing rice price increases have helped the BoJ manage inflation, the war-driven oil surge could intensify price pressures, according to José Torres of Interactive Brokers.
The S&P 500 closed down more than 1.3%, pressured by a hotter-than-expected PPI reading, a sharp rise in oil prices, and growing expectations that the Fed may delay rate cuts into 2026—even without Jay Powell at the helm.
The 2-year Treasury yield tells the story, jumping over 10 basis points to 3.79%, its highest level since August. While there’s minor resistance around 3.8%, it appears limited, leaving the door open for a move back toward 4% in the near term.
More notable is the move in the 30-year yield, which is once again approaching the 5% level. It rose 4 basis points on the day to 4.89%, putting it within striking distance of that key threshold.
If oil prices remain elevated—or push even higher—and inflation continues to trend upward, a breakout above 5% looks increasingly plausible, with a potential move toward 5.1%–5.2% not out of the question.
Turning back to the S&P 500, the index closed at its lowest level since November, finishing at 6,624. With the 200-day moving average just 9 points below, the market is approaching a key technical battleground ahead of Friday’s options expiration (opex).
A decisive break below the 200-day, especially with follow-through selling, would likely raise red flags for investors. For now, however, such a move would more likely signal a test of the next support zone around 6,520.
The real inflection point lies below that—if 6,520 gives way, downside momentum could accelerate. In the near term, 6,500 is also shaping up as a critical level, acting as a put wall at least through Friday.
Based on my CTA model, flows are currently negative, with the next key flip level sitting around 6,570. I’m still refining the longer-term trend signal, so confidence there remains limited. More importantly, though, systematic flows at this point are not providing support for a market move higher.
The Financials ETF (XLF) is nearing a break of key support just below $49. If that level gives way, the next support zone comes in around $47.25—an area that dates back to April last year and also marks an unfilled gap on the chart.
At the end of the day, it all comes back to one key driver: oil—and for now, that trend is still pointing higher. As long as oil continues to climb, it likely keeps upward pressure on rates and the dollar, while weighing on risk assets.
Micron (NASDAQ: MU) just delivered stellar earnings and strong forward guidance, yet the stock is still down more than 3%. It’s not disastrous—at least for now—but notably, shares remain below the $450 level.
In essence, call options at $450 and above could rapidly lose value today if the stock fails to recover. That may trigger selling pressure, which in turn could force market makers to unwind their hedging positions.
As long as the stock holds above $430, gamma should remain positive—at least based on yesterday’s readings—making that level a potential area of support. However, if it falls below $430, dealers may turn into sellers, which could push the stock down toward $400, or possibly even closer to $390.
In this market, it really does feel like the tail is wagging the dog—at least from my perspective.
Oil has climbed above $110 per barrel following direct strikes on key energy infrastructure in the Middle East, signaling a broader repricing of global risk that investors can no longer ignore.
Attacks on Iran’s South Pars gas field, significant damage reported at Qatar’s Ras Laffan LNG facility, and a vessel hit near the Strait of Hormuz point to a coordinated escalation rather than isolated events. Together, they highlight growing threats to both energy supply and critical trade routes.
The Strait of Hormuz alone handles about a fifth of global oil flows, along with a large share of LNG shipments, while Ras Laffan contributes roughly 20% of global LNG output. Disruptions at this scale quickly translate into higher energy costs, squeezed corporate margins, and slower economic growth.
Markets have responded, but likely not enough.
Parallels to the 1970s energy crises are becoming harder to ignore. Supply shocks of this magnitude tend to ripple across economies, embedding inflation and forcing a reassessment of risk across asset classes. Rising energy prices rarely stay confined to commodities—they spill over into transportation, manufacturing, and consumer prices, reshaping expectations.
Many portfolios built over the past decade have relied on assumptions of stable energy markets and smooth global trade. Those assumptions are now under strain. Investors may need to shift toward more resilient and diversified positioning.
Gold, for instance, has historically performed well during periods of geopolitical stress, reinforcing its role as a hedge. Hard assets tend to attract demand when uncertainty rises and currencies face pressure.
Energy exposure is also coming back into focus. Oil and gas producers—especially those outside immediate conflict zones—stand to benefit from tighter supply and higher prices. Investors underweight the sector may need to reconsider their positioning.
Broader commodities exposure is increasingly relevant as well. Higher energy costs feed into production and transportation expenses globally, strengthening the case for assets that perform in inflationary environments.
Sector allocation deserves careful review. Industries reliant on low fuel costs and efficient logistics—such as airlines and parts of heavy manufacturing—face growing pressure. Meanwhile, energy, defense, and infrastructure-related sectors are likely to see stronger demand as geopolitical risks rise.
Geographic diversification is becoming more critical. Economies heavily dependent on Middle Eastern energy, particularly across parts of Asia, are more exposed to disruptions. Expanding international exposure can help mitigate regional risk.
Currency dynamics are shifting alongside these trends. Energy-importing countries often see their currencies weaken as import costs rise, while the U.S. dollar and commodity-linked currencies tend to strengthen during periods of elevated oil prices and geopolitical tension.
A structural repricing of risk is clearly underway. Energy infrastructure is being directly targeted, and key transport routes are under strain—echoing past global shocks where supply disruptions had lasting economic consequences.
Investors who continue to position for a quick return to stability risk being caught off guard. The energy crises of the 1970s offer a useful precedent: prolonged inflation, shifting capital flows, and strong performance from diversified real assets.
In this environment, a disciplined and forward-looking strategy is essential. Reviewing exposure across asset classes, sectors, and geographies—and avoiding overreliance on any single outcome—can help portfolios better withstand what is shaping up to be a more volatile and uncertain global landscape.
Oil exports and production in the Middle East have plunged, wiping out more than 7–10 million barrels per day from global supply and triggering a significant physical shortage.
With supply tight and storage capacity limited, prices could climb to $150–$200+ per barrel, and some analysts caution that prolonged disruptions may drive even sharper spikes.
Even if the conflict subsides, a recovery is likely to be gradual, and any short-term relief won’t fully make up for the deficit, keeping prices elevated.
Just a month ago, any analyst predicting oil could surge to $200 per barrel would have been dismissed outright. Now, that scenario is increasingly being taken seriously—and for good reason.
Middle Eastern oil and fuel exports, which averaged over 25 million barrels per day in February, have plunged by nearly two-thirds by mid-March, according to data from Kpler and Vortexa. Even more concerning is production: across the region, output is being slashed, with wells not easily or quickly restarted. Limited storage is forcing producers to cut supply, and in some cases, oil is being stored offshore rather than delivered to buyers. Altogether, roughly a fifth of global oil supply is severely disrupted, and even if the conflict ended immediately, recovery would take time.
Production cuts are substantial: Iraq alone has reduced output by around 2.9 million barrels per day, while Saudi Arabia has cut between 2 and 2.5 million. The UAE and Kuwait have also made significant reductions, bringing total lost supply to over 7 million barrels daily. This stands in stark contrast to earlier expectations from the International Energy Agency, which had forecast a surplus this year. Instead, as much as 10 million barrels per day may now be offline.
With physical supply constrained, the market has little ability to respond to demand, pushing prices sharply higher and making them slow to fall even if conditions improve. Some analysts now see $150 oil as a baseline, with $200 or higher no longer out of the question. Others warn that prices could spike even further in a sustained shortage, as commodity markets tend to move dramatically under such conditions.
That said, not all forecasts are bullish. Some expect prices to retreat below $100 for Brent and $90 for WTI if the conflict ends quickly—though there are few signs of that happening. Even in a best-case scenario, restarting production would take months, meaning prices would likely remain elevated due to lingering supply constraints.
Temporary relief has come from increased availability of sanctioned Russian oil, with nearly 200 million barrels currently in transit globally. However, this is unlikely to fully offset the shortfall. Meanwhile, measures like China restricting fuel exports and cutting refining rates, or the potential restart of limited pipeline flows from Iraq and Kurdistan, are unlikely to significantly ease the imbalance.
What once seemed unthinkable—a $200 oil price—is now within the realm of possibility. Still, given the economic strain such levels would impose worldwide, there is hope that de-escalation efforts may eventually prevent the most extreme outcomes.
Bitcoin dropped sharply on Thursday, falling below $71,000 as investors reacted to a more hawkish Federal Reserve outlook and a spike in oil prices fueled by rising Middle East tensions.
The world’s largest cryptocurrency slid 4.2% to $70,817.4 by early trading, retreating from levels above $74,000 in the previous session and nearly $76,000 earlier in the week.
Fed outlook weighs on markets
Pressure on digital assets intensified after the Federal Reserve kept interest rates unchanged but flagged ongoing inflation risks, particularly from rising energy costs. Officials cautioned that higher oil prices could slow the disinflation process and push back expected rate cuts. The Fed also raised its 2026 inflation forecast to 2.7% from 2.4%, signaling concern over persistent price pressures.
Oil prices surged past $110 per barrel on Wednesday and continued climbing in Asian trading Thursday after Iran launched attacks on energy facilities across the Middle East following a strike on its South Pars gas field.
As cryptocurrencies increasingly move in tandem with macroeconomic trends, they faced headwinds from rising bond yields and a stronger U.S. dollar driven by higher oil prices. U.S. stock markets closed lower बुधवार, while Asian equities also declined early Thursday.
Meanwhile, the Bank of Japan held rates steady and warned that developments in the Middle East conflict and oil prices could influence Japan’s inflation outlook.
Kraken delays IPO plans
Crypto exchange Kraken has reportedly paused its plans for a multibillion-dollar IPO due to unfavorable market conditions, according to CoinDesk. The firm, which had confidentially filed a draft S-1 with the U.S. SEC in November, is now expected to delay its listing until market sentiment improves.
The decision reflects a broader downturn in crypto markets since late 2025, with weaker prices and trading volumes dampening valuations and investor demand. Kraken was last valued at $20 billion after raising $800 million.
Altcoins extend losses
Most altcoins also declined on Thursday. Ethereum, the second-largest cryptocurrency, fell 6% to $2,193.41, while XRP dropped 3.5% to $1.47. Solana and Polygon each lost about 4%, and Cardano slid 6%. Among meme coins, Dogecoin fell 5%.
Trump is expected to pressure Japan to support the Iran conflict during a White House meeting.
Donald Trump is expected to use a White House meeting with Japan’s prime minister, Sanae Takaichi, to seek support for the war against Iran, putting Tokyo in a difficult position as it weighs how much assistance it can offer.
Although Trump has criticized allies for their limited backing of the U.S.-Israeli campaign—while also claiming the U.S. does not need help—he is still urging partners to contribute naval forces to clear mines and protect tankers in the Strait of Hormuz, which has been largely disrupted during the conflict.
The visit, originally intended to reinforce long-standing U.S.-Japan ties, has become more complicated. While Takaichi has advocated for a stronger military posture at home, public opposition to the Iran war has so far prevented Japan from committing to operations in the Gulf.
Meanwhile, other U.S. allies, including Germany, Italy, and Spain, have declined to join any mission in the region, frustrating Trump. Takaichi has stated that Japan has not received a formal request but is reviewing what actions might be possible within constitutional limits.
Analysts note the meeting could prove challenging for Takaichi, who had hoped to influence Trump’s approach to Asia policy—particularly regarding China—but may instead have to respond to immediate demands related to the Middle East.
Japan is also preparing for potential U.S. requests to help produce or co-develop missiles to replenish American stockpiles depleted by conflicts in Iran and Ukraine. At the same time, Tokyo’s diplomatic ties with Iran could offer a channel for mediation, though past efforts have failed.
In addition, Takaichi is expected to express Japan’s intention to join the “Golden Dome” missile defense initiative and announce new investments in the U.S., potentially including tens of billions of dollars in sectors such as energy and critical minerals, building on earlier commitments tied to easing trade tensions.
Oil prices climb after Iran launches attacks on energy infrastructure across the Middle East.
Oil prices climbed on Thursday, with Brent crude surging by as much as $5 per barrel after Iran launched attacks on energy infrastructure across the Middle East in response to a strike on the South Pars gas field—marking a significant escalation in its conflict with the United States and Israel. By 0400 GMT, Brent futures had gained $4.66, or 4.3%, to $112.04 a barrel, after earlier peaking at $112.86. Meanwhile, U.S. West Texas Intermediate (WTI) rose 96 cents, or 1%, to $97.28, having previously jumped more than $3. Brent had already advanced 3.8% on Wednesday, while WTI ended nearly unchanged.
WTI has been trading at its widest discount to Brent in over a decade, driven by releases from U.S. strategic reserves and elevated shipping costs, while renewed strikes on Middle Eastern energy assets have lent additional support to Brent. Analysts noted that the intensifying conflict—targeted attacks on oil infrastructure and the loss of Iranian leadership—could lead to prolonged supply disruptions. They also pointed to the U.S. Federal Reserve’s decision to hold interest rates steady, accompanied by a hawkish outlook, as another factor heightening market concerns amid wartime conditions.
Further escalating tensions, QatarEnergy reported significant damage to its Ras Laffan LNG hub following Iranian missile strikes, while Saudi Arabia said it intercepted ballistic missiles and a drone targeting its gas facilities. Iran had issued evacuation warnings ahead of strikes on oil sites in Saudi Arabia, the UAE, and Qatar, retaliating for earlier attacks on its own facilities in South Pars and Asaluyeh.
South Pars, part of the world’s largest natural gas field shared between Iran and Qatar, was hit in an attack attributed to Israel, though U.S. and Qatari involvement was denied by President Donald Trump. He warned that the U.S. would respond if Iran targeted Qatar and said Israel would refrain from further strikes unless provoked.
Market analysts expect oil prices to remain elevated as tensions show no signs of easing and the Strait of Hormuz remains at risk of disruption. Reports also suggest the U.S. is considering deploying additional troops to the region, with options including securing tanker routes through the Strait—potentially involving both naval and air forces, and possibly ground troops if necessary.
The U.S. dollar rose against major currencies on Wednesday, recovering losses from the previous two sessions after the Federal Reserve decided to keep interest rates unchanged.
The Fed signaled expectations of higher inflation and projected just one rate cut this year, as policymakers assessed the economic effects of the ongoing conflict involving the U.S., Israel, and Iran.
Since tensions in the Middle East escalated nearly three weeks ago, the dollar has generally strengthened, hitting a 10-month high late last week as investors sought safety in U.S. assets amid rising oil prices.
Karl Schamotta of Corpay noted that the Fed’s latest outlook—featuring slower growth, weaker employment, and higher inflation—suggests that rising energy costs may temporarily weigh on economic demand.
In currency markets, the dollar climbed 0.92% against the Swiss franc, while the euro fell 0.5% to $1.148. Analysts say the Fed’s decision reinforced a “hawkish hold,” supporting the dollar as Treasury yields remain elevated despite unchanged rate projections.
The dollar index gained 0.51% to 100.0. Fed Chair Jerome Powell added that the central bank may look past oil-driven inflation pressures if progress continues in reducing core inflation.
Earlier data showed U.S. producer prices rose 0.7%, surprising expectations.
Meanwhile, attention is turning to upcoming decisions from other major central banks, including the ECB, Bank of England, and Bank of Japan, all expected to keep rates steady while monitoring inflation risks linked to the Middle East conflict.
The Japanese yen weakened toward levels that could trigger intervention, while the British pound also declined. The dollar also edged higher against the offshore Chinese yuan.
Investor focus remains firmly on Iran—and rightly so. West Texas Intermediate crude is hovering near $100 per barrel, up sharply from December lows, as tanker traffic through the Strait of Hormuz remains restricted. Iran is selectively allowing shipments—primarily to China and some Asian countries—helping ease oil price pressure slightly.
The key market variable continues to be how long the Strait disruption lasts. While timelines remain uncertain, reopening it will likely be slow and complicated, with limited international support increasing pressure on the U.S. to act.
Despite geopolitical tensions, corporate earnings have remained resilient and continue to support equities. Strong investment in AI is driving robust growth—especially in tech, which accounted for more than half of recent S&P 500 earnings gains—and is expected to play an even larger role ahead. Fiscal stimulus is also boosting capital spending and profits.
Notably, earnings estimates are holding up better than usual, defying the typical early-year downgrades and continuing to trend higher into 2026 and beyond.
Upward revisions in the energy sector are lifting overall 2026 earnings forecasts, as highlighted in “It’s Not Just Energy Boosting Earnings Estimates.” But the strength isn’t limited to energy—technology and materials are also pulling more than their weight. And this shift has already emerged just two weeks into March.
Bottom line
Earnings momentum remains strong and should stay resilient despite the conflict in Iran. With core U.S. growth drivers intact and energy independence in place, double-digit earnings growth in 2026 still looks achievable—providing solid support for the stock market and helping cushion downside risk until geopolitical tensions ease.
Mainstream media reports that the dollar is strengthening, attributing the move to rising oil prices. But is that explanation accurate?
The dollar’s strength is more likely tied to the sharp downturn in an overvalued U.S. stock market.
As equities slide, investors appear to be retreating into cash, driving demand for the dollar. Meanwhile, both major political parties continue to present the stock market as a key symbol of economic health, while commentators push for aggressive rate cuts—even as inflation risks remain elevated.
Such cuts could erode returns for retirees and savers, but may help prop up equities and prevent a collapse reminiscent of 1929, while also enabling the government to take on significantly more debt.
A broader perspective challenges the idea of a strong dollar rally. Viewed against gold over the long term, the dollar shows little real strength, with fiat currency appearing to be on a prolonged path of decline.
The persistent rise in the cost of essentials—such as food, housing, and transportation—is often linked to government reliance on fiat money. In this view, the long-term impact of fiat systems has been deeply damaging to citizens, rivaling the economic harm typically associated with major conflicts.
The argument here is that investors should consistently build positions in gold, taking advantage of key price zones such as $5,000, $4,850, and $4,650 to accumulate not only gold, but also silver and mining stocks.
From a technical perspective, momentum indicators like the Stochastics (14,7,7) are نزدیک oversold levels, and a dip toward $4,850 could help form a large bullish triangle pattern, with a potential upside target around $6,600.
In the near term, attention is on upcoming data and policy decisions—specifically the PPI report and the Federal Reserve’s rate announcement. With oil prices having surged significantly, the Fed may face challenges in addressing inflation while balancing pressure to support the economy. Policymakers could frame inflation as temporary, despite it remaining above their long-term target.
For long-term gold investors, however, the focus is less on short-term central bank actions and more on identifying attractive entry points to steadily accumulate precious metals and quality mining equities.
What about oil? The U.S. is aggressively trying—while piling on more debt—to contain the attacks around the Strait of Hormuz, and a positive headline could emerge within the next couple of weeks.
That could act as a catalyst for the stock market rally I’m expecting (including gold equities). Still, oil appears stuck in a wide $80–$120 range for now, though the odds favor an upside breakout, potentially driving prices toward $160.
The key point is this: oil production and transportation infrastructure across much of the Middle East has likely suffered meaningful damage, and restoring full capacity could take years.
As for Venezuela stepping in to offset the shortfall, that seems unlikely in the near term. Despite political maneuvering, international oil companies will likely expand production there very cautiously.
In short, $80 may now represent a structural floor for oil prices. If so, inflation floors—across CPI, PPI, and PCE—could settle in the 4%–5% range, or even higher.
What about miners? The CDNX hasn’t made any meaningful progress since I flagged a profit-taking opportunity five months ago at the key psychological resistance level around 1000.
From a technical standpoint, this consolidation phase could persist into the fall, potentially forming a highly bullish, symmetrical structure on the chart.
In the meantime, gold stock investors should use this period to properly organize their allocations—positioning themselves to patiently ride out the lull and ultimately capitalize on the powerful breakout and multi-year advance that is likely to follow.
The chart for SIL (the silver miners ETF) remains bullish. Based on classical charting principles from Edwards & Magee, rectangle patterns tend to break to the upside about 67% of the time, implying a potential target near $130.
Rather than trying to pinpoint an exact bottom, investors are better off identifying strong accumulation zones—like the current one—and buying incrementally. A gold price of $5,000 aligns with roughly $92 for SIL, while additional positions in GDX, SIL, and related mining stocks could be added if gold dips toward $4,850.
With governments globally becoming increasingly debt-driven, the macro backdrop remains chaotic. In that environment, gold, silver, and mining investors can stay on the sidelines of the noise and focus instead on taking advantage of attractive entry zones.
When geopolitical tensions tied to oil intensify, most investors focus on outright oil prices. While those prices matter, fewer pay attention to the spread between Brent and WTI—an equally revealing signal. West Texas Intermediate (WTI), priced in Cushing, Oklahoma, serves as the U.S. benchmark and mainly reflects North American supply-demand dynamics.
Brent, by contrast, is the global benchmark derived from North Sea crude and closely mirrors international supply-demand conditions—especially seaborne oil flows through key routes like the Persian Gulf and the Strait of Hormuz. Under normal circumstances, Brent trades at a premium of about $2–$5 over WTI.
Sharp changes in this premium carry important market signals. In the context of the Iran conflict, the Brent–WTI spread offers one of the clearest real-time indicators of how producers, consumers, and traders are interpreting the situation.
A widening spread suggests markets are pricing in a global supply disruption, while a stable or narrowing gap—even with high spot prices—implies expectations that any disruption will be limited and temporary.
Recently, the spread has been highly volatile. It currently stands at around $7, pointing to concerns that the conflict could continue to strain global supply. However, frequent swings in the spread show how quickly sentiment is shifting with each new development.
S&P 500 Trails Most Sectors
Last week, the S&P 500 slipped by less than 0.5%, but it has fallen just over 3% from its Tuesday peak and now sits roughly 5% below recent highs. As illustrated in the charts, most sectors are outperforming the broader market based on both absolute and relative measures. The blue circle in the first chart shows that many sectors are positioned in the top-left quadrant—suggesting they are somewhat overbought relative to the S&P 500, yet slightly oversold on a standalone technical basis.
The second chart compares each sector’s performance versus the S&P 500 over the past five days and the prior 20-day period. Transportation stands out as a clear laggard. The third chart, which breaks down the sector’s top ten holdings, shows that oil-sensitive industries—such as trucking, freight, and airlines—have been hit the hardest. These businesses are also closely tied to overall economic activity.
As a result, elevated oil prices combined with rising concerns about economic slowdown are weighing heavily on transportation stocks. If the conflict drags on, the sector is likely to continue underperforming. Even if valuations become deeply oversold, they may stay depressed until there are clearer signs of stability or resolution.
Bitcoin edged slightly lower on Tuesday, easing after briefly nearing the $76,000 mark, as investors kept a close eye on oil price volatility linked to the Middle East conflict and awaited major central bank decisions.
The leading cryptocurrency was last down 0.2% at $74,605.5 as of 18:10 ET (22:10 GMT). Earlier in the session, Bitcoin had climbed to a high of $75,991.2.
Bitcoin buoyed by short covering, ETF inflows
Bitcoin drew support from short covering, as traders closed out bearish positions built during the early-February sell-off. However, the upward momentum faded במהלך the session, leaving prices hovering near unchanged levels.
Further support came from renewed institutional interest and steady inflows into spot Bitcoin ETFs.
“Despite the rebound, Bitcoin’s path through March has been uneven. Each rally has met selling pressure near established resistance levels, as traders take profits following sharp gains,” said IG market analyst Axel Rudolph.
“This has resulted in a pattern of advances followed by consolidation, as the market searches for clearer direction,” he added.
Iran conflict and oil surge concerns linger; Fed decision in focus
Geopolitical tensions remained front and center as the conflict involving the U.S., Israel, and Iran entered its third week, keeping global risk sentiment fragile.
Oil prices slipped overnight but rebounded on Tuesday, staying above $100 per barrel amid ongoing concerns about potential supply disruptions through the Strait of Hormuz.
Persistently high energy prices have fueled worries about prolonged inflation, shaping investor positioning across markets, including cryptocurrencies.
“While escalating global tensions initially sparked risk-off selling, cryptocurrencies later began to behave more like defensive assets as the situation evolved,” said IG analyst Axel Rudolph.
Attention is now turning to the Federal Reserve’s policy decision on Wednesday. While the central bank is widely expected to leave interest rates unchanged, investors are closely watching for signals on inflation.
In addition, several other major central banks are set to hold policy meetings later this week.
Mastercard to buy BVNK in $1.8 billion stablecoin expansion
Mastercard announced on Tuesday that it has reached an agreement to acquire BVNK, a stablecoin payments infrastructure provider, in a deal worth up to $1.8 billion. The acquisition aims to strengthen Mastercard’s footprint in blockchain-driven transactions.
The move reflects increasing regulatory clarity and rising adoption of stablecoins, which are enabling card networks to expand beyond traditional payment systems into faster and more cost-efficient digital transfers. Both Mastercard and Visa are racing to establish an early advantage in this rapidly evolving sector.
The deal includes up to $300 million in contingent payments and is expected to be finalized before the end of 2026.
BVNK offers infrastructure that bridges fiat currencies and stablecoins, facilitating payments across major blockchain networks in over 130 countries. The acquisition is expected to enhance capabilities in areas such as cross-border remittances, business transactions, and digital token payouts.
Crypto prices today: altcoins remain subdued
The second-largest cryptocurrency, Ethereum, fell 0.9% to $2,335.81. Third-ranked XRP declined 1.2% to $1.5324. Solana dropped 1.1%, while Cardano was largely unchanged. Among meme coins, Dogecoin slid more than 1.8%.
Oil prices declined during Wednesday’s Asian session, pulling back from recent gains after Iraq and the Kurdistan Regional Government agreed to restart crude exports via Turkey’s Ceyhan terminal.
The agreement helped ease some concerns over supply disruptions stemming from the U.S.-Israel conflict with Iran. However, Brent crude remained above $100 per barrel, as the war entered its third week with little indication of de-escalation.
Markets also stayed cautious ahead of the Federal Reserve’s policy decision later in the day, amid worries that persistent inflation—fueled in part by higher oil prices linked to the Iran conflict—could prompt a more hawkish stance.
By 00:18 ET (04:18 GMT), Brent futures had dropped 2.3% to $101.05 per barrel, while West Texas Intermediate (WTI) crude fell 3.3% to $93.03 per barrel.
WTI faced additional pressure after data from the American Petroleum Institute showed U.S. crude inventories rose by 6.6 million barrels last week, defying expectations of a 0.6 million barrel draw. This data often signals a similar trend in official government figures, due later Wednesday.
On Tuesday, Iraq and Kurdish authorities finalized a deal to resume oil shipments to Turkey’s Ceyhan hub starting Wednesday. The move comes as major oil producers seek alternative export routes beyond the Strait of Hormuz, especially after Iran effectively blocked the critical passage earlier this month.
Iraq had reportedly aimed to export at least 100,000 barrels per day through Ceyhan, after shutting in around 70% of its production due to the conflict. Still, the volumes from Ceyhan are expected to cover only a small portion of the supply gap caused by disruptions in Hormuz.
Oil prices also eased after reports that the United Arab Emirates may support a U.S.-led initiative to secure shipping through the Strait of Hormuz. Iran had largely halted traffic through the strait—which handles roughly 20% of global oil supply—in retaliation for U.S. and Israeli strikes.
The UAE could become the first country to back Washington’s efforts, though most allies have so far declined to participate. Meanwhile, tensions remain high, with Iran escalating attacks on vessels near Hormuz following strikes on a key export facility. Reports also indicated that Iranian security chief Ali Larijani was killed in an Israeli strike, raising the risk of further retaliation.
Despite the pullback, oil prices remain supported by ongoing supply concerns. Brent has surged more than 40% since the conflict began in late February. Analysts at OCBC expect crude prices to stay above $100 per barrel through at least mid-2026, citing the lack of clear prospects for easing tensions.
Oil prices to remain above $100/bbl
Oil prices are expected to stay above $100 per barrel in the near term, as the U.S.-Iran conflict shows little indication of easing, according to analysts at OCBC.
The bank noted that with the conflict now in its third week and no meaningful diplomatic progress, crude flows through the Strait of Hormuz remain heavily restricted, keeping global supply tight.
OCBC has revised its outlook, projecting Brent crude to hover around $100 per barrel until mid-2026—well above its earlier estimate of roughly $70—before gradually declining toward $70 by early 2027 as disruptions ease.
Analysts warned that prolonged shipping disruptions are forcing Gulf producers to cut output, increasing the likelihood that short-term supply issues could turn into more sustained losses.
Tanker activity in the Strait of Hormuz has dropped sharply due to security concerns, effectively disrupting a crucial route responsible for about 20% of global oil consumption.
Although some shipments have cautiously resumed following Iranian inspections and potential stockpile releases from the International Energy Agency, overall volumes remain significantly below normal.
OCBC added that mitigation efforts—such as rerouting through alternative pipelines, tapping strategic reserves, and ongoing Iranian exports—could replace up to 10 million barrels per day. However, this would still leave a notable supply shortfall if disruptions persist.
The bank concluded that oil markets are nearing a “moderately severe” supply shock scenario, with risks tilted toward further price increases if geopolitical tensions continue.
The U.S. dollar paused on Wednesday as softer crude oil prices helped revive some risk appetite ahead of a series of major central bank decisions.
The yen remained fragile near levels that have previously raised concerns about possible intervention by Tokyo, especially with Japanese Prime Minister Sanae Takaichi set to meet U.S. President Donald Trump in Washington. Meanwhile, the euro slipped slightly after two sessions of gains, as the European Central Bank prepared to kick off its two-day policy meeting.
Amid the ongoing Middle East crisis, now in its third week, the dollar has strengthened as the primary safe-haven currency. However, oil prices edged lower after data from the American Petroleum Institute indicated a rise in U.S. crude inventories.
According to Hirofumi Suzuki, chief FX strategist at Sumitomo Mitsui Banking Corporation, while the pause in oil’s rally hasn’t dramatically improved conditions, markets are showing signs of stabilization. He noted that USD/JPY has moved modestly in favor of yen strength.
The dollar index rose slightly by 0.06% to 99.61 following a two-day decline, while the euro dipped 0.05% to $1.1532. The yen weakened marginally to 159 per dollar, and sterling remained steady at $1.3355.
The greenback had surged to a 10-month high late last week, driven by geopolitical tensions and rising oil prices that pushed investors toward safer U.S. assets.
Highlighting the broader impact of the crisis, Trump announced he would delay a planned trip to Beijing to meet Chinese President Xi Jinping. Takaichi is expected to leave for Washington later Wednesday.
Analysts at Mizuho Securities noted that even if the conflict drags on, equities could rebound, supporting commodity-linked currencies like the Australian dollar, as well as currencies of oil-importing nations such as the yen and euro. However, they expect limited downside for USD/JPY, partly due to the Japanese government’s preference for a weaker yen.
Attention now turns to central banks, with the Federal Reserve set to announce its decision Wednesday, followed by the ECB, Bank of England, and Bank of Japan a day later. All are widely expected to hold rates steady, though markets will closely watch their outlooks on inflation and growth amid geopolitical uncertainty.
Expectations for Fed rate cuts have been trimmed to around 25 basis points this year. Meanwhile, traders are now pricing in more than one ECB rate hike in 2026—a notable shift from earlier expectations of potential cuts.
Elsewhere, the Australian dollar gained 0.1% to $0.7109, and the New Zealand dollar rose 0.05% to $0.586. In crypto markets, bitcoin slipped 0.40% to $74,257.80, while Ethereum edged up 0.22% to $2,333.60.
For investors aiming to build reliable passive income and long-term wealth, dividend stocks continue to stand out as some of the most dependable assets. Among the most consistently favored names are The Coca-Cola Company and Walmart Inc..
Both companies belong to the elite group known as Dividend Kings — firms that have increased their dividends for at least 50 consecutive years. Their proven resilience and steady growth make them particularly attractive for long-term investors. Whether constructing a retirement portfolio or seeking stable income-generating holdings, these two consumer giants remain strong candidates.
Coca-Cola and Walmart: Enduring Dividend Leaders
Coca-Cola has delivered 63 straight years of dividend increases, reinforcing its reputation as a cornerstone income stock. It currently offers a yield of around 2.65%, supported by solid price performance, with shares up more than 10% year-to-date and over 77% in the past five years.
Its strength lies beyond dividends. With a portfolio of 32 billion-dollar brands, a deeply loyal global customer base, and a localized production strategy that helps mitigate tariff pressures, Coca-Cola continues to maintain a competitive edge that investors value.
Walmart, on the other hand, has raised its dividend for 53 consecutive years and operates the world’s largest retail network, spanning over 5,000 stores in the U.S. and nearly 11,000 globally. While its dividend yield is lower at roughly 0.79%, its total return profile is exceptional — the stock has surged more than 200% over five years, far outpacing the S&P 500.
Importantly, Walmart’s growth is no longer tied solely to its physical stores. Its e-commerce division expanded 24% year-over-year in fiscal Q4 2026, while its Walmart+ subscription service continues to grow, adding a high-margin recurring revenue stream.
Both companies operate within the consumer defensive sector, meaning demand for their products remains stable regardless of economic conditions. Essentials like food, beverages, and household goods are always needed, making these businesses naturally resilient. Combined with decades of disciplined dividend growth, this stability underpins their role as long-term portfolio anchors.
Stock Snapshot: Performance and Market Outlook
As of mid-March 2026, Coca-Cola trades at $77.49 with a market capitalization of roughly $333 billion. It has a trailing P/E ratio of 25.49 and generated $3.04 in earnings per share over the past year, consistently exceeding analyst expectations. The company also boasts a strong return on equity of over 43%, alongside annual revenue nearing $48 billion and profit margins above 27%.
Analyst sentiment remains positive, with an average price target of $83.36. Notably, Barclays recently raised its target to $83 while maintaining an overweight rating.
Walmart trades around $126.07, with a market value exceeding $1 trillion. Its higher P/E ratio of 46.17 reflects the premium investors are willing to pay for its consistent growth and execution.
Over the past 12 months, Walmart generated more than $713 billion in revenue and nearly $22 billion in net income, along with strong free cash flow of $7.77 billion — supporting both dividend increases and ongoing investments.
Analysts remain optimistic. Mizuho Financial Group rates the stock as outperform, while Tigress Financial Partners recently lifted its price target to $150.
Overall, both stocks demonstrate not only dependable income potential but also strong capital appreciation. Coca-Cola has outperformed the broader market so far in 2026, while Walmart’s nearly 202% five-year gain highlights its ability to generate superior long-term returns. Investors holding these names benefit from a powerful combination of rising dividends and sustained growth that often matches or exceeds market benchmarks.
USD/JPY’s recent dip has left it caught between firm uptrend support and growing concerns about potential intervention as it approaches the 160 mark. Traders now face a key question: does this bearish signal point to a deeper correction, or is it merely a temporary pause in the broader rally?
Pullback brings USD/JPY toward key support around 159
Intervention fears resurface near the 160 threshold
Attention shifts to the RBA decision and upcoming JGB auction
Reversal Highlights Tension Within the Uptrend
USD/JPY fell sharply on Monday, though the drivers behind the move were not particularly compelling.
The decline coincided with a sudden pullback in the US dollar and a drop in Treasury yields, despite a lack of meaningful new macro developments. At the same time, crude oil prices reversed earlier gains even as no additional countries committed to joining the United States in protecting tanker routes through the Strait of Hormuz. Given how energy supply concerns have recently underpinned the dollar, this suggests the move was more about positioning adjustments than a shift in the broader macro outlook.
For USD/JPY, the timing stands out. Japan’s finance minister, Satsuki Katayama, signaled readiness to take “decisive action” to curb excessive currency volatility as the pair neared 160. Considering Japan’s track record of intervening or conducting rate checks around this level, such remarks likely prompted traders to scale back long positions, accelerating the pullback.
A single bearish reversal candle is rarely enough to shift the narrative—especially when it appears without a clear fundamental catalyst. Without follow-through selling, Monday’s move in USD/JPY is more likely to be seen as a pause rather than confirmation of a broader trend reversal.
Technically, the pair is at a crossroads.
USD/JPY is now testing uptrend support drawn from the January lows, while hovering just above the 159.00 zone—a level that previously acted as strong resistance before being broken last week.
At the same time, momentum is starting to fade. The RSI (14) has broken its upward trajectory, and the MACD is flattening and drifting back toward its signal line after a prolonged climb. When this kind of momentum deterioration shows up at key support, it typically forces a decisive move.
So the setup boils down to two scenarios:
A continuation of selling that breaks trend support, opening the door for a deeper pullback toward 157.88
Or a defense of the uptrend, despite rising risks of Japanese intervention as price nears the psychologically important 160 level
Recent price action has largely been driven by sentiment around energy supply disruptions. The United States benefits from relative energy independence, while Japan—heavily reliant on imports—tends to see its currency weaken when oil prices surge. However, Monday’s reversal in crude oil hints that this geopolitical tailwind for the dollar may be fading.
Macro catalysts could now take the lead.
The upcoming policy decision from the Reserve Bank of Australia (RBA) may influence broader G10 currency flows. Markets are pricing only about a 62% chance of a 25bps hike, but if delivered, it would reinforce the divergence between a potentially easing Federal Reserve and other central banks that may still tighten—potentially pressuring the US dollar.
On the flip side, if the RBA holds rates steady, it could signal broader caution among central banks, which may end up supporting the dollar instead.
Bond markets also matter here.
20-year government bond auctions in both Japan and the US could offer additional clues. Demand for Japanese government bonds is particularly important—weak demand may reignite yen weakness, while strong bidding could stabilize sentiment and lend support to the currency.
In short, USD/JPY is no longer just a technical story. It’s sitting at the intersection of fading momentum, intervention risk, and shifting macro drivers—making the next move especially pivotal.
Utilities are outperforming the S&P 500, signaling growing investor demand for defensive positioning.
Consumer Staples and Health Care present mixed signals as traders evaluate potential rotation into risk-off sectors.
Tracking both absolute and relative sector strength can offer insight into broader market risk.
It’s March Madness on Wall Street: the VIX remains in the mid-20s, WTI crude oil has climbed back to $100, and bearish momentum continues to build. With “defense wins championships” in mind, traders may be weighing whether bracing for further downside is the prudent strategy.
In that context, sector analysis deserves a spot in your playbook. Within the 11 S&P 500 sectors, Utilities, Consumer Staples, Health Care, and Real Estate are typically viewed as less cyclical, lower-growth, defensive areas. Together, they account for about 18.5% of the index (under 10% excluding Health Care). From a portfolio standpoint, shifting heavily into these sectors represents a meaningful active bet. If sentiment flips and bulls regain control, a sharp rebound could quickly punish defensive positioning.
Even so, opportunities may lie beyond the high-growth “headline” sectors. Let’s take a closer look.
Utilities Gaining Momentum
Starting with Utilities (XLU), it’s useful to assess both absolute and relative price action. The sector ETF remains firmly in an uptrend.
As shown in the chart, a pattern of higher highs and higher lows has persisted since September 2023. The upward-sloping 200-day moving average indicates that bulls still dominate the primary trend. Meanwhile, the RSI momentum indicator has frequently reached overbought territory—often a sign of strength rather than weakness. In short, XLU continues to show strong upside momentum.
XLU remains in a strong uptrend and is trading near record highs.
But how does it compare to the S&P 500 ETF (SPY)?
To check, enter “XLU:SPY” in the SharpCharts symbol box (or “_XLU:_SPY” for a price-only view). As of last Friday, the ratio hit its highest level since May 2025, breaking above key resistance.
In short, relative strength is shifting toward Utilities, which implies a more bearish tilt for the broader S&P 500.
Staples Near a Crucial Support Zone
Looking at Consumer Staples (XLP), the price trend is less decisive. The ETF is edging closer to correction territory, pulling back toward key support around $84 and its 50-day moving average. Given the strong volume-by-price concentration in the mid-$80s, there’s an expectation buyers may step in at this level. The coming weeks will be pivotal.
Similarly, the XLP:SPY ratio is not as well-defined as XLU:SPY. It formed a rounded bottom around the start of the year and has since moved into a consolidation phase—potentially a bull flag.
From a technical perspective, consolidations typically break in the direction of the broader trend—which is upward here. That suggests XLP could maintain support near $84 and resume outperforming the S&P 500 in the weeks and months ahead.
Health Care Still on the Sidelines
Turning to Health Care (XLV), the chart shows a clear bearish double top, with sellers stepping in twice around the $160 level—first in Q3 2024 and again more recently over an extended period.
The sector, which includes defensive pharmaceutical firms, somewhat cyclical medical device makers, and higher-risk biotech names, has seen its RSI drop to its weakest level since just after Liberation Day. Meanwhile, the rising 200-day moving average sits only a few percentage points below the current price. In addition, after breaking below an upward trendline, the next key level to watch is the 38.2% Fibonacci retracement near $148.
Overall, XLV looks better left on the sidelines for now.
XLV:SPY lacks a compelling setup. The sector found a bottom last August, showed some strength in November, but has largely moved sideways since December.
Much like how Walmart and Costco lead the Staples space, Health Care performance is heavily driven by Eli Lilly, Johnson & Johnson, and UnitedHealth Group.
Don’t Overcomplicate the Defensive Trade
At a high level, it’s easy to get lost comparing relative strength across defensive, cyclical, and growth sectors. But the reality is simple: risk-off areas like Utilities, Staples, and Health Care can rally—and have done so multiple times during this bull market. In fact, companies such as Walmart, Costco, and Eli Lilly often behave more like growth stocks than traditional defensive names.
The takeaway: sector analysis—including relative strength—is just one tool within a broader top-down and intermarket framework.
When Defensive Strength Signals Trouble
So when does outperformance in defensive sectors shift from a caution sign to a real warning? If Utilities, Staples, Health Care (and possibly Real Estate) start showing relative strength while declining in absolute terms, it’s usually a sign the S&P 500 is under pressure.
There have been early hints of this dynamic alongside the index’s bearish rounded top, but so far it’s been inconsistent rather than decisive. While it’s not ideal for defensive sectors to lead, such phases can persist longer than expected.
Bottom Line
While attention is centered on Energy and Technology—with $100 oil and NVIDIA grabbing headlines—along with Financials facing stress from private credit concerns, traders shouldn’t ignore the defensive sectors. Monitoring both absolute and relative trends in these areas can provide clarity and help filter out noise during volatile market conditions.
Oil jumps more than 2% as markets assess supply threats from the Iran conflict.
Oil prices rebounded over 2% early Tuesday, recovering part of the previous session’s losses as supply concerns intensified amid major disruptions in the Strait of Hormuz.
Brent crude climbed to around $102.69 a barrel, while WTI rose to about $95.92. The gains follow a sharp selloff in the prior session, when prices dropped after some tankers managed to pass through the key shipping route.
The Strait of Hormuz—responsible for roughly 20% of global oil and LNG trade—has been largely disrupted by the ongoing US-Israel conflict with Iran, now in its third week, heightening fears of supply shortages, rising energy costs, and persistent inflation.
Tensions remain elevated as several US allies declined calls to deploy naval escorts for tankers, while risks of further attacks on shipping continue to threaten stability in the region. Iran has also sought the release of seized Indian tankers as part of efforts to secure safe passage through the Gulf.
The disruption has already forced the UAE to cut oil output by more than half, tightening global supply. In response to rising energy costs, the International Energy Agency is considering additional releases from strategic reserves beyond the 400 million barrels already planned.
Meanwhile, major banks have raised their oil price forecasts, reflecting the risk of prolonged supply disruptions. Scenarios range from a quick resolution that pushes prices back toward $70 to an extended conflict that could drive Brent toward $85 or higher.
Security sources report that drones and rockets were launched at the US embassy in Baghdad.
Several rockets and at least five drones targeted the US embassy in Baghdad early Tuesday, in what Iraqi security sources described as the most severe attack since the US–Israel conflict with Iran began.
Witnesses saw multiple drones heading toward the compound, with air defenses intercepting some, while at least one hit inside the embassy, sparking fire and smoke. Blasts were also reported across the city.
The strike reflects escalating retaliation by Iran-backed militias against US interests in Iraq following the war that started on February 28.
In response, Iraqi forces have increased security across Baghdad, shutting down the fortified Green Zone that houses key government buildings and diplomatic missions.
The US Dollar Index holds onto Monday’s pullback around the 100.00 mark as attention turns to the Fed’s policy decision.
Iran has permitted multiple countries to move their energy tankers through the Strait of Hormuz.
The Fed is widely anticipated to leave interest rates unchanged on Wednesday.
The US Dollar (USD) is holding onto Monday’s corrective move, which was triggered by a sharp pullback in oil prices that helped ease concerns about unanchored consumer inflation.
At the time of writing, the US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is edging slightly higher near 99.90.
The index retreated notably from Friday’s more-than-nine-month high of 100.54 as oil prices dropped after Iran permitted several countries to transport oil and Liquefied Petroleum Gas (LPG) shipments through the Strait of Hormuz, potentially reducing worries over energy supply disruptions.
In recent weeks, the USD has rallied strongly, supported by its safe-haven appeal amid escalating tensions involving Iran, the United States, and Israel. Additionally, elevated oil prices have dampened expectations for near-term interest rate cuts by the Federal Reserve (Fed).
Data from the CME FedWatch tool suggests that markets are largely convinced the Fed will keep rates unchanged until at least the September meeting, with the probability of a rate cut at that time standing at around 50%.
Looking ahead, investors will closely watch Wednesday’s Fed policy decision for further guidance. Attention will also be on the FOMC’s Economic Projections report, which will provide updated forecasts for interest rates, inflation, and economic growth.
WTI
WTI prices advance to around $94.20 during early Tuesday trading in Asia.
Rising geopolitical tensions in the Middle East continue to support crude prices.
The IEA is considering releasing additional oil reserves to mitigate the economic fallout from the US–Israel conflict with Iran.
West Texas Intermediate (WTI), the US crude benchmark, is hovering near $94.20 during early Tuesday trading in Asia, supported by ongoing tensions surrounding Iran, with no clear signs of de-escalation. Market participants are also awaiting the American Petroleum Institute (API) report due later in the day.
On Tuesday, the Israeli military reported detecting missiles launched from Iran toward Israeli territory, urging residents in impacted areas to seek shelter immediately. Meanwhile, the United Arab Emirates (UAE) announced a temporary full closure of its airspace as a precautionary step, with its defense ministry confirming responses to incoming missile and drone threats from Iran.
Fears of retaliatory Iranian strikes targeting ships, infrastructure, and key transit ports for oil shipments have raised concerns that the conflict could evolve into a prolonged regional war. Such risks may continue to provide near-term support for WTI prices.
However, on the supply side, the International Energy Agency (IEA) is considering releasing additional oil reserves into the global market to ease upward pressure on prices. The agency indicated a potential release of up to 400 million barrels, which, if coordinated among member countries, could temporarily boost supply and help limit sharp price spikes.
Silver (XAG/USD)
Silver declines as traders adjust positions ahead of Wednesday’s Federal Reserve policy decision.
Higher oil prices, driven by escalating tensions in the Middle East, are fueling inflation concerns and dampening expectations for near-term Fed rate cuts.
At the same time, geopolitical risks involving the United States, Iran, and Israel are helping to cap deeper losses by maintaining demand for safe-haven assets like silver.
Silver (XAG/USD) is trading near $80.50 on Tuesday, down about 0.60% on the day. The metal remains under pressure as fading expectations for near-term US rate cuts—amid rising inflation concerns tied to Middle East tensions—continue to weigh on sentiment.
Markets broadly expect the Federal Reserve to keep its benchmark rate unchanged within the 3.50%–3.75% range at Wednesday’s meeting, according to the CME FedWatch tool. If confirmed, this would mark a second straight pause following the prior easing cycle. Prolonged higher rates tend to pressure non-yielding assets like Silver, as they raise the opportunity cost of holding them.
Escalating geopolitical tensions in the Middle East have driven Oil prices higher, fueling fears of persistent inflation. Rising gasoline costs in the US are adding strain on households and may keep inflation expectations elevated, reinforcing the case for the Fed to maintain restrictive policy for longer.
Geopolitical developments continue to influence the precious metals market. Recent US strikes on Iran’s key export hub on Kharg Island have intensified concerns over global energy supply disruptions. While Washington has indicated the conflict could be resolved within weeks and is exploring an international effort to secure shipping routes through the Strait of Hormuz, uncertainty remains high.
This fragile geopolitical backdrop may help limit further downside in Silver. As a safe-haven asset, it tends to attract demand during periods of heightened risk, which could cushion losses even as higher interest rate expectations dampen overall investor appetite.
Sources: Ghiles Guezout, Lallalit Srijandorn and Sagar Dua
Gold draws safe-haven demand as tensions in the Middle East escalate further.
Inflation concerns dampen expectations of Fed rate cuts, supporting the USD and limiting the metal’s upside.
Traders remain cautious, avoiding aggressive positions ahead of this week’s major central bank events.
Gold (XAU/USD) ticks modestly higher in Tuesday’s Asian session but struggles to build momentum, hovering near a three-week low reached the day before. Ongoing tensions in the Middle East continue to provide some support, as the conflict shows little sign of easing. Israel has expanded its ground operations in southern Lebanon—an area where Hezbollah maintains a strong presence—keeping geopolitical risks elevated and sustaining demand for the safe-haven metal.
Now in its third week, the conflict has seen Iran target civilian infrastructure across six Gulf nations, including airports, ports, oil facilities, and commercial centers, using missiles and drones. Disruptions in the Strait of Hormuz—a critical route for about one-fifth of global oil supply—have also kept crude prices elevated. This adds to inflation concerns, potentially pushing the Federal Reserve to maintain higher interest rates for longer or even consider further tightening, which in turn limits upside for non-yielding assets like gold.
At the same time, rising geopolitical tensions have revived demand for the US Dollar following a pullback from its highest level since May 2025, further capping gains in XAU/USD. However, USD bulls remain cautious ahead of the outcome of the Federal Open Market Committee (FOMC) meeting on Wednesday. Policy decisions from other major central banks, including the ECB, BoJ, and BoE, are also expected later in the week and could drive fresh volatility in gold prices.
Gold (XAU/USD) on the 4-hour timeframe chart
Gold appears at risk, with a break below the 200-period SMA and the 38.2% Fibonacci level still in effect
Gold’s recent drop below the 200-period Simple Moving Average (SMA) on the 4-hour chart, along with sustained trading beneath the 38.2% Fibonacci retracement of the February–March rally, continues to favor bearish momentum in XAU/USD. The Moving Average Convergence Divergence (MACD, 12, 26, 9) remains in negative territory, with the MACD line below its signal line and a bearish histogram, pointing to ongoing downside pressure. Meanwhile, the Relative Strength Index (RSI) sits around 41, tilting toward the weaker side of neutral and suggesting sellers are still in control.
On the upside, initial resistance is seen near the 38.2% Fibonacci level around $5,040, followed by the 200-period SMA close to $5,063. A decisive move above this zone would help reduce bearish pressure and potentially pave the way toward the 23.6% retracement near $5,186. On the downside, immediate support lies at the key psychological level of $5,000, with further support around the recent lows between $4,995 and $4,985. A break below this area could open the door to a deeper pullback toward the 50.0% retracement at $4,921.41. A sustained move back above the 200-period SMA would weaken the bearish outlook, while continued rejection below $5,040 keeps the focus on further declines.
U.S. Strategy I: Roaring 2020s vs. Stagflating 1970s Redux
In last Tuesday’s QuickTakes, reacting to the latest Middle East conflict, we noted that although markets were already due for a pullback because of excessive bullish sentiment, the escalation increased the likelihood of a deeper correction. We suggested the market could fall around 10% from its peak, potentially reaching 15% if Iran’s Islamic Revolutionary Guard Corps (IRGC) succeeded in sustaining a blockade of the Strait of Hormuz using drones and fast boats.
Since then, much of Iran’s conventional naval capability has reportedly been destroyed. However, as long as the IRGC retains drone capabilities, the strategic waterway could remain effectively constrained. Donald Trump has authorized the United States Navy to escort vessels through the Strait, though the operation may take time to deploy and may not fully eliminate the threat of Iranian drone attacks.
Media reports over the weekend underscored those risks. According to the New York Post, an Iranian suicide drone struck a commercial oil tanker in the Strait, setting it ablaze while U.S. naval protection efforts for shipping lanes could still be weeks away.
Limits of Air Power
Military historians have long debated whether air power alone can decisively win wars. Most conclude it rarely achieves lasting victory by itself. While air strikes can destroy infrastructure, supply chains, and concentrated forces, they cannot control territory, conduct searches, or administer local governance. Nor can they fully eliminate dispersed threats such as drones.
Over the weekend, President Trump declined to rule out deploying ground forces, though he dismissed the idea of using Kurdish fighters as proxies for an invasion of Tehran, saying the conflict was already “complicated enough.” He indicated ground operations would only occur if the adversary were sufficiently weakened.
Domestic Economic Backdrop
At home, economic data has also softened. February’s U.S. employment report came in much weaker than expected, while January retail sales disappointed. As a result, the Federal Reserve Bank of Atlanta’s GDPNow model lowered its estimate for Q1 real GDP growth to 2.1% (annualized), down from 3.0%.
This leaves both the U.S. economy and equity markets caught between geopolitical shocks and slowing domestic momentum. The Federal Reserve faces a similar dilemma: if higher oil prices persist, its dual mandate could be squeezed between rising inflation and weakening employment.
Implications for the Economic and Market Outlook
Rapidly Changing Conditions
Given the speed of developments, scenario probabilities are being adjusted. The base case remains the “Roaring 2020s” with a 60% probability. However, the “Meltup” scenario has been cut from 20% to 5%, while the “Meltdown” scenario—now including the risk of 1970s-style stagflation—has been raised from 20% to 35%.
Looking beyond this year to the rest of the decade, the outlook narrows to two primary possibilities:
Roaring 2020s: 85% probability
Stagflating 1970s Redux: 15% probability
Oil Prices and Market Risk
Historically, sharp oil price spikes have often coincided with recessions and bear markets. One recent exception was the 2022 surge following Russia’s invasion of Ukraine, which produced a bear market but not a recession—highlighting the resilience of the U.S. economy.
A similar pattern could play out today. While the economy may absorb higher energy costs, the current oil shock still increases the likelihood of a 10%–15% correction in equities, even if a full bear market ultimately proves avoidable under current conditions.
War Likely to Continue for Several More Weeks
Our relatively optimistic scenario assumes the conflict will persist for a few more weeks, while the U.S. economy and corporate earnings remain resilient, as they have during previous shocks.
One reason for this resilience is the sharp decline in the economy’s energy intensity—measured as total energy consumption per unit of real GDP. In the United States, energy intensity has fallen dramatically over the past several decades, dropping about 70% between 1950 and 2024 and roughly 62% since 1979.
This structural shift means the U.S. economy is far less sensitive to oil-price shocks than in earlier decades, particularly compared with the 1970s oil crisis period when energy costs had a much larger impact on growth and inflation.
The United States economy has gradually shifted from heavy reliance on energy-intensive manufacturing toward a more service-oriented structure, which has helped reduce overall energy consumption relative to economic output.
Additional factors behind the decline in energy intensity include the introduction of Corporate Average Fuel Economy (CAFE) standards and ongoing technological improvements in internal combustion engines, both of which have improved fuel efficiency across the transportation sector.
At the same time, the expansion of the digital economy—including data centers, cloud computing, and artificial intelligence—has been driving stronger electricity demand. Even so, the growing use of natural gas and renewable energy sources in power generation, as well as their increasing adoption in industrial processes that previously relied on oil, should continue to moderate the economy’s direct dependence on crude oil.
Oil production
U.S. oil production, which includes natural gas plant liquids and renewable fuels/oxygenates, has reached a record level of 24 million barrels per day (mbd), significantly exceeding domestic consumption of 21 mbd (Fig. 7 and Fig. 8). As a result, the United States has become a net exporter of roughly 3.0 mbd (Fig. 9). This represents a dramatic shift compared with 2007, when the country was a net importer of approximately 12 mbd.
A potential return of 1970s-style stagflation
A bear market cannot be ruled out if investors begin to expect a repeat of the stagflationary conditions seen in the 1970s. At that time, the global economy was hit by two major oil shocks. In October 1973, Arab members of Organization of the Petroleum Exporting Countries (OPEC) imposed an oil embargo on the United States and other countries that supported Israel during the Yom Kippur War.
Oil prices surged dramatically, rising about fourfold from roughly $3 to nearly $12 per barrel within only a few months. This led to stagflation—an unusual and painful economic condition characterized by slow economic growth, high unemployment, and accelerating inflation (Fig. 10). The crisis resulted in long queues at gasoline stations, fuel rationing, and a heightened awareness of the United States’ dependence on foreign energy supplies.
The second oil crisis occurred after the Iranian Revolution, which significantly disrupted global oil supplies. As a result, oil prices surged, rising to more than twice their previous level. This shock further weakened an already fragile economy and deepened the stagflationary pressures. Together, the two oil crises contributed to two recessions during the 1970s.
According to Polymarket, the probability of a recession this year rose to a three-month high of 34% on Friday, up from 21% on Wednesday, February 25, just before the conflict began (Fig. 11).
U.S. Strategy II: A Direct Confrontation with the IRGC
When the conflict began on Saturday, February 28, the initial assumption was that it would end quickly. However, by the following Tuesday, that view changed, prompting further analysis in that day’s QuickTakes. A key concern is that by eliminating the leadership of the Iranian regime in the opening hour of the war, the United States and Israel effectively unleashed the regime’s most powerful force—the Islamic Revolutionary Guard Corps (IRGC). Often described as a “state within a state,” the IRGC is believed to control 20–40% of Iran’s economy, including large construction companies, telecommunications networks, and oil engineering firms. This financial base allows it to sustain operations even under severe sanctions.
In April 2019, the United States officially designated the IRGC as a Foreign Terrorist Organization—the first time Washington had applied such a label to a branch of another government. Because of their decentralized structure and access to weapons such as suicide drones, the group would be difficult to eliminate through air power alone.
Donald Trump first publicly demanded Iran’s “unconditional surrender” on Friday, March 6. The following day, he clarified that the phrase meant a situation where Iran could no longer continue fighting. On Sunday morning, he also warned that any new Supreme Leader selected by Iran’s Assembly of Experts “would not last long” without his approval, implying a U.S. veto over the succession process following the death of Ali Khamenei.
Without a central leader, Iran lacks a figure capable of formally accepting unconditional surrender. For example, on Saturday, Iranian President Masoud Pezeshkian issued a public apology for Iran’s “fire-at-will” attacks on neighboring countries. Yet only hours later, the IRGC launched another wave of strikes, highlighting a severe breakdown in command and control after Khamenei’s death on February 28. Even without the regime’s top leader, the IRGC’s decentralized design allows regional commanders to operate independently, already carrying out retaliatory drone and missile attacks against U.S. assets and allies in the Gulf.
One objective of the ongoing air campaign is to weaken the IRGC’s ability to suppress domestic opposition. By striking the Basij—the IRGC’s paramilitary force used for internal control—the United States hopes to open the door for a possible uprising inside Iran. However, from the perspective of financial markets, the war will not truly end until commercial ships can move through the Strait of Hormuz without the threat of IRGC attacks. Once that happens, the stock market’s bullish trend could resume.
U.S. Economy: Domestic Impact
Within the United States, economic data from January and February were collected before the war and present a mixed picture. Data from March will likely reveal the first economic effects of the conflict, including rising inflation and a weakening labor market. One immediate sign of inflationary pressure is the sharp increase in gasoline prices, driven by the surge in crude oil prices (Fig. 12).
Food prices may not increase right away, but fertilizer shortages could push them higher in the months ahead. Roughly 25%–33% of the global nitrogen fertilizer trade—particularly urea and anhydrous ammonia—moves through the Strait of Hormuz. On March 2, an Iranian drone attack struck the Ras Laffan Industrial City in Qatar, the world’s largest export hub for liquefied natural gas. Since natural gas is the main feedstock used to produce nitrogen fertilizers, disruptions there could have significant downstream effects. Meanwhile, Saudi Arabia, Oman, and the United Arab Emirates—all among the world’s top ten exporters of urea—are facing logistical and production challenges because of the ongoing air conflict.
If the blockade remains in place into early April, farmers might be forced to shift away from nitrogen-intensive corn-based fertilizer systems toward soybean alternatives or simply reduce fertilizer usage. Lower fertilizer application typically results in reduced crop yields, which could lead to a secondary food price shock toward the end of 2026.
This conflict represents another major test of the resilience of the U.S. economy since the beginning of the decade. It also challenges the so-called “Roaring 2020s” outlook. Despite the new risks, that optimistic scenario remains the base case with a 60% probability. However, the likelihood of a 1970s-style stagflation scenario has been raised to 35%, while the probability of a market melt-up has been reduced to 5% for the rest of 2026.
Recent economic data suggest that the labor market weakened in February and retail sales were soft in January. On the positive side, productivity growth has been particularly strong in recent quarters. If that trend continues, higher productivity could help mitigate some of the stagflationary pressures created by the war.
Employment
The January employment report came in significantly stronger than expected, whereas the February report was much weaker than forecasts. Severe weather conditions and a labor strike negatively affected February’s figures. As a result, nonfarm payrolls declined by 92,000 last month.
In addition, the January payroll figure was slightly revised downward by 4,000 to 126,000, while December’s data was adjusted from a previously reported gain of 48,000 to a decline of 17,000 (Fig. 13). Meanwhile, the unemployment rate increased marginally, rising to 4.4% in February from 4.3% in January.
The positive development is that average hourly earnings increased by 0.4% month over month in February, while the average workweek remained unchanged. Consequently, our Earned Income Proxy, which estimates wages and salaries within personal income, rose by 0.3% in February, reaching a new record high (Fig. 14).
The Federal Reserve is facing a policy dilemma: a softening labor market, which would normally justify cutting the federal funds rate, versus rising energy and fertilizer costs linked to the Iran conflict, which could push inflation higher and argue for keeping rates unchanged or even tightening policy.
This clash of signals complicates the Fed’s next move. Weak employment data suggests the economy may need monetary support, while higher oil and commodity prices risk reigniting inflation, forcing policymakers to remain cautious about easing.
Retail Sales
In January, retail sales declined by 0.2% month over month, while December’s figures, previously reported as showing moderate growth, were revised downward to no change compared with the previous month.
Among sectors, nonstore retailers experienced a 1.9% monthly increase, whereas motor vehicle and parts dealers recorded a 0.9% decline (Fig. 15). Sales at gasoline stations also dropped 2.9%.
One positive sign was a 0.3% month-over-month rise in core retail sales, which excludes several more volatile categories.
The rollout of last year’s One Big Beautiful Bill Act is expected to support consumer spending in the weeks ahead. A “February rebound” in retail activity is likely as record-high tax refunds—about 20% larger on average than last year—begin reaching households’ bank accounts.
Productivity
Labor productivity—defined as output per hour worked—increased at an annualized rate of 2.8% in Q4 2025. This marks the third consecutive quarter in which productivity growth has surpassed the long-term average of 2.1%, a benchmark calculated from data beginning in the late 1940s (Fig. 16).
At the same time, unit labor costs rose by only 1.3% year over year in Q4 2025, which helped contain inflationary pressures in the economy (Fig. 17).
GDPNow
As noted earlier, the newest economic data prompted the Federal Reserve Bank of Atlanta’s GDPNow model to lower its forecast for first-quarter 2026 economic growth from 3.0% to 2.1% (Fig. 18).
This week will see a series of major central bank meetings worldwide, including those of the Federal Reserve, European Central Bank, Bank of Japan, and Bank of England. With oil prices climbing sharply and inflation expectations edging higher, investors will be closely watching how policymakers assess the outlook for monetary policy and the implications of elevated energy costs.
Among these institutions, the Bank of Japan faces perhaps the most delicate situation, particularly after the country’s February general election and the policy trajectory it had already been pursuing since its previous meeting. With oil trading near $100 a barrel, the BOJ must proceed cautiously as the USD/JPY exchange rate moves toward 160 — a level widely viewed as a potential tipping point for the currency.
The pair has already broken above resistance near 159, though it still remains below the highs reached in July 2024.
From a technical perspective, once USD/JPY moves above its July 2024 peak, there would be no clear resistance levels ahead, potentially opening the door for further and possibly sharp depreciation of the Japanese yen.
Meanwhile, the recent surge in oil prices has reshaped expectations for U.S. interest-rate cuts. Markets have gradually scaled back their projections for easing, even though the incoming Federal Reserve chair nominee has indicated a preference for looser monetary policy.
December Fed funds futures have climbed to around 3.44%, reflecting reduced expectations for rate cuts. Since 2022, market pricing for Fed easing has broadly moved in tandem with oil prices.
If oil continues to rise, it could complicate the Fed’s ability to lower rates, as higher energy costs tend to fuel inflation. Rate cuts may only become more likely if oil prices rise to a point where they begin pushing the economy toward recession.
Rising rates are not limited to the U.S., as Australia’s 2-year bond yield has now moved above its October 2023 peak.
Rising global oil prices are likely to tighten liquidity and financial conditions worldwide. Tighter financial conditions typically place pressure on economic activity and risk markets. As long as oil prices remain elevated — or continue to climb — they are likely to further tighten global financial conditions and weigh on risk assets.
For investors trying to gauge the outlook for risk assets, the direction of oil prices has become increasingly important. However, predicting oil’s near-term path remains challenging. Weekend oil CFDs were trading about 3% higher and above $100 per barrel.
From a technical perspective, the trend remains upward for now, as long as oil continues to hold above its 10-day exponential moving average.
The situation is similar for the S&P 500—as long as the index stays below its 10-day exponential moving average, the short-term trend is likely to remain downward.
The distribution pattern in the S&P 500 appears relatively clear, with a key pivot level near 6,525, which coincides with the index’s November lows.
More significantly, measuring the decline from the recent high to this pivot level and projecting that move 100% lower points to a potential downside target near 6,050. Such a move would also fill the price gap from June 24 and allow the index to retest the breakout level from the pre-tariff highs, an area that could act as technical support.
Such a scenario would likely require oil prices to stay elevated while interest rates and the U.S. dollar continue to strengthen. The U.S. Dollar Index could also extend its gains; a decisive break above 100.50 may open the door for a move toward 102.
With momentum indicators turning positive, it appears likely that CTAs and leveraged funds may start adding long dollar positions while reducing their existing shorts.
Meanwhile, the U.S. 2‑Year Treasury Yield may have room to extend higher, with the next resistance level seen near 3.80%, followed by a potential move toward 3.97%.
Technically, the outlook has strengthened as the yield has moved above its 200-day moving average, while the 50-day moving average is beginning to trend upward. In addition, the yield recently broke above a multi-year downtrend line that had been in place since April 2024, reinforcing the case for further upside momentum.
We’ll have to watch how the week develops. With options expiration (OPEX) taking place, market volatility could remain elevated. This is particularly true for the S&P 500, where put options currently dominate positioning, increasing the potential for sharp and erratic intraday price swings.
Japanese equities tumbled sharply, with the Nikkei 225 dropping as much as 6.9% and the TOPIX falling up to 5.7%, as investors reacted to surging oil prices, escalating Middle East tensions, and weak U.S. employment data.
Asian markets traded cautiously while oil prices remained volatile amid uncertainty over shipping through the Strait of Hormuz. Investors are also watching a series of upcoming central bank meetings for signals on inflation. On Wall Street, attention is turning to Jensen Huang’s AI conference at Nvidia, while the U.S. dollar eased slightly from recent highs but stayed near key technical levels.
Oil prices fluctuated, with Brent crude trading around $105 per barrel and West Texas Intermediate near $99, after surging more than 40% over the past two weeks. The rally followed a U.S. strike on Iran’s Kharg Island, the country’s main oil export hub, and retaliatory Iranian attacks on Israel and several Arab states.
The International Energy Agency indicated that strategic oil reserves could soon be released to markets. Meanwhile, Donald Trump rejected ceasefire negotiations and called on nations to help reopen the Strait of Hormuz to global shipping.
Bond investors are debating the inflation outlook, weighing whether the Iran-war-driven oil shock will sustain inflation pressures or eventually lead to slower growth. Some strategists warn that markets may be underestimating that risk, favoring bullish bond strategies such as long positions in short-term rates that anticipate deeper Federal Reserve rate cuts than currently priced in.
U.S. stock futures edged higher on Sunday night, with Dow Jones Industrial Average, S&P 500, and Nasdaq Composite futures all posting modest gains. U.S. crude briefly climbed above $100 per barrel before retreating, while economic data from China came in stronger than expected.
U.S. equities declined for a third consecutive week as the Iran conflict entered its second full week. All three major indexes lost more than 1% again and hovered near their 2026 lows amid volatile markets and sharply rising oil prices.
U.S. Economic Data and Earnings Calendar
Investors will look for clearer signals next week on how the Middle East conflict may be altering expectations for interest-rate cuts this year, as policymakers at the Federal Reserve meet for the first time since U.S. and Israeli airstrikes on Iran roughly two weeks ago. The escalation pushed oil prices sharply higher and triggered volatility across global markets.
Comments from Fed Chair Jerome Powell following the policy decision will be closely monitored, as they could highlight divisions within the Federal Open Market Committee. Some officials support deeper rate cuts amid signs of labor-market weakness, while others remain concerned about persistent inflation. The press conference may also be Powell’s second-to-last before his term concludes in May.
Also on Wednesday, the February Producer Price Index will provide insight into wholesale inflation after January’s stronger-than-expected increase. Meanwhile, upcoming reports on new and pending home sales will be examined for indications of recovery in the U.S. housing market.
Economic Calendar
Monday, March 16
February Industrial Production and Capacity Utilization data
March Empire State Manufacturing Survey
March Homebuilder Confidence
Tuesday, March 17
February Pending Home Sales
Wednesday, March 18
Federal Open Market Committee interest-rate decision
Press conference by Jerome Powell, chair of the Federal Reserve
February Producer Price Index
January Factory Orders
Thursday, March 19
January New Home Sales
Weekly Initial Jobless Claims (week ending Mar. 14)
March Philadelphia Fed Manufacturing Index
January Wholesale Inventories
Friday, March 20
Xpeng (NYSE:XPEV)
Micron Technology (NASDAQ: MU) is set to report earnings after its stock surged more than fourfold over the past year amid the AI boom. The memory-chip maker posted a 60% year-over-year jump in revenue last quarter and exceeded profit expectations.
FedEx (NYSE: FDX) will release quarterly results on Thursday. Its shares have climbed nearly 25% this year, and investors will look for signals on global shipping trends and the health of the broader economy.
Results from Dollar Tree (NASDAQ: DLTR) are expected to provide further insight into U.S. consumer spending after the retailer previously noted that customers were feeling financially “stretched.” Earnings from General Mills, Lululemon Athletica, and Macy’s will also offer a clearer view of consumer demand.
Nuclear-energy startup Oklo is scheduled to report earnings as well, after announcing earlier this year a deal to supply power for data centers operated by Meta Platforms.
Meanwhile, Alibaba Group, China’s largest technology company, will post earnings as it accelerates investment in artificial intelligence. Chinese EV maker XPeng, a global competitor to Tesla, is also due to report.
Alibaba is reportedly preparing to launch an enterprise-focused agentic AI service built on its Qwen model by the DingTalk team, potentially as soon as this week. The company plans to gradually integrate the service with platforms such as Taobao and Alipay, aiming to capitalize on growing demand for AI assistants capable of performing complex tasks.
Technical Analysis
Dow Jones Industrial Average (DJIA) Index
The DJIA has broken below its long-term uptrend that began in August 2025 and is now trading within a downward-sloping channel, signaling a potential shift in short-term momentum.
Key support: 46,430
Next downside target: Around 45,770 if the index breaks decisively below support.
Short-term rebound level: A corrective bounce toward 47,000 remains possible as long as 46,430 holds.
In technical terms, the market is currently testing a critical support zone. Holding above it could trigger a temporary recovery, while a breakdown would likely accelerate downside pressure within the bearish channel.
DJIA Daily Candlestick Chart
Nasdaq‑100
The Nasdaq-100 is currently moving within a rectangular trading range between 24,300 and 25,370, with 24,860 acting as the midpoint pivot that helps define near-term direction.
Key support: 24,300
Midpoint resistance/pivot: 24,860
Upper range resistance: 25,370
A Monday 9:30 a.m. ET open below 24,300 would signal a bearish breakout from the range.
Downside targets if the breakdown occurs:
23,800
23,250
If support holds, the index is likely to continue consolidating within the lower portion of the range, trading roughly between 24,300 and 24,860 in the near term.
NDX Daily Candlestick Chart
SPX (S&P500) Index
The S&P 500 has broken below a rectangular consolidation pattern, signaling the start of a bearish move in the near term.
Primary support zone:6,550 – 6,520
Key resistance:6,670 – 6,680
A temporary corrective rebound toward 6,660–6,680 remains possible. However, this resistance area needs to hold firmly to maintain the bearish outlook.
If the index fails to reclaim this resistance zone, downside momentum could continue toward the 6,550–6,520 support range.
SPX Daily Candlestick Chart
Weekly Probability Outlook for Major U.S. Stock Indices
The U.S. weekly market probability map for March 16–20, 2026 indicates that historically, major U.S. indices tend to begin the week with mixed performance, followed by a three-day rally, before shifting to a mixed-to-bearish tone toward the end of the week.
This outlook applies broadly to benchmarks such as the S&P 500, Nasdaq-100, and Dow Jones Industrial Average.
The probability maps are constructed from historical seasonality trends, analyzing how markets have typically behaved during the same calendar period in past years. Sentiment readings in the model are generated through a seasonality-based scoring framework, which evaluates historical performance patterns to estimate the likely directional bias for the week.
Bitcoin climbed above $74,000 on Monday, reaching its highest level in roughly six weeks as a wave of short liquidations supported the rally, although investors stayed cautious amid rising geopolitical tensions in the Middle East.
The largest cryptocurrency was last up 3.4% at $73,892.4 by 02:21 ET (06:21 GMT), after touching an intraday high of $74,336.9 earlier in the session.
Bitcoin gained about 6% last week even as global equity markets declined, with surging oil prices fueling concerns about inflation.
Crypto rallies on short liquidations
Cryptocurrency markets posted broad gains as traders who had bet on further price declines rushed to close their short positions.
Data from CoinGlass showed about $344 million in crypto liquidations over the past 24 hours, with short positions making up roughly 83% of the total.
Liquidations occur when leveraged traders are forced to close their positions after prices move against them, often intensifying price swings.
Despite the rebound, sentiment remained cautious as the conflict in the Middle East entered its third week, raising worries about global energy supply and inflation pressures.
Donald Trump, the U.S. president, has urged allies to help safeguard the Strait of Hormuz, a critical route for global oil shipments, as hostilities in the region continue.
Oil stays above $100 amid Iran war concerns
Reports indicated that despite repeated statements from U.S. officials claiming Iran’s military capabilities had been destroyed, drone attacks continued in Gulf states on Monday.
Oil prices remained supported above $100 per barrel amid fears of potential supply disruptions around the Strait of Hormuz, a key shipping route for global crude exports.
U.S. stock futures moved slightly higher in Asian trading on Monday as investors looked ahead to the upcoming policy meeting of the Federal Reserve, where policymakers are widely expected to keep interest rates unchanged while evaluating inflation risks.
Analysts noted that geopolitical uncertainty and broader macroeconomic risks could keep cryptocurrency markets volatile in the near term, even as short covering supports prices.
Oil prices increased on Monday as the ongoing conflict involving the United States, Israel, and Iran continued to disrupt oil production and transportation across the Middle East, despite a call from Donald Trump for international cooperation to protect the strategic Strait of Hormuz.
Brent crude futures climbed by $2.30, or 2.2%, reaching $105.44 per barrel at 0903 GMT, while U.S. West Texas Intermediate crude rose $1.29, or 1.3%, to $100 per barrel.
Both benchmarks have jumped more than 40% this month, reaching their highest levels since 2022. The surge followed U.S.–Israeli strikes on Iran, which led Tehran to halt shipments through the Strait of Hormuz—an essential route for global energy trade—disrupting roughly one-fifth of the world’s oil and LNG supplies.
On Monday, oil-loading activities were suspended at the UAE’s Fujairah port after a drone strike triggered a fire in the emirate’s petroleum industrial area, according to two sources who spoke to Reuters.
Fujairah, located outside the Strait of Hormuz, serves as an export hub for around 1 million barrels per day of the UAE’s flagship Murban crude oil, equivalent to roughly 1% of global oil demand.
The International Energy Agency warned on Thursday that the conflict in the Middle East is causing the most severe oil supply disruption on record, as major producers including Saudi Arabia, Iraq, and the United Arab Emirates have reduced output since the war began.
According to PVM analyst Tamas Varga, investors appear to understand that if just two weeks of disruption in the Strait of Hormuz have already caused significant damage to production, exports, and refining, a prolonged conflict could have far more serious consequences, particularly as global inventories continue to decline.
Analysts from ING said on Monday that recent U.S. strikes on Kharg Island over the weekend have heightened concerns about oil supply, as the majority of Iran’s crude exports are shipped through the island.
Although the attacks appeared to focus on military installations rather than energy infrastructure, ING noted that they still threaten supply stability. This is because Iranian crude is currently among the few oil flows still passing through the vital Strait of Hormuz.
During the weekend, Donald Trump warned that additional strikes could target Kharg Island—an export hub responsible for roughly 90% of Iran’s oil shipments—after U.S. forces hit military facilities there, prompting retaliatory actions from Tehran.
On Sunday, Trump called on other countries to assist in safeguarding this critical energy corridor and said that Washington was holding discussions with several nations about jointly monitoring and securing the strait.
Trump also stated that the United States remained in communication with Iran, though he expressed skepticism that Tehran was ready to engage in meaningful negotiations to bring the conflict to an end.
Meanwhile, the International Energy Agency announced on Sunday that more than 400 million barrels of strategic oil reserves would soon be released into the market—a record intervention intended to stabilize prices amid disruptions caused by the Middle East conflict.
According to the agency, reserves from countries in Asia and Oceania will be made available immediately, while supplies from Europe and the Americas are expected to enter the market by the end of March.
SEB analyst Meyersson said that as the conflict moves into its third week, the absence of a clear resolution is increasing global market anxiety about the possibility of an uncontrolled escalation.
However, U.S. Energy Secretary Chris Wright said on Sunday that he expected the war to end within the next few weeks, which could allow oil supplies to recover and energy prices to decline.
In a market dominated by passive strategies, investment decisions are often detached from traditional valuation metrics, which blurs the distinctions between classic styles such as value and growth.
Passive investors are commonly associated with broad market index funds tracking benchmarks like the S&P 500 or the Nasdaq. Yet passive capital also flows into sector- or factor-focused ETFs, including funds targeting areas such as consumer staples or large-cap growth.
While “passive” refers to not selecting individual stocks, it does not necessarily mean the investment behavior itself is passive. Increasingly, investors in passive vehicles actively trade themes and narratives, shifting capital between popular sectors and strategies.
For example, in recent months, stocks within large-value ETFs have gained popularity, while the once-favored mega-cap technology names have lost momentum. This rotation is clearly visible in the diverging performance of value and growth ETFs and sectors, as well as in the inflows and outflows among the largest exchange-traded funds.
The first chart below highlights the sharp contrast in capital flows between the Vanguard Value ETF and the iShares Russell 1000 Growth ETF.
The second chart illustrates an even wider divergence in flows between the Energy Select Sector SPDR Fund and the Technology Select Sector SPDR Fund.
All flow data presented in the charts is sourced from ETF.com.
The Value Rotation Narrative
Financial media has been heavily focused on the apparent shift from “expensive” growth stocks into supposedly “cheaper” value stocks. However, as discussed in Part One, investors are largely responding to a narrative. In many cases, market participants believe they are buying value when they are actually selling it.
The value-rotation story generally goes like this: high-beta, mega-cap growth stocks have already enjoyed strong gains and now appear overvalued and risky. As a result, investors assume the logical move is to rotate into the opposite segment of the market—smaller-cap, lower-priced, and traditionally “value” sectors.
Whether or not this reasoning is accurate, the narrative itself is influencing markets, sectors, and factor performance. Even if many so-called value ETFs do not truly represent value, capital flows continue to follow the story until investor sentiment eventually shifts.
When narratives diverge from underlying fundamentals, however, distortions can emerge. For that reason, active investors must recognize the influence of prevailing narratives while also identifying genuine value opportunities—because eventually the market tends to reward them.
Why Traditional Screens Often Miss True Value
Most value investors start their search with quantitative screens that filter for metrics such as low price-to-earnings ratios, high dividend yields, or low price-to-book multiples. While these indicators are helpful starting points, they should not be treated as definitive conclusions. Frequently, they only highlight companies that appear inexpensive on the surface.
In reality, “cheap” valuation metrics can sometimes reflect underlying problems rather than attractive opportunities. For example:
Earnings could be cyclical and currently near their peak.
The company’s business model may be weakening.
Management execution might be inconsistent.
Emerging legal, political, or structural challenges could be affecting the outlook.
Many screening models—particularly those that rely on historical data rather than forward-looking estimates—struggle to differentiate between companies that are truly undervalued and those that are simply in decline. As a result, investors often mistake statistical cheapness for genuine value.
A Forward-Looking Framework
To properly assess value, investors should evaluate companies through several valuation perspectives. Each perspective addresses a different aspect of a company’s fundamentals, and when all three point in the same direction, the likelihood of identifying genuine value opportunities increases.
These perspectives focus on the past, present, and future. Investors should ask: Does the company have a strong earnings history? Is it currently performing well? And does it have solid prospects for future growth? Just as important as earnings themselves is how the current share price compares with past results, current performance, and expected future earnings.
Past Earnings
The first step is determining whether the stock appears expensive based on its recent financial performance. Measures such as trailing price-to-earnings ratios, free cash flow yield, and profit margins help investors evaluate valuation relative to earnings and cash flow generated over the past year or two.
One-Year Forward Earnings
Forward-looking estimates are often more informative than historical metrics—but only when those projections are credible. As the legendary investor Benjamin Graham once advised, investors should limit forecasts to what can reasonably be anticipated.
Businesses with stable financial trends, durable competitive advantages, and consistent management execution generally deserve greater confidence than companies reliant on optimistic projections, uncertain economic scenarios, or speculative growth stories.
Growth-Adjusted Valuations
As discussed earlier, both trailing and forward P/E ratios can appear elevated if earnings growth is expected to accelerate. For that reason, investors often incorporate the PEG ratio, which compares valuation multiples with anticipated growth rates.
This third layer is frequently absent from many screening approaches. It is also the most challenging to evaluate, since small adjustments to growth expectations can significantly influence whether a stock qualifies as a genuine value opportunity.
Applying the Framework
In Part One, we highlighted that companies such as Walmart and Costco—often perceived as classic value names—are not necessarily inexpensive.
Applying the three-tier framework shows that Walmart, for example, trades at a P/E ratio of 46, a forward P/E of 43, and a PEG ratio of 4.50, indicating a relatively high valuation across all three measures.
To help investors identify companies that may represent genuine value rather than merely appearing inexpensive, we developed a screening process. The companies that emerge from this screen combine relatively low valuations with solid earnings prospects and growth expectations that justify their current prices. While these stocks may better resemble true value opportunities in today’s market, they still carry risks.
The screen included the following criteria:
Market capitalization above $5 billion
U.S.-listed companies
P/E ratio
Forward P/E ratio
PEG ratio
Price-to-sales ratio
Quick ratio
Beyond the three primary valuation lenses, we also incorporated the price-to-sales ratio to reinforce the valuation assessment and the quick ratio to gauge a company’s short-term liquidity. Financial companies were excluded from the analysis because their earnings structures differ significantly from those of most other industries, making direct comparisons less meaningful.
Why True Value Often Gets Overlooked
Market outcomes are shaped not only by fundamentals but also by investor psychology and industry incentives. Many professional portfolio managers prefer to hold widely owned stocks because straying too far from benchmark indices can create career risk. Meanwhile, passive investment vehicles allocate capital according to index weightings that loosely align with their mandates, which naturally directs more money toward the largest and most established companies. Financial media narratives can further reinforce this dynamic by highlighting popular themes that attract even more capital to the same group of stocks.
These forces often create a self-reinforcing cycle: popular companies draw new inflows, rising prices follow, and the higher prices then attract additional investment. Companies that fall outside the spotlight frequently face the opposite pattern—even when their earnings and financial positions remain solid. As a result, the valuation gap between favored companies and overlooked ones can widen significantly.
For example, the companies identified in our screen generally represent only small positions in widely held ETFs. Phillips 66, the largest firm in the screen, represents just 3.78% of the Energy Select Sector SPDR Fund. Delta Air Lines and United Airlines—the next-largest companies—account for only 0.86% and 0.67% of the Industrial Select Sector SPDR Fund respectively. Their weights are even smaller in the large-cap value ETF Vanguard Value ETF.
The Value Trap
A common misconception in investing is that a stock that looks “cheap” automatically qualifies as a value investment. In reality, one of the riskiest situations is when a stock appears inexpensive but lacks the earnings strength, growth potential, or stability needed to justify its low valuation.
Take the airline sector as an example. Both Delta Air Lines and United Airlines appear in our screen as potential value candidates. However, their revenue prospects are highly sensitive to economic conditions and jet fuel prices. In addition, a meaningful share of their profits comes from airline credit card reward partnerships. If the economy slows, forecasts for strong double-digit earnings growth may prove unrealistic.
Rising jet fuel costs also pose an important question: can airlines pass those higher costs on to consumers? Another uncertainty is whether increasing competition from newer financial service providers could pull customers away from airline rewards cards tied to networks such as Visa and Mastercard.
Ultimately, genuine value investing requires both a reasonable price and credible earnings prospects. The stronger the investor’s confidence in a company’s future earnings growth, the higher the likelihood that a value investment will succeed.
Summary
Identifying true value has always been challenging, but the rise of passive investing has made the task even more difficult. Many investors today purchase “value” in name only, often through ETFs labeled with the term. These funds attract capital from investors seeking value exposure, yet fewer participants are actively searching for genuinely undervalued companies.
This dynamic can lead to a wide divergence between stocks perceived as value and those that truly offer value. Over time, such market distortions can create compelling opportunities—though investors must remain patient while waiting for those valuation gaps to eventually close.
The U.S. dollar remained highly volatile over the past week as markets continued to assess the broader risk appetite outlook. The 18 MXN level still stands as a major resistance barrier, while the weekly candlestick formed a hammer pattern, signaling the potential for continued volatility. However, it is important to remember that holding long positions may carry costs due to interest rate differentials. A move lower would likely indicate a return of risk appetite in the market.
NASDAQ 100
The NASDAQ 100 experienced significant volatility over the past week, driven largely by rising U.S. interest rates and ongoing war-related headlines. Surging energy costs could also pose challenges for many AI-related companies, creating a lingering overhang that may weigh on the market. That said, a major sell-off does not appear likely at this stage. Instead, the market is likely to remain choppy, with pullbacks continuing to attract buyers.
EUR/USD
The euro has declined sharply over the past week and has now slipped below the key 1.15 level, an area closely monitored by many traders. As a result, investors appear to be moving toward the US dollar in search of safety. At the same time, inflation in the United States remains persistent, leading traders to believe the Federal Reserve may have to keep interest rates higher for longer. Meanwhile, the European Central Bank must contend with potential energy shortages that could pose challenges for the continent.
USD/CAD
The US dollar strengthened for most of the week, with the market continuing to encounter significant resistance around this area. The 1.3750 level remains a key obstacle, having acted as a strong barrier on several occasions. While higher oil prices typically support the Canadian dollar, this pair may behave differently as the United States keeps boosting its oil output, currently around 14 million barrels per day. As a result, the pair is likely to be driven largely by shifts in risk sentiment, with traders turning to the greenback during periods of uncertainty.
GBP/USD
The British pound attempted to rally over the past week but was sharply pushed lower as risk appetite deteriorated. GBP is now threatening a breakdown below the 1.3250 level. If it falls through that support, the next potential target could be around 1.30. Any rallies at this stage may present selling opportunities, as several factors continue to drive traders toward the US dollar. For now, buying interest remains limited, especially with ongoing war-related headlines that could continue to influence market sentiment.
USD/ZAR
The US dollar started the week on the back foot but then rebounded sharply as traders navigated the ongoing risk aversion dominating the market. South Africa sits on the higher end of the risk spectrum, and concerns about the country’s ability to secure sufficient energy supplies are prompting capital outflows. As a result, the pair is now approaching the 17 ZAR level, a significant round and psychological threshold that many traders monitor closely. A break above this level could trigger a stronger move higher, suggesting the market is nearing a key turning point.
DAX
The German index has remained highly volatile, much like other markets, but it has so far managed to hold relatively steady, with the 23,000-euro level acting as a potential floor. From here, the market may attempt to recover. However, a closer look at the daily chart shows considerable choppiness, suggesting the index may be trying to form a base before any broader turnaround. If the market were to break below the 23,000-euro level, it could trigger a much sharper decline.
U.S. President Donald Trump has rejected Iranian proposals for a ceasefire, signaling that Washington intends to continue its “Operation Epic Fury” military campaign until Tehran agrees to tougher conditions, including the complete dismantling of its nuclear program.
With the conflict now entering its third week and the regional death toll approaching 3,750, the White House is reinforcing its “maximum pressure” strategy. At the same time, the effective shutdown of the Strait of Hormuz has helped keep global crude prices hovering close to $100 per barrel.
Hormuz tensions and Washington’s tougher demands
In a Saturday interview with NBC, Trump said Iran appears “ready to negotiate,” but emphasized that its current proposals do not meet U.S. strategic expectations. His refusal to scale back the offensive comes as Washington pushes for a multinational naval task force—including China, France, Japan, South Korea, and the United Kingdom—to reopen the world’s most critical maritime energy route.
The U.S. demands follow a wave of major strikes on Kharg Island, Iran’s main crude export terminal. Trump said military facilities there had been “obliterated,” though he claimed oil infrastructure was deliberately spared “out of decency.”
However, the president warned that restraint could end if Iran continues using mines and drones against commercial shipping. So far, at least 16 vessels have been targeted, prompting major oil exporters such as Saudi Arabia, Iraq, and Kuwait to scale back crude production.
Regional escalation and Fujairah’s role as a bypass
The conflict broadened overnight as Iran launched retaliatory attacks across the Persian Gulf, striking targets linked to Israel and several Arab energy hubs. The United Arab Emirates said its defenses have intercepted roughly 1,600 drones and 300 missiles since fighting began. Explosions were reported over Dubai as air defense systems engaged incoming threats.
Tensions intensified further after Tehran accused the UAE of allowing strikes on Iranian territory to be launched from its soil. Meanwhile, the port of Fujairah—a key export route that bypasses the Strait of Hormuz—resumed loading operations on Sunday after briefly suspending activity due to a drone-triggered fire.
Analysts view the stability of this alternative route as crucial to preventing a broader collapse in Gulf energy exports. Saudi Arabia also reported intercepting drones near Riyadh, while Qatar has suspended LNG shipments.
With the region’s defensive network under increasing strain, the prolonged confrontation risks turning into a sustained disruption to the global energy supply chain.
Stablecoins are transitioning from a niche cryptocurrency instrument into a macro-relevant component of the financial system, connecting global payment activity with U.S. dollar liquidity and short-term Treasury markets, according to a report from BCA Research.
The firm noted that the rapid growth of stablecoins could gradually alter parts of the global financial landscape as their use expands beyond crypto trading into areas such as payments, remittances, and tokenized assets.
Stablecoins are blockchain-based digital tokens designed to maintain a stable value by referencing another asset, most commonly the U.S. dollar. Their circulation has increased significantly in recent years, with total supply now exceeding $300 billion, compared with about $30 billion in 2020.
Because issuers must hold reserves to back the tokens they create, those funds are typically placed in highly liquid and low-risk assets such as U.S. Treasury bills, reverse repurchase agreements, and bank deposits. As the market expands, stablecoin issuers are becoming increasingly important marginal buyers of short-term U.S. government debt.
According to BCA, this development establishes a new channel linking worldwide payment demand to the U.S. Treasury market. Rising stablecoin issuance could boost demand for Treasury bills and potentially influence short-term interest rates, especially if new inflows represent additional capital rather than funds shifting from existing investors.
Adoption is also spreading geographically, particularly in emerging economies dealing with inflation, currency depreciation, or capital controls. In such environments, digital dollar tokens can function as a store of value and provide access to dollar-based financial services outside traditional banking channels.
This dynamic may further strengthen global demand for the U.S. dollar while creating policy challenges for governments where the growing use of digital dollars accelerates currency substitution and capital outflows.
Stablecoins may also pose competitive pressure for banks. The report highlighted that expanding digital dollar balances could divert funds from traditional bank deposits—especially non-interest-bearing transaction accounts—forcing banks to compete more aggressively to attract funding.
Despite their rapid growth, BCA emphasized that stablecoins still account for a relatively small portion of global payments and financial assets. However, continued expansion, clearer regulation, and broader institutional adoption could significantly increase their economic influence over the next decade.
Mid-tier and junior gold mining companies have largely completed reporting what has turned out to be the strongest quarter the industry has ever seen. These smaller producers—often considered the sector’s sweet spot for upside—once again broke numerous records and clearly outperformed the large major miners. In the latest quarter, mid-tier companies posted exceptional figures across the board, including revenue, net earnings, profit per ounce, operating cash flow, and cash reserves. Remarkably, early indicators suggest the current quarter could deliver even stronger results.
The main benchmark tracking mid-tier gold miners is the VanEck Junior Gold Miners ETF (GDXJ). With about $10.6 billion in assets under management as of midweek, it remains the second-largest gold-mining ETF after its counterpart, the VanEck Gold Miners ETF (GDX). While GDX is dominated by the largest mining companies, there is considerable overlap between the two funds. Despite its name, GDXJ today functions primarily as a mid-tier gold miner ETF, with true junior miners representing only a smaller share of the portfolio.
Gold mining companies are typically categorized by annual production levels measured in ounces. Junior miners generally produce less than 300,000 ounces per year, mid-tier producers generate between 300,000 and 1 million ounces, major miners exceed 1 million ounces, and the largest “super-major” companies produce more than 2 million ounces annually. On a quarterly basis, these thresholds translate to roughly under 75,000 ounces for juniors, 75,000–250,000 for mid-tiers, more than 250,000 for majors, and over 500,000 for super-majors. Among the 25 largest holdings of GDXJ, only four actually qualify as true juniors today.
In the referenced analysis table, quarterly production figures are highlighted in blue. Junior miners are defined not only by producing under 75,000 ounces per quarter but also by generating more than half of their revenue from gold production itself. This classification excludes streaming and royalty companies—firms that provide upfront capital for mine development in exchange for future production—as well as primary silver miners that produce gold as a byproduct. Even so, mid-tier miners often present more attractive investment opportunities than juniors.
The mid-tier companies dominating GDXJ offer a compelling combination of diversified production, strong growth potential, and relatively smaller market capitalizations, which create room for outsized gains. Compared with junior miners, they generally carry less operational risk, yet they tend to deliver greater upside during gold rallies than the large majors.
For many years, these mid-tier miners were largely overlooked by investors, but attention toward the group has grown recently. In 2025, leading up to gold’s mid-October peak, GDXJ surged an impressive 161.3% year-to-date. However, the sector experienced a sharp correction early in the fourth quarter as gold prices briefly retreated, sending GDXJ down 21.6% within just a few weeks. Once gold rebounded, the ETF quickly recovered, climbing another 38.9% by late December.
Interestingly, unlike GDX, GDXJ’s share price did not approach its historical highs during the quarter. The ETF originally peaked at $146.20 back in December 2010 and did not finally surpass that level until late January 2026, when gold reached an extremely overbought condition. The average price of GDXJ during Q4 2025 was about $103.33—still well below the $127.84 average recorded in Q4 2010. Even the strong rally earlier in the quarter did not push valuations to historic extremes.
At one point in early October, GDXJ traded 69.5% above its 200-day moving average, an unusually stretched level. However, this was still below the even more extreme 84.2% deviation reached in mid-2016. Over the course of gold’s massive 139.1% bull market from October 2023 to October 2025, GDXJ rose about 262.3%. That equates to only about 1.9 times leverage relative to gold’s gains, which is far below the historical pattern where smaller miners often amplify gold’s performance by three to four times.
Following a rapid correction, gold’s bull market resumed and continued climbing into late January 2026, ultimately reaching a total gain of roughly 196.4%. During that period, GDXJ increased about 387.9%, representing only around 2.0 times leverage to the metal. In other words, despite strong absolute returns, smaller gold miners have still underperformed relative to gold itself. This suggests that their share prices could still rise substantially as more investors begin to recognize the sector’s strong fundamentals.
For 39 consecutive quarters, the analyst behind this research has examined the operational and financial results of the 25 largest companies within GDXJ. These firms—mostly mid-tier producers—now account for roughly 69% of the ETF’s total weighting. While reviewing quarterly reports requires extensive effort, it provides valuable insight into the underlying fundamentals of smaller gold miners and helps cut through the often misleading market sentiment surrounding the sector.
The accompanying table summarizes key operational and financial metrics for the top 25 GDXJ holdings in Q4 2025. The stock symbols listed are not all U.S. listings and are preceded by their ranking changes within the ETF over the past year. These shifts largely reflect changes in market capitalization, highlighting which companies have outperformed or lagged since Q4 2024. Each company’s current weighting within GDXJ is also provided.
The table then details each miner’s gold production during Q4 2025, measured in ounces, along with year-over-year changes compared with Q4 2024. Production remains the lifeblood of the mining industry, and investors typically place the greatest emphasis on companies that can consistently grow output. Cost metrics follow, including cash costs and all-in sustaining costs per ounce, both of which provide insight into the profitability of each operation.
Additional financial data—such as quarterly revenue, net income, operating cash flow, and total cash holdings—comes directly from regulatory filings. Some data points may appear blank if companies had not yet reported those figures at the time of analysis. Year-over-year comparisons are also excluded in cases where they would be misleading, such as when figures shift from negative to positive or vice versa.
With gold’s average quarterly price soaring 56% year-over-year to a record $4,150 in Q4, the results for smaller gold miners were bound to be exceptional. Indeed, the industry delivered the strongest performance ever recorded. And if that were not impressive enough, preliminary data suggests the current quarter is shaping up to be even stronger. Mid-tier and junior miners clearly deserve far greater attention from investors than they have received so far.
Last week, a similar study was conducted on the Q4 results of the 25 largest gold miners within the VanEck Gold Miners ETF (GDX). These results serve as an important benchmark when comparing the performance of the 25 largest mid-tier miners in the VanEck Junior Gold Miners ETF (GDXJ). Over many quarters and years, smaller gold miners have consistently delivered stronger fundamental performance than their larger counterparts. Given that mid-tier companies outperform majors across most key metrics, there is little strategic rationale for prioritizing investment in major miners. In theory, GDXJ should attract significantly more capital than GDX.
However, as of midweek, GDXJ’s total assets were only about one-third the size of GDX. As more investors and traders examine the sector closely and recognize the superior operational and market performance of smaller gold miners, this imbalance may gradually shift. Mid-tier miners deserve stronger capital inflows than the majors, which could push their share prices higher at a faster pace. The Q4 comparison between GDXJ and GDX once again reinforced this argument.
During the fourth quarter, the top 25 GDXJ miners collectively produced approximately 3.237 million ounces of gold, representing a modest 0.6% increase year-over-year. While this growth was slightly below the global mined-gold output increase of 1.1% reported by the World Gold Council, it still significantly outperformed the production trend among the GDX top 25 majors. Those large miners experienced a steep 12% year-over-year decline in output. After adjusting for a structural change in the ETF composition, the majors’ production decline was closer to 5.6%, but this still lagged mid-tier performance.
Fundamentally, major and mid-tier gold miners operate under different dynamics. Large mining companies often struggle with declining production because of depletion at their massive operating scale. Mid-tier companies, by contrast, usually operate smaller portfolios of mines—often between one and four. This means that expansions or new projects can have a meaningful impact on their overall production levels. As a result, mid-tier companies are generally better positioned to offset depletion and maintain steady production growth.
Production growth is critical in the gold mining industry because it generates the cash flow needed to expand existing operations, develop new mines, or acquire producing assets. These investments ultimately support higher stock valuations. Interestingly, mid-tier miners frequently maintain lower mining costs than large producers, despite the supposed economies of scale enjoyed by major companies. Lower costs relative to output translate into higher profitability, which in turn can drive stronger share-price appreciation.
Another factor supporting mid-tier stock performance is their smaller market capitalization. The average market cap of the 25 largest GDX companies stood at roughly $38.8 billion last week—around 2.8 times higher than the average $13.9 billion market cap of the top 25 GDXJ miners. The five largest holdings in GDX averaged $98.3 billion each, compared with $20.3 billion for GDXJ’s top five. Companies with smaller market capitalizations typically require less capital inflow to drive significant stock-price movement, giving them greater upside potential.
Analyzing fourth-quarter results can be challenging because many mining companies delay reporting until their year-end annual reports are finalized. Some firms within the leading gold-miner ETFs do not release their Q4 results until mid-to-late March. One such company is Harmony Gold Mining Company from South Africa, which only reported its results this week. Harmony is notable because it appears among the top 25 holdings in both GDX and GDXJ.
Because Harmony is a large major producer, its results are important for comparison. Its late reporting meant it was excluded from the earlier GDX analysis but has now been incorporated into updated comparisons. Including Harmony slightly changes the previously reported GDX figures. Given its large size, the company arguably should not have been included in the GDXJ portfolio in the first place.
In general, unit mining costs tend to decline as production volumes increase. This is because many operational expenses for gold mines are fixed during the planning and construction phases, when processing plant capacities are determined. Infrastructure, equipment, and labor requirements remain relatively stable regardless of short-term production fluctuations.
The primary factor influencing quarterly production is the grade of the ore processed by the mining facilities. Ore grades can vary significantly even within the same deposit. Higher-grade ore produces more gold per ton, spreading fixed operating costs over more ounces and lowering per-unit costs. However, in addition to these fixed costs, gold mining also involves significant variable costs—many of which have been affected by the high inflation seen in recent years.
Cash costs remain the traditional metric for measuring mining expenses, covering the direct cash expenditures required to produce an ounce of gold. However, this measure does not include the capital investments required for exploration or mine construction. For that reason, cash costs should be viewed mainly as a minimum survival threshold, indicating the lowest gold price needed for mines to remain operational.
In Q4 2025, the average cash cost among the top 25 GDXJ miners surged 19.1% year-over-year to a record $1,293 per ounce. By comparison, the GDX top 25 majors experienced a smaller increase, with cash costs rising 7% to $1,238. One of the main drivers behind these increases was higher royalty payments, which rise alongside gold prices because they are typically calculated as a percentage of production value.
For example, Lundin Gold reported a 33.6% year-over-year increase in cash costs to $947 per ounce, partly due to higher royalty obligations and employee profit-sharing tied to record gold prices. Meanwhile, OceanaGold saw royalty payments across its operations increase sixfold in absolute terms compared with the same quarter the previous year.
A more comprehensive cost metric is the all-in sustaining cost (AISC), introduced by the World Gold Council in 2013. AISCs include cash costs along with sustaining capital expenditures and other operational expenses required to maintain current production levels. As such, they provide a clearer picture of true profitability.
Cash costs typically represent the largest portion of AISCs. In Q4 2025, they accounted for nearly seven-eighths of the average AISC among the top 25 GDXJ miners. As a result, rising royalty expenses pushed AISCs higher as well. During the quarter, the group’s average AISC rose 10.7% year-over-year to a record $1,490 per ounce. Even so, this still compared favorably with the GDX majors, whose AISCs climbed 16% to $1,687.
However, these averages were distorted by an extreme outlier. Peru’s Compañía de Minas Buenaventura reported a remarkable negative AISC of $2,178 per ounce. This unusual result stems from the company’s polymetallic production profile. While it reports results in gold-equivalent terms, its operations primarily produce other metals such as silver, copper, zinc, and lead. Gold accounted for only about 28% of its revenue in the quarter.
Because the company treats other metals as byproducts that offset gold-production costs, its gold AISCs can appear extremely low or even negative. Such anomalies have occurred repeatedly over the past nine quarters. Although Buenaventura was historically a top-25 holding in both GDX and GDXJ, it has recently fallen to 27th place in GDX as other companies have outperformed.
For consistency, all reported figures—including outliers—are included in the long-term dataset used in this research. Without Buenaventura’s unusual figures, the average AISC for the GDXJ top 25 would have been $1,719 per ounce in Q4, representing a much larger 27.7% year-over-year increase.
Other factors also influenced the cost averages. For instance, Hecla Mining reported exceptionally high AISCs of $2,696 per ounce, while New Gold did not release Q4 results due to its pending acquisition by Coeur Mining. In the previous quarter, New Gold had reported relatively low AISCs of around $966.
After decades of studying the gold-mining sector, the analyst considers “implied unit earnings” to be the most useful metric for evaluating the collective performance of mid-tier miners. This measure subtracts the average AISC from the average quarterly gold price, providing a clearer indicator of profitability than accounting earnings, which can be distorted by non-cash items.
In Q4 2025, the average gold price reached a record $4,150. Subtracting the $1,490 AISC yields implied profits of approximately $2,660 per ounce. This represents an extraordinary 102.4% increase year-over-year and the highest profitability ever recorded for either GDXJ or GDX miners.
This milestone extends a remarkable trend. Over the previous ten quarters, the GDXJ top 25 recorded year-over-year implied earnings growth of 106%, 133%, 63%, 63%, 71%, 95%, 91%, 79%, 82%, and 102%. Few sectors in global equity markets have experienced such sustained profit growth. With such performance, mid-tier gold miners arguably deserve to be among the most sought-after sectors for investors.
The trend may continue. With more than three-quarters of Q1 2026 completed, gold has averaged roughly $4,931 so far. If this level holds, it would represent another extraordinary year-over-year increase of about 72%. This rise would likely continue to outpace cost inflation among mid-tier miners.
Based on guidance, the average 2026 AISC for the GDXJ top 25 is projected to reach about $1,857 per ounce. Excluding unusually high estimates—such as the $3,075 forecast from Hecla Mining—the average falls closer to $1,776. Using a conservative estimate of $1,850, implied profits in Q1 2026 could approach another record near $3,080 per ounce, representing roughly 107% year-over-year growth.
Gold stocks also benefit from seasonal patterns. Historically, gold experiences three major rallies during the year—autumn, winter, and spring. The winter rally tends to be the strongest for gold itself, while the spring rally—from mid-March through early June—often delivers the strongest outperformance for gold-mining stocks. That seasonal window coincides with the release of Q1 earnings, which could further boost investor enthusiasm.
Sometimes accounting results differ from implied profitability due to non-cash adjustments. However, that was not the case in Q4 2025. The top 25 GDXJ miners reported total revenue of $16.6 billion, up 48.1% year-over-year and marking a new industry record. Net earnings surged even more dramatically, jumping 307% to a record $5.15 billion.
After adjusting for unusual items such as asset impairments or valuation changes, total earnings remained almost unchanged at $5.16 billion—still representing a massive 252% increase compared with Q4 2024.
Operating cash flow also surged, rising 86.3% year-over-year to a record $7.43 billion. This influx of cash boosted the combined cash reserves of the GDXJ top 25 to another all-time high of $14.4 billion, up 50.8% from the previous year.
While net profits influence valuations, operating cash flow and cash reserves directly support future production growth. Companies with strong balance sheets are better positioned to expand existing mines, build new operations, or acquire producing assets. These investments could accelerate production growth among mid-tier miners in the coming years.
The main risk to this bullish outlook is gold itself. Gold-mining stocks typically amplify movements in the metal by three to four times. When gold becomes extremely overbought, corrections can be sharp. Earlier this year, gold reached one of its most extreme overbought conditions since the early 1980s before experiencing a brief correction.
Although prices have since stabilized at elevated levels, historical precedent suggests that a significant pullback could still occur. If gold were to decline sharply, mining stocks would likely fall even more dramatically despite their strong fundamentals. Such declines, however, could present attractive buying opportunities.
In summary, mid-tier and junior gold miners have just reported the strongest quarter in the history of the industry. Record gold prices fueled unprecedented revenues, profits, cash flows, and balance-sheet strength. This marks the tenth consecutive quarter of extraordinary earnings growth for the sector.
With gold prices still trending toward another record quarter, the next round of results may be even stronger. These improving fundamentals could attract additional investment capital into mid-tier miners, driving further stock gains—unless a sharp gold correction occurs first, in which case mining stocks would likely magnify the downside.
The sharp rise in oil prices following escalating tensions between the United States and Iran has reignited talk of stagflation. That concern is largely misplaced. What markets may actually be reacting to is not a repeat of the 1970s, but the early stages of a broader shift in capital allocation — away from financial assets and toward tangible ones.
The Stagflation Comparison Falls Apart
Whenever oil prices surge, fears of stagflation quickly emerge. The pattern appeared in 2022 and is resurfacing again. The instinct makes sense: higher energy costs can push inflation upward while weighing on economic growth. However, drawing a direct parallel with the stagflation period of the 1970s and early 1980s oversimplifies the situation.
Classic stagflation requires a persistent combination of three conditions: entrenched inflation far above target levels, stagnating or shrinking economic activity, and limited policy tools capable of correcting the imbalance without worsening the problem. In the United States during 1973 and again in 1979, all of these factors were present. Today’s environment looks very different.
Inflation is the first major distinction. During the 1970s, U.S. consumer prices averaged above 7% for much of the decade and surged beyond 13% at the end of the period. Inflation was embedded in wages, expectations, and policy frameworks. By contrast, today’s inflation has already declined significantly from its 2022 highs. While still above the ultra-low levels seen after 2008, it remains far more controlled. Importantly, central banks now possess the credibility that was missing during the Federal Reserve leadership of Arthur Burns. Inflation expectations remain relatively stable — a crucial difference.
Economic growth tells a similar story. Real GDP continues to expand at a respectable pace, and while the labor market is gradually cooling, it is far from collapsing. Corporate profits have generally remained resilient, apart from sectors particularly sensitive to higher interest rates. Consumer spending — supported by continued employment — has not stalled. In this context, an oil price spike represents a headwind rather than an automatic trigger for recession.
Supply conditions also differ dramatically from those of the 1970s. The earlier oil crises were driven by coordinated OPEC embargoes that deliberately restricted supply to Western economies. At the time, alternatives were limited and domestic production could not compensate. Today, the United States is the world’s largest oil producer thanks to the shale revolution. A disruption involving Iran can lift prices, but it does not recreate the systemic vulnerability that defined the 1973 crisis.
The reality is straightforward: energy prices may push inflation slightly higher and shave some growth at the margins. But an isolated oil shock does not produce stagflation unless the broader economic structure is already broken — and that is not the case today.
What the Oil Spike Actually Signals
Rather than focusing on stagflation, investors should consider what oil’s move may be revealing about broader market dynamics.
Historical patterns following geopolitical shocks offer a useful guide. In the first three months after such events, oil tends to be the strongest performer among major assets, rising roughly 18% on average. Gold typically advances about 6%, while equities post modest gains of around 4%, often reflecting relief that the situation did not escalate further.
Six months later, however, the picture often changes. Gold generally continues to climb, with average gains near 19%. Equity markets lose momentum, and oil frequently gives back much of its initial spike as supply responses and fading fear premiums bring prices back down.
The tactical takeaway is clear: oil tends to perform best during the initial shock phase, while gold benefits from the longer period of uncertainty that follows. The geopolitical risk premium embedded in oil prices is often temporary, but in gold it can evolve into a more lasting repricing tied to concerns about currencies, fiscal sustainability, and the reliability of financial assets.
The Bigger Shift: Real Assets Regaining Importance
Looking at the broader market landscape, the oil rally may represent just one element of a larger transition.
During 2024 and 2025, equity markets were dominated by a single theme: artificial intelligence. Capital poured into a small group of large technology companies investing heavily in AI infrastructure. The narrative was simple — if AI would reshape the economy, investors should own the companies leading that transformation.
By 2026, leadership appears to be shifting. The strongest performers are increasingly the firms supplying the physical foundations of the AI economy: semiconductor manufacturers, materials producers, energy providers, and industrial supply chains. Meanwhile, some of the technology platforms themselves face rising costs and pressure on their traditional software revenue models.
This development suggests something deeper than a normal sector rotation.
For decades, capital markets favored companies that consumed resources while undervaluing those that produced them. Asset-light businesses commanded premium valuations, while industries tied to the physical economy — mining, energy, utilities, and heavy industry — were often neglected and underfunded.
Yet the real economy never disappeared. In fact, its importance is now becoming more apparent.
The expansion of artificial intelligence requires enormous amounts of electricity to power data centers. Electrification of transportation and manufacturing depends on vast quantities of copper and other metals. Efforts to rebuild domestic manufacturing and strengthen supply chains demand steel, critical minerals, and engineering capacity that has been underdeveloped for years. Energy security has also become a top political priority, encouraging renewed investment in domestic production infrastructure.
All of these forces point toward the same conclusion: the materials and energy systems that underpin the global economy are increasingly scarce relative to rising demand.
When markets begin to recognize a prolonged supply gap in strategically important commodities, the resulting repricing can be powerful and long-lasting. Recent strength in assets such as copper, gold, uranium, and energy infrastructure may be early evidence of that process.
Investment Implications
Viewing the current environment through the lens of stagflation frames it as a temporary economic problem. That interpretation misses the larger opportunity.
The macroeconomic risks are likely overstated: inflation is not deeply entrenched, the economy continues to expand, and the conditions that produced 1970s-style stagflation are absent. Investors who position primarily for economic collapse may find themselves overly defensive.
At the same time, the stagflation narrative understates the structural shift taking place. If markets are beginning to rotate from financial assets toward real ones — from digital platforms to the physical infrastructure supporting them — then the investment strategy should focus less on protection and more on positioning.
In simple terms, the beneficiaries are likely to be the builders rather than the spenders: companies involved in energy production, materials, infrastructure, and industrial supply chains, along with scarce hard assets.
History shows that when these types of market rotations begin, they often last longer and move further than most investors expect. Commodity sectors have experienced more than a decade of underinvestment, while the forces driving demand — artificial intelligence power needs, electrification, and reindustrialization — are structural trends rather than short-term cycles.
This moment may not replicate the 1970s. But it could mark the beginning of a similarly significant shift: a period in which the physical economy returns to the center of global capital markets, rewarding investors who recognize the change early.
Middle East tensions likely to delay Fed rate cuts
The conflict in the Middle East is expected to increase price pressures, while at the same time posing risks to U.S. economic growth and employment prospects. As a result, the situation is more likely to delay potential Federal Reserve rate cuts rather than eliminate them entirely. This differs from the situation in 2022, when a combination of demand and supply shocks sharply accelerated inflation and forced the central bank to raise interest rates.
Rising inflation limits the Fed’s flexibility
Recent developments in the Middle East have significantly altered expectations for monetary policy at the Federal Reserve. Financial markets had previously anticipated two 25-basis-point rate cuts this year, but pricing has now shifted to reflect barely one cut.
Investors are also overwhelmingly expecting the Federal Open Market Committee to leave interest rates unchanged at its meeting on March 18, a view we also support.
Military activity in Iran and heightened risks to shipping through the Strait of Hormuz have driven a sharp rise in energy prices. Although the United States imports relatively little crude oil from the Persian Gulf and remains self-sufficient in natural gas, global oil pricing means domestic consumers still feel the impact.
Retail gasoline prices in the U.S. have already climbed above $3.60 per gallon, with the national average potentially approaching $4.25 per gallon in the near term. Higher fuel costs are expected to raise transportation and distribution expenses, while airline ticket prices could also increase.
If the disruption persists, price pressures may extend into other sectors such as fertilizers, food products, and plastics. As a result, inflation could rise toward 3.5% by the summer, remaining well above the Fed’s 2% target.
Growth and employment outlook uncertain
The implications for economic growth and employment remain less certain. February’s ISM business surveys suggested activity levels consistent with roughly 3% GDP growth. However, the labor market data paints a less optimistic picture.
The February employment report showed the economy lost 92,000 jobs, while the unemployment rate rose to 4.4%. This suggests the Fed may have been premature in removing its earlier assessment that “downside risks to employment rose in recent months” from the January FOMC statement.
Increasing geopolitical and economic uncertainty is unlikely to support stronger job creation and may dampen economic activity outside the U.S. energy sector.
Fed expected to signal a delay in rate cuts
Against this backdrop, attention will turn to the updated economic projections from the Federal Reserve. In its December outlook, the Fed had anticipated one interest-rate cut in 2026, followed by an additional 25-basis-point reduction in 2027.
However, the ongoing conflict and the uncertainty surrounding its duration and severity make the outlook highly unpredictable. As a result, policymakers are likely to have limited confidence in their forecasts.
At the press conference, Fed Chair Jerome Powell is expected to emphasize the difficulty of setting monetary policy amid such geopolitical and economic uncertainty.
Even so, the Fed may modestly downgrade its growth projections, raise its inflation forecasts, and ultimately push back the previously expected 2026 rate cut to 2027.
Risks still tilted toward lower interest rates
We have been projecting two interest-rate cuts in September and December, although—like financial markets—we acknowledge the possibility that these reductions could be pushed into next year. While the Federal Reserve operates under a dual mandate of maintaining price stability and promoting maximum employment, safeguarding its credibility on inflation remains crucial. Cutting rates becomes difficult to justify when inflation is already above target and appears to be moving further away from it.
In early 2022, the Fed initially argued that inflation would prove temporary because it was largely driven by supply disruptions, suggesting there was no immediate need to raise rates. However, strong job creation, rapid wage growth, pent-up consumer demand following pandemic lockdowns, and stimulus payments fueled a surge in spending. Inflation subsequently accelerated far more than expected.
As a result, the central bank was forced to respond aggressively, lifting interest rates by 525 basis points between March 2022 and July 2023 in an effort to regain control over rising prices.
Currently, the U.S. labour market appears significantly weaker, with both job creation and real household disposable income showing little growth over the past six months. At the same time, consumer confidence has been weighed down by concerns over tariffs and job security, reducing the likelihood of a strong demand surge that could push inflation higher. This environment suggests that inflationary pressures may indeed prove temporary this time.
Instead, the current energy shock may ultimately dampen demand, which would help ease core inflation over time. A correction in equity markets could amplify this demand destruction further. For this reason, we continue to expect a downward bias in Federal Reserve policy rates over the next 12–18 months.
Although tax refunds this year are expected to be relatively large—averaging around $4,000 compared with $3,200 last year—a much stronger fiscal stimulus would likely be required to generate enough demand to entrench inflation. Measures such as widespread stimulus checks would probably be necessary to produce sustained price pressures that might force the Fed to raise interest rates again.
However, such a scenario could unsettle bond markets due to concerns about rising government debt and renewed inflation risks. This, in turn, could trigger fears of 1970s-style inflation dynamics, a period marked by persistent inflation and financial market volatility. For now, we view that outcome as relatively unlikely.
Should the Fed Address the Persistent Stickiness in the Effective Funds Rate?
Since the Federal Reserve resumed purchasing Treasury bills in mid-December 2025, it has accumulated about US$165 billion in T-bill holdings. Overall, the Fed’s total securities portfolio—including bills—has increased by US$130 billion, bringing the balance sheet to roughly US$6.26 trillion. At the same time, bank reserves have risen by around US$180 billion to slightly above US$3 trillion, partly supported by a moderate drawdown in the Treasury’s cash balance.
Despite this US$130 billion expansion of the balance sheet, the Fed may find it frustrating that the effective federal funds rate has not declined, even marginally. Historically, the effective rate traded roughly 8 basis points above the policy floor, but it climbed to about 14 basis points in September and October 2025—one of the factors that prompted the renewed T-bill purchase program.
The underlying issue emerged when bank reserves slipped below US$3 trillion, causing conditions in the repo market to tighten noticeably. That tightening, from a relative-value perspective, helped push the effective funds rate higher. While the broader policy narrative has been dominated by rate cuts, the real concern is the effective funds rate drifting upward within the 25-basis-point target range.
For now, the effective funds rate remains stuck at 3.64%, just 1 basis point below the interest rate on reserve balances (3.65%). Moving up to 3.65% would be difficult because eligible counterparties can choose between holding reserves or lending in the federal funds market, though the rate should not exceed that level. Whether the Fed will address this issue publicly remains uncertain, although it arguably warrants attention from reporters, given that efficient market functioning is particularly important in the current environment.
Looking more broadly at interest rates—especially the outlook for bonds—the Fed is facing signals of higher nominal yields, rising real yields, and widening inflation breakevens. This mix does little to support further rate cuts. In fact, each element points toward the logic of maintaining current policy settings. For the time being, the market is likely to see more of the same, with 10-year Treasury yields potentially moving into the 4.3%–4.5% range before real yields eventually begin to decline again.
Fed Caution Should Continue to Support the Dollar
Like the rest of the world, the United States has seen a hawkish re-pricing of short-term interest rate expectations as the Middle East energy shock reduces the likelihood of near-term monetary easing. Although the shift in US rates has been smaller than in many other regions, it has done little to weaken the dollar. At the moment, the macro impact of rising energy prices is the dominant force shaping currency markets, while traditional drivers such as rate differentials have temporarily taken a back seat.
This suggests that even a mildly hawkish Federal Open Market Committee meeting on Wednesday—where the Fed could push the projected 25-basis-point rate cut from 2026 to 2027—may not provoke a dramatic reaction in the dollar. Still, if policymakers emphasize the inflation risks posed by higher energy prices while the US labor market remains resilient, it would likely provide modest support for the currency. In fact, the market’s reassessment of the Fed’s policy path has amplified the energy shock confronting Europe, Asia, and many emerging economies, undermining earlier expectations of a gradual dollar decline this year.
As long as energy prices remain elevated—or climb further—it will be difficult for the dollar to surrender the gains it has made this month. One potential source of increased dollar supply could come from official intervention, particularly if Japan steps in to curb USD/JPY should the pair rise beyond 160. A coordinated intervention by the United States and Japan to sell dollars would be unexpected and could trigger a broader correction in the currency. However, unless energy prices retreat meaningfully, any intervention would likely serve only to limit volatility rather than reverse the dollar’s broader strength.
Bitcoin climbed on Friday, marking its fifth consecutive day of gains as expectations for more supportive cryptocurrency regulation in the United States helped counter lingering worries surrounding the Iran conflict.
The world’s largest cryptocurrency rose 1.4% to $71,113.1 by 18:00 ET (22:00 GMT).
Bitcoin on track for weekly gains amid regulatory optimism
Bitcoin was heading for a weekly advance of nearly 6%, outperforming broader risk-sensitive assets despite the uncertainty stemming from the ongoing Iran war.
The rally in the leading digital asset was largely fueled by an announcement on Wednesday that the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission will cooperate to develop a clearer and more comprehensive regulatory framework for U.S. crypto markets.
Through the agreement, the two agencies signaled plans to jointly craft a federal policy that would introduce a “fit-for-purpose regulatory framework for crypto assets and other emerging technologies.”
The initiative, known as the Joint Harmonization Initiative, seeks to establish structured data-sharing practices, simplify reporting requirements, and reduce overlapping enforcement actions between the two regulators.
Although the arrangement is non-binding, the announcement boosted investor confidence that U.S. authorities may move toward clearer and more coordinated regulation for the cryptocurrency sector.
The initiative also aligns with promises by Donald Trump to provide greater regulatory clarity for the crypto industry, with the administration appointing leaders at both agencies viewed as supportive of digital assets.
Bitcoin has climbed about 6.1% since the United States and Israel launched attacks on Iran in late February. Meanwhile, the second-largest cryptocurrency, Ether, has gained roughly 6.2% during the same period.
According to David Morrison, senior market analyst at Trade Nation, both Bitcoin and Ether have demonstrated notable resilience despite growing negative sentiment toward risk assets.
He noted that the two cryptocurrencies have held up well even as global equities—particularly technology stocks—faced significant selling pressure. At the same time, Bitcoin has been rising alongside the U.S. dollar and crude oil, while traditional safe-haven metals such as gold and silver have struggled.
Morrison added that the rebound may partly reflect technical factors. After reaching an all-time high above $126,000 six months ago, Bitcoin lost more than half of its value, dropping to around $60,000 in early February. That sharp correction left the market technically positioned for renewed buying interest. Whether the recovery proves temporary or develops into a more sustained trend remains uncertain.
Despite the recent gains, broader investor appetite for risk remains subdued, as equity markets have experienced sharp declines amid concerns about the economic consequences of the U.S.–Israel conflict with Iran.
One major concern is the war’s potential inflationary impact. Prolonged disruptions to oil supply could push crude prices higher and contribute to global inflation. Such pressures may force major central banks to adopt a more hawkish policy stance, which could weigh on cryptocurrencies and other speculative assets.
Iliya Kalchev, analyst at Nexo Dispatch, said Bitcoin’s rebound from the mid-$60,000 range to above $72,000 suggests the market has stabilized after a brief period of deleveraging. Open interest has recovered to 687,200 BTC—its highest level since late February—while funding rates and trading volume indicators have turned positive. Meanwhile, implied volatility has dropped to a two-week low of 55%.
Inflation data meets expectations
U.S. inflation figures released earlier showed price pressures broadly in line with forecasts but still above the level preferred by the Federal Reserve.
The Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, rose 0.4% month-on-month in January, matching expectations. On an annual basis, core PCE increased 3.1%, also in line with estimates and still well above the central bank’s 2% target.
The Fed closely monitors the core PCE index because it reflects a broader range of consumer spending than the Consumer Price Index and captures shifts in purchasing behavior.
Earlier data from the U.S. Department of Labor showed that February’s headline CPI rose 2.4% year-on-year, while core CPI increased 2.5%—the lowest reading since March 2021, though still above the Fed’s target.
The Federal Reserve is scheduled to announce its next interest-rate decision on Wednesday, with markets currently pricing in an almost certain probability that the Federal Open Market Committee will keep rates unchanged.
Altcoins mostly higher, $TRUMP token surges
The broader cryptocurrency market also moved higher on Friday in line with Bitcoin.
Ether gained 1.3% to $2,089.11, while XRP rose 1.2% to $1.3950. BNB, Cardano, and Solana increased 0.6%, 0.8%, and 2.2%, respectively.
Among memecoins, Dogecoin added 1.4%, while the $TRUMP token surged 30%. The rally followed news of an exclusive cryptocurrency and business conference at Mar-a-Lago, where President Donald Trump is expected to deliver a keynote speech, prompting traders to accumulate the token ahead of an April 25 gala luncheon.
Despite the recent rebound, most altcoins—like Bitcoin—remain significantly below their highs from recent months, with overall sentiment toward the crypto sector still fragile.
U.S. President Donald Trump warned that he could authorize strikes on Iran’s oil infrastructure on Kharg Island if Tehran continues attacks on vessels passing through the strategically crucial Strait of Hormuz. The threat added further uncertainty to global markets already facing one of the most significant supply disruptions in history.
Trump accompanied the warning with a social media message claiming that U.S. forces had “completely destroyed” military targets on Kharg Island. The island functions as the main export terminal for roughly 90% of Iran’s crude shipments and is located about 300 miles northwest of the Strait of Hormuz.
However, the president clarified that American strikes had not targeted Kharg’s oil infrastructure. He added that if Iran or any other party attempted to block the safe passage of ships through the Strait of Hormuz, Washington could reconsider that restraint.
Trump also stated that Iran lacked the capability to defend itself against U.S. military action. In a post on Truth Social, he urged Iran’s armed forces and their allies to surrender, warning that continuing the conflict could further devastate the country.
Iran’s military responded on Saturday by warning that any attack on its oil or energy facilities would be met with retaliation against installations belonging to oil companies cooperating with the United States in the region, according to Iranian media reports.
Iran’s semi-official Fars News Agency reported that more than 15 explosions were heard on Kharg Island during the U.S. strikes. Sources said the attacks hit air-defense systems, a naval installation, and airport infrastructure, while leaving oil facilities untouched.
Energy markets were closely monitoring whether the strikes had damaged Kharg Island’s complex network of pipelines, storage tanks, and export terminals. Even minor disruptions could further constrain global oil supply and intensify volatility in energy markets.
Elsewhere in the region, Iran’s Islamic Revolutionary Guard Corps announced that it had carried out additional strikes against Israel in coordination with Lebanon’s Hezbollah, according to Iran’s Tasnim News Agency.
Meanwhile, the Israel Defense Forces said on Friday that its air force had attacked more than 200 targets across western and central Iran within the past 24 hours, including missile launchers, air-defense systems, and weapons manufacturing facilities.
The United States has also suffered losses. The U.S. military confirmed that all six crew members aboard a refueling aircraft that crashed in western Iraq had died.
According to The Wall Street Journal, citing U.S. officials, five U.S. Air Force tanker aircraft stationed at a base in Saudi Arabia were damaged in an Iranian missile strike and were undergoing repairs.
Gulf and Lebanon emerge as key flashpoints
Oil markets have experienced sharp price swings in response to Trump’s shifting comments about the potential duration of the conflict, which began on February 28 when large-scale U.S. and Israeli airstrikes targeted Iran. The fighting quickly expanded into a wider regional confrontation with major implications for global energy and financial markets.
Lebanon has become another focal point of the conflict, with Israeli forces and Hezbollah exchanging strikes in and around Beirut.
In addition to missile and drone attacks against Israel and U.S.-aligned Gulf states, Iran’s Islamic Revolutionary Guard Corps has attempted to disrupt shipping through the Strait of Hormuz, a vital route that carries about 20% of the world’s fossil fuel supplies.
Trump said on Friday that the United States Navy would soon begin escorting oil tankers through the waterway.
Although he previously suggested the war might last only a few weeks, Trump declined to predict a timeline for its end, saying the conflict would continue for as long as necessary.
Despite the fighting, Iran has continued exporting crude oil while several Gulf producers have halted shipments due to concerns about potential Iranian attacks.
Satellite imagery reviewed by TankerTrackers.com showed multiple very large crude carriers loading oil at Kharg Island earlier in the week. Iran exported between 1.1 million and 1.5 million barrels per day from the start of the war through midweek.
Bob McNally, president of Rapidan Energy Group, said Trump’s remarks could push markets to focus on the possibility that the current energy disruption — already the largest on record — might worsen and persist longer than expected.
Some industry analysts doubt Kharg Island’s oil infrastructure will remain untouched. Josh Young, chief investment officer at Bison Interests, remarked that bombing the island without hitting its oil facilities would be pointless.
War spreads across the Middle East
Iran’s new supreme leader, Mojtaba Khamenei, said in his first public remarks that the Strait of Hormuz would remain closed and warned neighboring countries to shut down U.S. military bases on their soil or risk becoming targets themselves.
European governments are now discussing measures to protect their interests. France has been consulting with European, Asian, and Gulf Arab partners on plans to deploy warships to escort commercial tankers through the Strait of Hormuz, according to French officials.
After nearly two weeks of fighting, about 2,000 people have been killed — the majority in Iran, with significant casualties also reported in Lebanon and increasing losses in Gulf states that have rarely been on the front lines of regional conflicts.
Millions of civilians have been displaced. In Lebanon, as Israeli airstrikes continued to hit the outskirts of Beirut, the country’s interior minister said authorities were struggling to accommodate the hundreds of thousands of people seeking refuge in the capital.
The U.S. dollar strengthened on Friday and remained on course for a solid two-week winning streak, supported by its status as a preferred safe-haven asset amid the ongoing conflict involving Iran.
By 15:46 ET (19:46 GMT), the U.S. Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.7% to 100.36 and was set for a weekly gain of around 1.4%. Meanwhile, EUR/USD fell 0.8% to 1.1423 and GBP/USD dropped 0.9% to 1.3228. USD/JPY edged 0.2% higher to 159.65.
Analysts at ING noted that the dollar has climbed to fresh monthly highs as markets struggle to see a clear resolution to the escalating Middle East crisis.
The joint U.S.–Israeli military campaign against Iran has now lasted more than a week and shows little sign of easing. President Donald Trump stated that Washington is “totally destroying” Iran’s military and economic capacity.
However, Tehran has signaled it will continue resisting. Iran’s new Supreme Leader, Mojtaba Khamenei, emphasized that the strategic Strait of Hormuz — a crucial shipping lane responsible for roughly one-fifth of global oil supply — will remain closed.
The possibility of a prolonged shutdown of the strait has triggered significant volatility in global oil markets. Brent crude prices surged to nearly $120 per barrel earlier in the week before briefly dropping below $90. On Friday, Brent futures were trading above $100 per barrel.
Because much of the oil and gas transported through the Strait of Hormuz is used to produce key goods such as fertilizers and plastics, rising energy prices could intensify inflationary pressures worldwide.
These inflation risks could lead central banks, including the Federal Reserve, to reconsider plans for near-term interest rate cuts. Higher interest rates typically attract foreign capital, which could further strengthen the U.S. dollar.
PCE inflation data in focus
Investors are also closely watching U.S. inflation data due on Friday, when the personal consumption expenditures (PCE) price index for January will be released.
The core PCE index — which excludes volatile categories like food and energy — is expected to rise 3.1% year-on-year, slightly above the 3.0% reading in December. This indicator is closely followed by financial markets because it is one of the Federal Reserve’s preferred gauges when setting monetary policy.
According to ING analysts, the core PCE index has been drifting further away from the Fed’s 2% target since reaching a low of 2.6% last summer.
They suggested that this trend may limit the Fed’s ability to lower interest rates this year and that policymakers will likely address the issue during next Wednesday’s Federal Open Market Committee (FOMC) meeting.
Interestingly, recent PCE data has shown stronger inflation than the Consumer Price Index (CPI) reported by the Labor Department. This difference largely reflects variations in weighting methods, particularly for housing and healthcare costs, as well as differences in coverage and consumer substitution patterns. Lower weighting for cooling shelter costs and higher exposure to rising medical expenses have kept PCE inflation relatively elevated compared with CPI.
In contrast, February’s CPI data released on Wednesday showed relatively moderate inflation of 2.4% year-on-year.
However, these figures mostly reflect a period before the Iran conflict escalated in late February with a wave of U.S. and Israeli airstrikes. Since then, the inflation outlook has become more uncertain.
Major central bank decisions ahead
Next week will be a crucial period for global monetary policy watchers, as several major central banks — including the Federal Reserve, the European Central Bank (ECB), and the Bank of England — are set to announce interest rate decisions.
Investors will pay close attention to how policymakers address the economic implications of the Iran conflict.
According to JPMorgan economist Michael Feroli, markets widely expect the Fed to leave its benchmark interest rate unchanged at a target range of 3.5%–3.75%.
However, the Middle East conflict may complicate the outlook. Feroli said the Fed’s post-meeting statement is likely to mention the crisis as an additional source of uncertainty affecting both employment and inflation objectives.
The ECB is also expected to keep rates unchanged, although policymakers are likely to comment on the severe oil and gas shock Europe is experiencing due to the conflict.
JPMorgan economists Bruce Kasman and Nora Szentivanyi noted that central banks often face difficult policy choices during periods of volatile energy prices. Energy costs frequently fluctuate by around 25% annually, pushing up energy inflation while making it difficult to determine whether changes stem from supply disruptions or shifts in demand.
While oil prices are expected to remain elevated, a prolonged closure of the Strait of Hormuz could drive prices well beyond current market expectations. A sustained rise to $125 per barrel or higher would likely increase inflation while simultaneously weakening economic growth.
They warned that such a scenario could trigger different policy responses from major central banks. The Federal Reserve typically prioritizes mitigating recession risks and could adopt a more dovish stance if oil shocks intensify. In contrast, the ECB has historically been more sensitive to rising inflation and could tighten monetary policy if oil prices climb significantly.
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