Market Sector Scanner: Markets Turn Risk-Off as Iran War Keeps Oil Near $100
Fears the Iran conflict could last longer have kept oil near $100 and supported the U.S. dollar, pushing USD/JPY close to 160 while pressuring global equities. With stocks weakening and gold struggling to rise, traders now focus on central bank meetings and key economic data this week while watching developments in the Middle East.
Markets were driven mainly by the conflict with Iran, which now looks likely to last longer than expected. Oil was volatile but ended the week just below $100 as traders worried about possible disruptions to supply through the Strait of Hormuz. Stock markets weakened, with U.S. equities falling for a third week and the Nikkei also declining despite the weak yen. The U.S. dollar stayed strong as higher oil prices may delay interest rate cuts, while gold struggled as much of the geopolitical risk already appears to be priced in.
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Key Events Calendar for March 16 – March 20
Forex Market
USD/JPY
Last Week Recap
USD/JPY continued to move higher last week as the U.S. dollar strengthened. Rising oil prices linked to the Iran war increased inflation concerns in the U.S., making interest rate cuts less likely. At the same time, higher oil prices could also hurt Japan’s economy, which may delay any policy tightening from the Bank of Japan. Despite the weak yen, there has still been no sign of currency intervention from Japanese authorities.
Technical Picture
After breaking above the 158 resistance level, USD/JPY has moved higher and is now testing the important 160 level. The upper Bollinger Band is also moving higher, showing the trend is still strong. The 10-day moving average continues to point upward.
Outlook This Week
The Iran war may continue longer than expected, which could keep the U.S. dollar strong. As long as the Bank of Japan does not intervene, USD/JPY may continue to move higher. Buying on weakness may remain the preferred strategy this week.
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GBP/JPY
Last Week Recap
GBP/JPY moved higher early in the week as the yen continued to weaken. However, poor UK economic data released on Friday, including weak GDP and industrial production figures, caused the pair to fall back and erase most of the week’s gains.
Technical Picture
The upper Bollinger Band triggered a sell signal in the middle of the week. Friday’s selloff pushed GBP/JPY below the 10-day moving average, which could signal that the recent uptrend is weakening unless the market moves back above this level.
Outlook This Week
Further yen weakness may be limited as the risk of Bank of Japan intervention increases. At the same time, concerns about the UK economy remain. If the market stays below the 10-day moving average, selling rallies may be the preferred strategy this week.
EUR/USD
Last Week Recap
EUR/USD held support early in the week, but as oil prices continued to rise toward the end of the week, selling increased. The pair closed near its lowest levels since July last year as the stronger U.S. dollar and rising geopolitical risks weighed on the euro.
Technical Picture
The break below the 1.1550 support level triggered strong selling because there were few nearby support levels. As a result, the market moved below the lower Bollinger Band and has become oversold in the short term.
Outlook This Week
Short-term traders may find a buying opportunity if the fighting in Iran eases and the price moves back above the lower Bollinger Band. However, the medium-term trend remains weak, so many traders may prefer to wait for a rebound toward the 1.1550 resistance level before looking for selling opportunities.
Equities
U.S. Stock Market
Last Week Recap
The Nasdaq came under pressure last week as rising oil prices linked to the Iran war increased concerns that inflation may rise and interest rates could stay higher for longer. However, support held near the yearly lows as strong demand for technology stocks helped limit the losses.
Technical Picture
The Bollinger Bands are narrowing, suggesting volatility may increase in the short term. The 10-day moving average is now pointing lower, which may signal continued selling pressure.
Outlook This Week
Investor concern is increasing as the war may last longer than expected. If sentiment worsens, panic selling from investors looking to protect gains from the strong stock market in recent years could appear. Selling on rallies or a break below the yearly lows may be the preferred strategy this week.
Commodities
Gold
Last Week Recap
Despite the Iran war continuing, gold struggled to rise. The stronger U.S. dollar and a lack of new buying interest kept the market under pressure, and gold finished the week weaker.
Technical Picture
The 10-day moving average is starting to turn lower. If prices move below the $5,000 support level, there could be further downside as there is room for the market to fall toward the lower Bollinger Band.
Outlook This Week
Gold has disappointed for the past two weeks. In the short term, selling near resistance around $5,200 or selling on a break below $5,000 could be the preferred strategy this week.
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Markets could see another volatile week as traders assess the economic impact of the Iran war. Oil prices may spike higher again if tensions escalate, while equity markets remain under pressure. USD/JPY has moved close to 160, increasing the risk that the Bank of Japan could intervene. Several major central banks also meet this week, and markets will watch their statements for clues about future policy.
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