Market Sector Scanner: Markets Turn Risk-Off as Middle East Tensions Push Oil Higher
Rising tensions around Iran pushed oil above $90 and strengthened the U.S. dollar, sending USD/JPY toward 158 while pressuring global equities. Markets now turn to key U.S. data this week including CPI and GDP, though developments in the Iran conflict are likely to have the biggest impact.
Global markets turned cautious last week after U.S. and Israeli military strikes on Iran increased tensions in the Middle East. Oil prices surged above $90 per barrel, the highest level since September 2023, raising concerns that inflation could remain high and delay interest rate cuts. The stronger U.S. dollar pushed USD/JPY toward 158, while U.S. and Japanese stock markets fell as investors reduced risk. Gold rose briefly on safe-haven demand but pulled back as traders took profits.
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Key Events Calendar for March 9 – March 13
Forex Market
USD/JPY
Last Week Recap
USD/JPY tested the key 158 resistance level several times last week. Higher oil prices linked to the Iran war increased concerns about inflation, making U.S. interest rate cuts less likely. At the same time, the weakness in the yen prompted Japan’s finance minister to express concern, raising the possibility of currency intervention.
Technical Picture
The 158 level remains important resistance after USD/JPY fell sharply from this level last month. The upper Bollinger Band is also acting as resistance. Despite this, the overall trend remains upward, with the 10-day moving average continuing to point higher.
Outlook This Week
Further gains may be difficult as the risk of intervention increases. However, the trend is still upward, so traders may prefer to sell on weakness rather than fight the current trend, especially as the risk of intervention may already be partly priced into the market.
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GBP/JPY
Last Week Recap
Continued yen weakness pushed GBP/JPY higher last week, even though poor UK economic data weighed on sentiment toward the UK economy.
Technical Picture
The 10-day moving average continues to point higher, supporting the upward move. However, the narrowing Bollinger Bands suggest resistance may be getting closer.
Outlook This Week
Further yen weakness may be difficult as the risk of intervention increases. Selling near resistance around the late February highs near 212 could offer opportunities for short-term traders this week.
EUR/USD
Last Week Recap
The stronger U.S. dollar, following the escalation of fighting in Iran, pushed EUR/USD down to its yearly lows. Worse-than-expected EU GDP data also added pressure on the euro.
Technical Picture
The lower Bollinger Band and the yearly lows are providing short-term support. However, the overall downtrend remains strong, with the 10-day moving average continuing to point lower, which may limit any rebound.
Outlook This Week
There could be a short-term buying opportunity if support around 1.1550 holds. However, the downtrend remains strong, so if support breaks — especially if the war escalates — traders may prefer to follow the downward trend.
Equities
U.S. Stock Market
Last Week Recap
The war in Iran weakened U.S. equity markets last week, although the Nasdaq saw smaller losses compared with other major indices.
Technical Picture
The lower Bollinger Band acted as support several times last week. The 10-day moving average is currently flat, suggesting the market is moving sideways for now.
Outlook This Week
Equity markets are likely to remain under pressure while the war continues. Traders may prefer to focus on selling opportunities and avoid the temptation to buy weakness, as the risk of a sharp fall remains.
Commodities
Gold
Last Week Recap
Gold recovered after a quick rejection from record highs early in the week, as traders were disappointed the market did not rally further on news of the Iran war. However, strong support held at $5,000, bringing buyers back and allowing gold to close the week strongly.
Technical Picture
The upper Bollinger Band acted as resistance last week and may be tested again this week. The 10-day moving average remains bullish, supporting the upward trend.
Outlook This Week
With the war continuing, gold is likely to remain strong. In the current environment, focusing on buying opportunities may be the better strategy for traders.
Several major economic releases will be watched this week, including U.S. CPI on Wednesday and U.S. GDP, inflation, and industrial production data on Friday. However, the main focus remains the worsening war in Iran, as higher oil prices raise concerns about inflation and weaker equity markets. USD/JPY has also continued to rise, increasing the risk of possible intervention by the Bank of Japan.
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