Market Sector Scanner: USD/JPY and Oil Break Key Levels as Iran War Drives Inflation Fears
Markets stayed volatile last week as the Iran conflict continued, with early optimism fading as negotiations stalled. Oil moved back toward $100, U.S. stocks fell to yearly lows, and USD/JPY pushed toward 160 as higher inflation expectations supported the dollar. With risk sentiment still weak, traders are watching Middle East developments, central bank signals, and key economic data for direction this week.
Markets were driven by the conflict in Iran last week, creating high volatility. Early in the week, efforts by Donald Trump to ease tensions helped calm markets, with oil prices falling and stocks rising. However, by the end of the week, there was little progress in negotiations, and Iran did not appear ready to end the conflict. Oil moved back toward $100, and U.S. stocks fell for a fifth straight week, closing near their lows as uncertainty remained high.
Scan for opportunities on:
Forex Market
USD/JPY
Last Week Recap
Rising inflation expectations, driven by higher oil prices, pushed U.S. interest rate expectations higher and supported USD/JPY last week. The pair moved above the 160 level, with no clear sign of intervention from the Bank of Japan despite the weaker yen.
Technical Picture
The move above 160 has pushed price toward the upper Bollinger Band, while the 10-day moving average continues to point slightly higher, keeping the short-term trend intact.
Outlook This Week
Buying at these levels is difficult due to the risk of Bank of Japan intervention. It may be better to wait for a clearer shift in fundamentals, such as easing tensions, before looking for selling opportunities.
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GBP/JPY
Last Week Recap
GBP/JPY moved slightly higher last week, with the weak yen remaining the main driver. Better-than-expected UK retail sales supported some buying, but overall price action was driven by yen weakness.
Technical Picture
The upper Bollinger Band acted as resistance throughout the week, while the 10-day moving average continued to point higher and provided support, keeping the uptrend intact.
Outlook This Week
The uptrend remains in place, so buying on weakness looks like the best strategy. However, there is a risk of a sharp move lower if the Bank of Japan steps in to support the yen.
EUR/USD
Last Week Recap
Hopes of an end to the Iran conflict and better-than-expected European data helped EUR/USD move higher early in the week. However, the downtrend resumed later as rising oil prices pushed expectations for higher U.S. interest rates, strengthening the dollar.
Technical Picture
The 10-day moving average is pointing lower and acting as resistance, showing continued downside pressure as the dollar strengthens.
Outlook This Week
EUR/USD remains in a downtrend, and it is worth following if tensions in Iran continue. Selling near the 10-day moving average looks like the best short-term strategy.
Equities
U.S. Stock Market
Last Week Recap
The Nasdaq reacted to headlines around potential negotiations to end the conflict in Iran, rising strongly early in the week. However, it closed weak as it became clear the conflict is likely to continue in the short term.
Technical Picture
Another close well below the lower Bollinger Band highlights the strength of the downtrend, while the 10-day moving average continues to point lower, confirming a textbook bearish trend.
Outlook This Week
Selling pressure shows no sign of slowing given ongoing tensions between the U.S. and Iran. Focusing on selling opportunities remains the best approach, while avoiding trying to pick a bottom.
Commodities
Gold
Last Week Recap
Rising U.S. interest rate expectations continued to push gold lower, with a sharp drop at the start of the week breaking below earlier yearly lows. Despite the ongoing conflict in Iran, the market became oversold, which brought some buyers back later in the week.
Technical Picture
The lower Bollinger Band gave a buy signal early in the week, but the 10-day moving average is still pointing lower, showing gold remains under pressure.
Outlook This Week
Gold has fallen a lot recently, so there is a growing chance that buyers may start to return. If the market begins to stabilise, a move above the 10-day moving average could signal a shift in trend and offer a good buying opportunity in the coming weeks.
Markets start the week in a weak position, with U.S. stocks at yearly lows, USD/JPY near 160, and oil around $100. The main focus is the conflict in Iran, and markets expect big moves as news from the region changes quickly. Friday could be very volatile, with U.S. Nonfarm Payrolls released during the Easter holiday period.
