French economic exposure to Mideast tensions are limitedThe ECB won’t decide on interest rates only on the basis of energy pricesIt would be a mistake to predict rate move in a hurryEuropean gas prices have surged on Monday after Qatar announced it was halting LNG production following an Iranian drone attack. Oil prices continue to rise amid the US-Iran conflict and the virtually closed Strait of Hormuz. All of this is feeding into higher inflation expectations.Central banks are taking a patient approach as they try to assess the situation and the impact on the economy. Depending on the length of this conflict, the central banks will have a hard decision to make as cutting rates to support the economy could lead to more serious problems with inflation in the future, but letting the economy weaken hoping for the event to be “transitory” could end up in a recession.The market, on the contrary, is pricing slight chances of an ECB rate hike by year-end. If the stock market continues to bleed and high energy prices dampen demand, then a rate hike wouldn’t be necessary at all as financial conditions would tighten anyway. This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source 💡 DMK Insight Rising European gas prices due to Qatar’s LNG production halt could shake up ECB’s rate outlook. With tensions in the Mideast escalating, traders need to keep an eye on how this affects energy prices and, consequently, inflation. The ECB’s stance on interest rates is already cautious, and a spike in energy costs could complicate their decision-making process. If gas prices remain elevated, it might push the ECB to reconsider its current trajectory, which could impact the euro and related assets. Watch for any statements from ECB officials in the coming days, as they could provide clues on how the central bank plans to navigate this volatile situation. On the flip side, while the immediate impact on French economic exposure seems limited, the interconnectedness of energy markets means that any sustained rise in gas prices could have broader implications across Europe. Traders should monitor key resistance levels in natural gas futures and the euro against the dollar, particularly if geopolitical tensions escalate further. 📮 Takeaway Keep an eye on ECB communications and natural gas futures; a sustained rise in gas prices could shift monetary policy expectations significantly.

Oil prices are surging again today with WTI crude now bordering on 5% gains near $74.65 on the day. The resurgence of the petrodollar trade is one argument as to why the dollar is managing to come out on top this week, after having been shunned as a safe haven asset in previous occasions since last year.Adding to that, higher oil prices is also a weighing negatively on the Japanese yen while the SNB has made it clear that they’re willing to step in to rein in the Swiss franc strength amid the situation in the Middle East. That puts the dollar in a good spot to benefit and traders are definitely running with it, after also having been short dollars before all of this transpired.And amid the gains today, we’re starting to see the technical narrative also shift in favour of the dollar. And perhaps this will be one that is more compelling to keep the momentum going for the greenback in the weeks to come.EUR/USD has been one to fancy itself for a move higher at the start of the year, with price even briefly nudging above the 1.2000 level. But after some ECB warnings, we’ve seen the currency pair hold off on that push.And now with the latest short covering in the dollar, could we be teeing up for a more significant squeeze lower? The drop this week now threatens to take out both the 100-day (red line) and 200-day moving averages (blue line) at one go. That’s quite a major technical development if held of course.The last time the pair traded below both key daily moving averages was all the way back in March last year. So, that speaks to the significance of a downside break on the key technical region above. That will shift the conversation back towards 1.1500 next with potential for an even stronger correction lower in the short-term.Elsewhere, we’re also seeing a similar technical break in GBP/USD on the week. The pair is down to its lowest in almost three months on a strong break under 1.3400 today.Besides that, USD/CHF is also up another 0.7% to 0.7843; no doubt helped by the SNB. And we have AUD/USD down another 0.4% to 0.7063 after a brief recovery overnight. A firmer break of near-term support around 0.7025-30 will then put the spotlight back on the 0.7000 mark before a potential trip back lower for the currency pair. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight Oil’s near 5% jump to $74.65 is shaking up the dollar’s status, and here’s why that matters: The petrodollar trade’s revival is a key driver behind this surge, suggesting that oil demand is strengthening, which could lead to inflationary pressures. Traders should keep an eye on the correlation between oil prices and the dollar, as rising oil typically supports the greenback, especially if inflation expectations rise. If WTI continues to hold above $74, it could trigger further bullish sentiment, potentially pushing prices toward resistance levels around $76.50. However, if the dollar strengthens too much, it might dampen oil’s upward momentum, creating a tug-of-war scenario. Watch for any economic indicators or geopolitical events that could impact oil supply, as these could create volatility. On the flip side, if oil prices retreat, it could signal a broader market correction, especially for energy stocks. Keep an eye on the daily charts for WTI; a close below $72 might indicate a shift in sentiment. Overall, the interplay between oil and the dollar is crucial right now, and traders should be ready to adjust their positions accordingly. 📮 Takeaway Monitor WTI crude’s performance around $74; a sustained hold could push it toward $76.50, impacting the dollar’s strength and inflation outlook.

There was a bit of profit-taking at the onset yesterday but given time to digest the Middle East situation, we’re starting to see oil prices surge higher again today. The jump on the day now sees prices move back up to contest the highs from the opening gap higher yesterday. WTI crude oil is now up well over 5% and is knocking on the door of the $75 level once more:In times like these, technical levels don’t work too well as headline risks and market emotions take over trading sentiment. Still, the technical levels will factor into any potential slowdown in the momentum amid profit-taking triggers and perhaps acting as psychological barriers.The talk of the town is that if the US-Iran conflict is prolonged and the Strait of Hormuz remains disrupted, we should easily see oil surge above $100.So, are traders just taking things day by day? Or perhaps it was a case that there wasn’t enough short positions to squeeze in the first place in the run up for oil prices?The price action certainly is interesting and the best we can do is try to work out trading sentiment with the tools we have alongside digesting the headlines and fundamental drivers.The 200-week moving average is now in focus with that sitting at $75.66. Then, there’s also the June 2025 highs around $77.10-55 to watch out for after. All of that will be key checkpoints in gauging the momentum before we get to the $80 mark.If and when we do start to creep towards $80, it is likely that traders are signaling that they are certain that the oil market disruption is going to be a prolonged one. If so, expect a break of that level to lead to much higher prices in a jiffy.For now, all eyes will stay on the Strait of Hormuz and how much other energy disruptions are taking place across the region.But when chasing higher oil prices, do be reminded that the big picture backdrop remains very different to what the war-torn narrative might suggest in the short-term. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight Oil prices are bouncing back, and here’s why that matters for traders: profit-taking might have created a temporary dip, but the ongoing tensions in the Middle East are fueling renewed buying interest. As traders digest the geopolitical landscape, keep an eye on how oil prices react to these developments. The recent surge suggests a potential breakout above previous highs, which could trigger further momentum. If prices can hold above these levels, it might attract more speculative buying, especially from institutional players looking to capitalize on volatility. Watch for resistance around the recent highs; a sustained move above could signal a strong bullish trend. On the flip side, if tensions ease or if there’s a significant shift in supply dynamics, we could see a sharp pullback. Traders should monitor news closely and be prepared for rapid changes in sentiment. The next few days will be crucial in determining whether this rally has legs or if it’s just another false start. 📮 Takeaway Watch for oil prices to break above recent highs; a sustained move could signal a bullish trend, while easing tensions might trigger a pullback.

Prior +1.0%HICP +1.6% vs +1.1% y/y expectedPrior +1.0%Slight delay in the release by the source. That’s a sharp increase in price pressures and one that is also reflected in core prices. Of note, core annual inflation shows an increase from 1.7% in January to 2.4% in February. That as services inflation accelerated on the month from 2.5% previously to 3.6% last month.The overall Eurozone CPI estimates here are what will matter more for markets, and they’re also running hotter than expected. It’s a bit untimely for the ECB amid the US-Iran conflict. That now shifts the narrative away from rate cuts and opens the door in asking the question of perhaps the central bank needing to think about rate hikes instead. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight Inflation pressures are rising faster than expected, and here’s why that’s crucial for traders right now: The recent HICP data shows a jump to 1.6% y/y, surpassing the 1.1% forecast, while core inflation surged from 1.7% to 2.4%. This uptick signals a potential shift in monetary policy, which could impact interest rates and, consequently, forex and crypto markets. Traders should be on alert for volatility, especially in pairs sensitive to Eurozone economic indicators. If the ECB reacts to these inflation figures, we could see significant movements in EUR/USD and related assets. Look for resistance levels around recent highs, as a break could trigger further selling pressure in risk assets. But here’s the flip side: if the market overreacts to this data, it could create buying opportunities in oversold assets. Keep an eye on how institutions position themselves in the wake of this news. Watch for any comments from ECB officials in the coming days, as they could provide clues on future policy adjustments. The immediate focus should be on the next few trading sessions to gauge market sentiment and potential corrections. 📮 Takeaway Monitor EUR/USD closely for volatility; a break above recent highs could signal further selling, while an overreaction might present buying opportunities.

Prior +1.7%Core CPI +2.4% vs +2.2% y/y expectedPrior +2.2%Well, this sort of reading won’t do well to ease the nerves amid the US-Iran situation. Amid fears of a temporary spike in inflation pressures, market players have even started to weigh up a rate hike by the ECB before the end of this year. Traders priced that at a probability of around 25% before the inflation numbers.And with price pressures keeping more stubborn now, the balance of the scales looks to have firmly shifted to the other side. That being markets are instead having to anticipate when the ECB will have to raise interest rates instead of reducing them next.It will be interesting to see what policymakers make of the latest data alongside the higher energy price developments in the weeks ahead. Will the ECB start to shift gears to a more hawkish leaning? I doubt it though.At most, we are likely to see policymakers play it cool in keeping the status quo. They are likely to reaffirm that they are in no rush to adjust monetary policy and that they will need time in assessing the US-Iran conflict and its impact on price developments. And even if there will be a spike in energy prices, they are likely to play that down as being “transitory”. Famous last words, eh? This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight Core CPI just came in at 2.4%, higher than the expected 2.2%, and here’s why that’s a big deal: This uptick in inflation could shake up market sentiment, especially with ongoing geopolitical tensions like the US-Iran situation. Traders are already pricing in the possibility of a rate hike from the ECB, which could further complicate the landscape for forex and crypto markets. If inflation continues to rise, we might see a stronger dollar as the Fed reacts, impacting everything from EUR/USD to crypto valuations. Keep an eye on the 2.5% level for Core CPI; a sustained breach could signal more aggressive monetary policy ahead. On the flip side, if inflation proves to be transitory, we might see a reversal in market expectations, leading to a potential rally in risk assets. Watch how the markets react over the next few days, especially with the ECB meeting on the horizon. Traders should monitor the volatility in related assets like gold and oil, as they often react sharply to inflation data. 📮 Takeaway Watch for Core CPI levels around 2.5%; a sustained breach could trigger rate hike speculation, impacting forex and crypto markets significantly.

FUNDAMENTAL OVERVIEWUSD:The US dollar rallied across the board yesterday on safe haven demand as US-Iran conflict erupted over the weekend. The main driver though was the market’s realisation that rate cuts might not come as soon as expected. In fact, higher oil prices will eventually put upward pressure on inflation and yesterday’s ISM Manufacturing PMI showed how wrong the market has been in being so dovish on the economy. The data was hot for the second consecutive month, so the one-off narrative was put to rest. Moreover, the prices index jumped to the highest level since 2022, in another sign that inflationary pressures remain high. Traders pared back their rate cut bets with the total easing by year-end now seen around 45 bps vs 58 bps on Friday. EUR:On the EUR side, nothing has changed on the macro side, but the US-Iran conflict led to a surge in energy prices which are feeding into higher inflation expectations. The Eurozone CPI today was higher than expected which coupled with the higher energy prices is leading to rate hike bets. The market is pricing a 21% chance of a rate hike in June already and 50% by the end of the year. On the other hand, ECB policymakers are cautioning against reacting too fast to Middle East events as they could end up being transitory like in the past. EURUSD TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that EURUSD is approaching the key swing level at 1.1575. That’s where we can expect the buyers to step in with a defined risk below the level to position for a rally back into the 1.18 handle. The sellers, on the other hand, will look for a break to increase the bearish bets into the 1.14 handle next.EURUSD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, there’s not much we can add here as the nearest key level is the swing point at 1.1575. We need to zoom in to see some more details.EURUSD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we have a downward trendline defining the bearish momentum. If we were to get a pullback, we can expect the sellers to lean on the trendline with a defined risk above it to keep pushing into new lows. The buyers, on the other hand, will look for a break higher to increase the bullish bets into the 1.1740 resistance. The red lines define the average daily range for today. UPCOMING CATALYSTSTomorrow we have the US ADP and the US ISM Services PMI. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP report. The data might not matter much this week amid the US-Iran conflict. This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source 💡 DMK Insight The US dollar’s recent rally signals a shift in market sentiment, driven by geopolitical tensions and inflation concerns. With the US-Iran conflict escalating, traders are flocking to the dollar as a safe haven, which could strengthen its position against other currencies. The realization that rate cuts may be delayed is crucial; higher oil prices are likely to keep inflation elevated, complicating the Fed’s monetary policy. This environment could lead to a stronger dollar in the short term, especially if inflation metrics continue to surprise to the upside. Traders should monitor key levels in the dollar index and related currency pairs, looking for potential breakouts or reversals. However, it’s worth questioning whether this dollar strength is sustainable. If geopolitical tensions ease or if economic indicators suggest a slowdown, we might see a rapid reversal. Keep an eye on inflation reports and oil price movements, as these will be pivotal in shaping market expectations and trading strategies moving forward. 📮 Takeaway Watch for inflation data and oil prices; a sustained dollar rally could unfold if these trends persist.

On Monday evening, a commander from Iran’s Revolutionary Guard Corps declared that the Strait of Hormuz was “closed” and warned that any vessel attempting to pass through would be attacked. As expected, on Tuesday oil, gas, and gold prices all jumped higher, while shipping traffic in the region only worsened. Yet there’s still no sign of panic, why?One of the main reasons is that the market does not seem to believe that Iran has either the incentive or the capacity to impose a total blockade of the Strait of Hormuz.First, closing such an important energy route would not really benefit Iran or its key partners, such as India and China. Second, from a military standpoint, Tehran likely lacks the resources necessary to maintain a total blockade. So far, we have not seen large-scale use of mines, torpedoes, or drones to carry out threats, only isolated and selective attacks on ships.Second, despite the recent geopolitical tensions, the global oil market is still dealing with a certain supply surplus. Some estimates suggest that existing spare capacity and stockpiles could help balance the market for at least three weeks without major disruption. That said, if the situation drags on and doesn’t improve, pressure on energy prices could certainly intensify.Gas is a different story.In Europe, gas storage levels are at historic lows — around 30% on average and just above 20% in Germany and France. That helps explain the sharper jump in gas prices and the more visible pressure on European stock markets, even while the S&P 500 index managed to close Monday slightly in positive territory. What if Iran actually decides to block the strait?Then everyone loses.Iran would face an immediate and forceful military response. Gulf states would see their oil and LNG exports disrupted, and energy revenues would take a hit. Global markets would feel the shock instantly. Thus, the worst seems unlikely; however, Iran doesn’t need a full blockade to create chaos.Even amid the current tensions in the Middle East, insurance and freight costs for vessels affiliated with Israel or the U.S. have surged by 20–30 times. Many insurers are either temporarily suspending coverage or refusing to insure ships until the conflict subsides.In conclusion, although a full blockade of the Strait of Hormuz appears to be a low-probability scenario, if the conflict continues to escalate, the negative impact — especially on energy-dependent economies — will grow and be reflected in market sentiment. This article was written by IL Contributors at investinglive.com. 🔗 Source 💡 DMK Insight Iran’s threat to close the Strait of Hormuz is a game-changer for energy markets. With oil and gas prices spiking, traders need to keep a close eye on geopolitical tensions. The Strait is a critical chokepoint for global oil supply, and any disruption could lead to significant price volatility. If tensions escalate, we might see WTI crude testing resistance levels around recent highs. Gold’s rise also indicates a flight to safety, suggesting that investors are hedging against potential conflict. Shipping routes are already feeling the pinch, which could lead to increased freight costs and further strain supply chains. But here’s the flip side: if diplomatic efforts manage to de-escalate the situation, we could see a rapid correction in oil and gold prices. Watch for any news from OPEC or the U.S. government, as their responses could provide critical signals for market direction. For now, traders should monitor the $90 mark for WTI as a key level to watch for potential breakout or reversal. 📮 Takeaway Keep an eye on WTI crude around $90; any escalation in the Strait of Hormuz could drive prices significantly higher.

The reaction in the bond market to the US-Iran conflict is something that should warrant more attention. While traders are focused on the risk side of things and safety flows, it’d be easy to miss that Treasury yields have actually gone up since the end of last week. 10-year yields are up another 5 bps today to 4.107%. That is well over 15 bps higher from where we finished up in February.In a time when traders have to balance out seeking safety assets and pricing in higher inflation expectations, the latter looks to be taking over in a relatively strong manner. That as we see oil prices spike higher again with WTI crude oil now up over 6% to $75.65, its highest level since June last year.And if you look at major central bank pricing, the market reaction that we’re seeing is starting to make more sense now. The appetite for rate cuts is diminishing and the narrative for some major central banks is totally shifting in favour of rate hikes instead.Looking at Fed fund futures, the odds of a July rate cut have dropped further to just ~65% now. And by year-end, traders are now just pricing in ~43 bps of rate cuts by the Fed. That as opposed to the ~59 bps priced in at the end of last week.Alongside the resurgence of the petrodollar, this is also another strong shift in the winds that is keeping the dollar more bid this week.Meanwhile earlier today, traders have also even gone as far as to price in ~25% odds of the ECB raising interest rates at the end of the year. And those odds have increased further to near 40% after the hotter-than-expected euro area inflation numbers here.At the end of last week, traders were pricing in no movement whatsoever by the ECB all throughout the year. And if anything, policymakers were still trying to play down chances of a rate cut. Now, the script has flipped and we have to weigh up rate hikes instead by the central bank.And just like the Fed, the BOE has also seen rate cut odds diminish significantly. Traders were pricing in ~52 bps of rate cuts by year-end on Friday but are now just seeing ~24 bps of rate cuts by year-end.Putting the pieces together, it looks like inflation is back on the menu and that is starting to cause a material shift to the outlook for major central banks. And that could matter much more than any temporary risk reaction that we’re seeing to the US-Iran conflict in the meantime. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight Rising Treasury yields amidst geopolitical tensions could signal a shift in market sentiment. As ETH hovers around $1,955.18, the bond market’s reaction to the US-Iran conflict is crucial. Typically, heightened geopolitical risks lead to lower yields as investors flock to safety. However, the recent uptick in 10-year Treasury yields suggests that traders might be reassessing their risk appetite. This could have implications for crypto assets like Ethereum, as rising yields often correlate with a stronger dollar, potentially putting pressure on ETH prices. If yields continue to rise, it could trigger a sell-off in riskier assets, including cryptocurrencies. On the flip side, if the situation escalates and leads to broader market instability, we might see a flight back to crypto as a hedge. Traders should keep an eye on the $1,900 support level for ETH; a break below could signal further downside. Watch for any changes in Treasury yields, as they could provide insight into market sentiment and influence ETH’s trajectory in the coming days. 📮 Takeaway Monitor the $1,900 support level for ETH; rising Treasury yields could pressure prices, but geopolitical tensions may lead to a flight to crypto.

The United States, allied with Israel, struck Iran over the weekend, killing Iran’s Supreme Leader, Ayatollah Ali Khamenei. 🔗 Source 💡 DMK Insight The assassination of Iran’s Supreme Leader is a game-changer, and here’s why traders need to pay attention: geopolitical tensions are likely to spike, impacting oil prices and broader market sentiment. With the U.S. and Israel taking such a decisive action, we could see immediate volatility in oil markets, especially if tensions escalate further. Traders should keep an eye on crude oil futures, as prices could surge if Iran retaliates or if there are disruptions in oil supply routes. Historically, similar geopolitical events have led to sharp price movements in energy markets, so expect heightened trading volumes and potential breakouts above key resistance levels. On the flip side, this situation could also lead to risk-off sentiment across equities, particularly in sectors sensitive to energy prices. Watch for reactions in the S&P 500 and related ETFs, as they might show signs of weakness if investors flee to safe havens. The next few days will be crucial—monitor the news closely and consider adjusting positions based on the unfolding geopolitical landscape. 📮 Takeaway Keep an eye on crude oil prices and S&P 500 movements this week; volatility is expected as geopolitical tensions rise.