Market Digest

Global markets began the week under intense pressure as escalating geopolitical tensions in the Middle East drove sharp repricing across currencies, commodities, and equities.
The US dollar rebounded strongly on renewed safe-haven demand after reports that the United States is deploying additional military forces to the region, raising fears of a broader conflict escalation. This move pushed the Dollar Index back toward the 99.50 area, supported further by a sharp rise in US Treasury yields across the curve.

Gold experienced extreme volatility following a steep multi-day sell-off. After plunging over 3% on Friday and recording its largest weekly decline since 1983, bullion extended losses in early Asian trading before staging a rapid rebound of more than $80 as bargain hunters stepped in near key support levels. Despite the rebound, sentiment remains fragile as rising yields and a stronger dollar continue to cap upside momentum.

Oil markets remained firmly bid, with crude prices surging to multi-year highs amid ongoing supply disruption fears linked to the Strait of Hormuz. Brent crude briefly pushed above $108, while WTI held near $97, reflecting a persistent geopolitical risk premium driven by threats to global energy supply routes.

Equity markets reflected the broader risk-off tone, with US and European indices closing sharply lower as investors reacted to rising yields, geopolitical uncertainty, and inflation concerns.

Key Market Drivers

Geopolitics and Safe-Haven Flows
Escalating tensions between the US, Israel, and Iran continue to dominate market sentiment. Reports of increased US military deployment, combined with threats targeting critical energy infrastructure and shipping routes, have significantly raised the risk of prolonged disruption in global oil supply.
These developments have reinforced demand for safe-haven assets such as the US dollar, while simultaneously increasing inflation expectations due to surging energy prices.

Monetary Policy Expectations Shift
Rising oil prices and persistent inflation risks are forcing markets to reassess global central bank policy paths. Expectations for near-term Federal Reserve rate cuts have been further reduced, while other major central banks—including the ECB and BoE—are also signaling caution due to inflation pressures.
Higher-for-longer interest rate expectations have supported bond yields and weighed on non-yielding assets like gold.

Energy Market Shock and Inflation Risk
The disruption of shipping through the Strait of Hormuz, combined with attacks on regional oil infrastructure, has pushed crude prices sharply higher. Brent crude has risen nearly 50% since the start of the conflict, intensifying global inflation concerns and complicating the outlook for monetary policy worldwide.

Technical Analysis

US Dollar Index (USDX) – Rebound Faces Resistance
The Dollar Index rebounded but remains within a broader corrective structure.
A failure below the 99.90 resistance zone could trigger renewed downside toward 99.25 and 98.90.

• Resistance: 99.85 – 99.90, then 100.10 – 100.15

• Support: 99.25 – 99.30, then 98.90 – 98.95

EUR/USD – Bullish Bias Holds After Pullback
EUR/USD remains supported after holding above key support levels.
A sustained move above 1.1515 could open the path toward 1.1590 and 1.1625.

• Resistance: 1.1585 – 1.1590, then 1.1620 – 1.1625

• Support: 1.1515 – 1.1520, then 1.1485 – 1.1490

XAU/USD – Bearish Bias Despite Short-Term Rebound
Gold remains under pressure following a sharp breakdown, despite a short-term rebound.
A rejection below 4,571 could lead to further downside toward 4,406 and 4,312.

• Resistance: 4,566 – 4,571, then 4,660 – 4,665

• Support: 4,406 – 4,411, then 4,312 – 4,317

Market Movements

Equities
US equity markets declined sharply, reflecting risk aversion and rising yields.
The Dow Jones fell 0.97%, the S&P 500 dropped 1.51%, and the Nasdaq declined 2.01%, led by heavy losses in major technology stocks.

European equities also closed lower, with the DAX falling 2.01%, the FTSE 100 down 1.44%, and the Euro Stoxx 50 declining 2%, as energy-driven inflation fears weighed on sentiment.

Commodities
Gold extended its losing streak to eight consecutive sessions, marking its longest decline since October 2023. Prices dropped below $4,500, recording one of the steepest weekly declines in decades.
Silver followed the trend, falling sharply below $68, while platinum and palladium also recorded notable losses.

Oil prices surged, with Brent crude reaching multi-year highs above $108 and WTI holding near $97, supported by persistent supply disruption risks.

Outlook and Strategy

Market conditions remain highly volatile and headline-driven, with geopolitical developments continuing to dominate price action.
The US dollar is expected to remain supported in the short term due to safe-haven demand and elevated yields, although broader corrective pressure may persist if risk sentiment stabilizes.

Gold is likely to remain under pressure in the near term due to rising yields and a stronger dollar, although intermittent rebounds may occur on geopolitical headlines.

Oil markets are expected to remain highly sensitive to developments around the Strait of Hormuz and regional infrastructure risks, maintaining a strong volatility profile.

Trading Strategy (Short-Term)

• USDX: Sell near 99.90, target 99.25

• EUR/USD: Buy near 1.1520, target 1.1590

• GBP/USD: Sell near 1.3410, target 1.3270

• USD/JPY: Sell near 159.95, target 158.85

• AUD/USD: Sell near 0.7070, target 0.6980

• USD/CAD: Sell near 1.3750, target 1.3700

• Gold (XAU/USD): Sell near 4,571, target 4,406

Risk management remains critical. Traders are advised to implement strict stop-loss discipline and protect profits once positions move favorably.