Trading sentiment remained uncertain early Tuesday as mixed remarks from U.S. President (Pres.) Donald Trump spoke about the Iran conflict, combined with caution ahead of key U.S. inflation data later this week. Market hesitation was also influenced by the upcoming Group of Seven (G7) ministers’ meeting, and the possibility of a Strategic Petroleum Reserve (SPR) release to ease energy supply risks caused by Iran’s control of the Strait of Hormuz through its Islamic Revolutionary Guard Corps (IRGC).
Pres. Trump’s comments added to the uncertainty. He noted that the U.S. military operation was progressing faster than expected and nearing completion, yet also stressed the conflict would continue until a decisive victory was achieved. He warned of a strong escalation if Iran attempted to disrupt regional oil shipments. Iran’s IRGC responded that Tehran would decide when the conflict ends and cautioned that continued U.S. or Israeli attacks could halt oil exports from the region.
Markets have also adjusted expectations around monetary policy. Bets on interest-rate cuts by major central banks have declined, while expectations of rate hikes remain high, possibly overstated. If central banks tighten policy amid the current supply shock, recession risks would rise as stock markets could fall sharply and economic activity could weaken enough to impact labor markets.
On Monday, the North American session opened on a defensive note. The U.S. Dollar (USD) strengthened, equities fell, U.S. Treasury (UST) yields rose, and crude oil surged amid geopolitical concerns and potential disruptions at the Strait of Hormuz. Focus soon shifted to discussions among G7 finance ministers over rising oil prices and the potential use of Strategic Petroleum Reserves (SPR). While no immediate decision was made, officials indicated energy ministers would meet the following day, raising expectations of a coordinated release. The White House confirmed it was considering an SPR release, but no formal decision had been announced.
Later, Pres. Trump’s interview with CBS News improved market sentiment. He suggested the conflict could end sooner than feared and described Iran’s military capability as heavily degraded, noting the country has no effective navy, limited communications, and a non-functional air force. He added that the U.S. could take control of the Strait of Hormuz if needed, hinted at a possible successor for Iran’s Supreme Leader, and mentioned the administration might ease sanctions on Russian oil in response to high global prices.
In the foreign exchange (FX) market, the U.S. Dollar Index (DXY) attempted to recover after a two-day decline. Major currency pairs moved cautiously, with EURUSD and GBPUSD weakening despite soft economic data from Germany, the Eurozone, and the UK. USDJPY traded near 157.00 without a clear trend after retreating from a six-week high. Asia-Pacific equity markets moved higher following strong gains in Wall Street benchmarks, while the Antipodean currencies traded mixed, with AUDUSD steady, NZDUSD slightly weaker, and USDCAD moderately higher.
On Monday, the pullback in the U.S. Dollar (USD) allowed EURUSD and GBPUSD to record strong daily gains, even though economic data from Europe remained weak. German Factory Orders, German Industrial Production, Eurozone Sentix Investor Sentiment Index (Sentix), and the UK Consumer Sentiment all showed disappointing results.
However, during early Tuesday trading, EURUSD and GBPUSD edged lower as the recent selling pressure on the USD paused and traders became cautious again due to growing concerns about a possible global energy supply shortage.
USDJPY pulled back from a six-week high the previous day and remained directionless early Tuesday as market sentiment stayed uncertain and the U.S. Dollar (USD) traded without strong momentum. At the same time, the pair failed to fully reflect the hawkish stance of the Bank of Japan (BoJ) and the upward revision in Japan’s economic growth data.
Japan reported stronger economic momentum as Fourth-quarter Gross Domestic Product (GDP) growth was revised up to 1.3% annualized from the earlier estimate of 0.2%, mainly supported by stronger business investment. Private consumption was also revised higher, although the latest data showed household spending declined in January.
The Antipodean currencies reflect the mixed overall market mood as the Dollars of Australia (AUD), New Zealand (NZD), and Canada (CAD) trade unevenly despite supportive factors such as strong China trade data, mixed sentiment figures from Australia, and high crude oil prices, which remain Canada’s key export commodity. In this context, AUDUSD stays largely flat, NZDUSD records a mild decline, while USDCAD continues the rebound seen in the previous session.
China’s external sector showed strong momentum at the start of 2026, highlighting its continued dependence on global demand. Customs data revealed that exports increased 21.8% year-on-year (YoY) during January and February, sharply higher than December’s 6.6% YoY growth and far above market expectations. As a result, China’s trade surplus reached $213.6 billion, well above forecasts and the level recorded during the same period last year, keeping the world’s second-largest economy on track to potentially surpass last year’s record $1.2 trillion surplus.
In Australia, sentiment indicators delivered mixed signals. Business confidence turned negative even though business conditions remained steady in a survey conducted before the war, while Australian consumer sentiment improved slightly, but inflation concerns rose sharply.
Oil markets remained highly volatile after Monday’s sharp surge and reversal in crude prices. Front-month West Texas Intermediate (WTI) crude recorded its largest intraday trading range outside the extreme volatility seen during the Coronavirus Disease 2019 (COVID-19) period, driven by the escalating Iran conflict and uncertainty over its impact on global energy supplies.
During Tuesday’s Asian session, oil prices eased slightly as traders turned cautious ahead of the Group of Seven (G7) energy ministers’ discussions. Reports suggested a coordinated release of 300–400 million barrels from the Strategic Petroleum Reserves (SPR) could be considered to stabilise global markets. Despite this, WTI remained more than 5.0% higher intraday, keeping buyers optimistic.
Mixed market sentiment also supported safe-haven demand. Gold reversed the previous day’s losses and held firm, while silver rose for a third consecutive day as traders sought refuge amid ongoing uncertainty.
Despite mixed market sentiment, Bitcoin (BTC), Ethereum (ETH), and Asia-Pacific shares posted mild gains, maintaining the previous day’s advances and following Wall Street’s positive trend. The optimism is linked to traders' positioning ahead of this week’s key U.S. inflation data and expectations that today’s Group of Seven (G7) meeting could support global energy markets.
On Monday, U.S. equities rebounded sharply after remarks from President Donald Trump. The NASDAQ Composite rose 1.38%, the S&P 500 gained 0.83%, the Dow Jones Industrial Average increased 0.50%, and the Russell 2000 advanced 1.12%. In the bond market, U.S. Treasury (UST) yields reversed earlier gains, with the 10-year yield falling to about 4.107% from nearly 4.20%, while the 2-year yield held around 3.556%, reflecting continued caution over short-term interest rates.
Tuesday’s economic calendar features German trade numbers, U.S. Weekly ADP Employment Change, February Existing Home Sales, and the NFIB Business Optimism Index. However, market focus remains on headlines around the Iran conflict, crude oil, and remarks from Pres. Donald Trump.
With uncertainty over the Iran situation and the U.S. Dollar (USD) struggling to hold last week’s gains, a further pullback in the Greenback on softer data or improving sentiment cannot be ruled out. A weaker USD could allow major currencies to extend their weekly rebound and help equities and cryptocurrencies stay firm. USDJPY may face downside pressure, while gold and silver could hold recent gains unless the USD rallies.
May the trading luck be with you!
