Market sentiment remains negative as Iran increases attacks on energy vessels, while U.S. efforts to ease the energy supply shortage fail to convince markets. U.S. inflation data met expectations and supported hawkish bets on the Federal Reserve (Fed), keeping the U.S. Dollar firm. A container ship was hit by a projectile near the port of Jebel Ali in the United Arab Emirates (UAE). Global rating agency Fitch Ratings warned that rising local government debt could reduce China’s fiscal space, while Reuters reported that global shipping company CMA CGM has resumed cargo bookings from Gulf ports.
In a major incident, three oil tankers carrying Iraqi crude were reportedly attacked by explosive-laden Iranian speedboats near Basra, catching fire and leaking burning oil into nearby waters, forcing nearby oil ports to halt operations. Iran has also targeted merchant vessels across Gulf shipping lanes, including near the Strait of Hormuz, and warned that oil prices could rise toward $200 per barrel if the conflict escalates.
The International Energy Agency (IEA) announced the release of 400 million barrels of oil from strategic reserves, the largest coordinated emergency release in history. The U.S. will contribute 172 million barrels from the Strategic Petroleum Reserve (SPR) starting next week, with deliveries expected to take about 120 days. However, supply disruptions and rising shipping risks continue to outweigh the stabilizing effect of these releases. Energy infrastructure in Oman also came under pressure after drone strikes triggered fires at the Mina petroleum facility near the Port of Salalah, while vessels were evacuated from the Mina Al Fahal oil export terminal, which exports about one million barrels per day of Omani crude and is located outside the Strait of Hormuz.
In the U.S., the Consumer Price Index (CPI) for February matched expectations, with headline CPI rising 2.4% year-over-year and 0.3% month-over-month. Core CPI, which excludes food and energy, held at 2.5% year-over-year and rose 0.2% monthly. Supercore CPI, which measures services excluding housing, increased 0.35% month-over-month compared with 0.593% previously, while the yearly reading edged up to 2.746% from 2.671%. Real weekly earnings rose 0.1%, slowing from 0.5%. Markets now expect the March CPI to reflect the recent oil price surge linked to the Iran conflict and are also watching components tied to the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation measure.
Rising oil prices increased inflation concerns and pushed U.S. Treasury yields higher across the curve. In interest rate markets, U.S. Fed funds futures now price only about 26 basis points of rate cuts this year.
Geopolitical tensions remain elevated as the conflict between the U.S. and Israel against Iran continues. President Donald Trump said the U.S. military is “way ahead of schedule” and has caused more damage than expected, claiming the operation has already exceeded the original six-week plan. He added that “practically nothing is left to target in Iran” and suggested the conflict could end soon, noting the war would stop whenever he decides to end the operation. Trump also said the U.S. has targeted 28 naval mine ships to limit Iran’s ability to disrupt shipping routes. However, some U.S. and Israeli officials are preparing for at least two more weeks of strikes, while U.S. intelligence assessments suggest Iran’s leadership remains firmly in control.
With this, the U.S. Dollar Index (DXY) edges higher following a two-day uptrend, while EURUSD and GBPUSD both drop for three consecutive days. Meanwhile, USDJPY rises for the third straight day to hit a seven-week high, while AUDUSD posts the first daily loss in four, NZDUSD drops for the third straight day, and the USDCAD remains softer within a weekly trading range. Further, crude oil rises for the third consecutive day, extending Tuesday’s recovery, whereas Bitcoin (BTC) and Ethereum (ETH) both snap their three-day winning streak, while the Asia-Pacific shares remain weak, tracing a downbeat performance on Wall Street. That said, gold and silver both post mild losses, down for the second straight day.
EURUSD reversed its early-week gains and fell for the third consecutive day, pressured by a firmer USD and growing economic concerns in Europe linked to the Iran war. The European Union (EU) warned that the conflict and persistently high energy prices could push inflation in the region above 3% in 2026. European Commission Executive Vice-President and economy chief Valdis Dombrovskis said inflation risks would increase if Brent crude remains near $100 per barrel and natural gas prices stay elevated.
Meanwhile, USDJPY climbed to a seven-week high during its four-day uptrend, supported by the stronger USD and mixed economic data from Japan. The move came despite warnings from Japan that a weaker Japanese yen (JPY) could harm the national interest, especially as rising oil prices increase inflation risks. Bank of Japan (BoJ) Governor Kazuo Ueda also cautioned that a weak yen could further lift inflation as oil prices rise.
GBPUSD declined for the third consecutive day as softer United Kingdom (UK) housing prices, rising inflation concerns, and reduced confidence in the Bank of England (BoE) to control the situation pressured the pair. The move also reflects market positioning ahead of today’s speech by BoE Governor Andrew Bailey. In the UK housing sector, the Royal Institution of Chartered Surveyors (RICS) house price balance fell to -12, signaling a cooling housing market.
AUDUSD ended its three-day winning streak, and NZDUSD fell for the third straight day, while USDCAD reversed a two-day losing streak, despite higher crude oil prices, Canada’s key export.
In Australia, inflation expectations rose to 5.2% from 5%, and the government allowed imports of higher sulphur fuel to secure supply. Commonwealth Bank of Australia (CBA) expects the Reserve Bank of Australia (RBA) to raise interest rates in March and May due to rising inflation risks, while Australia and New Zealand Banking Group (ANZ) also anticipates a March 17 rate hike from the RBA.
Oil-dominated trading as Iran stepped up attacks on shipping and energy infrastructure across the Gulf, pushing crude prices above $100 per barrel and raising fears of supply disruptions along one of the world’s most critical oil shipping routes. Crude Oil prices surged after reports that several tankers were struck in Iraqi waters and energy facilities in Oman were hit by drone attacks. The Energy Information Administration (EIA) reported weekly U.S. crude oil inventories rose by 3.824 million barrels, well above the expected 1.055 million barrels. Actions from the International Energy Agency (IEA), the EIA inventory build, and a firmer USD failed to curb oil buyers, who extended their three-day rally.
Meanwhile, gold and silver softened for the second consecutive day, pressured by the stronger USD despite their traditional safe-haven appeal.
Bitcoin (BTC) and Ethereum (ETH) both posted their first daily loss in four days, weighed down by the market’s risk-off mood, a firmer USD, and lingering lack of confidence in crypto markets following the early 2026 drawdown.
Meanwhile, Asia-Pacific shares drifted lower after Wall Street’s mixed but mostly weak performance. U.S. equities closed mixed, with the NASDAQ Composite Index posting a modest gain, while the Dow Jones Industrial Average and Russell 2000 Index declined. The S&P 500 ended slightly lower. Energy stocks led gains on the surge in crude oil prices, and technology shares were supported by strong earnings from Oracle Corporation. Consumer discretionary and financial stocks lagged amid rising yields and ongoing geopolitical risks.
BoE Governor Andrew Bailey’s speech, along with Canada’s trade and building data, will grab traders’ attention ahead of the U.S. jobless claims, housing starts, building permits, and trade balance releases. Updates on Iran’s attacks on energy vessels and infrastructure, and the U.S. and Israel’s response, as well as global efforts to contain the conflict, will be key for market direction.
With U.S. inflation data and rising crude oil prices supporting hawkish Federal Reserve (Fed) bets and a firm USD, the chance of a Greenback pullback—even if upcoming data disappoints—remains low. This could pressure gold and cryptocurrencies lower, while oil may stay strong. Equities are likely to drift down, and major currencies like EURUSD and GBPUSD may extend recent losses unless risk sentiment improves.
May the trading luck be with you!
