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Aussie's broad-based strength continues today as markets further strengthened expectations that the RBA will deliver two consecutive rate hikes in the coming months. Investors are increasingly convinced that the RBA will raise the cash rate at the March 17 meeting and follow up with another increase in May, lifting the policy rate from the current 3.85% to 4.35%.

What has significantly reinforced the narrative this week is the alignment among Australia’s major banks. Commonwealth Bank and ANZ have now joined NAB and Westpac in forecasting back-to-back hikes. With all four major institutions now projecting the same policy path, the market has quickly embraced the view that the RBA is preparing to act more decisively against inflation risks.

A key driver behind this shift is the belief that the RBA is becoming increasingly "activist" in defending inflation expectations. Westpac Chief Economist Luci Ellis, a former senior RBA official, noted that policymakers may now respond more aggressively to the headline inflation shock caused by rising oil prices. Acting pre-emptively could help prevent the energy-driven spike from becoming embedded in longer-term inflation expectations.

The urgency is understandable given Australia’s recent inflation data. Core inflation jumped to 3.4% in January, already well above the RBA’s 2–3% target range. With global energy prices surging following the Iran war, policymakers appear increasingly concerned that the inflation outlook could deteriorate further if action is delayed.

Despite the growing hawkish expectations, markets still broadly believe the tightening cycle will peak at around 4.35%. This level is widely viewed as sufficiently restrictive to contain inflation pressures while avoiding a sharp economic downturn. However, the more important question may be how long rates remain elevated. Many analysts now believe policy could stay at that level well into the second half of 2027.

Technically, AUD/JPY has been one of the clearest beneficiaries of this shift in expectations. The cross surged above 38.2% projection of 96.24 to 110.78 from 107.67 at 113.22 this week. While the cross is now testing the ceiling of its rising channel and could see short-term consolidation, the broader outlook remains bullish as long as the former resistance at 110.78 holds as support. The next upside target for AUD/JPY is 61.8% projection at 116.20.

Meanwhile, GBP/AUD has continued its decline and has already reached 200% projection of 2.0848 to 1.9984 from 2.0472 at 1.8744. While the cross may attempt a temporary rebound from the falling channel floor, the broader outlook remains bearish. As long as resistance at 1.9114 caps any recovery, the downtrend is likely to continue toward 261.8% projection at 1.8210.

European policymakers are deeply concerned that the Iran war could deliver a fresh stagflation shock to the region’s economy. In a private briefing to EU finance ministers earlier this week, Economy Commissioner Valdis Dombrovskis reportedly warned that the conflict’s impact on energy markets could push inflation higher while simultaneously weighing on growth.

According to officials cited by Bloomberg, sustained Brent crude prices around $100 per barrel could lift EU inflation above 3% in 2026. That would mark a significant setback, reversing the disinflation progress achieved in 2025 as inflation gradually moved to the ECB’s 2% target.

The growth outlook could deteriorate at the same time. The European Commission estimates that economic expansion could be reduced by about 0.4 percentage points this year. With the bloc’s baseline forecast previously standing at just 1.4%, such a hit would meaningfully weaken Europe’s already fragile recovery.

Natural gas prices represent another key risk. Dombrovskis warned that gas could climb to around €75 per megawatt-hour by year-end. Such a move would likely feed directly into broader price pressures and could add another full percentage point to core inflation across the Eurozone economy.

Despite these warnings, the outlook still depends heavily on how long the conflict lasts. Dombrovskis emphasized that if the war is contained within a few weeks, inflation pressures could ease and growth forecasts might stabilize. But if the conflict drags on and Gulf energy infrastructure continues to face attacks, the EU may have to confront what he has already described publicly as a “stagflationary shock.”

WTI oil remains in a sideways mode and ranging between $80 and $90 for the second consecutive day, suggesting that the price action has temporarily stabilized after surge to near $120 per barrel on opening on Monday and subsequent drop of about $40 during Mon/Tue trading.

The latest comments from President Trump about the end of the war in the Middle East and about partial lifting of sanctions on sales of Russian oil, provided relief, with decision of International Energy Agency to release record 400 million barrels from strategic reserves in response to crisis, further cooling the situation and stabilizing the price for now.

On the other hand, fears that global economies could start feeling a full impact of the war through significant supply shortages, as Iran warned the world to be prepared for disastrous scenario of oil price running to $200 per barrel, produce an opposite effect that could inflate the price quickly in scenario of prolonged and escalating war (the US said on Monday that the war may extend towards September).

Long-legged Doji candle on Tuesday and today’s action being in similar shape, signal indecision, with significant barriers at $89.00 and $90, break of which to generate initial reversal signal and open way for stronger recovery.

Conversely, $82.00 (range base) offers solid support, followed by $80, loss of which would further weaken near-term structure.

Res: 89.00; 90.00; 91.41; 92.50
Sup: 81.80; 80.00; 78.40; 76.80

• Investors are assessing whether the 2022 or 2025 oil scenario will play out.
• Releasing reserves will not necessarily lower oil prices.

The oil market is focused on two main issues: how quickly the conflict in the Middle East will end, and how it will conclude. Donald Trump insists on regime change and further cooperation between Tehran and Washington. The so-called Venezuelan scenario could enable Iran to boost oil production from the current 3.5 million bpd. Before the 1979 revolution, production exceeded 6 million bpd. An increase in supplies will likely cause prices to fall sharply. If the ruling regime remains in power and relations with the West stay strained, production may decline.

Earlier this week, Donald Trump assured investors that the conflict would soon conclude, setting the stage for a 12-day war in 2025 and causing a surge in Brent and WTI prices at the start of the week. Market rumours suggest that the US president, under domestic political pressure, might declare victory and back down. Investors are awaiting the right moment to deploy the TACO strategy, or Trump Always Chickens Out.

However, in past instances, the White House’s opponents agreed to the conditions imposed upon them. Iran is now outright refusing to engage in negotiations, citing that two previous dialogues with the US, in summer 2025 and winter 2026, ended in bombings. Trump has promised to escalate actions if Tehran begins mining the Strait of Hormuz. Rumours of a tanker explosion near Abu Dhabi imply that he is already taking such steps.

Meanwhile, according to Goldman Sachs, oil flows through the world’s main artery have increased from zero to 1.6 million bpd. While this is far below the pre-war level of 20 million bpd, its growth could support the bearish outlook on Brent and WTI. In fact, the actual volume of crude passing through the Strait of Hormuz may be even higher, as tankers try to conceal their movements.

The intention behind the IEA member countries releasing barrels from strategic reserves appears to be twofold. The US and its allies experienced a similar situation in 2022, when the release of 182 million barrels caused fears and a 20% spike in Brent prices within a week. Investors interpreted this as a sign of a fragile market. Conversely, the United States’ sale of reserves on the first day of the 1991 Iraq invasion, during Operation Desert Storm, led to a 20% decline in North Sea crude prices.

The IEA has officially pulled the trigger on a "historic bazooka," yet the oil market’s response has been a collective shrug. By authorizing a 400-million-barrel release—the largest coordinated action in the agency's history—the IEA intended to crush speculative fervor. However, crude prices remain stubbornly anchored, with WTI hovering near $85. This suggests that while the headline volume is staggering, the underlying market mechanics are far more concerned with the math of a physical deficit than a diplomatic gesture.

The disconnect lies in a simple, brutal calculation. The closure of the Strait of Hormuz has effectively orphaned 20 million barrels per day (mb/d) of global supply. Spreading the IEA’s 400 million barrels over a 60-day window provides a supplementary flow of only ~6.6 mb/d. This leaves a gaping 13.4 mb/d hole in the global energy balance. Even with the "largest release ever," the world remains in a state of extreme scarcity, a reality that traders are pricing in with surgical precision.

Furthermore, the market had already digested the news. Large-scale interventions of this nature are rarely a surprise; they are telegraphed through G7 communiqués and diplomatic leaks days in advance. By the time the formal announcement hit the wires at 13:00 GMT, the "intervention premium" had already been shaved off. The initial dip to $76.76 proved to be a "bear trap," as buyers quickly realized that the strategic reserves are a finite band-aid for an infinite geopolitical wound.

Logistics also play a haunting role. An IEA announcement is a policy shift, not a physical delivery. Moving these reserves to the right refineries involves a labyrinth of maritime hurdles, especially with the world's primary transit artery blocked. The time lag between the "order" and the "barrel at the pump" is estimated to be at least a week, if not more. In a war-torn market, a week is an eternity, and the "spot" price reflects that immediate anxiety.

Technically, the picture has shifted. We have adjusted lower the near-term range to $76.76–$91.44, down from $80-100. The $91.44 level is now the critical pivot point; a firm break above this resistance would signal that the market has completely discounted the IEA's intervention. Such a move would likely trigger a technical "sling-shot" toward the 61.8% Fibonacci retracement at $103.14. For now, the IEA has prevented a vertical spike to $150, but they haven't won the war for $70- oil.

• YOY inflation remained stable at 2.4% (matching expectations and the lowest level since May 2025).
• Core inflation remained unchanged at 2.5% annually, a multi-year low.
• Monthly CPI rose 0.3%, primarily driven by Shelter (0.2% increase), Gasoline (0.8% increase), and Food (0.4% increase).
• Future inflation releases (especially April's) will be significantly impacted by the surge in oil prices stemming from the Middle East conflict (Israel, Iran, US). The US Dollar Index (DXY) rose, continuing its upward trend, and remains swayed by developments in the Middle East.

The US annual inflation rate remained stable at 2.4%, holding firm from January and matching market expectations. This figure represents a continued cooling of the economy, maintaining the lowest inflationary levels seen since May 2025.

Monthly Fluctuations and Core Trends

On a month-to-month basis, the Consumer Price Index (CPI) edged up slightly by 0.3%, a minor acceleration from January’s 0.2% increase. The primary contributors to this monthly rise were:

• Shelter: Increased by 0.2%, serving as the largest contributor to the monthly gain.
• Gasoline: Rose by 0.8%.
• Food: Increased by 0.4%.

While the headline number (YoY) stayed flat, the underlying drivers saw some shifts: energy prices rebounded to a 0.5% increase, fueled by rising natural gas costs and a significant spike in fuel oil, which offset a moderating decline in gasoline prices.

Conversely, the cost of used cars and trucks saw a steeper drop than the previous month, while inflation for essential categories like food and shelter held steady at 3.1% and 3% respectively.

Meanwhile, core inflation, which strips out the volatile food and energy sectors to provide a clearer look at long-term trends remained unchanged at an annual rate of 2.5%. This marks a multi-year low, hovering near levels not seen since 2021.

On a monthly basis, core prices rose by a modest 0.2%, showing a slight deceleration from the previous month and signaling that underlying price pressures remain largely in check.

Outlook moving forward

Today 's CPI print for lack of a better term is ‘out of touch’ with reality. The reason i say this is that the surge in oil prices and concerns around its impact on inflation all began on February 28.

Thus any shocks to be felt on the inflation front may only start to filter through in next month's release, which should be a blockbuster one. The release in April could potentially make or break the case for rate cuts globally.

If the war drags on to that date between Israel, Iran and the US, the impact may be huge on energy prices. Thus the longer the war drags on the larger the impact on inflation and thus rate cut expectations.

For now, even this week's PCE data may take a backseat and not have a huge impact on markets. Not until some form of clarity on the Middle East situation comes to fruition.

Market impact & US dollar index (DXY) reaction

The data was not really a huge surprise and heading into the release the print was highly unlikely to have a major impact on markets.

The DXY did however continue on its upward trajectory which began yesterday.

The Dollar continues to sway based on developments in the Middle East. A daily candle close is still needed above the 99.57 handle if the bullish momentum is to continue.

Immediate support rests at 98.72 before the 100 and 200-day MAs come into focus.

If acceptance above the 99.57 handle is achieved, then the psychological 100.00 level comes into focus.

US Dollar Index Daily Chart (Left)/15M Chart (Right), March 11, 2026

Source: TradingView

USDJPY keeps firm tone and heads towards Monday’s peak (158.89) after broader uptrend (from 152.26, Feb 12 low) was briefly interrupted by shallow pullback (158.89/157.27 on Mon-Tue) when rally was capped by upper 20-d Bollinger band and subsequent dip contained by rising 20DMA (near-term price action continues to channel higher between these two indicators).

Daily picture remains bullish (strong positive momentum / multiple ascending DMAs bull-crosses) and favor attack at 158.89, violation of which to open way towards key barriers at 159.45 (2026 peak, posted on Jan 14) and 160.00 (psychological).

Traders remain cautious as the pair approaches 160 zone where Japanese authorities may intervene to support weakening currency.

The Bank of Japan is widely expected to keep interest rates unchanged at 0.75% in the policy meeting next week, but with growing bets for 25 basis points hike by the end of June and another one in early 2027 that may also provide headwinds to the pair’s action.

Initial support lays at 158.00 zone, followed by 157.39 (ascending 10DMA which tracks the action in nearly three weeks) and 156.20 (55DMA).

Res: 158. 89; 159.22; 159.45; 160.00
Sup: 158.00; 157.39; 156.20; 155.71

Daily Pivots: (S1) 1.1590; (P) 1.1628; (R1) 1.1650; More….

Range trading continues in EUR/USD and intraday bias remains neutral. Further decline is expect red with 1.1740 support turned resistance intact. On the downside, break of 1.1506 will resume the fall from 1.2081 and target 38.2% retracement of 1.0176 to 1.2081 at 1.1353 next.

In the bigger picture, a medium term top should be in place at 1.2081 on bearish divergence condition in D MACD. Sustained trading below 55 W EMA (now at 1.1500) should confirm rejection by 1.2 key cluster resistance level. That would also raise the chance that whole up trend from 0.9534 (2022 low) has completed as a three wave corrective bounce too. For now, medium term outlook is neutral at best as long as 1.2081 holds, even in case of rebound.

Daily Pivots: (S1) 1.3392; (P) 1.3438; (R1) 1.3463; More...

Range trading continues in GBP/USD and intraday bias stays neutral. With 1.3574 resistance intact, further decline is still in favor. On the downside, below 1.3252 will extend the decline from 1.3867 to 1.3008 structural support. Decisive break there will carry larger bearish implications.

In the bigger picture, considering bearish divergence condition in both D and W MACD, a medium term top should be in place from 1.3867. Firm break of 1.3008 support will argue that fall from 1.3867 is at least corrective the whole rise from 1.0351 (2022 low) with risk of bearish reversal. That would open up further decline to 38.2% retracement of 1.0351 to 1.3867 at 1.2524. For now, medium term outlook will be neutral at best as long as 1.3867 resistance holds, or under further development.