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USD/JPY rose to 159.29 on Friday, marking one of the weakest levels for the Japanese yen since July 2024. The yen's decline is heightening market concerns about possible intervention by authorities in the foreign exchange market.

Bank of Japan Governor Kazuo Ueda warned that a weak yen could exacerbate imported inflation amid rising oil prices. According to him, this may accelerate the BoJ's transition towards normalising monetary policy.

Ueda also noted that exchange rate fluctuations are now having a more pronounced impact on inflation than in the past, increasing their significance for policy decisions.

Oil prices surged following a pledge by Iran's new Supreme Leader, Mojtaba Khamenei, to maintain the effective closure of the Strait of Hormuz. Tehran is intensifying attacks on oil and transport infrastructure across the region.

There is no sign of de-escalation in the Middle East conflict. Tough rhetoric from both Tehran and Washington indicates that the confrontation involving Iran remains far from resolution as it enters its second week.

Technical Analysis

On the H4 USD/JPY chart, the market is forming a consolidation range around 159.12, currently extending to 159.60. A decline to test 159.20 from above is expected today, followed by a possible growth wave towards 159.88.

Technically, this scenario is confirmed by the MACD indicator, whose signal line is high above zero and pointing firmly upwards.

On the H1 chart, USD/JPY is forming a growth wave targeting 159.88, with a possible extension to 160.00. Thereafter, a downward correction is likely towards at least 158.55.

Technically, this scenario is supported by the Stochastic oscillator, whose signal line is above 80 and continuing to trend upwards.

Conclusion

USD/JPY has surged to multi-month highs amid a weakening yen, driven by rising oil prices and evolving expectations for BoJ policy. Governor Ueda's remarks suggest that currency weakness may accelerate the Bank's policy normalisation, though speculation over intervention continues to grow. With geopolitical tensions in the Middle East showing no signs of easing, and technical indicators pointing to further near-term upside, the pair appears poised to test the psychologically significant 160.00 level. However, verbal warnings from Japanese officials could amplify volatility.

The short-term Elliott Wave outlook for USDJPY indicates that the cycle from the January 28, 2026 low remains in progress, unfolding as an impulsive structure. From that low, wave (1) concluded at 157.72, followed by a corrective pullback in wave (2), which ended at 152.25. The market then advanced into wave (3), developing as an impulse of lesser degree. Within this sequence, wave 3 of (3) terminated at 156.82, as reflected in the one-hour chart. Subsequently, wave 4 of (3) completed at 155.57, setting the stage for the current advance in wave 5.

From the wave 4 low, wave ((i)) finished at 157.97, while the corrective wave ((ii)) ended at 156.44. The rally then resumed, with wave ((iii)) reaching 158.90 before another modest pullback in wave ((iv)) concluded at 157.26. The structure now points toward the completion of wave ((v)), which should finalize the broader wave 5 of (3) sequence. This progression highlights the sustained impulsive character of the rally, with each corrective phase finding support before resuming higher.

Near term, as long as the pivot at 155.57 remains intact, dips are expected to hold in either three or seven swings. This technical condition favors continued upside extension, reinforcing the view that the impulsive rally is not yet complete. Traders should monitor short-term corrections carefully, as they are likely to provide opportunities for participation in the ongoing bullish cycle. The overall structure suggests that USDJPY retains upward momentum, with the Elliott Wave framework offering a clear roadmap for the next stages of development.

USDJPY 60-Minute Elliott Wave Chart

USDJPY Elliott Wave Video:

https://www.youtube.com/watch?v=uadiJpnYZ5Q

Key takeaways

• Dow’s performance reversal amid geopolitical shock: The Dow Jones Industrial Average shifted from one of the best-performing US indices earlier in 2026 to one of the worst since the start of the US–Iran war 2026, falling 4.7% between 27 Feb and 12 Mar as global risk sentiment deteriorated.
• Financial sector exposure weighing on the index: Heavy weighting in financial stocks, particularly Goldman Sachs, has amplified downside pressure as rising oil prices increase stagflation risks and reduce expectations of interest rate cuts by the Federal Reserve.
• Yield curve dynamics signalling downside risk: A bear flattening of the US Treasury yield curve (10Y–2Y), driven by faster increases in short-term yields, is tightening financial conditions. Technically, the Dow is near key support at 46,330 (200-day moving average), where a breakdown could trigger deeper losses.

The Dow Jones Industrial Average (DJIA) has undergone a remarkable change of fortune since our last report published on 13 February 2026, “Chart alert: Dow Jones (DJIA) potential recovery at 20-day MA support, bulls need to break above 49,940”.

Dow Jones (DJIA) from outperformer to underperformer

Fig. 1: DJIA & major global stock indices performances from 1 Jan 2026 to 27 Feb 2026 (Source: MacroMicro)

Fig. 2: DJIA & major global stock indices performances from 27 Feb 2026 to 12 Mar 2026 (Source: MacroMicro)

Before the ongoing US-Iran war (entering its 14th day) that started on Saturday, 28 February 2026, the DJIA was the second-best US stock index (+1.9%), trailed behind the small-cap Russell 2000 (+6.1%), which came in top and outperformed the tech-heavy S&P 500 (+0.5%) and the Nasdaq 100 (-1.2%) from 1 January 2026 to 27 February 2026.

In a significant reversal, the DJIA is now the second-worst-performing US stock index (-4.7%), and the Russell 2000 is the worst (-5.5%), versus the S&P 500 (-3%), and the Nasdaq 100 (-1.7%) from 27 February 2026 to 12 March 2026 (see Fig. 1 & Fig. 2).

Why did the DJIA fare the worst in the current period?

Banking/financial stocks are the main trigger for such underperformance in the DJIA.

The Financials sector is the top sector in the DJIA with a weightage of around 27%, and Goldman Sachs is the top price-weighted component stock in the DJIA with a weight of 10.4% as of Thursday, 12 March 2026.

The recent swift jump in oil prices due to global oil supply disruption arising from the US-Iran war has increased the risk of a stagflation environment, in turn, reducing the odds of interest rate cuts by the US Federal Reserve in 2026.

Bear flattening in the US Treasury yield curve can trigger further downside in DJIA

Fig. 3: DJIA & US Treasury yield curve (10-YR minus 2-YR) major trends as of 13 Mar 2026 (Source: TradingView)

The US Treasury market has adjusted to rising stagflation risks and expectations of a less dovish Federal Reserve. Since 27 February 2026, the 2-year US Treasury yield has climbed by 37 basis points (bps), outpacing the 32 bps increase in the longer-term 10-year yield.

As a result, the US Treasury yield curve (10-year minus 2-year) has undergone a bear flattening, where short-term interest rates rise faster than long-term yields. Such a shift typically signals tighter financial conditions, which can weigh on economic growth and pressure bank profitability (see Fig. 3).

Let's examine the short-term trajectory of the US Wall Street 30 CFD index and its supporting elements.

Dow Jones (DJIA) – Oscillating within a steeper bearish trend, at risk of breaking below 46,330

Fig. 4: US Wall Street 30 CFD index minor trend as of 13 Mar 2026 (Source: TradingView)

Watch the 47,460 key short-term pivotal resistance on the US Wall Street 30 CFD index (a proxy of the Dow Jones Industrial Average futures), a break below the 46,330 key long-term support (also close to the 200-day moving average) damages the major uptrend phase of the DJIA in place since the October 2022 low (see Fig. 4).

Further potential weakness to expose the next intermediate supports at 45,780 and 45,485 in the first step.

On the other hand, a clearance and an hourly close above 47,460 negates the bearish tone for a squeeze up to retest the next intermediate resistance at 48,119 (also the pull-back of the former medium-term ascending channel support from 23 May 2025 low).

Key elements to support the bearish bias on Dow Jones (DJIA)

• The price actions of the US Wall Street 30 CFD index have started to evolve within a steeper minor descending channel in place since the 26 February 2026 minor swing high of 49.837.
• The hourly MACD trend indicator has just flashed out a bearish crossover condition below its centreline, which supports the ongoing downtrend phase of the US Wall Street 30 CFD index.

Markets

Core bonds continue to feel the heat as the Brent crude price cruises above the $100/b mark. Again despite all efforts to lower them. The latest initiative came from the US Treasury which said that it would allow countries to buy Russian oil stranded at sea. As long as the US and Iran continue trading jabs with the latter blocking the supply chain, oil prices won’t retreat. US President Trump this morning warned that the US has plenty of time in the war against Iran and added “watch what happens to these deranged scumbags today”. The German yield curve continued bear flattening with yields rising by up to 4 bps at the front end of the curve. The German 10-yr yield (+2.5 bps) closed at the second highest level (2.96%) since 2011 and is ready for a take at key 3% resistance. In the UK, bear flattening turned into a slight bear steepening as rising inflation expectations start impacting the long end of the curve in absence of monetary responses. UK yields rose by 8.8 bps (2-yr) to 9.6 bps (30-yr). For the first time, US Treasuries also faced significant selling pressure at the front end of the curve as US money markets start pricing out rate cut bets this year. The US yield curve bear flattened with yields rising by 0.3 bps (30-yr) to 9 bps (2-yr). From a technical point of view, the 2-yr yield broke the 3.6% resistance barrier which capped rangebound trading between September of last year now. That also coincided with a longer term downward trend line and the 200d moving average in a technically significant move. On FX markets, the dollar grows stronger everyday. The trade-weighted greenback moved beyond the YtD high at 99.70 and is has its sights at the November top at 100.40. EUR/USD loses the 1.15 barrier this morning with the August low at 1.1392 being the next target. A weaker euro is further complicating matters for the ECB and (upward) inflation risks when it meets next week. USD/JPY is back at January levels (just below 160) which prompted rate checks by the NY Fed and talk of potential coordinated interventions. This morning, the verbal treat only comes from the Japanese corner. Risk sentiment suffers from the lasting conflict with key European indices yesterday losing 0.5% to 1% and losses in the US exceeding 1.5%. We expect these underlying market dynamic – high oil prices, rising interest rates, stronger dollar, weaker equities – to remain in place going into a very uncertain weekend. Today’s eco calendar contains (outdated) January PCE deflators in which goods inflation is the one the watch. The University of Michigan’s March consumer survey could be the more important one from a market point of view. Interviews are conducted through the Monday before the release implying that inflation expectations will be impacted by the (start of) the conflict in the Middle-East and could further dent bond sentiment. US durable goods orders (January) and JOLTS job openings (January) are also in today’s data mix but will play second fiddle.

News & Views

Rating agency S&P warned that a sustained rise in energy prices could result in a lower Hungarian credit rating. With Hungary holding BBB- with a negative outlook (confirmed in October), such a downgrade would mean the country loses its investment grade status. S&P’s head analyst for the EMEA region said that if gas prices would develop similarly to 2022, Hungary’s current account could deteriorate significantly, inflation would rise and the forint could dramatically depreciate, pressuring “their fiscal indicators and their rating”. S&P said that the risk of a downgrade is compounded by pre-election fiscal stimulus measures which - unlike those in 2022 - are expected to have a longer-lasting fiscal impact. Hungary’s budget deficit at the end of February reached HUF2.1tn, which was already 40% of the full year target of 5%. The next S&P rating review is on May 29.

Fed vice-chair for supervision Michelle Bowman announced yesterday that US banks will get relaxed capital proposals from regulators in the coming week. While adopting the final package of Basel III rules would result in a small increase in capital requirement, Bowman said that the other proposed changes to surcharge for global systemically important banks would more than offset that. “These changes to the capital framework eliminate overlapping requirements, right-size calibrations to match actual risk and comprehensively address longstanding gaps in our prudential framework,” Bowman explained. The reform package is designed to encourage bank lending and to reverse the trend of mortgage activity increasingly being done by non-banks.

UK economic growth stalled at the start of the year, with GDP showing no expansion in January, falling short of expectations for a modest 0.2% mom rise. Sector data showed a mixed picture beneath the headline reading. Services output, which accounts for the largest share of the UK economy, was flat during the month. Production declined slightly by -0.1%

Construction posted 0.2% mom growth, but the sector remains under sustained pressure following a prolonged period of contraction driven by high borrowing costs and subdued investment.

Looking at the broader trend, the UK economy still managed a modest expansion of 0.2% in the three months to January, an improvement from the 0.1% growth recorded in the three months to December. Services output rose by 0.2% over the period, while production delivered stronger growth of 1.3%. However, construction was a significant drag, contracting by -2.0% over the same period.

Full UK GDP release here.

We’re coming toward the end of the second trading week since the US-Israel joint attack on Iran caused major damage to both sides’ oil facilities and disrupted trade through the Strait of Hormuz — where around 20% of global oil flows transit. Oil prices have been wavering up and down on the news ever since.

Several measures have been proposed to ease the oil rally: countries within the International Energy Agency said they would release a record amount of oil from their reserves; the US said it would insure and escort ships through the Strait of Hormuz; and Washington temporarily scrapped a century-old maritime law requiring American-built ships to transport goods between US ports, allowing foreign vessels to step in.

More surprisingly, the US announced earlier this week that it would tolerate continued purchases of Russian oil by India to help ease pressure on global oil prices. Yesterday, officials went even further by signalling broader flexibility around Russian oil flows.

So far, these efforts have been largely in vain. The strikes in the Middle East, damage to regional oil facilities and the closure of the Strait of Hormuz — with Iran possibly laying mines to prevent ships from passing — continue to keep upside pressure on oil prices tight.

WTI crude briefly rose to $98 per barrel before easing this morning, while Brent Crude hit $100pb and is consolidating near $98pb today. Quick measures are unlikely to relieve the pressure. If the bombings continue, the situation could worsen.

Rising oil prices have been fueling global inflation expectations since the beginning of the month. In the US, gasoline prices are up more than 25% since the start of the month and nearly 80% since the beginning of the year.

Oil prices are only part of the equation — tariffs are the other. Latest reports suggest that US trade officials are looking for ways to restore tariffs that the Supreme Court of the US judged unlawful earlier this year. If companies face both higher energy costs and renewed tariffs, they will ultimately pass those costs on to consumers.

As a result, the inflation outlook for the US — and the rest of the world — is deteriorating. And the US decisions remain decisive for global markets.

So what’s next? Investors tend to get used to war headlines faster than they get used to rising energy prices. The US 2-year yield — which closely reflects expectations for Federal Reserve (Fed) policy — spiked past 3.75% as rising energy prices erode hopes for Fed rate cuts.

Activity in Fed funds futures has also shifted: markets are no longer pricing a full 25bp cut this year, meaning investors increasingly believe the Fed may not cut rates at all in 2026 — even as Donald Trump continues to call for immediate rate cuts. But financial markets do not work that way. An unjustified rate cut would not necessarily help bring yields lower.

Consequently, the short end of the US yield curve is being pushed higher by the idea that the Fed may not cut rates this year, while the long end faces another pressure: the growing fear that a prolonged conflict could add further strain to US finances. The US 10-year yield is preparing to test the 4.30% level, while the 30-year yield topping 4.90%.

Equities are feeling the pinch from rising yields and growing stress in the private-equity space. More “cockroaches,” as Jamie Dimon calls them, are appearing in headlines every day. Banks are being shaken by their exposure to private credit companies facing record redemption requests due to heavy software selloff. And risk appetite in that the Saas-space remains weak despite falling valuations.

Adobe released earnings after the bell yesterday. Results topped estimates on both revenue and earnings, but the stock still slid 6–7% in after-hours trading as AI-related concerns combined with the announcement that the long-time CEO would step down.

Meanwhile, Big Tech stocks also slipped yesterday, shrugging off the optimism that followed Oracle earnings.

Overall, the S&P 500 fell 1.52% yesterday. Yet the index is still down less than 5% from its January peak — meaning that despite the combination of negative news — the Iran conflict, rising energy prices, fading Fed-cut expectations, AI anxiety and private-credit stress — the correction remains relatively shallow.

US and European futures are pointing to modest gains this morning, though the bearish outlook is unlikely to reverse until tensions in the Middle East materially ease — and that does not appear to be on the menu for now.

Today, investors will watch the latest US GDP and core PCE updates — with Core PCE Price Index being the Fed’s preferred gauge of inflation.

US growth is expected to slow from 4.4% to 1.4% in Q4 as consumer spending cools, high borrowing costs from the Fed weigh on demand, inventories normalize, AI investment momentum wanes, and tariffs add pressure to trade and business activity.

Core PCE, on the other hand, is expected to rise to around 3.1% — still sticky and well above the Fed’s 2% policy target. And that 3% mark comes before the surge in oil and gas prices triggered by the Middle East conflict.

That means the market reaction to today’s data could be asymmetric. Slower growth may matter less for markets right now than inflation. A strong PCE print could further crush hopes for Fed cuts this year, while a softer-than-expected reading may do little to calm fears that inflation could reaccelerate in the coming months.

Looking ahead, uncertainty, market volatility and the risk of slower global growth combined with rising inflation remain firmly on the menu. Markets will eventually find a floor — they always do — but further downside may come before that moment arrives.

In focus today

Focus remains on energy markets ahead of the close of the week, as tensions in the Middle East continue to weigh on oil supply disruptions and market sentiment.

The Fed's preferred measure of inflation, the PCE, will be released for January today. The January JOLTs report is also due for release today after a delay caused by the government shutdown. On the more forward-looking front, University of Michigan's flash consumer sentiment survey will be released for March.

In Norway the Technical Calculation Committee will publish its final report ahead of the front party wage negotiations. Markets will look for potential revisions to the provisional 3.0% CPI forecast in particular, as this would impact wage demands.

UK publishes January GDP data. 2025 finished on a stronger note and PMIs suggest momentum has continued in the new year.

In Sweden, the Labour Force Surveys (AKU) for February will be published today. Yesterday's figures from the Public Employment Service indicated continued declines in unemployment. However, AKU is notoriously volatile, and following the significant drop in January to 8.0%, we anticipate a slight rebound today to 8.4% due to increased labour force participation. Employment levels have risen and are close to an all-time high, and an unchanged figure today would be reassuring given the weaker GDP reading for January.

Economic and market news

What happened yesterday

The oil price traded around the USD 100/bbl level yesterday and overnight, driven by still high tensions in the Middle East and growing concerns of prolonged disruption to traffic through the Strait of Hormuz. Yesterday, two tankers in Iraqi waters were hit by explosive-laden Iranian boats, prompting Iraq to halt operations at its oil ports, while Oman relocated vessels from its main oil terminal as a precautionary measure. The oil market has been hit by big shocks over the past two weekends, and the IEA has described the conflict as the largest oil-supply disruption in history. While the IEA announced a record release of 400 million barrels from strategic reserves, scepticism remains about its impact, as the volume covers only 25 days of the current disruption, according to Reuters. Overnight, the US Treasury issued a 30-day waiver allowing countries to purchase stranded Russian oil at sea. While the waiver may ease short-term supply pressures, it risks undermining efforts to limit Russian revenue and has drawn criticism from US allies. Pressure on oil prices is likely to persist ahead of the close of the week.

In Iran, newly appointed Supreme Leader Mojtaba Khamenei pledged to keep the Strait of Hormuz closed, and called for intensified attacks on US bases, further escalating geopolitical tensions in his first speech.

In the US, the Trump administration is considering a temporary waiver of the Jones Act to address fuel price spikes and supply disruptions caused by the conflict with Iran. The waiver would allow foreign vessels to transport goods between US ports, easing domestic shipping constraints and potentially lowering costs. Gasoline and diesel prices are at their highest levels in years, creating political risks for Trump and Republicans ahead of the midterm elections.

Furthermore, in an effort to rebuild tariff pressure after the Supreme Court struck down Trump's global tariffs last month, the Trump administration has launched two trade investigations under Section 301. The probes target excess industrial capacity in 16 trading partners, including China, the EU, and Japan, and forced labour in global supply chains across over 60 countries. These investigations could lead to new tariffs by summer.

In yesterday's release, the US goods trade deficit narrowed from USD 99.2bn to USD 81.8bn in January primarily as exports recovered. That said, the deficit remains above last fall's lows, and we expect it to continue widening later in the year as import volumes are likely to recover.

In Sweden, the final print confirmed the flash estimate with revisions showing year-on-year core inflation (CPIF ex energy) at 1.38%, CPIF at 1.71%, and CPI at 0.49%. Higher energy prices will increase headline inflation in the near term, but we do not expect a rapid rise in underlying price pressures. The pass-through from energy prices to core inflation will depend on the duration of the conflict.

Equities: As oil prices edged up, US equities sold off. S&P 500 closed down -1.5% and small cap Russell 2000 -2.2%. Europe managed better, with Stoxx 600 ending just -0.7%. The US session had more classical risk-off dynamics than last week. Cyclicals underperformed defensives, small caps underperformed large caps and growth stocks underperformed value. Outside energy, we note relative outperformance in materials and consumer staples, while industrials, tech and consumer discretionary sold off the most.

FI and FX: Risk sentiment deteriorated further over yesterday's trading session following Iran's new supreme leader vowing to continue blocking the Strait of Hormuz. Equities sold off and oil is currently trading around USD 100/bbl. The USD gained vs most currencies and EUR/USD drop to around the 1.15 mark. SEK was the main underperformer, pushing EUR/SEK above 10.70. EUR/NOK moved higher to just below 11.19 and EUR/DKK stayed elevated above 7.4720, which we expect will continue going into the dividend season. Yields climbed across markets, with Bunds gaining some 2-4bp across the curve and the 1Y EUR ZC inflation swaps trading around 20bp higher over the past two days. 2Y US Treasury yields gained some 10bp. Looking to today, the University of Michigan's flash March survey will provide the Fed with the first (partial) sense of how consumers' inflation perceptions have evolved during the war.

Daily Pivots: (S1) 212.28; (P) 212.75; (R1) 213.09; More...

A temporary top is formed at 213.28 and intraday is turned neutral in GBP/JPY first. On the upside, break of 213.28 will resume the rebound from 207.20 to retest 214.98 high. However, sustained break of 55 4H EMA (now at 211.54) will argue that the rebound has completed, and turn bias back to the downside for 209.15 support first.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress. Firm break of 214.98 will target 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90. This will remain the favored case as long as 55 W EMA (now at 202.80) holds, even in case of another deep pullback.

Daily Pivots: (S1) 183.11; (P) 183.53; (R1) 183.85; More...

Intraday bias in EUR/JPY remains neutral and outlook is unchanged. On the upside, above 184.75 will resume the rebound from 180.78 to retest 186.86 high. Firm break there will confirm larger up trend resumption. On the downside, 182.00 will target 180.78. Firm break there will indicate that fall from 186.86 is already correcting whole up rise from 154.77.

In the bigger picture, a medium term top could be in place at 186.86 and some more consolidations could be seen. Nevertheless, the larger up trend from 114.42 (2020 low) remains intact. Firm break of 186.86 will pave the way to 78.6% projection of 124.37 (2022 low) to 175.41 (2025 high) from 154.77 at 194.88 next.

Daily Pivots: (S1) 0.8616; (P) 0.8628; (R1) 0.8639; More…

Intraday bias in EUR/GBP remains on the downside at this point. Firm break of 0.8611 will resume the whole decline from 0.8863, and target 100% projection of 0.8863 to 0.8611 from 0.8788 at 0.8536. On the upside, above 0.8659 minor resistance will turn intraday bias neutral again first.

In the bigger picture, current development revived the case that whole rise from 0.8221 (2024 low) has completed at 0.8863, after rejection by 61.8% retracement of 0.9267 (2022 high) to 0.8221 at 0.8867. Sustained trading below 38.2% retracement of 0.8821 to 0.8863 at 0.8618 will confirm this case, and bring deeper fall to 61.8% retracement at 0.8466 at least. For now, medium term outlook is neutral at best as long as 0.8863 resistance holds.