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Markets

Markets experienced an impressive ‘relieve squeeze’ after the US and Iran agreed to a two-week ceasefire that should allow for a more in-depth solution to the conflict. Visibility on how this process will develop and what it eventually might yield in the end remains low with US and Iranian starting points miles apart. Despite the multiple ‘likely’ roadblocks, markets cheered the announcement as if they expected it to be a real game-changer. European equities rebounded up to 5% (EuroStoxx 50). US indices which already anticipated something to happen on Tuesday still gained another 2.5-3%. The force of the moves suggests investors had built up quite some ‘defensive protection’ in the run-up to Tuesday’s deadline that now had to be unwound. Oil evidently was one of the key barometers on the perceived level of stress. Brent oil at some point dropped from $110+ levels on Tuesday to almost $90 p/b intraday (close near $94.75). It also triggered a similar impressive squeeze in the inflation trade that had been set up over the previous weeks. German yields declined between 22.9 bps (2-y) and 7.4 bps (30-y). Euro are money markets reduced their expected probability on a April 30 ECB rate hike to 30% from 70% and now see two rather than three hikes EoY. The ‘pricing out’ in the UK (yield declines up to 23.7 bps in the 2-y) was even more impressive. US yields initially joined the easing trend but gradually reversed gains and eventually closed the session little changed between -0.5 bps 5-y & +1.2 bps 30-y. The Fed assessment as revealed in the Minutes of the March 18 meeting in the current context evidently is subject to a quickly developing economic and inflation environment. The conflict in the Middle East probably raises the risk both to the labour market and at the same time of higher inflation. While views in the Fed are divided on the weight of those factors for policy, a growing number of governors is rather focusing on the inflation risks. On FX markets the dollar, which of late profited only modestly for safe haven flows, was one of the victims of the ‘relieve squeeze’. DXY closed at 99.13 (from 99.86 on Tuesday). However, ‘in line’ with the reversal on the US yields markets, the dollar closed well off intraday lows. EUR/USD filled offers north of 1.17, but closed at 1.166 (from 1.1595). In a similar move, EUR/GBP briefly dipped below 0.87 to close just north of the big figure.

The evident question now evidently is ‘what’s next’? This uncertainty applies to the status of the ceasefire (violated?), the kick-off of the negotiations (expected this weekend in Islamabad) & the status of the ‘opening’ of the Strait of Hormuz. For (interest rate) markets, the key is to assess the inflationary fall-out of the conflict even with this (fragile) ceasefire in place. The multiple political and logistic issues that still have to be solved suggest that quite some costs in the end still might filter through to end demand. In this respect, the relief rally on interest rate markets yesterday probably doesn’t have to go much further as long as there is no indication of a genuine improvement in fixing distorted supply chains. The dollar might enter a more neutral pattern. Recent performance at least doesn’t suggest a really strong rush to the US currency in a context of current low geopolitical visibility. Some EUR/USD consolidation in the 1.15/1.18 corridor might be on the cards with the downside better protected.

News & Views

Geopolitically driven macro pressures weigh on UK housing market activity and the near term outlook according to the March 2026 RICS UK Residential Market Survey. With intensifying inflationary pressures pushing borrowing costs higher, buyer demand has weakened. At the headline level, the new buyer enquiries net balance slipped to -39% (-29% in Febr, weakest since August 2023). Volume of agreed sales has also been adversely affected, with the aggregate net balance falling from -13% to -34%, also the weakest since the summer of 2023. Respondents anticipate a further contraction of sales in coming months and see broadly stabilization for year-ahead sales (vs moderately positive view last month). On the supply side, there was marginally softer flow of listings coming to the market. The level of unsold stock on agents’ books has risen. The aggregate net balance of -23% for house prices points to some renewed downward pressure on prices coming through. It is still relatively moderate at the moment and is expected to build over the coming three months. A broad flat trend is seen for the year ahead, significantly down from +43% and +33% levels at the start of the year.

Czech National Bank board member Seidler said in an interview with Hospodarske Noviny that the central bank was in a relatively good position when the war in the Middle East started. Its slightly restrictive monetary policy allows it to look through the primary impact on inflation from the energy-related supply shock. The CNB must nevertheless be attentive to second-round effects to assess potential steps and their timing.

Daily Pivots: (S1) 1.3813; (P) 1.3857; (R1) 1.3889; More...

Intraday bias in USD/CAD remains neutral and more consolidations could be seen below 1.3965. As long as 38.2% retracement of 1.3840 to 1.3965 at 1.3780 holds, further rally is in favor. Break of 1.3965 will resume whole rise from 1.3480. However, sustained break of 1.3780 will argue that the rebound from 1.3840 has completed, and bring deeper decline to 61.8% retracement at 1.3665 and below.

In the bigger picture, price actions from 1.4791 are seen as a corrective pattern to the whole up trend from 1.2005 (2021 low). Deeper fall could be seen, as the pattern extends, to 61.8% retracement of 1.2005 to 1.4791 at 1.3069. However, decisive break of 38.2% retracement of 1.4791 to 1.3480 at 1.3981 will argue that the correction has completed with three waves down to 1.3480 already. Further break of 1.4139 will confirm and bring retest of 1.4791 high.

Daily Pivots: (S1) 0.6979; (P) 0.7032; (R1) 0.7097; More...

Intraday bias in AUD/USD stays mildly on the upside at this point. Corrective fall from 0.7187 should have completed at 0.6832. Further rise should be seen to retest 0.7187. Strong resistance could be seen there to bring another fall the extend the corrective pattern. On the downside, below 0.6962 resistance turned support will turn intraday bias neutral again first.

In the bigger picture, as long as 0.6706 cluster support holds, rise from 0.5913 (2024 low) should still be in progress. Decisive break of 61.8% retracement of 0.8006 to 0.5913 at 0.7206 will solidify the case that it's already reversing the down trend from 0.8006 (2021 high). However, firm break of 0.6706 will dampen this bullish case, and bring deeper fall back to 0.6420 support, and possibly below.

Daily Pivots: (S1) 1.1593; (P) 1.1658; (R1) 1.1727; More….

Intraday bias in EUR/USD stays mildly on the upside at this point. Fall from 1.2081 could have completed as a correction at 1.1408. Further rise should be seen to 61.8% retracement of 1.2081 to 1.1408 at 1.1824. Firm break there will pave the way to retest 1.2081 high. On the downside, below 1.1626 minor support will turn intraday bias neutral and bring consolidations first.

In the bigger picture, the strong support from 38.2% retracement of 1.0176 to 1.2081 at 1.1353 suggests that the pullback from 1.2081 is more likely a corrective move. Strong support was also found in 55 W EMA (now at 1.1505). Focus is back on 1.2 key cluster resistance level. Decisive break there will carry long term bullish implications. Nevertheless, break of 1.1408 support will revive the case of medium term bearish trend reversal.

Daily Pivots: (S1) 1.3293; (P) 1.3389; (R1) 1.3492; More...

Intraday bias in GBP/USD is turned neutral first with current retreat. Fall from 1.3867 could have completed as a correction at 1.3158 already. Above 1.3483 will target 61.8% retracement of 1.3867 to 1.3158 at 1.3596. Firm break there will bring retest of 1.3867 high. Nevertheless, sustained break of 55 4H EMA (now at 1.3304) will dampen this bullish view and bring retest of 1.3158 instead.

In the bigger picture, current development suggests that price actions from 1.3867 are merely a corrective pattern within the broader up trend from 1.0351 (2022 low). With 1.3008 support intact, medium term bullishness is maintained and break of 1.3867 is back in favor for a later stage, towards 1.4248 key resistance (2021 high).

Daily Pivots: (S1) 157.72; (P) 158.73; (R1) 159.59; More...

USD/JPY is still extending the consolidation pattern from 160.45 and intraday bias remains neutral. Further rise is expected as long as 157.49 cluster support (38.2% retracement of 152.25 to 160.45 at 157.31) holds. Firm break of 160.45 will resume the rise from 152.25 to retest 161.94 high. However, firm break of 157.31/49 will bring deeper fall back to 61.8% retracement at 155.38 next.

In the bigger picture, outlook is unchanged that corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. This will remain the favored case as long as 55 W EMA (now at 152.97) holds. Firm break of 161.94 will pave the way to 61.8% projection of 102.58 to 161.94 from 139.87 at 176.75.

In focus today

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

From the US, February PCE data and final Q4 GDP are due for release in the afternoon. While the PCE is the Fed's preferred measure of inflation, the pre-war data will likely gather less attention than usual.

The Bank of Poland (NBP) is widely expected to keep the key rate unchanged at 3.75% at today's meeting. Although Governor Glapinski has previously hinted that there might be the odd cut left in store for NBP, the Board has been unanimous over the last month in communicating that for the time being, a wait-and-see approach is to be preferred. And the recent ceasefire deal between the US and Iran is unlikely to have changed that, given the remaining uncertainties and its likely brittle status.

Economic and market news

What happened yesterday

Global markets breathed a sigh of relief as Brent crude fell 14% to USD 95/bbl and equities surged to one-month highs following President Trump's announcement of a two-week ceasefire late Tuesday. However, the truce has failed to completely halt fighting across the region. Israel launched heavy strikes on Lebanon, while Hezbollah retaliated with rocket fire into northern Israel. Iran targeted Gulf neighbours' critical oil and power infrastructure, adding to the volatility. Confusion over the terms of the ceasefire has emerged, with Iran believing it included Lebanon, while the US and Israel maintain it does not. The oil market has reacted with relative calm, suggesting that reported damages may be manageable for now. That said, Asian markets turned more cautious on Thursday, with Japan's Nikkei flat and South Korea's Kospi down 0.4% after sharp gains the previous day. Brent futures also edged up slightly to USD 97/bbl. The Strait of Hormuz remains blocked, though Iran has indicated it could reopen later this week subject to further agreements. Markets are closely watching for signs of increased traffic through the strait in the coming days.

In the US, FOMC minutes from the March meeting revealed a growing openness among policymakers to potential rate hikes, as concerns about persistently high inflation, driven by the war-related oil shock, outweighed earlier expectations. While the Fed held rates steady at 3.50-3.75%, several officials cited the risk of prolonged above-target inflation and its impact on core price trends. Despite this, most participants still viewed rate cuts as the baseline scenario, anticipating that the economic fallout from the Middle East conflict could weaken growth and labour markets.

Equities: Global equities rallied sharply yesterday in the wake of the Iran ceasefire headlines, leaving global benchmarks just ~2% below all-time highs and back in positive territory year-to-date. Unsurprisingly, the move was characterized by a strong cyclical rotation, while energy stood out as the clear underperformer. At the same time, minimum volatility significantly lagged; in fact, min vol is now the worst-performing factor since our latest strategy report in early March, standing in stark contrast to the heavy flow of geopolitical risk over the past month.

Notably, the rebound dynamics show a clear reversal pattern: the strongest moves were seen in Asia and Europe, and at industry level, semiconductors outperformed energy by ~15% yesterday alone. While US moves were more muted, it is worth noting that yesterday marked the sixth consecutive positive session for the S&P 500.

This morning, with uncertainties around how the ceasefire will evolve, Asian equities are giving back some of the gains. European and US futures are also modestly lower.

FI and FX: EUR/USD initially rallied on the ceasefire, but with stirring doubts regarding the longevity of the deal we saw the greenback slowly crawl back, as well as equities softening a tad and risky assets in general retrace some of the earlier moves. The SEK had a stellar first half of the session, with EUR/SEK briefly printing 10.75, before turning 10 figures higher in the latter half, currently sitting close to 10.90. Also, US treasuries saw partial reversals of the initial ceasefire rally, with a modest bear-flattening of the curve, supported a slight hawkish lean to the March FOMC minutes. The NOK failed to capitalize on the rallying risk sentiment, weighed down by the decline in energy prices, highlighting the tug-of-war that is likely to dominate the NOK over the coming weeks.

Daily Pivots: (S1) 0.7855; (P) 0.7927; (R1) 0.7985; More….

USD/CHF recovered after drawing support from 0.7877 cluster support (38.2% retracement of 0.7603 to 0.8041 at 0.7874). Intraday bias stays neutral first with price actions from 0.8041 seen as a consolidation pattern. With 0.7874/7 intact, rally from 0.7603 is expected to resume through 0.8041 later. However, decisive break of 0.7874/7 will argue that the rise has completed, and bring deeper fall to 61.8% retracement at 0.7770 and below.

In the bigger picture, rebound from 0.7603 medium term bottom is seen as correcting the fall from 0.9200 only. rejection by 55 W EMA (now at 0.8081) will affirm this case, and setup down trend resumption to 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382 at a later stage. Though, sustained break of 55 W EMA will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high).

The market reaction to the two-week US-Iran ceasefire is already turning, with signs of rejection of ceasefire optimism emerging across key asset classes. What initially appeared as a decisive de-escalation could be reassessed as a fragile truce, not peace, with markets are pricing risk re-entry as early doubts take hold. The most telling signal lies in the rates market. The US 10-year yield "V-shaped" reversal—from an initial drop to 4.234 overnight, and then back to close 4.291—highlights a sharp shift in sentiment. It should be highlighted that 4.300 was nearly reclaimed.

This is not a stable repricing of lower risk, but a bond market rejecting the peace trade, with the yields rebound signals skepticism on de-escalation. This reversal carries broader implications. It suggests that the rates market are not pricing clean disinflation, as the initial assumption of easing energy pressures is being questioned.

Oil markets reinforce this narrative. Brent’s recovery from near $93 back to around $100 suggests that the war premium is creeping back. FX markets are adjusting in tandem. Dollar is stabilizing and recovering mildly, paring ceasefire-driven losses as euphoria fading. The move reflects a broader shift from optimism to caution.

What’s driving this rapid reversal is not just market positioning, but developments on the ground. The ceasefire is already facing compliance issues, with doubts emerging within the first 24 hours.

Iran’s Parliament Speaker Mohammad Bagher Ghalibaf accused the US of violating multiple clauses. At the center of the dispute is the "Lebanon Gap" as key fault line. While Iran and mediators claim the ceasefire should cover the Israel-Hezbollah front, Washington has rejected that interpretation, with strikes in Beirut continuing. This divergence is not a minor detail—it is a structural flaw in the agreement.

At the same time, the Strait of Hormuz remains a critical uncertainty. Despite reopening headlines, Hormuz still contested despite reopening claims, with Iranian naval threats requiring transit “permission” keeping shipping conditions fragile.

Taken together, these developments explain why negotiations risk collapsing before they begin. Institutional investors could already be pricing in a higher probability that upcoming talks will fail to produce a durable agreement.

Looking ahead, the Islamabad talks is next binary catalyst. A high-level US delegation led by Vice President JD Vance is expected to begin formal talks in Islamabad on Friday to attempt to solidify the "two-week pause" into something more durable. However, If the US insists on "complete denuclearization" and Iran insists on "lifting all sanctions" as prerequisites for a permanent deal, the ceasefire is merely a 14-day clock ticking toward a larger escalation.

In parallel, data like those from MarineTraffic over the next 12 hours will be the ultimate "truth-teller" regarding whether the Strait of Hormuz is actually open for commercial transit or if insurance premiums will remain at prohibitive, war-time levels. Until then, ceasefire is a 14-day clock, not a resolution, and markets are shifting from optimism to conditional skepticism.

In the currency markets, Dollar is the worst performer so far this week, followed by Yen and Loonie. Kiwi leads gains, with Aussie and Sterling also firm, while Euro and Swiss Franc trade in the middle of the pack.

In Asia, at the time of writing, Nikkei is down -0.65%. Hong Kong HSI is down -0.25%. China Shanghai SSE is down -0.73%. Singapore Strait Times is down -0.24%. Japan 10-year JGB yield is up 0.026 at 2.398. Overnight, DOW rose 2.85%. S&P 500 rose 2.51%. NASDAQ rose 2.80%. 10-year yield fell -0.052 to 4.291.

Fed Minutes: Rates Near Neutral, Cuts Still Seen but No Longer a Given

Federal Reserve minutes delivered a clear message: rate cuts are no longer on autopilot. With policy now near neutral, officials signaled that further easing will depend on a sustained decline in inflation—not just expectations. At the same time, Middle East tensions and oil price risks have created a rare two-sided policy dilemma, where both rate cuts and hikes remain possible. Read More.

RBNZ’s Breman: Ready to Act Decisively with Rate Hikes if Inflation Jumps

RBNZ Governor Anna Breman delivered a clear hawkish signal: if inflation starts rising again, the central bank is ready to act decisively with rate hikes. With risks now tilted to the upside, easing is off the table as policymakers focus on preventing a renewed inflation surge. Geopolitical tensions and supply disruptions are adding uncertainty, but the policy bias is clear—RBNZ is prepared to tighten again if price pressures build. Read More.

USD/CHF Daily Outlook

Daily Pivots: (S1) 0.7855; (P) 0.7927; (R1) 0.7985; More….

USD/CHF recovered after drawing support from 0.7877 cluster support (38.2% retracement of 0.7603 to 0.8041 at 0.7874). Intraday bias stays neutral first with price actions from 0.8041 seen as a consolidation pattern. With 0.7874/7 intact, rally from 0.7603 is expected to resume through 0.8041 later. However, decisive break of 0.7874/7 will argue that the rise has completed, and bring deeper fall to 61.8% retracement at 0.7770 and below.

In the bigger picture, rebound from 0.7603 medium term bottom is seen as correcting the fall from 0.9200 only. rejection by 55 W EMA (now at 0.8081) will affirm this case, and setup down trend resumption to 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382 at a later stage. Though, sustained break of 55 W EMA will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high).

Key Highlights

• GBP/USD started a fresh surge above 1.3350 and 1.3440.
• It cleared a key bearish trend line with resistance at 1.3280 on the 4-hour chart.
• EUR/USD also climbed higher above the 1.1650 resistance.
• WTI Crude Oil prices trimmed most gains and traded below $95.

GBP/USD Technical Analysis

The British Pound found support at 1.3150 and started a fresh increase against the US Dollar. GBP/USD gained pace for a move above 1.3250 and 1.3350.

Looking at the 4-hour chart, the pair cleared a key bearish trend line with resistance at 1.3280 to enter a positive zone. The pair settled well above 1.3400, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour).

The pair tested the 1.3485 resistance and started a consolidation phase. Immediate support is seen near 1.3410 and the 23.6% Fib retracement level of the upward move from the 1.3177 swing low to the 1.3485 high.

The first key support sits at 1.3365. The next key area of interest might be near 1.3300 or the 61.8% Fib retracement level of the upward move from the 1.3177 swing low to the 1.3485 high.

A close below 1.3300 might call for heavy losses. In the stated case, it could even revisit 1.3220. On the upside, the pair could face resistance near the 1.3500 zone. The first major resistance sits at 1.3550. The main resistance could be 1.3620. A close above 1.3620 could open the doors for gains above 1.3650. In the stated case, the bulls could aim for a move to 1.3750.

Looking at Oil, the price started a fresh decline amid peace talks, and the bears were able to push the price below $95.

Upcoming Key Economic Events:

• US Initial Jobless Claims - Forecast 210K, versus 202K previous.
• US Gross Domestic Product for Q4 2025 – Forecast 0.7% versus previous 0.7%.