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• Iran insists on control of the Strait of Hormuz and is demanding compensation.
• The US withdrawal from the Middle East could mark the beginning of the end of the petrodollar era.

Rising oil prices, triggered by Iran’s rejection of Donald Trump’s 15-point plan, have sent the EURUSD lower. Tehran does not consider itself to have lost the war and is putting forward its own demands. This does not look like a capitulation by Iran, which means the armed conflict is likely to continue, a development that is positive for the US dollar in the near term.

Morgan Stanley describes the USD rally as a bull trap, pointing out that the oil crisis is a temporary phenomenon, whilst divergence in monetary policy always works. The futures market indicates a 64% probability of rates remaining unchanged until the end of the year and a 32% chance of a hike. This is a dramatic shift from the start of the year, when speculators were betting on 2–3 rate cuts by year-end. Nevertheless, the ECB is expected to deliver up to three rate hikes by the end of the year, which should favour the euro against the dollar.

However, it must be understood that without a resolution to the fuel crisis caused by the armed conflict in the Middle East, there is no point in discussing monetary policy divergence. It is by no means certain that the ECB will raise rates, no matter how much Christine Lagarde speaks of determination in the fight against inflation and bringing it back to the 2% target.

Far from everyone is convinced that the continuation of the conflict will, in the medium to long term, lead to a depreciation of the euro against the dollar. Deutsche Bank believes that a protracted conflict in the Middle East carries the risk of a shift from the petrodollar to the petro-yuan. The concept first emerged in 1974, when Saudi Arabia agreed to sell oil for US dollars and channel its foreign trade surplus into dollar-denominated assets in exchange for US security guarantees. Riyadh now sells four times as many barrels to China as it does to the United States.

Tehran’s continued control of the Strait of Hormuz and the fact that most of Iran’s oil is supplied to China suggest that the transition to the petro-yuan is a matter for the foreseeable future. At the same time, the dollar’s loss of its role as the settlement currency for black gold could undermine its other privileges, particularly its status as the primary reserve asset.

GBP/USD traded at 1.3364 on Thursday. The pair declined over the previous two sessions and is now showing signs of a tentative recovery amid expectations of a possible de-escalation in the Middle East conflict.

The US has reportedly presented Iran with a 15-point settlement plan following discussions about a potential month-long truce. However, Iran has rejected participation in negotiations, stating that US diplomacy cannot be trusted.

In the UK, February inflation figures matched expectations. Headline CPI held steady at 3%, while core inflation edged up slightly to 3.2% against a forecast of 3.1%. However, the data had limited impact on the market, as it reflected conditions prior to the latest escalation in the Middle East.

Against the backdrop of lower oil prices, investors are revising their expectations for Bank of England policy. The market is now pricing in fewer than two rate hikes before year-end, with total expected tightening estimated at approximately 68 basis points, down from nearly 75 basis points previously.

Technical analysis

On the H4 GBP/USD chart, the market is forming a broad consolidation range around 1.3354, currently extending up to 1.3434. A decline to 1.3255 is expected in the near term, followed by the formation of a new consolidation range. An upside breakout would pave the way for a continuation wave to 1.3494, while a downside breakout would suggest further movement to 1.3119. Technically, this scenario is confirmed by the MACD indicator, whose signal line is above zero and pointing firmly downwards.

On the H1 chart, the market has formed a compact consolidation range around 1.3355. A downside breakout has initiated a wave structure extending to 1.3255. Should this level be breached, further downside towards 1.3125 is likely. Conversely, an upside breakout from the range could trigger a growth wave to 1.3494. Technically, this scenario is confirmed by the Stochastic oscillator, with its signal line below 20 and pointing firmly downwards.

Conclusion

GBP/USD is navigating competing forces amid short-term volatility driven by geopolitical headlines. While tentative signs of a potential US–Iran truce have offered some relief to markets, Iran’s rejection of negotiations underscores the fragility of hopes for de-escalation. Meanwhile, UK inflation data – though in line with forecasts – has been largely overlooked given its pre-escalation timeframe. Lower oil prices have prompted markets to scale back expectations for Bank of England tightening, offering modest support for sterling. With technical indicators pointing to continued consolidation and the Middle East situation remaining fluid, the pair’s near-term direction will likely hinge on further geopolitical developments.

Key takeaways

• Bearish trend intact despite rebound: Gold (XAU/USD) plunged 15% to a 4-month low before a 12% rebound, but the bounce is likely a dead cat bounce, with another bearish leg expected.
• Stagflation & oil strength driving downside risk: Rising WTI crude oil supports a stagflation backdrop, increasing interest rate pressures, and the opportunity cost of holding gold, reinforcing a negative correlation and downside bias.
• Key technical levels signal further weakness: Breach below $4,440 on Gold (XAU/USD) may trigger a move toward $4,099 and lower, while only a break above $4,620 would invalidate the bearish outlook.

Since 19 March, Gold (XAU/USD) has staged the expected bearish impulsive down move sequence and plummeted by 15% to print a 4-month low of $4,099 on Monday, 23 March 2026, supported by the “stagflation fear” macro factor.

Thereafter, the previous yellow metal staged a rebound of 12% to hit an intraday high of $4,603 on the backdrop of “TACO” optimism that the US White House Administration is looking to end the month-long US-Iran war, in turn, allowing passage to reopen in the Strait of Hormuz, the global oil flow choke point.

Right now, intermarket and technical analyses are pointing to another leg of bearish impulsive down move for Gold (XAU/USD), likely the end of the 12% corrective rebound, aka dead cat bounce from Monday’s low.

A firmer WTI crude oil supports further weakness in Gold (XAU/USD)

Fig. 1: Gold (XAU/USD) & WTI crude oil futures indirect correlation as of 26 Mar 2026 (Source: TradingView)

Fig. 2: West Texas Oil CFD minor trend as of 26 Mar 2026 (Source: TradingView)

The macro connection between WTI crude oil and Gold is stagflation risk.

Higher oil prices via supply side shock (closure of the Strait of Hormuz leads to a lesser oil supply globally, in turn, also creating a second-order effect of lower aggregate demand as input costs of finalized goods and services get more expensive).

Hence, stagflation is a deadly combination of higher prices and lower economic growth prospects in later stages. A challenging environment for central bankers as they cannot easily implement expansionary monetary policies to counter and anticipate the second-order demand destruction in a stagflation environment.

Therefore, central banks are likely to adopt a “wait and see” approach, and some “inflation-fighting” central banks may turn cautiously hawkish and start to implement an interest rate hike cycle.

Gold, being a non-interest income-bearing asset, will incur higher opportunity costs as interest rates rise globally, in turn, triggering a negative feedback loop into the price actions of Gold.

Since 17 February 2026, the movement of WTI crude oil futures has an indirect correlation with Gold (XAU/USD), and its 20-day rolling correlation coefficient stands at -0.5 at this time of writing (see Fig.1).

The recent pull-back in the West Texas Oil CFD (a proxy of the WTI crude oil futures) due to “TACO jaw bowing” has managed to find support at its rising 20-day moving average.

West Texas Oil CFD’s medium-term uptrend phase remains intact, a clearance above $93.70 key near-term resistance may see a further push up to retest the $102.25 intermediate range resistance in the first step (see Fig. 2).

Gold (XAU/USD) - End of corrective rebound, start of new bearish leg

Fig. 3: Gold (XAU/USD) minor trend as of 26 Mar 2026 (Source: TradingView)

Watch the $4,620 key short-term pivotal resistance on Gold (XAU/USD). A break below the $4,440 key near-term support (downside trigger level) may set off another bearish impulsive down move sequence to retest $4,167/4,099 before exposing the next supports at $4,007 and $3,936/3,886 (also a Fibonacci extension) (see Fig. 3).

On the other hand, a clearance and an hourly close above $4,620 invalidate the bearish scenario for an extension of the corrective rebound towards the $4,737/4,775 key medium-term pivotal resistance zone.

Key elements to support the bearish bias on Gold (XAU/USD)

• The hourly RSI momentum indicator has staged a bearish breakdown below its key ascending trendline support.
• The recent 12% rebound seen in Gold (XAU/USD) from its 23 March 2026 low has stalled close to the 50% Fibonacci retracement of the prior impulsive down move from the 10 March 2025 high to 23 March 206 low.

As can be observed on the XAG/USD chart, the price of silver has once again dropped below the psychological $70 level. At the same time, this week has been marked by sharp fluctuations: on Monday, prices traded below $65, while as recently as yesterday, silver reached $74 per ounce.

Market volatility is being driven by ongoing geopolitical uncertainty. Conflicting statements from the United States and Iran regarding potential peace negotiations continue to unsettle financial markets. According to media reports:

• → Washington maintains that negotiations are ongoing, with the Trump administration reportedly delivering a 15-point proposal to Iran via intermediaries, aimed at resolving the conflict and reopening the Strait of Hormuz.
• → Iran, in turn, has stated that it does not intend to negotiate with the US, rejecting the proposed ceasefire and instead putting forward its own conditions.

On the morning of 19 March, analysing the XAG/USD chart, we:

• → concluded that the market was under significant pressure;
• → identified and plotted a descending channel (marked in red) on the silver price chart;
• → suggested that the channel’s median line could act as near-term resistance, thereby validating the structure.

Indeed, subsequent price action confirmed this framework, as indicated by the arrows:

• → the lower boundary acted as support on the same day;
• → yesterday, price reversed lower from the median line (which shifted from support to resistance), reinforcing the prevailing bearish sentiment observed throughout March.

From a bullish perspective:

• → the break below the 6 February low around the $64 level highlights aggressive demand — so-called “smart money” may have absorbed liquidity in this zone, positioning for higher prices;
• → silver may be in the process of forming an inverse head and shoulders pattern.

However, as long as price continues to trade below the red median line of the active channel, it would be premature to speak of any meaningful bullish conviction.

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If last Thursday trading was taking place below the 1.6300 level, today one euro is worth more than 1.6660 Australian dollars. The upward trend seen in recent days has been driven by a combination of factors, including:

• → Bullish factor for the euro: The European Central Bank (ECB) has revised its 2026 inflation forecast upwards (to 2.6%). The reason lies in the Middle East conflict and rising energy prices. This signals to the market that the ECB may not only refrain from cutting rates but could also begin discussing potential rate hikes this year.
• → Bearish factor for the Australian dollar: The Middle East conflict is placing significant pressure on China’s economy (which is already dealing with a property market crisis). A slowdown in trade with China is weakening the Australian currency. For more details, see the article: What Are Commodity Currencies?

However, the chart indicates that the bullish momentum is fading — this is reflected in a series of bearish divergences, with the RSI moving down from overbought territory.

Continuing the technical analysis of the EUR/AUD chart, it can be observed that price fluctuations have formed a long-term descending channel. In this context:

• → Bulls have shown initiative: after touching the lower boundary of the channel, they (as marked by arrows) gradually took control over intermediate channel levels.
• → The current situation can be interpreted as a period of short-term consolidation (with the formation of a narrowing triangle pattern). The triangle may have been broken this morning, but Australia’s inflation report came in line with expectations — and the market continues to consolidate.

If we assume that bulls manage to gather enough strength for another upward push, they may face a significant test in the form of a resistance zone:

• → the March high around the 1.6730 level;
• → the upper boundary of the descending channel.

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Bundesbank President Joachim Nagel signaled today that an April ECB rate hike is a live option, driven by rising inflationary risks following the conflict-induced energy spike in Iran. Nagel emphasized that the Governing Council will have sufficient data by April to determine if action is required, warning that the ECB should not "shy away" from early tightening if wage growth and medium-term inflation expectations continue to climb.

Speaking with Reuters, the Bundesbank chief cited the sharp increase in energy costs stemming from the Middle East conflict. He argued that "every passing day contributes to an increase in inflationary risks". His rhetoric suggests a shift toward pre-emptive action to protect medium-term inflation expectations.

While describing April as one of several possible options, Nagel pointed to mounting market speculation that the ECB could move sooner rather than later. "It is certainly an option, but just one option... We shouldn’t shy away from it now just because we think it’s still too early."

Nagel’s primary concern is "secondary" inflation. While energy prices provided the initial shock, the Bundesbank is now hunting for signs of price hikes spreading into the broader services sector and wage negotiations. If wage growth suggests that higher inflation is taking root, the ECB may be forced to move in April to prevent a wage-price spiral that would be far harder to break later in the year.

Daily Pivots: (S1) 0.8640; (P) 0.8655; (R1) 0.8664; More…

Intraday bias in EUR/GBP remains neutral at this point. With 55 D EMA (now at 0.8681) intact, further decline is in favor. On the downside, firm break of 0.8611 will resume the whole fall from 0.8863 to 100% projection of 0.8863 to 0.8611 from 0.8788 at 0.8536. However, sustained break above 55 D EMA will turn bias back to the upside for 0.8788 resistance instead.

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.

Daily Pivots: (S1) 1.6585; (P) 1.6632; (R1) 1.6683; More...

Intraday bias in EUR/AUD stays mildly on the upside despite loss of momentum. Rebound from 1.6125 short term bottom should extend to 55 D EMA (now at 1.6753). Sustained break there will pave the way to 38.2% retracement of 1.8554 to 1.6125 at 1.7053. Nevertheless, below 1.6448 minor support will suggest that the recovery has completed, and bring retest of 1.6125 low.

In the bigger picture, fall from 1.8554 medium term top is seen as reversing the whole up trend from 1.4281 (2022 low). Deeper decline should be seen to 61.8% retracement of 1.4281 to 1.8554 at 1.5913, which is slightly below 1.5963 structural support. Decisive break there will pave the way back to 1.4281. For now, risk will stay on the downside as long as 55 W EMA (now at 1.7245) holds, even in case of strong rebound.

Daily Pivots: (S1) 184.02; (P) 184.32; (R1) 184.61; More...

Intraday bias in EUR/JPY remains mildly on the upside. Firm break of 184.75 resistance will resume the whole rise from 180.78 and target a retest on 186.86 high. On the downside, below 183.17 minor support will turn intraday bias neutral first. Further break of 182.02 will bring deeper fall back to 180.78 support.

In the bigger picture, a medium term top could be in place at 186.86 and some more consolidations would be seen. Nevertheless, as long as 55 W EMA (now at 175.61) holds, 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) 212.71; (P) 212.97; (R1) 213.37; More...

Intraday bias in GBP/JPY stays mildly on the upside for the moment. Firm break of 213.28 resistance will resume the rally from 207.20 and target a retest on 214.98 high. For now, risk will stay mildly on the upside as long as 210.77 support holds, in case of retreat.

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 203.13) holds, even in case of another deep pullback.