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• Markets are pricing in a 68% probability for a 25-basis-point (bps) rate hike, lifting the cash rate to 4.1%.
• The board needs to move policy past the current "neutral" rate (where interest rate ≈ inflation) to cool the "very hot" economy and suppress climbing prices.
• A hawkish statement pointing to further hikes could propel AUD/USD toward 0.7200, while a non-committal tone could trigger a drop to 0.6940.
• An escalating Iran conflict and the potential closure of the Strait of Hormuz complicates the path forward beyond this weeks meeting.

The meeting of the Reserve Bank of Australia is scheduled for Tuesday March 17, 2026 at 03:30am GMT. The transition from a period of disinflationary hopes in 2025 to a "live" hiking cycle in early 2026 represents one of the most abrupt pivots in recent Australian central banking history.

At the center of this volatility is the escalation of the US-Israeli conflict with Iran, which has transformed from a regional skirmish into a systemic threat to global energy security and maritime trade.

The closure of the Strait of Hormuz, a critical artery for roughly 20% of the world's liquid energy supplies, has introduced a "nightmare scenario" for policymakers: a classic supply-side shock that threatens to unanchor inflation expectations while simultaneously suppressing economic activity.

Prior to the conflict in the Middle East though, markets were already leaning toward an RBA rate hike at Tuesday's meeting.

What are markets expecting?

As things stand market participants and economists are still leaning toward a 25-basis-point (bps) rate hike, which would take the cash rate to 4.1%.

Market Pricing: Overnight index swaps (OIS) currently imply a 68% probability of a hike, a significant jump from early March expectations.

Analyst Consensus: A Bloomberg survey shows 24 out of 33 analysts now forecast a 25bps increase this month.

Hawkish Signaling: Recent comments from Governor Michele Bullock and Deputy Governor Andrew Hauser have labeled the March meeting as "live". Hauser specifically warned that keeping rates too low could fuel a "damaging rise" in inflation expectations.

This seems like the most likely outcome for tomorrow as the RBA remains concerned about inflationary pressure.

The board are worried that their current strategy isn't doing enough to slow things down. Right now, the interest rate is 3.85%, but since prices are rising by 3.8%, the "real" cost of borrowing is basically nothing.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

In simple terms, when the interest rate and the inflation rate are almost the same, the policy is "neutral", it isn't really helping or hurting. Because almost everyone who wants a job has one (full employment), the economy is running very hot.

To actually cool things down and stop prices from climbing, the bank believes they need to move past this neutral point and make borrowing expensive enough to discourage extra spending.

Outlook moving forward

The March decision may be the start of a renewed tightening phase rather than a one-off move.

• Further Hikes: Several major banks (ANZ, CBA, NAB, Westpac) now expect a follow-up 25bps hike in May, potentially bringing the terminal rate to 4.35%.
• Prolonged Target Horizon: In February, the RBA forecast that trimmed mean inflation would not return to the target band until H1 2027 and wouldn't reach the 2.5% midpoint until H1 2028.
• Economic Slowdown: Tighter policy and energy price headwinds are expected to lower 2026 GDP growth to roughly 1.9%, with unemployment potentially rising toward 4.5% by year-end.

Now of course, if the war in the Middle East persists and oil prices remain high the entire outlook may change and inflation may surge.

A lot to consider not just for the RBA but global central banks if the Middle East conflict drags on at the current pace.

Market reactions and AUD/USD technical dynamics

The Australian dollar (AUD) has been highly sensitive to the shifting RBA outlook. Throughout mid-March, the AUD/USD pair has experienced a "tug-of-war" between domestic hawkishness and global risk aversion.

While the US dollar (USD) has strengthened as a safe-haven asset due to the Iran conflict, the AUD has been supported by the rising probability of a 4.10% cash rate.

Technically, the AUD/USD reached a 45-month high of 0.7189 in the middle of the week prior to the meeting, but has since pulled back to test the 0.7000 handle.

If the RBA hikes as expected but adopts a more patient or "wait-and-see" tone for the future, the AUD could see a "sell the fact" reaction, potentially dropping toward the 0.6940 support level.

Conversely, a hawkish statement that explicitly points toward a May hike and a 4.35% terminal rate could propel the AUD/USD back toward the 0.7200 mark.

Source: TradingView.Com (click image to enlarge).

Conclusion

The March decision will be a signal of the RBA’s resolve. By choosing to act pre-emptively, the Bank is attempting to avoid the systemic failures of 2022 and 2025, hoping that a firm hand now will prevent the need for a much more destructive tightening cycle later in the year.

The path forward remains fraught with geopolitical peril, and uncertainty. Either way volatility appears inevitable.

Daily Pivots: (S1) 1.1373; (P) 1.1452; (R1) 1.1494; More….

Intraday bias in EUR/USD is turned neutral with current recovery and some consolidations could be seen. But further decline is expected as long as 1.1666 resistance holds. Below 1.1408 will resume the fall from 1.2081 to 38.2% retracement of 1.0176 to 1.2081 at 1.1353. Firm break there will target 61.8% projection at 1.0904 next.

In the bigger picture, the break of 55 W EMA (now at 1.1495) confirms rejection by 1.2 key cluster resistance level. The whole up trend from 0.9534 (2022 low) might have completed as a three wave corrective rise too. In either case, deeper fall is now expected to long term channel support (now at 1.0528. Risk will stay on the downside as long as 1.2081 holds, in case of recovery.

Daily Pivots: (S1) 1.3171; (P) 1.3271; (R1) 1.3323; More...

Intraday bias in GBP/USD is turned neutral with current recovery and some consolidations would be seen. But risk will stay on the downside as long as 1.3482 resistance holds. Below 1.3216 will resume the fall from 1.3867 to 1.3008 structural support. Firm break there will carry larger bearish implication and target 1.2524 fibonacci level.

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 correcting the 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.

Daily Pivots: (S1) 159.23; (P) 159.49; (R1) 160.00; More...

Intraday bias in USD/JPY is turned neutral with current retreat. On the upside, above 159.74 will target a retest of 161.94. Firm break there will confirm larger up trend resumption and target 61.8% projection of 139.87 to 159.44 from 152.25 at 164.34. However, considering bearish divergence condition in 4H MACD, break of 158.55 should indicate short term topping, and turn bias back to the downside for deeper pullback.

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 152.70) 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.

Headline CPI inflation cooled in February to 1.8% year-on-year (y/y) slightly below consensus expectations. The GST/HST break ended partway through February 2025, which lead to large price increases in that month, but puts downward pressure on the year-on-year price change in February 2026.

Energy prices were a source of downward pressure on inflation including gasoline (-14.2% y/y) and natural gas (-17.1% y/y).

There was good news on grocery prices, where inflation cooled to 4.1% y/y in February, down from 4.8% in January. Overall food inflation remained the highest of Statistics Canada's major categories, up 5.4% y/y.

Shelter inflation continued to cool (1.5% y/y). Inflation eased for rent (+3.9% y/y) and homeowners' replacement costs (-2.1%y/y) among other subcomponents.

Overall services inflation cooled to 2.7% y/y – the slowest pace since 2021. Another source of downward pressure on services inflation was cellular services, where prices were up only 1.5% y/y after being up 4.9% in January.

The Bank of Canada has focused on broader "underlying inflation" recently, but the official core inflation metrics (median and trim), both cooled further in February to 2.3% y/y. Zeroing in on trends over the past three months, trim and median inflation continued to run well below the Bank of Canada's 2% target.

Key Implications

Canada's inflation cooled in February, but that is backward looking now that prices at the pump have skyrocketed in the wake of the U.S./Israeli war with Iran. We expect higher energy costs will lift headline inflation close to 3% in the months ahead, but the effect on the Bank of Canada's core measures should be more modest. Core inflation is expected to stay reasonably close to the 2% target on a year-on-year basis this year.

The Bank of Canada's interest rate decision is coming up on Wednesday, and the Bank is universally expected to remain on pause. We will be listening closely for the Bank's assessment of the impact of the oil shock on Canada's economy.

Daily Pivots: (S1) 0.7866; (P) 0.7893; (R1) 0.7939; More….

A temporary top is in place at 0.7921 in USD/CHF and intraday bias is turned neutral first. Some consolidations would be seen but further rally is in favor as long as 0.7746 support holds. Rise from 0.7603 is seen as correcting whole down trend from 0.9200. Break of 0.7921 will target 38.2% retracement of 0.9200 to 0.7603 at 0.8213.

In the bigger picture, a medium term bottom should be in place at 0.7603 on bullish convergence condition in D MACD. Rebound from there is seen as correcting the fall from 0.9200 only. However, decisive break of 55 W EMA (now at 0.8091) will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high). On the other hand, rejection by the 55 W EMA will 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.

Oil slipped back below $100 today as signs emerged that the Strait of Hormuz remains navigable, easing fears of a full disruption to global energy supply. Dollar weakened broadly as traders scaled back the most extreme oil shock scenarios tied to the US-Israel conflict with Iran. Overall market sentiment also improved with major European indexes trading mildly higher, along with US futures.

Comments from US Treasury Secretary Scott Bessent helped trigger the shift in sentiment. Speaking to CNBC, Bessent said Iranian ships had already been leaving the Strait of Hormuz. He suggested the movement reflects a decision to allow oil flows to continue, stating that “we’ve let that happen to supply the rest of the world.”

For markets, the key takeaway is that Iran has not mined the Strait. A mined waterway would make the passage impassable for all vessels and would take significant time to clear, potentially causing a prolonged global energy crisis. The continued movement of tankers therefore signals that the worst-case scenario has not materialized.

Iranian Foreign Minister Abbas Araghchi also confirmed that the Strait remains open from Tehran’s perspective. Speaking at a press conference, he said the route is only closed to vessels belonging to the US, Israel and their allies, while other shipping traffic can still pass.

At the same time, governments are preparing to release strategic oil reserves to stabilize markets. The International Energy Agency said a coordinated release among its 32 member countries will soon begin in response to the supply concerns triggered by the conflict.

Japan has already started to release reserves, including 15 days of private-sector stocks and 30 days of government-held supplies. The US plans to contribute 172.2 million barrels, with oil expected to reach markets toward the end of March. European contributions are scheduled to follow the same timeline.

These additional supplies should act as a temporary bridge for global markets, limiting the immediate upside risk to crude prices while policymakers monitor developments in the Middle East.

In currency markets, Dollar is currently the weakest major currency on the day, followed by Loonie and Yen. Kiwi leads gains, with Aussie and Euro also strengthening, while Sterling and Swiss Franc are near the middle of the performance rankings.

In Europe, at the time of writing, FTSE is up 0.66%. DAX is up 0.63%. CAC is up 0.29%. UK 10-year yield is down -0.078 at 4.693. Germany 10-year yield is down -0.035 at 2.950. Earlier in Asia, Nikkei fell -0.13%. Hong Kong HSI rose 1.45%. China Shanghai SSE fell -0.26%. Singapore Strait Times rose 0.55%. Japan 10-year JGB Yield rose 0.035 to 2.280.

Canada CPI slows to 1.8% in February, inflation pressure eases before oil shock

Canada’s inflation slowed more than expected in February, with headline CPI easing to 1.8% yoy while core measures including CPI median, trimmed and common all softened. The slowdown was driven partly by declines in energy prices such as gasoline and natural gas, suggesting underlying price pressures are gradually moderating.

China industrial production, retail sales, investment beat expectations in Jan–Feb

China’s economic activity showed a stronger-than-expected start to 2026, with industrial production, retail sales and fixed-asset investment all beating forecasts. However, the property sector remains a key drag on the broader recovery.

New Zealand BNZ services falls back Into contraction, weak demand hits

New Zealand’s services sector slipped back into contraction in February, with the BusinessNZ Performance of Services Index dropping to 48.0. Weak demand, high living costs and elevated interest rates continue to weigh on activity.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.7866; (P) 0.7893; (R1) 0.7939; More….

A temporary top is in place at 0.7921 in USD/CHF and intraday bias is turned neutral first. Some consolidations would be seen but further rally is in favor as long as 0.7746 support holds. Rise from 0.7603 is seen as correcting whole down trend from 0.9200. Break of 0.7921 will target 38.2% retracement of 0.9200 to 0.7603 at 0.8213.

In the bigger picture, a medium term bottom should be in place at 0.7603 on bullish convergence condition in D MACD. Rebound from there is seen as correcting the fall from 0.9200 only. However, decisive break of 55 W EMA (now at 0.8091) will suggest that it's probably correcting the larger scale down trend from 1.0146 (2022 high). On the other hand, rejection by the 55 W EMA will 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.

Canada’s inflation slowed more than expected in February, with headline CPI easing from 2.3% yoy to 1.8% yoy, below market expectations of 1.9%. On a monthly basis, prices rose 0.5% mom, also slightly below forecasts of 0.6%, suggesting price pressures continued to moderate.

The slowdown was driven by declines across several components. Energy prices as a key drag, with gasoline falling -14.2% yoy and natural gas down -17.1% yoy. Other categories that exerted downward pressure included homeowners’ replacement cost (-2.1%), other owned accommodation expenses (-2.6%), and travel tours (-3.1%).

Core inflation measures also softened. CPI median and CPI trimmed both eased to 2.3% yoy, while CPI common slowed from 2.7% yoy to 2.4% yoy, all coming in below expectations. The broad-based cooling in underlying inflation suggests price pressures were easing gradually before the oil shock.

Full Canada's CPI release here.

Market Overview

The crypto market cap is on an upward trend, having surpassed the $2.5 trillion mark, the region of previous local highs and the 50-day moving average. Consequently, the technical picture is becoming more favourable for the bulls, who are steadily reclaiming one high after another.

This gradual growth appears to be a further sign of the recovery’s robustness. At current levels, the crypto market cap is approaching the 61.8% retracement of the latest downtrend, and all eyes are on whether the recovery momentum will fade. The consolidation may simply become broader but lack the strength to turn into an uptrend.

The sentiment index stands at 23, on the verge of exiting the extreme fear zone and at its highest level since 29 January. This could be a new trap, just as it was in the second half of January, when the index’s recovery was followed by a fresh wave of selling and new lows.

Bitcoin is looking on the bright side, approaching the $74K level and already hitting seven-week highs. The leading cryptocurrency closed Sunday above the 50-day moving average and began Monday with a further upward move. This could well prove to be a prelude to a rise towards $85K – the region of recent significant lows. However, it is quite possible that near the $75K mark, the bears will take control, leaving BTC within a corrective rebound pattern following a decline. From a cross-market analysis perspective, the bears have more arguments on their side, but Bitcoin has often moved ahead of the market, reflecting its underlying shifts in sentiment.

News Background

Bitcoin has passed the ‘stress test’ of geopolitical tensions in the Middle East. However, on-chain metrics indicate a lack of strength among the bulls for a medium-term breakout, according to Glassnode.

Ethereum risks continuing its decline due to the ‘adoption paradox’ — the widening gap between network activity and the asset’s price dynamics, CryptoQuant notes. An exit from the bearish phase should be facilitated by capital inflows into the ecosystem and a reduction in cryptocurrency inflows to exchanges.

BlackRock has launched an Ethereum ETF with staking. At launch, assets under management reached $100 million. Around 82% of the staking rewards received will be paid out to investors on a monthly basis — like dividend-paying ETFs.

According to Mizuho Bank, Circle’s USDC stablecoin has overtaken Tether’s USDT in terms of adjusted transaction volume since the start of 2026. The total stablecoin market has recovered to $311 billion amid an influx of retail capital.

Stablecoins could form the basis of a global payment system within the next 10–15 years, billionaire Stanley Druckenmiller has stated. According to him, such assets offer clear advantages over traditional banking infrastructure.

Gold prices fell to 5,023 USD per ounce on Monday, extending losses after two consecutive weeks of decline. Pressure on the market persists amid rising oil prices, with the situation becoming more problematic following a US strike on Iran's Kharg Island oil terminal – one of the country's key export hubs.

The attack prompted retaliation from Tehran, with Iran striking Israel and energy infrastructure in several Arab nations. These developments have intensified concerns about global supply stability.

The military confrontation between the US, Israel, and Iran has entered its third week with no signs of resolution. Volatility across financial markets remains elevated.

Rising energy prices are increasing inflation risks and reducing the likelihood of imminent monetary policy easing. Against this backdrop, gold faces pressure, as higher interest rates diminish the appeal of non-yielding assets.

The Federal Reserve is expected to maintain its interest rate this week. Monetary policy decisions are also anticipated from numerous other central banks, including those in the Eurozone, the UK, Japan, Switzerland, Australia, Canada, China, Brazil, and Russia.

Technical Analysis

On the H4 XAU/USD chart, the market formed a consolidation range around the 5,092 USD level. It has now broken downwards, likely continuing the correction towards 4,953 USD. The MACD indicator confirms the current momentum, with its signal line below the centre line and pointing sharply downwards.

On the H1 chart, the market has broken below the 5,035 USD level and is forming a wave towards 4,953 USD. Looking ahead, a corrective growth wave towards 5,200 USD is possible, with potential for the trend to extend to 5,412 USD. The Stochastic oscillator supports the short-term bearish scenario, with its signal line remaining above the 50 level and under pressure to decline towards level 20.

Conclusion

Gold continues to face headwinds as escalating geopolitical tensions in the Middle East drive oil prices higher, reinforcing inflation concerns and delaying expectations for Fed rate cuts. The third week of military confrontation shows no signs of abating, keeping markets on edge. With the Federal Reserve widely expected to hold rates steady this week, and technical indicators pointing to further downside, gold's immediate trajectory appears vulnerable. A break below key support could accelerate losses towards 4,953 USD, though dovish surprises from central bank meetings this week might offer temporary relief.