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DBS Group Research economist Radhika Rao notes Indonesia’s March inflation eased to 3.5% year-on-year as government stimulus offset base effects and Lebaran-related pressures. She expects inflation to normalise from the second quarter, with Bank Indonesia likely on hold while watching Rupiah stability and subsidised fuel risks. New energy conservation measures offer temporary fiscal relief but could prove insufficient if Oil prices rise further.

Benign inflation and fuel policy tradeoffs

"March inflation was relatively benign at 3.5% yoy from 4.6% in Feb as stimulus measures offset fading base effects."

"Passage of base effects from 2Q will normalise inflation, with the absence of an increase in retail pump and non-subsidised fuel products expected to cap inflationary pressures."

"For now, authorities have opted to absorb the initial shock from global energy prices to protect consumers’ purchasing power. However, a further rise in oil prices could increase the likelihood of partial passthrough to domestic fuel prices, potentially fuelling inflation and prompting a shift toward tighter policy."

"The Indonesian government announced energy conservation plans on Wednesday, consisting of a) fuel rationing – subsidised fuel cap at 50l per day; 50% B50 rollout from July; b) civil servants to work-from-home once a week except in strategic sectors, alongside lower vehicle usage and reduced travel requirements, etc; c) review after two months; d) unsubsidized fuel prices held unchanged after initial expectations of an impending hike from 1 April; e) adjustments to the Free meal program (MBG) (potential savings: ~IDR25 trn; 0.1% of GDP)."

"BI is expected to stay on hold this month, while monitoring financial market stability, rupiah movements and risks of an increase in subsidised fuel prices (and consequent unanchoring of inflationary expectations)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• USD/JPY rises near 159.50 amid heightened geopolitical tensions, boosting the US Dollar.
• Trump signals weeks of further conflict with Iran, and Oil surge pressures the JPY.
• Iran–Oman Hormuz protocol sparks brief risk recovery, limiting USD gains.

The USD/JPY pair is trading near the 159.40 price region on Thursday, having surged earlier in the day, though price action turned more volatile during the American session as headlines briefly supported risk sentiment.

Earlier in the day, United States (US) President Donald Trump escalated tensions with Iran, stating the US would “go harder” and warning that two to three more weeks of fighting are likely, while ruling out negotiations. Iran also appears unwilling to engage diplomatically, maintaining control over the Strait of Hormuz.

Markets initially reacted with a strong risk-off tone. Oil prices surged sharply, while stocks, bonds, and gold tumbled, boosting demand for the US Dollar (USD). This dynamic pushed USD/JPY higher, as the Greenback benefited from safe-haven flows and relative economic resilience.

However, the pair trimmed intraday gains during the American session after reports emerged that Iran is drafting a protocol with Oman to manage and facilitate traffic through the Strait of Hormuz, signaling a potential step toward stabilizing shipping conditions.

On the Japanese side, fundamentals continue to weigh on the Japanese Yen (JPY). Japan’s heavy reliance on imported energy leaves it particularly exposed to rising oil prices, worsening its trade balance and pressuring the currency. Additionally, concerns persist that the Bank of Japan (BoJ) may be underestimating the economic fallout from the Iran conflict, particularly due to higher input costs and supply disruptions.

At the same time, Japanese authorities have reiterated warnings about excessive Yen weakness, suggesting that intervention risks remain elevated if volatility intensifies. However, without a decisive policy shift from the BoJ, these warnings have had limited lasting impact.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 159.37. The near-term bias is almost neutral as the pair holds above both the 20-period and 100-period Simple Moving Averages (SMAs), with the shorter average still trading over the longer one despite flattening. Price is consolidating just under the 159.70 resistance area after recovering from last week’s pullback toward 158.30, keeping buyers in control while momentum stabilizes. The Relative Strength Index (RSI) hovers around 52, aligning with a moderating but still positive tone rather than strong trending conditions.

Immediate support is seen at 159.32, with additional protection at 159.24, both sitting close to the 20-period SMA and reinforcing this area as a key floor for the current upswing. A sustained break below these levels would expose the rising 100-period SMA near 159.20, where a deeper correction could develop. On the upside, initial resistance stands at 159.39 ahead of the more significant 159.70 cap, which coincides with recent consolidation highs. A clear move above 159.70 would reopen the path toward the 160.00 region and strengthen the bullish outlook.

(The technical analysis of this story was written with the help of an AI tool.)

• WTI Crude Oil surges more than 8% on Thursday, rebounding after a two-day decline.
• Middle East tensions keep supply disruptions through the Strait of Hormuz in focus.
• OPEC+ meeting eyed for potential output increase on Sunday.

West Texas Intermediate (WTI) Crude Oil rebounds sharply on Thursday, rising more than 8% on the day, as ongoing tensions in the Middle East continue to keep a geopolitical risk premium embedded in prices amid supply disruptions through the Strait of Hormuz.

At the time of writing, WTI is trading around $103, bouncing off a daily low of $92.49 and snapping a two-day losing streak.

The rebound comes after Donald Trump dashed hopes of a near-term end to the US-Iran war in his address to the nation, signaling continued military action in the coming weeks. His comments reinforced expectations of prolonged disruptions to energy flows through the Strait of Hormuz.

Markets had briefly priced in some easing of tensions earlier this week following reports of possible negotiations, which led traders to believe the war could end soon, but the latest rhetoric has shifted sentiment back toward supply risks.

However, some positive signs have also emerged. According to Tasnim, Iranian Deputy Foreign Minister Kazem Gharibabadi, in an interview with Sputnik, said Iran and Oman are working on a joint plan to ensure safe shipping through the Strait of Hormuz after the war. Gharibabadi added that the protocol is intended not as a restriction, but as a mechanism to facilitate safe transit and provide better services to vessels.

Meanwhile, the UK is also set to convene virtual talks later on Thursday with around 35 countries to discuss a plan to restore shipping through the Strait.

Attention is also turning to the OPEC+ meeting on Sunday. According to Reuters, OPEC+ is likely to weigh a further Oil output increase when eight of its members meet, a move that would position key producers to add more barrels should the Strait of Hormuz reopen.

TD Securities’ Robert Both argues that higher Oil prices will support Canada’s 2026 GDP, but export bottlenecks limit the upside. Existing pipelines and potential rail expansion could lift nominal and real GDP modestly, yet the output gap is expected to remain negative into 2027, allowing the BoC to stay on hold through 2026 despite the Oil-driven boost.

Oil boost constrained by export capacity

"Higher energy prices will provide a tailwind to 2026 GDP growth even with ongoing export bottlenecks."

"We estimate spare export capacity at 100-200k bpd in 25Q4, with another 300k bpd from expanded railcar shipments if conditions allow."

"Maxing out existing pipeline infrastructure would contribute $8-9bn to nominal GDP (0.3%) with our baseline view for WTI, with the contribution to real GDP ~0.2% before any downstream effects or fiscal response."

"Increased railcar shipments could lift that to 0.6%/0.4% for nominal/real GDP, but without new export capacity we see limits to the growth tailwind from higher oil prices (TMX pipeline is reported to hit full capacity by April)."

"We look for higher crude oil prices to raise GDP by 0.4pp by Q4 (relative to $65 baseline). However, this still leaves a negative output gap into 2027 which should allow the BoC to remain patiently on the sidelines through 2026."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• GBP/USD slumps on Trump’s tougher rhetoric.
• Mixed US jobs data kept traders focused on Friday’s payrolls release.
• Iran-Hormuz headlines helped Sterling trim losses after hitting two-day lows.

The British Pound retreats during the North American session after US President Donald Trump escalated the conflict, hinting that it will at least extend for two to three weeks. At the time of writing, the GBP/USD trades at 1.32144, down 0.40%.

Sterling weakens as war fears and oil surge sour market mood

Late Wednesday, Trump commented that the mission in Iran will be finished very fast and warned Tehran that the US would strike energy plants and Oil facilities if there is no deal. He reiterated that the US did not need the Strait of Hormuz, challenging allies to work to reopen it, given its dependence on energy products from the Middle East. After this, the Greenback rallied, global equities dropped, and crude prices surged.

The GBP/USD tumbled to fresh two-day lows at 1.3181 before reclaiming 1.3200. Meanwhile, reports that “Iran reportedly drafts a protocol with Oman for the Strait of Hormuz traffic,” via IRNA, sparked a recovery in the pair, trimming some of its earlier losses.

US jobs data mixed, NFP eyed

Data-wise, US jobs data was mixed, with jobless claims improving, while the Challenger report showed that companies slashed 60,620 jobs in March, up more than 24% from 2025 figures. Initial Jobless Claims for the week ending March 28 came in at 202,000, below estimates of 212,000 and down from the previous week's 215,000.

Dallas Fed President Lorie Logan said that monetary policy is well-positioned to respond to uncertainty. She added that the Fed is prepared to make adjustments to interest rates “as appropriate, warning that the Middle East conflict clouds the future of the economy."

On Friday, markets will be closed in the UK and the US due to Good Friday, but economic data will continue to flow in the US. March Nonfarm Payroll figures are expected at 60,000, an improvement following February’s dismal -92,000 print. The Unemployment Rate is projected at 4.4%, unchanged from the previous month.

GBP/USD Price Forecast: Technical Outlook

In the daily chart, GBP/USD trades at 1.3240. The pair retains a mildly bearish near-term bias, with price slipping below the clustered Simple Moving Averages (SMAs) around 1.3480, which now cap the broader trend context. The break under the prior ascending support line from 1.3035 shifts the technical tone, as recent closes have gravitated toward the lower half of the recent range while the downward-sloping resistance line from 1.3869 continues to limit recovery attempts. Fed sentiment readings trending higher underscore a firmer US Dollar backdrop, aligning with the prevailing downside pressure on the pair.

Initial resistance is now seen near 1.3350, where recent swing highs converge with the descending trendline, followed by the 1.3480 zone defined by the compressed SMAs. A daily close above 1.3480 would be needed to ease bearish pressure and expose the 1.3550 area next. On the downside, immediate support emerges around 1.3220, just above the trendline origin at 1.3035, which marks the next key level if sellers extend control. A sustained break below 1.3035 would confirm a deeper downswing, opening the door toward the 1.2900 region.

(The technical analysis of this story was written with the help of an AI tool.)

Lorie Logan, President of the Federal Reserve (Fed) Bank of Dallas, said that the Fed should not let balance sheets distract them from their main mission. Logan also claimed that central bank balance sheet growth isn’t bad if it meets the public's need during a speech at her bank on Thursday.

Key takeaways:

Fed should not let balance sheet issues distract from mission.

Fed balance sheet growth isn't bad if that meets public's needs.

US central bank's balance sheet policy should be driven by what's best for economy.

It costs the Fed little to meet bank reserve demand.

Reducing reserve demand better than returning to scarce reserves system.

Smaller balance sheet could be from lower reserve demand or scarce reserves system.

Possible regulatory changes could reduce reserves demand.

Current ample reserves system 'efficient and effective'.

Many options with complex interactions for lowering size of Fed balance sheet.

Pushing banks to economize reserves would increase financial system risk.

Broaden access to Fed liquidity tools could also lower reserves demand.

Some options to reduce reserve demand must come from other than Fed.

Supported Fed holding steady at recent FOMC meeting.

The labor market stabilized in second half of 2025 into this year.

Payroll gains have been pretty weak, feels 'uncomfortable'.

Immigration has changed job market breakeven to close to zero.

Wasn't convinced inflation was easing enough even before war started.

Business investment strong, consumers have been resilient.

Iran war has increased level of uncertainty, has increased risk on both sides of Fed mandate.

Was quite challenging to do most recent round of Fed forecasts.

Swift war resolution may mean economic impact might be pretty moderate.

Policy is positioned to respond to data, Fed prepared to make adjustments as needed.

US has some buffers to impacts from the war.

Key question is if war disruptions induce investment in US energy production.

Energy producers appear to need extended higher prices to boost production.

I am not hearing we will see 'dramatic' US energy production increase so far."

• Gold rebounds and trims part of its intraday losses after sliding below $4,600.
• Strait of Hormuz developments lift sentiment, while Trump remarks keep uncertainty high.
• Technically, XAU/USD forms a bearish flag on the 4-hour chart as momentum weakens.

Gold (XAU/USD) stages a rebound on Thursday and trims most of its intraday losses as sellers fail to sustain a move below the $4,600 level, while easing US Dollar (USD) and Treasury yields provide additional support. At the time of writing, XAU/USD is trading around $4,660, recovering after sliding to $4,554 during the European session.

Gold remains sensitive to Middle East headlines

Risk sentiment improved somewhat after reports that Iran is working with Oman to manage traffic through the Strait of Hormuz. According to Tasnim, an Iranian deputy foreign minister said Tehran and Oman are drafting a joint protocol to ensure safe maritime passage through the Strait in the post-war period.

Earlier in the day, the metal had slid as much as 4% after US President Donald Trump signaled continued military action in his address to the nation. Trump said the US is “on track to complete all of America’s military objectives shortly — very shortly,” while warning that Washington would “hit them extremely hard over the next two to three weeks” and “bring them back to the stone ages.” Trump added that discussions are ongoing, stating, “We have all the cards; they have none.”

This raises the risk of a prolonged conflict and continued disruptions to energy flows through the Strait of Hormuz, keeping Oil prices elevated.

Hawkish interest rate outlook remains a headwind for Gold

Rising inflation and growth risks linked to higher energy prices are prompting a more hawkish outlook from central banks, particularly the Federal Reserve (Fed), which is offsetting the metal’s appeal as a safe-haven asset.

The “higher-for-longer” interest rate narrative has remained a key headwind for the non-yielding metal since the Middle East war began, as higher rates increase the opportunity cost of holding Gold. According to the CME FedWatch Tool, markets widely expect the Fed to keep rates unchanged at 3.50%-3.75% this year, compared to earlier expectations of at least two rate cuts.

Fed officials struck a cautious tone this week, signaling that policymakers are in no rush to adjust interest rates despite rising inflation risks driven by energy prices.

St. Louis Fed President Alberto Musalem said on Wednesday that monetary policy is “well positioned” and should remain in place “for some time,” while noting that risks to both inflation and employment are skewed to the downside. He also described the economic outlook as “highly uncertain."

Kansas City Fed President Jeffrey Schmid said on Tuesday that the central bank must “follow through with policy actions to validate stable medium- and long-term inflation expectations.” Schmid added that he “can’t assume inflation from higher oil prices will be transitory."

Technical analysis: XAU/USD forms a bearish flag on the 4-hour chart

From a technical perspective, XAU/USD remains tilted to the downside in the near term. On the 4-hour chart, prices have failed to sustain a move above the 100-period Simple Moving Average (SMA) around $4,711, keeping the bearish bias intact.

Price action appears to be forming a bearish flag pattern, with price bouncing off the lower boundary. Momentum deteriorates as the Relative Strength Index (RSI) retreats toward the 50 line from overbought territory, while the Moving Average Convergence Divergence (MACD) histogram turns slightly negative as the MACD line crosses below the signal line, reinforcing fading upside momentum.

Immediate support is seen around the $4,600 level, followed by the 50-period SMA near $4,534. A break below this zone could open the door for further downside toward the $4,200-$4,000 region.

On the upside, a move above the 100-period SMA around $4,711 or even the $4,800 mark could pave the way for a test of the next resistance near $5,000.

BNY's EMEA Macro Strategist Geoff Yu argues that the National Bank of Poland’s (NBP) March rate cut underestimated inflation risks linked to the regional conflict. While European Central Bank (ECB) and Bank of England (BoE) pricing looks excessive given weak Eurozone and UK growth, he sees Central and Eastern Europe (CEE) rate expectations as too defensive. He flags upside risks to CEE policy pricing, starting with the NBP, over the coming months.

CEE central banks lag ECB repricing

"The NBP decision in March was the first major European central bank decision at the beginning of the Iran conflict. Understandably, the consensus at the time saw a time-limited operation that was not expected to generate prolonged disruption to global energy markets or other inputs. The NBP press release didn’t even mention a conflict, only acknowledging that “changes in the global commodity prices and inflation, amid geopolitical tensions,” represented a risk factor for the country’s inflation outlook."

"Ultimately, it wasn’t long before global policy expectations were upended. Instead of further softening in CPI, Polish inflation jumped to 3% y/y in March, led by a 1.0% m/m sequential figure as input prices increased materially. Other central banks in the region have shifted their near-term outlook without pre-committing to any moves, and we believe the general inflation figures in CEE don’t warrant a strong reaction yet."

"We remain of the view that current ECB and BoE pricing is excessive. Given the condition of the Eurozone and U.K. economies, there is very limited scope for aggressive tightening without triggering a material economic downturn, independent of a view on the direction of the conflict."

"Either way, we see strong upside risks to CEE policy pricing in the near term, beginning with the NBP, unless the market significantly changes its expectations for the ECB as well. The latter course is more in line with fundamentals, in our view, but rates markets currently believe otherwise."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Commerzbank’s Tatha Ghose notes that improving PMIs in Poland, Czech Republic and Hungary had signalled a potential upswing, helped by Germany’s earlier recovery signs. However, he argues the Iran war and energy price shock now overshadow that momentum, likely worsening real economies in the region unless geopolitical tensions de-escalate soon, leaving the earlier PMI-based optimism outdated.

CEE growth hopes hit by war shock

"Among Eastern European PMI indices, we find the Czech PMI to be consistently reliable and free from noise (whereas the Hungarian PMI is the most volatile and unreliable). In March, the Czech PMI surprised to the upside, marking a clear and discernible improvement trend over the past few months. Being a proxy for the bloc, this presented a promising sign. The Polish PMI also showed tentative steps toward reversing earlier declines, moving closer to the 50 mark"

"These trends coincided with indications of improvement in the German economy earlier this year, which suggested that the CEE bloc could have been on the brink of an economic upswing, supported by Germany’s recovery. Of course, the context has shifted entirely due to the Iran war and the resultant energy price shock. "

"These events have overshadowed what could have been a brighter economic outlook and are beyond the control of regional policymakers. Given the highly volatile nature of the situation, it’s worth noting that these geopolitical developments could resolve just as unpredictably as they arose – potentially providing a renewed opportunity for optimism, if this were to occur soon enough."

"For now, the shock will likely contribute to a general deterioration in the real economies of the region, particularly as Germany will also be susceptible to the rising energy cost. In other words, the recent improvement in PMIs painted a positive picture, but it is already outdated, unless we see a de-escalation of the geopolitical situation soon."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)