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MUFG’s Head of Research Derek Halpenny highlights that a two-week ceasefire between the US, Israel and Iran has sharply weakened the US Dollar as risk sentiment improves and Brent Oil falls. He argues this outcome is clearly bearish for the Dollar, reinforces monetary policy divergence with Europe, and could undermine confidence in US assets, with further short-term Dollar losses likely if negotiations progress.

Ceasefire shifts risk and Dollar outlook

"So there are a lot of uncertainties that will persist but having said that, this of course is a step in the right direction and we see this as reducing considerably, over the short-term at least, the risk of a major risk-off and with it a strengthening of the dollar."

"This outcome is a clear bearish outcome for the US dollar."

"The US dollar throughout this conflict has underperformed our expectations given the scale of energy price increase and under these circumstances of a ceasefire and possible deal will potentially suffer further losses over the short-term."

"However, uncertainties are high and hence we would expect markets to remain highly sensitive to incoming news on progress in the negotiations that lie ahead."

"Reversal trades in G10 on this positive news would imply the big underperformers throughout the conflict could perform best in the coming days – that would point to SEK and NZD performing well at the expense of NOK and GBP – the two top performers since the conflict began."

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

Wells Fargo economists highlight that the Iran conflict and higher Oil prices are reviving consumer inflation and breaking the recent disinflation trend. They now sees headline PCE peaking at 3.7% year-on-year in Q2, with core PCE stuck in a 2.7–3.1% range through 2026, and expects energy-driven pressures to spill into categories like airfares and food.

Energy shock lifts PCE trajectory

"March consumer inflation will break disinflation. Higher energy prices have fed quickly into prices at the pump, ending the two‑year disinflation trend."

"Energy-driven inflation is likely to linger and pressure other components. We now look for core PCE inflation to end the year at 2.8% on a Q4-over-Q4 basis."

"We raised our inflation outlook as the conflict in the Middle East continues. We now expect the PCE deflator to peak at 3.7% year-over-year in Q2. The energy shock should remain concentrated in oil and fuels, at least in the U.S., as domestic natural gas prices generally have remained in check. Still, higher fuel costs are likely to work their way into other categories as production and transportation expenses rise, with airfares and food most notably exposed. Moderating shelter inflation and the unwinding of tariff-related pressures should partially offset the energy shock spillover, but not fully. We now expect core PCE inflation to remain stuck between a range of 2.7-3.1% through the remainder of the year, marking an end to the gradual disinflationary trend that has underpinned the past two years."

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

• The Minutes of the Fed’s March 17-18 meeting are due on Wednesday.
• Investors are expected to closely follow details of the latest hawkish hold.
• Markets see one or no interest rate cut this year. 

The Federal Reserve (Fed) will publish its Minutes from the March 18 meeting on Wednesday. The release should be less about the decision itself and more about the officials’ “no rush to cut” narrative.

Let’s recall that the Fed matched consensus last month, leaving its Fed Funds Target Range (FFTR) unchanged at 3.50%-3.75%, although both the statement and the subsequent Chair Jerome Powell’s press conference showed a subtly hawkish tilt.

Indeed, economic growth looks healthy; the labour market appears somewhat cooling, albeit slower than many policymakers would prefer; and inflation continues to run hot… hotter, actually. And prospects for inflation are far from rosy. Indeed, allow us to forget about tariffs for a moment. The ongoing surge in crude oil prices in response to the Middle East war and its impact on refined products should catapult the energy component of inflation even further, eventually reinforcing the views of those who advocate a “tighter-for-longer” policy.

The updated Summary of Economic Projections (SEP) showed a higher inflation path into 2026 and a slightly higher longer-run rate, all advocating for a policy stance that may need to stay restrictive for longer than previously assumed.

That said, the Minutes should shed some light on how broad that view holds inside the Committee. If we look at the fresh dot plot, they still reveal a meaningful split, with some officials saying there won't be any rate reductions this year and one rate setter even hinting at a potential rate hike in 2027. On this, market participants will be closely watching whether it is a real change in the centre of gravity or simply a few more hawkish opinions.

At his usual press conference, Chair Jerome Powell said that the Fed isn't ready to disregard current price pressures without further confirmation of a return to some disinflationary pressure, particularly when it comes to goods costs. Powell also stressed that further tightening is not the basic scenario, implying that policy is in a two-sided but clearly unequal stance, with the bar for staying on hold much higher than the bar for lowering.

What to watch in the Minutes

There will probably be three main areas of attention.

First, how worried policymakers are about inflation being high, particularly if they regard shocks connected to energy and tariffs as transient or more permanent.

Second, how confident people are that the process of disinflation will work. Any phrase that calls into question the disinflation of products or the inflation of services that remain around would support the idea that rates would stay higher for longer.

Third, the balance of risks within the Committee. If the Minutes demonstrate that members are much more anxious about inflation than growth, it would back up what Powell said about the imbalance.

When will the FOMC Minutes be released, and how could they affect the US Dollar?

The FOMC will release the Minutes of the March 17-18 policy meeting at 18:00 GMT on Wednesday. 

FX takeaway

The Minutes probably won't alter the game for the US Dollar (USD) unless their tone emerges as really surprising. A generally hawkish assessment that confirms patience and a limited desire for cuts should keep US Treasury yields stable and the Greenback propped up.

In contrast, the US Dollar would be in danger if there were any signs that more members were worried about the threats to growth or the job environment. If that doesn't happen, the basic assumption is still that the Fed will continue in ’wait-and-see’ mode, and policy will stay tight for longer than the markets would want.

All in all

The Minutes should reinforce the idea that the Fed is not just pausing; it is deliberately holding its ground. Unless there is a clear shift towards growth concerns, the message remains unchanged, rates stay higher for longer, and the bar for cuts remains firmly elevated.

Royal Bank of Canada (RBC) analysts review how Canada has weathered one year of U.S. tariff shocks. They note that Canada’s Gross Domestic Product (GDP) and unemployment held up, but sectoral and regional damage was significant. Analysts stress Canada’s heavy reliance on U.S. trade, uneven provincial impacts, and a growing role for fiscal policy to diversify exports.

Canada adjusts to concentrated tariff damage

"Canada posted its first per-capita gross domestic product increase in three years in 2025, and the unemployment rate moved broadly sideways. Consumer confidence plunged in the spring, but household spending held up and net foreign direct investment was positive for the first time in more than a decade."

"For all the announcements and noise, economies look remarkably similar overall, but with important distributional changes. The past year also broadly confirmed the world may be resilient to a U.S. trade shock, but Canada is still highly dependent."

"Ongoing trade turmoil has also underscored other economic vulnerabilities in Canada, including lagging productivity growth that makes economic shocks difficult to handle."

"However, Canada’s trade relationship with the U.S. is more than a reliance—it’s an orientation requiring new supply chains, and major new infrastructure to rebalance goods trade with other regions."

"The recent federal budget has the goal of doubling non-U.S. exports by 2035, while supporting infrastructure and easing the way for major projects."

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

• Gold climbs toward three-week highs as US-Iran ceasefire lifts market sentiment.
• Softer US Dollar and falling Oil prices support XAU/USD.
• Technically, XAU/USD shows a mild bullish bias as it holds above the 100-day SMA, with momentum indicators turning supportive.

Gold (XAU/USD) holds firm but struggles to extend gains after touching three-week highs on Wednesday, following news of a two-week ceasefire between the United States and Iran. At the time of writing, XAU/USD is trading around $4,771, up nearly 1.5% on the day after touching an intraday high of $4,857.

US-Iran ceasefire lifts market sentiment

US President Donald Trump announced on Truth Social that he had agreed to suspend attacks on Iran for a period of two weeks, provided that Tehran ensures the “complete, immediate, and safe opening of the Strait of Hormuz.” Iran’s Foreign Minister Abbas Araghchi also stated that safe transit through the Strait could be maintained during this period in coordination with Iranian armed forces.

The first round of negotiations is scheduled to take place in Islamabad on Friday, where Iran’s 10-point peace proposal will be discussed. Trump described the proposal as “a workable basis on which to negotiate.”

The ceasefire news eases fears of a prolonged war and lifts market sentiment, supporting a risk-on mood. Global equities are rallying while the US Dollar (USD) comes under broad pressure, lending support to XAU/USD. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading around 98.77, down nearly 0.90% on the day.

Oil slump eases inflation concerns

Meanwhile, Oil prices also retreat sharply, with WTI falling more than 10% to trade near $87 at the time of writing. The pullback in Crude helps ease inflation pressure and may reduce the need for tighter monetary policy from major central banks.

This shift in expectations supports Gold, which had previously struggled as markets priced in a higher-for-longer interest rate outlook, particularly from the Federal Reserve (Fed).

Even so, the metal lacks strong follow-through buying as traders expect the Fed to remain patient before resuming rate cuts, with recent US Nonfarm Payrolls (NFP) data pointing to a stable labor market and Oil prices still holding above pre-conflict levels, keeping inflation risks in focus.

Looking ahead, investors will closely watch the Fed’s minutes from the March meeting, due later in the American session, for fresh cues on the monetary policy outlook.

Technical analysis: XAU/USD trades between key SMAs as momentum improves

According to the daily chart, XAU/USD sits between its major moving averages, holding beneath the 50-day simple moving average (SMA) at $4,928.81 but above the 100-day SMA at $4,667.89, which suggests a broadly neutral near-term bias within a developing range. Momentum is mildly constructive, with the Relative Strength Index (14) hovering just above the midline and the Moving Average Convergence Divergence (MACD) in positive territory, hinting that buyers retain a slight edge while price remains capped by overhead trend reference levels.

On the topside, immediate resistance is defined by the 50-day SMA at $4,928.81, and a sustained break above this barrier would open the way for a more decisive recovery phase. On the downside, initial support is located at the 100-day SMA near $4,667.89, where a clear break lower would likely shift focus back toward a deeper corrective leg despite the currently improving momentum backdrop.

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

TD Securities strategists argue that higher energy-linked inflation and delayed Fed cuts keep the opportunity cost of holding Gold elevated in the near term. They also flag the lack of Middle East capital as a downside catalyst. However, as energy and rates normalize and the Dollar weakens, they expect Gold to return above $5,000 in late 2026.

Near-term headwinds, long-term bullish target

"Even with the ceasefire, it will take time to reverse higher inflation expectations along with higher energy, fertilizer, and chemical prices, making it difficult for the Fed to cut soon."

"This will keep the opportunity costs to holding precious metals elevated. The lack of Middle East capital in the gold market is also a downside catalyst."

"However, as broader normalization in energy and rates materialize and the dollar weakens, gold is likely to return above $5,000 in the latter part of 2026."

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

• The US Dollar Index (DXY) drops to one-month lows as easing geopolitical tensions weaken safe-haven demand.
• A sharp pullback in Oil prices weighs on the Greenback, with US Treasury yields retreating as inflation concerns ease.
• Technically, DXY breaks below a rising channel and tests key support near 98.50-98.60, with momentum turning negative.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, comes under heavy selling pressure on Wednesday, sliding to one-month lows after the United States and Iran agreed to a two-week ceasefire deal. At the time of writing, the DXY trades around 98.60, down nearly 1% on the day.

The US Dollar (USD) had been supported during the conflict as investors sought liquidity and safety, while surging Oil prices also boosted demand, as Oil is globally priced in USD. At the same time, Oil-driven inflation fueled expectations that the Federal Reserve (Fed) would keep interest rates higher for longer, lifting US Treasury yields and the Greenback.

Traders are now unwinding long US Dollar positions as the ceasefire reduces immediate geopolitical risks. Meanwhile, falling US Treasury yields are adding further downside pressure on the Greenback, as a sharp pullback in Oil prices eases inflation concerns and revives Fed rate cut expectations.

From a technical perspective, the US Dollar Index has decisively broken below an upward-sloping parallel channel that had guided price action since late January, signaling a shift in near-term structure.

The move follows repeated failures to sustain gains above the 100.00–100.50 zone, a multi-month resistance area that has capped upside attempts since May 2025.

The latest leg lower now brings prices toward a key confluence support zone, where the 50-day, 100-day, and 200-day Simple Moving Averages (SMAs) have converged around the 98.50-98.60 region.

Holding above this area may offer some near-term stabilization, while a decisive break below could accelerate downside momentum and extend the broader downtrend.

On the upside, the 99.00 level acts as initial resistance, with a stronger barrier at the 100.00-100.50 zone. Rallies are likely to be capped unless there is a sustained move above this zone.

Momentum has also cooled, with the Relative Strength Index (14) slipping toward the low-40s and the Moving Average Convergence Divergence (MACD) turning negative, suggesting fading upside pressure.

OCBC strategists Sim Moh Siong and Christopher Wong stress that markets are being driven almost entirely by Iran headlines, with Oil and yields reacting to ceasefire developments. A credible de-escalation would likely see the US Dollar resume a shallow depreciation trend as lower energy risks support non-US economies, risk assets and cyclical currencies like AUD, NZD and SEK.

Geopolitics steering Dollar and risk assets

"Markets have whipsawed on every Iran-related headline in recent weeks, with little else driving price action."

"Overnight trading was volatile as looming geopolitical deadlines first stoked inflation and oil supply fears, before de-escalation hopes dragged oil prices and front-end yields lower."

"Momentum accelerated after President Trump agreed to a two-week Iran ceasefire, conditional on the Strait reopening."

"Brent fell below USD100/bbl, S&P 500 futures rallied, and the USD weakened further."

"Credible signs of de‑escalation would likely see the USD resume a shallow depreciation trend, as lower energy risks support non‑US economies and global risk assets. FX moves since the Iran conflict began have been shaped by terms‑of‑trade shifts and broader risk sentiment."

"In a de‑escalation, lower oil prices and a risk‑on environment should favour AUD, NZD and SEK over oil‑linked CAD and NOK, as well as safe havens CHF and JPY. Our preferred expression is long AUD, supported by domestic economic tailwinds. EM carry trades—BRL, MXN and ZAR—are also likely to re‑emerge if a truce holds."

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

Commerzbank’s Thu Lan Nguyen notes Copper has turned into a top performer after being one of the weakest metals, pressured by rising LME stocks and mixed supply news. Possible stock sales and a Panama mine restart could cap prices near term, but sharply lower Chilean output suggests supply worries may dominate once growth fears ease, supporting higher Copper prices longer term.

Short term overhang, longer term supply strain

"This morning, copper is one of the top performing metals. This is likely due to the fact that copper had previously been one of the worst performing metals. On the one hand, this can be explained by the fact that the red metal is considered highly cyclical. On the other hand, there were also fundamental reasons for its price weakness: LME stockpiles have risen significantly since mid-January and are now at their highest level since 2018."

"At the same time, supply prospects remain mixed. Adding further downward pressure to prices was the news that the government in Panama will soon allow the sale of stockpiles from a mining company whose copper mine was closed in 2023."

"Additionally, the government plans to decide in the coming months whether operations at the mine could be resumed. A decision is expected by June."

"More significantly, the mining production in Chile, the world’s top producer, is struggling. In February, monthly production fell to its lowest level in 10 years."

"This suggests that, once current economic concerns subside, supply worries are likely to take over again in the longer term, pushing prices further upward."

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