Introduction
A relatively quiet market landscape was abruptly shifted this week by escalating geopolitical tensions. The Monday open set the tone as Crude Oil gapped decisively higher following the continued closure of the Strait of Hormuz. With approximately 20% of global oil supply currently constrained, the energy sector became the primary catalyst for market movement. The result was a classic risk-off effect: global indices sold off, Gold found a strong bid, and Oil surged to three-year highs.
Global Macro
While geopolitics dominated the headlines, the underlying narrative remains tied to the upcoming Non-Farm Payrolls (NFP) report. Although the CME FedWatch Tool suggests a rate pause for the March FOMC meeting is virtually a certainty (priced at 97.3%), NFP data will provide insight into the strength of the labor market.
We remain in a “bad news is good news” environment. Soft employment data could potentially tie the Federal Reserve's hands, increasing the probability of future rate cuts and providing a tailwind for broader market sentiment.
Equities
The start of the week saw a rotation into risk-off sentiment, with all indices gapping down on the Weekly Open. While American indices have since closed that gap, European and Japanese stock indices remain under significant pressure.
DAX 40 on the Daily Timeframe
The DAX had the toughest week, erasing multiple weeks of gains in just a few days. From a technical picture, we’re in a ‘wait and see’ environment as price has bounced exactly where you’d expect it to. However, Thursday’s Daily candle, which closed as a bearish engulfing of an inside day, indicates a slightly bearish picture.
Forex
Risk-off flows created a strong week for the Dollar, which saw it appreciate against virtually all majors. Perhaps the most interesting setup of the week was to be found in USD/JPY, where we shared a potential price path on Thursday.
USD/JPY on the 1-hour Timeframe
Following a convincing bounce from the ¥156-156.5 support zone early Thursday morning, the price moved up into a key area of old highs and lows. If price were able to flip that level into support, the next logical target would be ¥158.18, the low of the day before the bearish engulfing visible on the Daily timeframe:
USD/JPY on the Daily Timeframe
Link to Thursday's Article:
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Commodities
Oil was the star of this week. As the conflict in the Middle East continued, the Strait of Hormuz was closed. As long as the closure persists, Oil is in a significant supply shortage, which might push the prices significantly higher.
Oil on the Daily Timeframe
This week, price went above its 2025 Swing high and later also above the 2023 High. The next resistance area is now located at $88-94, with the path to new highs being open beyond that.
Conclusion
One-sentence summary of the week:
Oil to 3-year highs, DAX decisively lower, and USD/JPY up.