The Middle East war rages on. The Houthis have entered the fray and there is risk that it shuts the Bab El-Mandeb Strait. Aluminum and steel facilities have been reportedly attacked. The US continues to amass forces, including troops, ostensibly for a potential landing operation. There seem to be two “logics” playing out. One is that the US is keeping its military options open to pressure negotiations. Second, if there is a reasonable chance for regime chance, infrastructure can be preserved, but in lieu of regime chance, Iran’s capability will be downgraded.
The risk-off mood is evident in the foreign exchange market, where the dollar is bid. The notable exception is the Japanese yen. The market had pushed the greenback above the JPY160 psychological level ahead of the weekend. It opened firmer but Japanese officials ratcheted up their verbal warnings and the market took heed. The dollar pulled back to around JPY159.50 in European dealing. North American participants may see this as a new dollar buying opportunity.
Prices
G10
• The euro fell for the fourth consecutive session before the weekend. It slipped a little through $1.15. Today, it probed last Monday’s low near $1.1485. Resistance is now seen around $1.1520. The low since the Middle East war began was around $1.1410 on March 13.
• The yen fell to its lowest level in almost two years before the weekend. After several attempts, the dollar rose above JPY160 for the first time since July 2024 and reached JPY160.40. It edged slightly higher earlier today. It has been knocked back to almost JPY159.50 by heightened intervention threats by the Vice Minister for International Affairs Mimura, and the record from the BOJ’s recent meeting, in which a greater usual rate hike was discussed. In comments to the Diet, Governor Ueda also showed concern about the recent developments. The pre-weekend low was near JPY159.45. A break of the JPY159.30 area could see JPY159, but we suspect intraday operators in North America fear intervention less.
• Sterling’s losing streak is extending to the fifth consecutive session with today’s push to $1.3325. Ahead of the weekend, it approached last week’s low seen last Monday slightly above $1.3255. It reached almost a four-month low around the middle of the month near $1.3220. Nearby support is seen in the $1.3180-$1.3200 area.
• The Canadian dollar fell every session last week and reached its lowest level in two months. It remains under pressure today. The greenback reached nearly CAD1.39 ahead of the weekend and nearly CAD1.3920 today. The year’s high was seen in mid-January near CAD1.3930. Stronger resistance may be in the CAD1.3985-CAD1.4000 area.
• The Australian dollar fell for the last six consecutive sessions and has yet to find traction. At the end of last week, it fell to $0.6865, which it had not seen since January 23. Today’s it slipped below $0.6845. There is little on the charts before $0.6800, though it settled the past two sessions below the lower Bollinger Band (found ~$0.6865 today).
EM
• The Mexican peso slumped to new lows for the year before the weekend. The risk-off mood and the dovish rate cut by the central bank saw the peso fall by nearly 1%. It lost around 4.9% this month, coming into today. The US dollar reached almost MXN18.1360 at the end of last week and posted its first close above MXN18.00 since last December. The greenback reached nearly MXN17.1630 today. The 200-day moving average is near MXN18.1925, and the dollar has not settled above it since last April.
• The offshore yuan eased to its lowest level in nearly three weeks. The dollar’s session high was recorded in early North American turnover near CNY6.9235. It reached almost. CNH6.9270 today. The month’s high was seen on March 3, slightly below CNH6.9435. Last week was the first week in nearly four months that the PBOC’s dollar fix rose. It was set at CNY6.9141 before the weekend and CNY6.9223 today, the highest since March 2. The fix has been raised by nearly 0.50% over the past three sessions. Beijing also announced measures to boost outbound investment quotas by about $5.3 bln (to $176.17 bln). Reports also indicate that China may have exports diesel and other fuels to regional neighbors, including the Philippines and Vietnam.
• Initially, the markets bid the Indian rupee up in response to the pre-weekend announcement by the central bank to cap open short rupee positions, forcing a dramatic position adjustment today. The rupee surged by 1.4% but gave it all back. The greenback reached a new record high near INR95.1250.
Other Markets
• Equities continued to sell off sharply in the Asia Pacific regions. Most of the large markets, outside of China were off 2-3%. The MSCI regional index fell 1.5% last week, its fourth consecutive weekly loss. Europe’s Stoxx 600 is up by about 0.25%. It rose 0.35% last week, the first weekly advance in four weeks. US index futures are 0.3%-0.4% higher after falling 2-3% last week.
• Benchmark 10-year yields are mostly softer today. The 10-year JGB yield slipped a little more than one basis point, but the yields on the 30- and 40-year bonds jumped 6-10 bp. European yields are little lower, but the 10-Gilt yield is slightly firmer. The 10-year Treasury yield is off three basis points to almost 4.39%.
• Gold is firm around $4532, the upper end of its three-day range. Silver is also firm near $71.
• May WTI reached almost $103.40 today, its highest level since the March 9 peak near $113.40. Since the high was recorded, the contract has not been below $100. June Brent reached nearly $109.50 today. Last week’s high was a little closer to $110.
Data
• It is a quiet start of a busy week for US data, the highlight being the March jobs report on Friday, which is widely expected to show a modes recovery after a loss of 92k jobs in February, according to the initial estimate. Before it, the US reports February retail sales, March auto sales, and the February trade figures. As the equities markets close today, NY Fed President William speaks on the US economy.
• The European Commission’s March sentiment surveys were out earlier today, and to no one’s surprise, confidence mostly waned. Separately, German states have reported a sharp jump in March inflation, and the national figures, due shortly, may show a jump to 2.8% from 2.0%, spurred by energy prices.
• The UK reported February consumer credit and mortgage lending data. The numbers were mostly a little firmer. The market impact seems minimal.
• Japan will report March Tokyo inflation, and the February jobs data, and preliminary February industrial production first thing tomorrow. Tokyo CPI is expected to be little changed at 1.6% headline and 1.8% core rates. Unemployment looks steady at 2.7%. Both retail sales and industrial production likely fell after strong gains in January.
Reviewed by Marc Chandler
on
March 30, 2026
Rating:
