The euro remained under pressure below $1.16 as investors shunned riskier assets amid escalating US-Iran tensions. Washington insisted Iran seeks a deal while deploying more troops to the region, but Iran’s foreign minister dismissed talks, instead demanding control over the Strait of Hormuz. Markets now expect two to three ECB rate hikes by year-end, following ECB President Christine Lagarde’s warning that the bank stands ready to act "at any meeting" to counter inflation risks from energy shocks. German consumer confidence also slumped to a two-year low heading into April, highlighting the conflict’s economic fallout.

Euro Holds Below $1.16 on Middle East Tensions

The British pound dipped toward $1.33 as risk aversion surged amid ongoing US-Iran tensions. President Trump claimed Iran seeks a deal but "fears admitting it," while Iranian state media rejected negotiations, instead pushing for unilateral guarantees, including potential fees for ships passing through the Strait of Hormuz. Oil prices soared, with Brent nearing $105/barrel and poised for its largest monthly gain since 1990. UK consumer confidence plunged in March, hitting record lows as the conflict stoked inflation fears. Markets now anticipate two to three Bank of England rate hikes, with a 70% chance of a move next month and a second fully priced in by July.

Sterling Slides as Middle East Tensions Rattle Markets

The Philippine peso weakened to around 60.2 per USD, setting a fresh all-time low after the central bank held interest rates steady in an off-cycle meeting but signaled it may delay further tightening despite rising inflation risks. The Bangko Sentral ng Pilipinas kept its policy rate at 4.25% in an unscheduled meeting, warning that inflation could exceed the 4% ceiling in the near term due to supply-side pressures. However, policymakers stressed that aggressive rate hikes may have limited impact and could weigh on the still-fragile economic recovery, prompting a cautious stance. Earlier this week, President Marcos already declared a national energy emergency, citing an imminent threat to energy supply and the need for urgent measures to safeguard the economy and essential services. The Philippines, which relies almost entirely on Middle East oil imports and had just 45 days of supply as of March 20, is among the first countries to formally declare such an emergency.

Philippine Peso Hits New Record Low

The Indonesian rupiah held near IDR 16,900 per dollar on Thursday, little changed from the prior session, as traders awaited key data next week, including March inflation and February trade figures. Inflation rose to 4.76% in February, a near three-year high and above Bank Indonesia’s target, while January’s imports surged ahead of Ramadan and Eid al-Fitr, weighing on the trade balance. Currency stability remains a priority, with Bank Indonesia reaffirming intervention and tighter regulations to manage capital flows and curb volatility. From April 1, forex purchases above USD 50,000 will require documentation, while domestic NDF sales limits will be doubled to USD 10 million to deter speculation. These steps follow last week’s move to hold rates at 4.75% for a sixth straight meeting after 150bps of cuts since September 2024. Jakarta also pledged to keep the budget deficit within 3%. Globally, the dollar index remained firm around 99.6, amid uncertainty over efforts to end the Iran war.

Rupiah Steady as BI Maintains Stability Focus

The South Korean won weakened past 1,505 per dollar, extending losses near its weakest level since March 2009, as persistent Middle East tensions continued to weigh on market sentiment. Conflicting messages between the United States and Iran clouded prospects for a near-term ceasefire, while disruptions around the Strait of Hormuz kept crude and LNG supply risks elevated, straining Korea’s energy-dependent economy. The Bank of Korea cautioned that the conflict could amplify inflation, slow growth, and heighten foreign exchange volatility, signaling policy caution and suggesting rates may remain at 2.50% at least through August. Foreign investor outflows and rising bond yields further reflected cautious sentiment. The United States also advances plans to raise global tariffs, adding trade uncertainty and posing risks to South Korea’s export-driven economy.

South Korean Won Extends Losses

The offshore yuan steadied around 6.90 per dollar, following two sessions of losses as market sentiment improved after confirmation of a high-level meeting between Presidents Donald Trump and Xi Jinping. Trump is scheduled to visit China from May 14-15 for his first trip to the country in eight years, a closely watched journey that had been postponed due to the Iran crisis. He also said he would host Xi in a reciprocal visit to Washington later this year. The yuan’s relative stability also reflects its insulation from mixed signals over efforts to de-escalate tensions in the Middle East. Trump has sought support from major oil consumers, including China, to counter Tehran’s efforts to close the Strait of Hormuz. However, the outreach has largely gone unanswered as China appears to see little tangible benefit in intervening. Chinese and other non-hostile ships continue to navigate the strait safely, while China has bolstered strategic oil reserves and invested heavily in green energy.

Offshore Yuan Steady on Trump-Xi Talks

The Japanese yen fell to around 159.5 per dollar on Thursday, marking a third consecutive session of losses as the dollar strengthened amid heightened uncertainty over diplomatic efforts to resolve the Middle East conflict. The US maintained that peace negotiations are ongoing, while Iran signaled it has no intention of holding direct talks with Washington. Tehran said it would reject a US ceasefire offer, instead countering with a five-point plan granting it control over the Strait of Hormuz. The yen also faced pressure from rebounding oil prices, which stoked inflation concerns and weighed on Japan’s growth outlook. Meanwhile, Japan received two oil tankers from the Middle East this week that bypassed the critical waterway, easing some supply pressures. A former Japanese national security adviser suggested the country consider deploying warships to help secure the waterway alongside other nations, protecting both its own vessels and those of international partners.

Yen Weakens as Dollar Gains

The dollar index held around 99.6 on Thursday after rising in the previous session, as investors continued to monitor developments in the Middle East amid heightened uncertainty over efforts to end the Iran war. The White House maintained that talks are ongoing, with the Trump administration reportedly sending a 15-point plan to Iran via Pakistan aimed at resolving the conflict. Top Iranian authorities are reviewing the US proposal but indicated no intention of holding talks with Washington. Tehran said it would reject a US ceasefire offer, instead countering with a five-point plan that would grant it control over the Strait of Hormuz. Disruptions from the conflict have pushed energy prices higher, fueling inflation concerns and reinforcing expectations that the Federal Reserve will keep interest rates steady throughout the year. Investors now turn to the latest weekly jobless claims data on Thursday for fresh signals on labor market conditions.

Dollar Holds Gains on Diplomatic Uncertainty

The Australian dollar traded below $0.695, holding steady at a seven-week low as investors remained skeptical of a near-term  Iran war de-escalation, while the RBA flagged rising inflation risks from global oil shock. The central bank warned that a prolonged conflict-driven supply shock could lift both inflation and long-term expectations, potentially requiring a more restrictive policy stance. Assistant Governor Chris Kent noted that such shocks tend to push prices higher while weighing on growth, limiting the ability of policy to fully offset the impact and instead shifting the focus toward preventing inflation from becoming entrenched. Meanwhile, uncertainty around the conflict continued to cloud sentiment, with conflicting signals from the US and Iran over potential negotiations. While Washington indicated efforts to advance talks and ease tensions, Tehran pushed back against ceasefire proposals, and increased US troop deployments in the region added to fears of further escalation.

Aussie Dollar Holds Near 7-Week Low

The dollar index was little changed at around 99.4 on Wednesday, remaining below the ten-month highs reached earlier this month, as traders weighed the prospects of a potential de-escalation in the conflict with Iran. US President Trump said Washington was negotiating with Tehran and suggested that Iran may be willing to reach a peace agreement, although Iranian authorities have denied engaging in direct talks. He also noted that he had stepped back from his recent threat to order strikes on Iranian energy infrastructure “based on the fact that we’re negotiating”. Oil prices fell by around 6% in response, providing some temporary relief from concerns over a renewed spike in inflation. Meanwhile, traders have scaled back expectations for Federal Reserve rate cuts this year and now anticipate no reductions for the time being.

Dollar Below Recent Highs

The euro steadied near $1.16 on growing hopes of de-escalation in the Middle East, after reports that Washington proposed a 15-point peace plan to Tehran following a potential one-month ceasefire. Iran dismissed the claims, stating it was not engaged in negotiations and reiterating its distrust of US diplomacy. Brent crude dipped below $100 a barrel, easing fears of inflation driven by soaring energy costs and leading investors to trim expectations for rate hikes. ECB President Christine Lagarde warned that while the central bank is assessing the economic impact of the conflict, it stands prepared to adjust policy "at any meeting" if the energy price surge risks fueling broader inflation. Markets now price in only two ECB rate increases by year-end, down from earlier forecasts of three.

Euro Holds at $1.16 as Middle East Tensions Ease

The British pound held firm near $1.34 on hopes of de-escalation in the Middle East conflict, with reports indicating Washington proposed a 15-point peace plan to Tehran following a potential one-month ceasefire. Iran dismissed involvement in negotiations, stating, "No one can trust US diplomacy." In the UK, February’s inflation data showed consumer prices unchanged at 3%, matching forecasts, while core CPI edged up to 3.2%, slightly above the expected 3.1%. However, the figures, which predate the Middle East conflict, had little market impact. Investors now anticipate fewer than two rate hikes by year-end, with around 68 basis points of tightening priced in for December, down from nearly 75 basis points earlier this week, as easing oil prices reduce concerns over inflationary pressures from high energy costs.

Pound Steady as Middle East Tensions Ease and UK Inflation Holds

The Indian rupee hovered just below 94 per dollar, steadying near record low levels, as oil prices pulled back on reports of a US ceasefire proposal to Iran. The move lifted risk sentiment around the Middle East conflict and tempered safe-haven demand for the dollar. However, gains remained limited as persistent foreign portfolio outflows and upcoming non-deliverable forward (NDF) and fiscal-year-end maturities continued to generate strong dollar demand. India’s reliance on oil imports, along with lingering concerns over damaged Gulf energy infrastructure, kept underlying pressures elevated, while Reserve Bank of India intervention after earlier support of $16–18 billion left the rupee more exposed to external shocks. Market participants continue to watch crude price swings, foreign flows, and geopolitical developments.

Indian Rupee Steadies Near Record Low

The Indonesian rupiah firmed below IDR 16,900 per dollar on Wednesday, rebounding from a brief dip to 16,930 in the prior session, as the dollar index eased amid reports that the U.S. is pursuing talks with Iran to de-escalate the Middle East conflict. Markets also reopened after a week-long Eid break with improved sentiment, supported by Finance Minister Purbaya Yudhi Sadewa’s reassurance that there is no plan to breach Indonesia’s 3% budget deficit cap, with contingency measures reserved for a major crisis. Still, rising energy costs stoke fears of an inflation shock, given Indonesia’s reliance on Middle Eastern oil. Against this backdrop, Bank Indonesia is set to roll out measures on April 1 to curb rupiah speculation: forex purchases above USD 50,000 will require documentation, while domestic NDF sales limits will be doubled to USD 10 million. The central bank last week held rates at 4.75%, underscoring its priority on currency and financial stability.

Rupiah Edges Higher amid Market Reopening and Fiscal Reassurance

The Philippine peso hovered around 60 per dollar, near its record low, as elevated oil prices and supply disruptions in the Middle East weighed on the economy. President Ferdinand Marcos Jr. declared a national energy emergency, citing an imminent threat to energy supply and the need for urgent measures to safeguard the economy and essential services.The Philippines, which relies almost entirely on Middle East oil imports and had just 45 days of supply as of March 20, is among the first countries to formally declare such an emergency. Pump prices have more than doubled since the war began, raising inflationary pressures and weighing on economic growth. Meanwhile, the central bank has limited interventions to temper currency volatility rather than defend a specific level. The peso has now fallen over 4% this month, ranking among Asia’s worst-performing currencies.

Philippine Peso Hovers Near Record Low

The South Korean won hovered around 1,497 per dollar, holding broadly steady as improving risk sentiment followed signs of easing tensions in the Middle East. US President Donald Trump signaled progress in negotiations with Iran, raising optimism over a potential de-escalation in the conflict. The shift supported regional markets and tempered safe-haven demand for the dollar. However, gains in the won remained limited as underlying risks persisted. Ongoing disruptions to energy flows, including the constraints in the Strait of Hormuz and supply setbacks from QatarEnergy, continued to fuel concerns over elevated import costs and inflation in South Korea. Meanwhile, discussions around expanding foreign exchange hedging by the National Pension Service pointed to potential longer-term support for the currency, though near-term movements remained driven by geopolitical developments and oil price volatility.

South Korean Won Steadies on Ceasefire Hopes

The New Zealand dollar edged lower to around $0.582 on Wednesday, extending the previous session’s losses as investors reassessed the Reserve Bank’s policy outlook following comments from the central bank. Governor Anna Breman said on Tuesday the RBNZ will look through temporary energy-driven inflation but is prepared to hike rates if persistent price pressures threaten inflation expectations. Since the conflict erupted, investors have speculated that the RBNZ may need to tighten policy earlier than expected to offset the inflationary impact of rising energy costs. However, Breman’s comments prompted markets to trim bets on an imminent move. Markets are pricing in a 44% chance of a rate hike in May, down from 68% at the start of the week. Chief Economist Paul Conway also noted that the central bank continues to see lingering economic slack, which will influence how forcefully it responds to any inflationary pressures stemming from higher oil prices.

New Zealand Dollar Drops for 2nd Day

The Japanese yen steadied around 158.7 per dollar on Wednesday after a volatile start to the week, as oil prices retreated on hopes for a Middle East ceasefire, easing pressure on Japan’s import-dependent economy. The moves came amid reports that the US was pursuing diplomatic efforts to end the war with Iran, though investor skepticism persisted after Tehran denied engaging in any negotiations with Washington. The yen also drew support from concerns over potential intervention in currency markets, as Japanese officials signaled the government’s readiness to take all necessary steps to defend the currency. Reports further indicated that Japan’s Finance Ministry had reached out to market participants regarding possible intervention in crude oil futures markets, given their impact on the yen.

Yen Steadies as Oil Prices Retreat

The dollar index held its recent decline near 99.1 on Wednesday, remaining under pressure amid reports that the US was pursuing talks with Iran to end the conflict. President Donald Trump said Iran had offered a gesture of goodwill in negotiations tied to energy flows through the Strait of Hormuz. Israeli media also indicated that Washington was seeking a one-month ceasefire to facilitate talks, while the New York Times reported that the US had sent Iran a 15-point proposal to resolve the conflict. Still, investors remained skeptical as Tehran denied engaging in any negotiations with the US, while Gulf states signaled readiness to join the war against Iran. Oil prices eased on these developments, providing some relief to markets concerned that surging energy costs could fuel inflation and prompt interest rate hikes. Meanwhile, Federal Reserve Governor Michael Barr said the central bank may need to keep rates elevated for some time to address inflation.

Dollar Holds Decline on Mideast Optimism

The Australian dollar edged down to around $0.70 on Wednesday, approaching a two-week low as caution persisted around US President Trump’s efforts to end the Iran conflict, while investors weighed softer domestic inflation figures. Consumer prices were unchanged in February from the previous month, while annual inflation slowed to 3.7% from 3.8%, slightly below expectations. Underlying inflation also came in weaker than forecast, suggesting some gradual cooling in core pressures. However, inflation remains above the central bank’s 2–3% target range, keeping the policy outlook uncertain. Markets see the odds of another rate hike in May as evenly balanced, while around 65 bps of additional tightening is still priced in for the rest of 2026. Meanwhile, reports indicated the US was pursuing talks with Iran, including a proposed one-month ceasefire and a 15-point plan to resolve the conflict. Still, the deployment of US ground troops to the region signaled that risks of escalation remain.

Aussie Dollar Approaches 2-Week Low

The South African rand weakened to around 17.1 per USD, moving back to November 2025-lows, as persistent uncertainty around the duration of the Iran war weighed on risk appetite. The rand has faced increased volatility since the onset of the Middle East crisis in late February, as the outlook on inflation has taken a dramatic turn. The main risk is that a prolonged war and higher oil prices could push inflation higher in energy-importing South Africa, challenging central bank's efforts to keep it under control. Inflation is currently around the new 3% target, but it is expected to move higher in the next months. “Beyond oil, increases in electricity and food prices are likely to add upward pressure on inflation. The South African Reserve Bank is widely anticipated to keep its policy rate unchanged at 6.75% this week, as policymakers navigate one of the most uncertain economic environments in recent years.

South African Rand Loses Ground

The Mexican peso weakened past 17.8 per US dollar as resurging geopolitical uncertainty and disappointing domestic data ended its recent attempt to rebound. Market skepticism regarding a Middle East de-escalation intensified following Iranian denials of direct negotiations and reports that Saudi Arabia and the UAE may join the conflict against Tehran. This environment bolstered the US dollar while driving Brent crude back toward 100 dollars per barrel which rekindled global inflationary fears and led traders to price out Federal Reserve rate cuts for 2026. Locally the peso faced further selling pressure after Mexico’s economic activity index fell 0.9% monthly in January marking its worst performance since late 2024 alongside a manufacturing contraction of 3%. Compounding these growth concerns was a mid-March inflation print of 4.63% that exceeded analyst estimates and challenged the Bank of Mexico’s policy outlook.

Mexican Peso Loses Ground

The Canadian dollar weakened to 1.375 per US dollar, marking fresh two month lows as a resurgent greenback and persistent geopolitical friction overwhelmed the brief relief from diplomatic efforts. Traders grew skeptical of a de-escalation following Iranian denials of direct talks and reports that Saudi Arabia and the UAE may join the conflict against Tehran. Although oil prices continued to rise at a more moderate pace, the ongoing attacks on US bases in the Gulf have maintained a high risk premium that complicates the inflation outlook for both the Bank of Canada and the Federal Reserve. This heightened uncertainty has led markets to price out any Federal Reserve rate cuts for 2026 as officials now signal a much more gradual easing path limited to single quarter point reductions in 2026 and 2027. Consequently the Loonie remains under intense pressure as the prospect of sustained high US interest rates and regional instability bolsters the greenback.

Canadian Dollar Weakens to 2-Month Lows

The British pound fell to $1.34 as investors reacted to weaker-than-expected PMI data and escalating Middle East tensions, raising fears of an energy shock. UK business activity growth slowed to its lowest level since September 2025, with the Iran war stalling growth and driving inflation sharply higher. Manufacturing cost growth accelerated at the fastest pace since Black Wednesday in 1992. Meanwhile, markets remained focused on developments in the war. On Monday, US President Donald Trump announced a five-day delay in planned strikes on Iran’s energy infrastructure, claiming that "positive talks" were underway, a claim Tehran dismissed, though reports suggested indirect negotiations. The recent surge in energy prices has led investors to increase bets on policy tightening this year, with markets now anticipating multiple Bank of England rate hikes, marking a stark reversal from pre-conflict expectations of two cuts.

Sterling Weakens Amid Weak PMI and Middle East War Fallout

The dollar index rose to 99.4 on Tuesday, as traders continued to navigate the conflict with Iran and assess prospects for de-escalation. Reports point to ongoing communication and diplomatic efforts to end the war, but fighting has persisted despite President Trump’s announcement of a five-day pause. Adding to concerns, the Wall Street Journal reported that Saudi Arabia and the UAE are moving closer to joining the conflict against Tehran. Iran has continued its attacks on US bases in the Gulf and maintains that no negotiations with the US are underway. Meanwhile, oil prices are still rising, albeit at a slower pace, keeping pressure on inflation. As a result, traders are no longer expecting the Federal Reserve to deliver any rate cuts this year. Last week, the central bank left the fed funds rate steady and pointed to uncertainty about the impact of the Middle East war in the US economy, but still pointed to one quarter point reduction in 2026 and another in 2027.

Dollar Moves Higher

The euro slipped below $1.16 as investors weighed weaker-than-expected PMI data and ongoing Middle East tensions, raising fears of an energy-driven economic shock. The latest survey revealed Eurozone business activity growth at a ten-month low in March, with costs surging at the fastest pace in over three years due to soaring energy prices and supply chain disruptions from the war. Business confidence collapsed, suffering the sharpest decline since Russia’s 2022 invasion of Ukraine. Adding to the uncertainty, US President Trump delayed strikes on Iran for five days, citing "positive talks", a claim Tehran dismissed as "psychological warfare", though reports suggested indirect negotiations may be underway. With energy prices spiking, markets are doubling down on ECB rate hike expectations, despite the central bank’s recent decision to hold rates while upgrading inflation forecasts and downgrading growth projections amid deepening regional risks.

Euro Dips Below $1.16 on Weak PMI, Middle East Tensions

The Indonesian rupiah slipped toward IDR 16,920 per dollar on Tuesday, after briefly touching 16,860 in the prior session, as the dollar index strengthened amid heightened Middle East tensions. Domestically, markets will reopen on Wednesday after the Eid holidays, with sentiment seen staying cautious. As a net oil and gas importer, Indonesia remains exposed to rising energy costs. While authorities have pledged to keep subsidized fuel prices unchanged through the festive period, persistently elevated oil prices could eventually force policy adjustments. Inflation climbed to 4.76% in February, a near three-year high and above Bank Indonesia’s 1-1/2%–3-1/2% target range. Still, losses were capped by upcoming measures to curb speculation in the currency, due to take effect on April 1. Last week, the central bank held its benchmark rate at 4.75% for a sixth straight meeting, dropping earlier hints of easing and signaling a more cautious policy stance.

Rupiah Weakens Ahead of Market Reopen

The South Korean won fell to around 1,495 per dollar, staying under pressure amid ongoing uncertainty over US-Iran tensions. The currency remains highly sensitive to developments in the Middle East, as US threats of strikes on Iranian energy infrastructure and Iran’s warnings over regional energy routes maintain elevated safe-haven demand for the dollar. While oil prices eased slightly following news of delayed US strikes, continued volatility in crude markets weigh on the won, reflecting Korea’s heavy reliance on imported energy. Elevated energy costs and broader inflation concerns are reinforcing investor caution, limiting the won’s ability to sustain a meaningful recovery. Foreign flows also contribute to downward pressure, as investors remain hesitant amid risk-off sentiment in Asian markets. Market participants are monitoring both geopolitical developments and energy price trends closely.

South Korean Won Remains Under Pressure

The offshore yuan edged slightly lower to around 6.894 per USD, moving in a tight range as markets stayed cautious amid conflicting signals on Middle East tensions. The dollar initially weakened after Trump delayed planned strikes on Iranian energy infrastructure, citing productive discussions with Tehran. However, the safe-haven currency later rebounded as Iran denied any talks to de-escalate the conflict, directly contradicting those claims. Tehran also said it had launched new attacks on US targets, while Israel continued its strikes on Iran, keeping geopolitical risks and oil prices elevated. Meanwhile, China stands to gain from the conflict due to its lower energy dependence and its edge in renewables. China's Premier Li also vowed to boost imports of high-quality foreign goods and promote balanced trade, while PBoC Governor Pan sought to calm concerns over China’s trade surplus. The yuan is still expected to be volatile amid dollar strength and fading seasonal support.

Offshore Yuan Trades Sideways

The Australian dollar weakened to around $0.69 on Tuesday, erasing gains from the previous session as market sentiment turned cautious after Iran denied holding talks with the US. President Donald Trump announced a five-day delay to planned military strikes on Iranian power and energy infrastructure, but Tehran denied any talks with Washington and accused claims of negotiations of distorting markets. Disappointing business activity data added further pressure on the Aussie, with the manufacturing PMI slipping to a five-month low of 50.1 in March 2026, while the services PMI recorded its first contraction since January 2024, at 46.6. Investors are now eyeing Wednesday’s inflation report for clues on the monetary policy outlook amid uncertainties stemming from ongoing Middle East tensions. Meanwhile, the European Union and Australia sealed a free-trade deal, ending nearly a decade of talks to strengthen ties and uphold a rules-based order challenged by the Trump administration.

Australian Dollar Weakens

The Japanese yen weakened past 158.5 per dollar on Tuesday, trimming gains from the previous session as oil prices recovered some of Monday’s losses, keeping pressure on Japan’s oil-importing economy. The moves followed Iran’s denial of any talks to end the conflict, pushing back against President Donald Trump’s claims. On Monday, the yen had jumped 0.5% after Trump postponed planned strikes on Iranian energy infrastructure for five days, citing productive discussions with Iran over the past two days. Domestically, data showed core inflation rose 1.6% in February, the smallest increase since March 2022 amid government efforts to ease living costs, though rising energy prices from the Iran war could push inflation higher in the coming months. The soft inflation reading offered little impetus to change monetary policy after the Bank of Japan held rates steady last week.

Yen Slips as Oil Prices Rise

The dollar index climbed toward 99.5 on Tuesday, recovering some losses from the previous session as Iran denied any talks to end the conflict, pushing back against President Donald Trump’s claims. Tehran also said it launched new attacks on US targets, while Israel continued strikes against Iran, keeping tensions elevated. On Monday, the dollar had come under heavy selling pressure after Trump postponed planned strikes on Iranian energy infrastructure for five days, citing productive discussions with Iran over the past two days. The outcome of any talks and the potential reopening of the Strait of Hormuz remain highly uncertain, while Middle Eastern energy capacity may take time to return to prior levels. That raises the risk of higher inflation in the coming months and the possibility of interest rate hikes from major central banks. Investors now turn their focus to upcoming US manufacturing data for fresh cues on how businesses are faring under heightened geopolitical risks.

Dollar Rises as Iran Denies US Talks

The New Zealand dollar slipped to $0.585 on Tuesday, following a volatile session on Monday in which it had closed higher, as investors digested RBNZ Governor Anna Breman's remarks. Breman said the central bank would look past a temporary surge in energy costs stemming from the Middle East conflict, but higher interest rates could become necessary if inflation became entrenched. She emphasized that the duration of the energy shock would be a key factor in balancing the risk of higher inflation against its potential drag on economic growth. Since the conflict erupted, investors have speculated that the RBNZ may need to tighten policy sooner than previously expected to counter the inflationary impact of rising energy prices. Markets currently see little chance of a rate hike in April, but imply roughly a 60% probability of one in May.

New Zealand Dollar Weakens

The Canadian dollar stabilized near the 1.37 per USD mark, hovering near two-month lows as a shift toward diplomacy in the Middle East neutralized the safe-haven bid for the greenback while simultaneously cooling the global energy rally. President Trump’s decision to postpone military strikes on Iranian infrastructure for five days triggered a collapse in energy prices and eased the geopolitical premium previously embedded in the Loonie. While the Bank of Canada and the Federal Reserve both maintained a cautious stance on inflation, the domestic currency found a technical floor as US Dollar demand softened following disappointing American construction and manufacturing data. These factors effectively countered the loss of oil-led support, as Federal Reserve officials downplayed the necessity of near-term rate hikes despite the stagflationary risks cited by Chicago Fed President Austan Goolsbee.

Canadian Dollar Steady Near 2-Month Lows

The Mexican peso appreciated toward 17.7 per US dollar as a broad improvement in global risk appetite and a sharp retreat in the greenback provided a reprieve for emerging market assets. This recovery was largely driven by a significant narrowing of the dollar's safe-haven premium after President Trump postponed military strikes on Iranian energy infrastructure for five days following productive negotiations. Locally, the peso found additional support from Mexican retail sales rising a strong 5% annually in January, a figure that significantly beat market expectations and highlighted domestic economic resilience despite elevated borrowing costs. While the peso  previously hit a three-month low of 18.08 on fears of a Strait of Hormuz closure, the easing of geopolitical tensions triggered a collapse in Brent crude prices that cooled the inflationary outlook. These developments reinforced the Bank of Mexico's hawkish stance.

Mexican Peso Rebounds on Risk Appetite

The Brazilian real surged toward 5.22 per US dollar after President Donald Trump's decision to postpone strikes on Iranian energy infrastructure triggered a sharp reversal in global risk sentiment. This recovery followed a period of intense pressure where the currency weakened toward 5.3 as investors reacted to record Treasury interventions and soaring oil prices. Domestic markets are also navigating a leadership transition with the swearing-in of Dario Durigan as Finance Minister who pledged to maintain fiscal continuity following Fernando Haddad's departure. Despite this relief the outlook for interest rates has turned increasingly hawkish with year-end 2026 Selic expectations rising to 12.5% as persistent price pressures weigh on the Central Bank's easing cycle.

Brazilian Real Rebounds Sharply

The South African rand rose to around 16.9 per USD, pulling away from recent four-month lows of 17.2 per USD, as risk aversion moderated after US President Trump said the US would postpone strikes on Iranian power plants for five days. The decline in key precious metals, particularly gold, also eased. The rand has faced increased volatility since the onset of the Middle East crisis in late February, pressured by global risk aversion and oil price swings. The main concern is that a prolonged war and higher oil prices could push inflation higher in energy-importing South Africa. Attention turns to the upcoming SARB's decision, the second of the year, with a hold widely anticipated. The Iran conflict has complicated the policy outlook, intensifying the balancing act between supporting growth and maintaining inflation near the 3% target. Before the recent shock, inflation expectations were showing signs of becoming better anchored; they are now expected to rise in the near term.

South African Rand Recovers

The British pound recovered to $1.34, reversing earlier declines, after President Trump delayed US strikes on Iran for five days, citing "very good and productive" negotiations with Tehran. The announcement temporarily reduced fears of a Middle East escalation, just ahead of a 48-hour US deadline for Iran to reopen the Strait of Hormuz. Despite the diplomatic reprieve, markets still price in four BoE rate hikes this year, a stark reversal from pre-conflict expectations of two cuts, as policymakers focus on taming inflation amid the UK’s vulnerability to energy supply shocks.

Sterling Bounces to $1.34 as Trump-Iran Talks Ease Tensions

The dollar index slipped to around 99.6 on Monday after President Donald Trump said he had instructed the Department of Defense to postpone all planned strikes on Iranian energy infrastructure for five days, citing productive discussions with Iran over the past two days. While Tehran has not confirmed the talks, the comments suggest a possible opening toward de escalation. Oil prices dropped sharply following the announcement, with WTI falling more than 9% below $90 per barrel and Brent sliding over 13% to under $97. Despite the pullback, earlier gains in energy costs have continued to fuel inflation concerns, reducing expectations for near term Federal Reserve rate cuts and prompting some traders to price in a potential hike later this year. Major central banks including the Fed, ECB, BOE and BOJ have all held rates steady while signaling readiness to tighten policy further if inflation persists.

DXY Eases as Trump Delays Iran Strikes

The euro reversed early losses to steady at $1.157 after President Trump announced a five-day delay in planned US strikes on Iran’s energy infrastructure, calling recent talks "very good and productive" in a Truth Social post. The move temporarily eased fears ahead of today’s 48-hour US deadline for Iran to reopen the Strait of Hormuz, a flashpoint after Trump’s weekend threat of retaliatory strikes if Tehran failed to comply. Iran had vowed to target Gulf energy and desalination plants, risking wider conflict. Despite the reprieve, markets still anticipate three ECB rate hikes in 2026, following last week’s decision to hold rates while raising inflation forecasts and cutting growth outlook amid escalating Middle East risks.

Euro Recovers as Trump Delays Iran Strikes

The South African rand continued to weaken to 17.2 per USD, the lowest since November 2025, as heightened geopolitical tensions between the US and Iran spurred risk-off sentiment. At the same time, key precious metals, notably gold, fell, removing a traditional source of support for the currency. The rand is likely to remain under pressure amid concerns that elevated oil prices could push inflation higher in energy-importing South Africa.

South African Rand at 4-Month Lows

The Canadian Dollar touched 1.38 against the USD, the lowest since January 2026. Over the past 4 weeks, US Dollar Canadian Dollar gained 0.38%, and in the last 12 months, it decreased 3.95%.

Canadian Dollar Hits 8-week Low

AUDUSD decreased to 0.69, the lowest since February 2026. Over the past 4 weeks, Australian Dollar US Dollar lost 1.59%, and in the last 12 months, it increased 10.49%.

Australian Dollar Hits 6-week Low

The British pound weakened further to $1.33 as investors piled into the US dollar, bracing for a potential escalation in the Middle East conflict. With a 48-hour US deadline for Iran to reopen the Strait of Hormuz expiring today, President Trump has threatened strikes on Iranian power plants if Tehran refuses. Iran’s vow to retaliate against Gulf energy and desalination infrastructure pushed Brent crude above $110 per barrel, deepening concerns over the UK’s exposure to imported energy disruptions. Markets now anticipate four BoE rate hikes in 2026, a dramatic shift from pre-war expectations of two cuts, as policymakers prioritize inflation control. Focus this week turns to February CPI, retail sales, March PMI, and consumer confidence data, which could further shape the central bank’s response to the deepening crisis.

Sterling Slumps to $1.33 as Hormuz Deadline Looms

The euro extended its decline toward $1.15 as investors sought safety in the US dollar amid escalating Iran conflict risks. A 48-hour US deadline for Iran to reopen the Strait of Hormuz expires today, with President Trump threatening strikes on Iranian power plants if Tehran fails to comply. Iran has vowed retaliatory attacks on Gulf energy and desalination facilities, raising fears of a broader regional escalation. Against this backdrop, traders intensified bets on ECB tightening, now pricing in at least three rate hikes in 2026. The central bank held rates steady last week but raised inflation forecasts and cut growth projections, citing mounting risks from the Middle East crisis. Joachim Nagel hinted at a potential April rate hike if inflation pressures worsen, while Francois Villeroy de Galhau reaffirmed the ECB’s commitment to act decisively.

Euro Slides Further as US-Iran Tensions Escalate

The Thai baht fell to around 33 per dollar, reaching the lowest level in ten months as escalating geopolitical tensions in the Middle East weighed on market sentiment. The currency remains under pressure as the war between the US, Israel, and Iran enters its fourth week, with escalating tensions following strikes on Iranian infrastructure and a strong response from Tehran. President Donald Trump has issued a 48-hour ultimatum to reopen the waterway, warning of strikes if it is not met, while Iran has threatened to close the strait and escalate retaliation if attacks continue. Brent crude has surged more than 50% since the start of the conflict, increasing import costs and worsening Thailand’s terms of trade, which has placed downward pressure on the baht. The currency has fluctuated by about 9% year-to-date, reflecting heightened sensitivity to global risk sentiment and energy shocks.

Thai Baht Slips to 10-Month Low

The New Zealand dollar weakened to around $0.581, approaching a two-month low touched in early March, as markets weighed a cautious economic outlook against persistent inflation concerns. Fitch Ratings downgraded New Zealand’s credit outlook, lowering its AA+ rating to negative due to growing challenges in reducing debt after years of delayed fiscal consolidation. This added to worries following weaker-than-expected GDP figures last week, underscoring a still-fragile recovery that faces further risks amid the ongoing conflict in the Middle East. These concerns offset rising expectations for a hawkish Reserve Bank policy stance. Market pricing has shifted sharply, now reflecting nearly 90 basis points of tightening this year. Just last month, the central bank indicated that even a single rate hike was not fully priced in. Investors are now awaiting Governor Anna Breman’s speech on Tuesday for cues on the economy and rate path.

Kiwi Dollar Falls Toward January Low

The Philippine peso weakened to around 60.2 per dollar, marking a new record low, as escalating Middle East tensions and rising oil prices pressured the currency. Threats of strikes on energy infrastructure in the Gulf and broader geopolitical risk fueled safe-haven demand for the US dollar, while foreign selling of local assets added to the decline. The peso has dropped 4.2% this month, ranking among Asia’s worst-performing currencies. The country’s heavy reliance on energy imports and a persistent trade deficit amplify vulnerability, while broader risk-off sentiment across Asian markets adds to pressure. Meanwhile, the BSP has limited interventions to temper volatility rather than defend a specific level, and prolonged oil above $100/barrel could force a policy pivot. Fiscal strains are rising, with higher borrowing costs highlighting the need for reforms and measures to support energy security and domestic demand.

Philippine Peso Falls to New Record Low

The offshore yuan weakened to around 6.915 on Monday, hitting its lowest level in more than two weeks as escalating Middle East tensions boosted the greenback and weighed on broader risk sentiment. The safe-haven dollar remained strong as the standoff between US President Donald Trump and Iran over the Strait of Hormuz intensified, pushing oil prices higher and further fueled global inflation worries. These in turn raised expectations for tighter monetary policy from major central banks. Last week, the People's Bank of China kept key rates unchanged, reflecting a cautious stance that offered limited near-term support to the currency. Meanwhile, sentiment found some support after officials at the China Development Forum struck a reassuring tone, emphasizing policy stability, further market opening, and support for domestic demand. Authorities also downplayed recent yuan weakness, framing market volatility as largely driven by external shocks rather than underlying economic conditions.

Offshore Yuan Hits Two-Week Low

The Australian dollar fell to around $0.69 on Monday, extending last week’s losses and hitting its lowest level in over a week, as a stronger greenback and declining Asian stocks weighed on the risk-sensitive currency. The greenback drew broad support from safe-haven demand amid escalating tensions in the Middle East. US President Trump threatened strikes on Iranian power plants if the Strait of Hormuz remains closed, while Tehran warned it would target key US and Israeli assets. Adding to the Australian dollar’s pressure were falling Asian stocks, reflecting growing concerns about the broader economic fallout from the Middle East conflict and dampening appetite for the commodity-linked Aussie. Domestically, investors now await Wednesday’s inflation data following the RBA’s narrowly approved rate hike to 4.1%. It marked the first back-to-back interest rate increase since mid-2023 and reversed two of last year’s three cuts as the RBA seeks to rein in persistent inflation.

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