As the Middle East war escalates continuously, the oil price has broken through $100 per barrel, and the demand for safe-haven assets has soared, causing the US dollar to strengthen against all major currencies.
The demand for the US dollar has soared as the crude oil market faces the prospect of further production cuts and the United States threatens to deepen its conflict with Iran. Meanwhile, Iran has appointed a new leader and its armed forces have demonstrated their ability to sustain a high-intensity war.
“The US dollar is seen as the ultimate safe-haven asset due to its liquidity, and rising oil prices have also boosted the dollar,” said Matthew Ryan, head of market strategy at financial services firm Ebury. “As long as the war continues and there are no signs of a short-term end, we are bullish on the dollar continuing to strengthen.”
The soaring oil prices have intensified global inflation concerns, causing traders to reduce their bets on the Federal Reserve cutting interest rates. Previously, rate cuts had been putting pressure on the US dollar. Additionally, the United States’ position as the world’s largest oil producer has also contributed to the strengthening of the US dollar.
Amid the Middle East conflict’s disruption of financial markets, the US dollar is one of the few traditional safe-haven assets that offer investors refuge. US Treasuries, the Japanese yen, the Swiss franc and gold are all under pressure, while the dollar is rising against the trend.
Michelle Bowman, the vice chair for supervision at the Federal Reserve, said that the weaker-than-expected jobs report in February has made her more inclined to support further interest rate cuts.
“I was originally skeptical about the January meeting outcome, but now looking at the labor market situation, perhaps that was just an exception,” Bowman said in an interview with Fox Business on Friday, referring to the strong job growth in January.
According to data released by the US Bureau of Labor Statistics on Friday, the US labor market unexpectedly lost 92,000 jobs in February, and the unemployment rate rose slightly to 4.4%.
Technical analysis:
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Gold: Last Friday, our plugin provided two operation alerts. One was to directly buy at the limit in the green zone, and the other was to wait for a rebound after breaking below the yellow zone and then place a buy stop. So far, the two operations mentioned above are in line with the actual trend. For today’s trading, we believe that as long as the price recovers above the 5100/15 level, it is highly likely that the price will mainly rebound, with targets at 5130, 5150 and 5180. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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The Nasdaq index: Due to the escalation of geopolitical tensions, which has driven up oil prices and may slow down the pace of the Fed’s interest rate cuts, the Nasdaq index is falling towards the 2,400 level. From a technical perspective within the day, there is a need for the price to fill the gap. However, if the geopolitical tensions do not ease, the time and space for the rebound may continue to be limited. In terms of operation, it is reasonable to take advantage of small-scale rebounds in the short term or to wait and see. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: The price gapped up sharply and then continued to rise to around 119.50. The short-term trend is too extreme, which is likely to trigger a significant sweeping movement. We need to be cautious of a sweeping liquidity movement towards 105 within the day. It is suitable to wait and observe or wait for the price to sweep down to around 105 to capture long signals. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key financial data and events to focus on:
23:00 US New York Fed 1-year inflation expectations for February
