WTI Above $100 as Talks Fail and Inflation Fears Rise

Markets were mainly focused on developments in Iran last week, creating high volatility across oil and equity markets. Early in the week, efforts by Donald Trump to reduce tensions helped calm sentiment. Oil prices moved lower, and stock markets pushed higher as traders hoped for progress.

By the end of the week, however, there was little progress in negotiations, and Iran did not appear ready to end the conflict. This shifted sentiment back to risk-off. Oil prices moved toward the $100 level again, while U.S. equity markets reversed lower, falling for a fifth straight week and closing near their weekly lows.

On the economic side, there were not many major releases, but the data added to concerns. U.S. S&P Global Services PMI came in weaker than expected, and consumer sentiment also declined. Consumers are now expecting higher inflation and are more worried about the future, which is keeping overall market sentiment cautious.

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Markets This Week

U.S. Stocks

The downtrend in U.S. stocks is still strong as markets worry about rising inflation from the conflict in Iran. The chart looks bearish, with the 10-day moving average acting as resistance, and the Dow closing near its yearly lows. Even though stocks have fallen recently, they are still relatively high compared to the past few years, so investors may still panic and take profits. Unless the war clearly ends, focusing on selling opportunities remains the best approach. Resistance levels are at 46,500, 47,500, and 48,000. Support is seen at 45,000, 44,500, 44,000, and 43,500.

Japanese Stocks

Optimism about a possible end to the Iran conflict and a weaker yen helped push the Nikkei higher earlier in the week. However, the sharp drop in U.S. equities on Friday brought sellers back into the market, and the overall downtrend remains in place. Inflation is still a concern for Japan, especially with high oil prices, and there is also the risk of Bank of Japan intervention to support the yen. This makes it unlikely that the Nikkei will rise significantly in the short term. Selling near the 10-day moving average remains the preferred approach for the coming week. Resistance is seen at 53,000, 54,750, 56,000, 57,000, and 58,000, while support is at 51,000円, 50,000円, and 49,000円.

USD/JPY

USD/JPY continued to move higher, driven by rising U.S. interest rate expectations, and pushed above the key 160 level at the end of the week. Oil prices are still having a strong impact on short-term moves. This week, traders are likely to test the upside to see if the Bank of Japan will intervene. If there is no intervention, the pair could move higher quickly, while any intervention could cause a sharp drop. The uptrend remains strong, so selling in anticipation of intervention is risky in the short term. However, a move back below 160 could create a short-term selling opportunity. Resistance is at 162, and 165, while support is seen at 159.00, 158.50, 158.00, and 156.50.

Gold

Rising U.S. interest rate expectations continued to pressure gold last week, with a sharp sell-off at the start of the week breaking below yearly lows. There was a small recovery, but gains were limited as the 10-day moving average continued to act as strong resistance. Gold has fallen significantly in recent weeks, and the break below the lows followed by a recovery suggests the worst of the selling may be over in the short term. A move above the 10-day moving average, especially if tensions in Iran ease, could offer a buying opportunity in the week ahead. Resistance is at $4,700, $4,850, $5,000, and $5,100, while support is at $4,400, $4,300, $4,200, $4,100, and $4,000.

Crude Oil

WTI fell sharply at the start of the week after failing to break above $100 and on hopes of a quick end to the Iran conflict. However, as it became clear that Iran is likely to continue hostilities, buyers returned, pushing prices higher and closing the week above $100. This suggests strong underlying demand. Expect a volatile start to the week, with the potential for another spike above $100 and the risk of a further strong move higher if tensions continue. Resistance is at $102.50, $110, $120, $125, and $130, while support is at $90, $80, $75, $70, and $67.5.

Bitcoin

Bitcoin remains quiet, trading between $65,000 and $75,000, as traders focus on other markets with better opportunities. The sharp drop in U.S. equities on Friday triggered risk-off selling, pushing Bitcoin toward the lower end of the range. It now looks more likely that price could break below the $65,000 support and move lower in the near term. Resistance is at $75,000, $80,000, and $85,000, while support is at $65,000, $60,000, and $55,000.

This Week’s Focus

• Monday: U.S. Retail Inventories Ex Auto (Feb) and Fed Chair Powell Speaks
• Tuesday: Japan Tokyo Core CPI and Industrial Production, Australia RBA Meeting Minutes, China Manufacturing PMI, U.K. GDP, Current Account and Nationwide HPI, E.U. CPI, U.S. Chicago PMI and CB Consumer Confidence
• Wednesday: Japan Tankan Large Manufacturers Index, Australia Building Approvals, E.U. HCOB Eurozone Manufacturing PMI and Unemployment Rate, U.K. S&P Global Manufacturing PMI, U.S. Retail Sales and S&P Global Manufacturing PMI
• Thursday: Australia Trade Balance, U.S. Trade Balance
• Friday: U.S. Nonfarm Payrolls and S&P Global Services PMI

  Markets will start the week at a critical point, with U.S. equities falling sharply on Friday to yearly lows, USD/JPY moving toward 160, and oil holding around $100. The main focus remains the conflict in Iran, and with markets now pricing in a longer war, the risk of large moves is high as headlines from the region drive sentiment.

  Friday will be especially important, with U.S. Nonfarm Payrolls released on the same day that Easter holidays begin in many parts of the world-this combination could lead to sharp volatility. Markets will also be watching closely for any signs of intervention from the Bank of Japan as USD/JPY approaches 160, with traders alert to the risk of sudden moves in the yen.