Global financial markets experienced another period of significant volatility last week amid escalating tensions between the US and Iran and disruptions to shipping through the Strait of Hormuz. Oil prices surged, US stocks continued their decline, gold prices fluctuated wildly, and crypto assets diverged amid tightening liquidity and macroeconomic uncertainty. The coexistence of escalating conflict and "false easing" has placed markets in a highly uncertain environment, with the Middle East situation presenting a complex picture of both escalation and de-escalation signals.

US President Trump announced a postponement of the planned military strikes against Iranian energy infrastructure until 8 p.m. ET on April 6, 2026. However, this statement failed to reassure the market. While the postponement reduced the probability of immediate escalation in the short term, it did not provide a clear path to de-escalation, especially given Iran's continued rejection of key negotiating conditions, leaving the situation highly uncertain.

At the macro level, the global economy has been clearly impacted. The OECD raised its inflation forecasts, many countries lowered their growth outlooks, and markets have begun to re-discuss the "stagflation-like" scenario—the risk of both slowing economic growth and rising inflationary pressures.

Under the dual pressures of energy shocks and policy uncertainty, global stock markets continue to face pressure. U.S. stocks continued to weaken on Friday, with the Nasdaq falling 1.8%, further entering technical correction territory; the S&P 500 and Dow Jones Industrial Average both fell 1.3%, following a significant sell-off in the previous trading day.

Gold prices exhibited typical high volatility, reflecting the back-and-forth between safe-haven demand, interest rate expectations, and liquidity pressures.

Last Week's Market Performance Recap:

U.S. stocks suffered another sharp decline over the weekend, with the Dow Jones Industrial Average officially entering correction territory and the S&P 500 falling to a seven-month low. At the close, the 30-component Dow Jones Industrial Average fell 793.47 points, or 1.73%, to 45,166.64. The S&P 500 fell 1.67% to close at 6,368.85, its lowest closing level in seven months; the Nasdaq Composite fell 2.15% to 20,948.36. Looking at weekly performance, the S&P 500 has fallen for the fifth consecutive week, with a cumulative drop of 2.1% last week; the Nasdaq fell 3.2% this week, continuing to lead the decline among major stock indices; and the Dow Jones Industrial Average, dominated by blue-chip stocks, also fell nearly 1% this week.

After several weeks of decline, the gold market finally saw a significant recovery this week. With continued tensions in the Middle East and rising market risk aversion, gold rebounded sharply on Friday (March 27) and briefly broke through $4,550. Although the current rebound in gold prices has brought some optimism to the market, multiple factors such as high oil prices, a strong dollar, rising US Treasury yields, and the risk of central bank gold sales are still intertwined, making the future outlook for gold still highly uncertain. Gold's performance this week has improved significantly. Spot gold rose as much as 4.1% on Friday, breaking through the $4,550 mark, essentially recovering the losses of the previous trading day.

Silver prices closed at approximately $69.580 per ounce last week, after President Trump postponed the deadline for an agreement to end the war with Iran. Trump's pledge not to target Iranian energy facilities before April 6 provided some relief to markets unsettled by nearly a month of hostilities. Precious metals faced significant selling pressure as the Middle East conflict and rising energy prices exacerbated inflation concerns and reinforced expectations of potential interest rate hikes by major central banks this year.

The US dollar index resumed its upward trend, recovering the psychological level of 100.00 before the weekend, reversing last week's losses. The dollar has closed higher for three consecutive days, with a cumulative gain of nearly 1.8% in March, on track for its best monthly performance since July 2025. In the short term, the dollar index will likely fluctuate around the 100 level, but its monthly strength is expected to continue unless geopolitical risks are substantially alleviated.

A volatile week led to a slight decline in the euro/dollar pair, with the trading focus falling back to around 1.1500. After a sharp sell-off from above 1.2000 to below 1.1500, the euro/dollar pair has exhibited an almost eerily calm trading pattern over the past two weeks. Currently, this currency pair is showing a clear tug-of-war between bulls and bears, with the ongoing repercussions of the Middle East conflict remaining a significant external factor influencing the euro's trajectory. The USD/JPY pair was extremely passive last week, accelerating upwards after breaking through the previous high of 159.75, reaching a high of 160.41, the first time it has broken the 160 mark since July 2024. Although the MACD showed a slight bearish divergence, suggesting technical overbought conditions, the yen's depreciation pressure failed to ease substantially in the face of strong dollar buying.

The pound performed weakly last week. It fell against the dollar for four consecutive trading days, recording a weekly decline of 0.9%, becoming one of the worst-performing non-US dollar currencies. GBP/USD performed poorly, hovering at the lower end of its annual range and breaking below the 1.3300 support level. The MACD histogram continued to expand, indicating that bearish momentum is still being released. The AUD/USD pair hovered around 0.7030. The AUD/USD experienced a bad week, breaking below the 0.6900 support level for the first time since the end of January. The divergence in commodity currencies reflects the differences between energy-exporting countries and risk-sensitive economies. As long as geopolitical premiums exist, the downside for the Canadian dollar will be limited, while the Australian dollar will need to wait for a recovery in global risk appetite.

Last week, the international oil market experienced highly volatile and volatile trading. Despite headlines about geopolitical conflicts constantly signaling reconciliation, the actual market movement exhibited a cold, defensive expansion. Brent crude and US crude both recorded significant gains on Friday, not only recovering some of the losses from the beginning of the week but also revealing traders' deep skepticism about the so-called "ceasefire prospects." Overall, international oil prices are currently in a transitional phase from "panic-driven" to "logic reshaping." The market's attention will be firmly focused on the psychological and technical level of $100.

The Pentagon plans to send 10,000 additional ground troops to the Middle East! Bitcoin briefly fell to $68,000, and prediction platforms experienced a dramatic shift in sentiment. Bitcoin fell to $68,507 last week, down 3.2% earlier and a cumulative decline of 2.7% for the week. Previously, the market had followed a familiar pattern for the fifth consecutive week: news of easing tensions was followed by reports of escalation. The total market capitalization of the cryptocurrency market fell by nearly 1%, to $2.4 trillion.

Before the end of last week, the US Treasury market experienced a significant sell-off, with yields surging to their highest levels since July of last year. Driven by inflation concerns stemming from escalating tensions in the Middle East and soaring energy prices, both 2-year and 10-year US Treasury yields broke through key resistance levels. Although the debt relief period was extended, it failed to alleviate market fears of a global inflation spiral, and short-selling momentum in the bond market continued to be released. In the short term, US Treasury yields are expected to remain volatile at high levels, with geopolitical rhetoric and inflation data continuing to be the core pricing drivers. Further upward movement in yields is limited in the short term, and a technical pullback towards the middle band is likely.

Market Outlook for This Week: This week (March 30 - April 3), the first key employment data since the start of the US-Iran conflict, signals of a policy shift from the Bank of Japan, global inflation data, and statements from multiple central banks will be intertwined.

From European CPI to Chinese PMI, from G7 energy policy wrangling to speeches by Federal Reserve officials, every event can amplify market volatility against the backdrop of geopolitical conflict.

With some US data releases delayed due to the government shutdown, coupled with the closure of many international exchanges on Friday, the interplay between market liquidity and expectations will intensify. Investors need to plan ahead to address potential risks and opportunities.

The G7 finance ministers, energy ministers, and central bank governors will meet to focus on releasing strategic petroleum reserves. Against the backdrop of the US-Iran conflict pushing up energy prices, the meeting's decisions may directly impact the crude oil market.

This week's final data release is the US March non-farm payrolls, unemployment rate, and wage changes. This is the first non-farm payrolls report from the US Department of Labor since the start of the Iran conflict, and it's a key indicator of the US economic resilience, inflationary pressures, and the Federal Reserve's policy direction amidst geopolitical disruptions. Stay tuned to articles on the non-farm payrolls data in the app.

It's important to note that US stock markets and most European exchanges were closed that day. Trading in CME Group's precious metals and US crude oil futures contracts was suspended for the entire day; stock index futures trading ended early at 21:15 Beijing time; and forex and US Treasury futures trading ended early at 23:15 Beijing time.

Regarding this week's risks:

Geopolitical and policy variables require close attention.

In addition to core economic data, investors should be wary of three potential risks:

First, the continued escalation or spread of the US-Iran conflict could push up energy prices and global risk aversion, benefiting safe-haven assets such as gold and the US dollar;

Second, if the Bank of Japan's policy summary releases a clear signal of an interest rate hike, or if Federal Reserve officials' speeches convey a policy shift, it could trigger sharp short-term fluctuations in the yen, the US dollar, and global asset prices;

Third, the combined effect of delayed US data releases and Friday's market closure could tighten market liquidity, potentially amplifying market volatility; fourth, the scale and pace of the G7's release of strategic petroleum reserves could exceed expectations, impacting crude oil and related industry assets.

This Week's Conclusion:

Financial markets have regained their footing after last week's correction and are now poised for an upward move. This shift occurred amid escalating tensions in the Middle East, with ongoing concerns about the Strait of Hormuz's tensions and its potential impact on global energy markets. While the Easter holiday disrupted the work week, the US economic calendar will remain a focal point, drawing market attention alongside global political developments.

Meanwhile, the Middle East conflict is not only altering the rhythm of the oil, bond, and stock markets but is also reshaping the trading logic of the US dollar. In the short term, market focus remains on the impact of high oil prices on global economic growth. Although the US, as a major oil producer, is relatively more resilient to energy shocks, if high energy costs continue to drag down economic activity, market expectations for another Fed rate cut could resurface. This is why some institutions remain cautious about the dollar's future.

However, in the medium to long term, whether the dollar's current rebound can be sustained if the conflict eases and concerns about economic growth intensify remains to be seen.

Geopolitical tensions abruptly cease, yet US Treasury yields have instead collapsed from their highs? The market is racing to predict a script no one has explicitly stated.

Last week's global financial market turmoil saw dramatic volatility in the US Treasury market. Affected by a sudden reversal in the Middle East situation, the benchmark 10-year US Treasury yield fell significantly from an eight-month high. Previously, market concerns about escalating geopolitical risks had pushed the yield to a peak range of 4.442% to 4.445%, but after the latest news indicated that the planned strikes against Iranian energy infrastructure had been suspended due to progress in dialogue, safe-haven premiums and inflation concerns eased simultaneously.

The 10-year US Treasury yield closed at 4.367%, showing a clear upward and downward trend throughout the day. Meanwhile, short-term yields also exhibited similar volatile movements; the 2-year US Treasury yield, after reaching a high of 4.016%, briefly fell to 3.805%, subsequently fluctuating around 3.911%. This sharp market fluctuation reflects traders' search for a new balance between urgent Middle East diplomatic developments and robust inflation expectations.

Fundamental Analysis and Technical Analysis: A Battle Between Bulls and Bears

From a macro perspective, last week's market turning point stemmed from a sharp drop in geopolitical pressure. Previously, tensions in Iran triggered market panic regarding potential disruptions to the energy supply chain and soaring oil prices. This directly translated into inflation expectations, pushing up US Treasury yields. However, as the US announced a five-day ceasefire following productive dialogue, downward pressure on oil prices suppressed long-term inflation compensation in the bond market.

This rapid shift in sentiment is clearly reflected in the technical charts. Since the low of 3.925% in late February, US Treasury yields have been in a standard upward channel. This morning's surge followed by a pullback resulted in a large bearish candlestick with a long upper shadow, technically considered a strong signal of a short-term top.

This easing of yields at high levels had a ripple effect on other markets. As yields fell from their highs, the upward momentum of the US dollar index was hampered, indirectly providing support for safe-haven assets such as gold. In the stock market, declining yields eased discount rate pressures, but investors remain wary of potential trade protectionism triggered by future tariff rhetoric and uncertainties surrounding the Middle East situation.

Conclusion:

In the short term, the US Treasury market has entered a period of high volatility driven by geopolitical news. While the easing of tensions in Iran has alleviated immediate selling pressure, fundamentals remain resilient: the mainstream market view has begun to factor in the possibility of further Fed rate hikes, a stark contrast to previous expectations of rate cuts.

From a technical perspective, as long as the previous low of 4.168% remains intact, the long-term ascending flag pattern remains valid. In the short term, the focus should be on the diplomatic outcome after the five-day ceasefire ends. If the situation recurs, yields may retest the 4.45% level; conversely, if a substantial diplomatic breakthrough is achieved, and inflation data returns to normal, yields are expected to return to a rational range below 4.20%.

Gold Bull Market Top Confirmed! Is This Correction Temporary?

Gold Bull Market High May Have Been Confirmed? Since January 2026, international gold prices have fallen rapidly from a high of $5,598 at the beginning of the year to below $4,100, a cumulative drop of over 25% from the January peak (approximately $5,598); currently, they are hovering in the $4,600-$4,500/ounce range. This sharp decline is not accidental, but rather the result of multiple converging signals: a confirmed double-top technical pattern, continued large-scale ETF selling, an overestimation of the logic behind central bank gold purchases, and most importantly—the arrival of a hawkish outlook. The Federal Reserve has turned hawkish due to the surge in oil prices triggered by the Iranian conflict, leading to upward revisions in inflation expectations and a significantly narrowed path for interest rate cuts. The dual pressure of a strong dollar and high yields directly signals that the top for gold may have been confirmed.

Do not overestimate the supporting role of central bank gold purchases.

Although emerging market central banks are still strategically increasing their holdings, developed countries' willingness is weak, and central bank gold purchases are a long-term, slow-moving behavior with extremely low sensitivity to short-term prices.

In fact, some central banks have already been selling gold. In January 2026, Russia became the largest net seller (selling 9 tons), the National Bank of Bulgaria sold 2 tons due to the euro's accession to the euro, and Kazakhstan and Kyrgyzstan each reduced their holdings by 1 ton. When gold prices rise too quickly, adjustment pressure inevitably emerges. Ordinary investors (especially ETF holders) exhibit a much stronger tendency to "buy high and sell low" than central banks, a logic that has been fully validated in the current high-level fluctuations.

ETF Outflows Intensify: High-Level Selling Becomes a Reality

The world's largest gold ETF—SPDR Gold Trust (GLD)—has seen its holdings rapidly decrease from over 1070 tons in early March to 1056.99 tons (as of March 20th), with net selling for several consecutive days. The outflow in March alone reached a 13-year high, with cumulative outflows exceeding $6 billion in the last three weeks. North America led the outflows, while Europe also recorded net redemptions at times. The forced liquidation of leveraged funds and profit-taking have created a vicious cycle, further amplifying downward pressure on prices.

Gold's "Strange" Failure During the Iranian Conflict: Safe-Haven Logic Completely Overturned

Nearly a month into the ongoing Middle East conflict, gold has not only failed to rise but has instead plummeted by over 18% after an initial surge. The core reason for the failure of the traditional safe-haven logic lies in the fact that oil prices have surged by over $100 per barrel due to the Strait of Hormuz risk, pushing up global inflation expectations and forcing the Federal Reserve to tighten policy. Safe-haven demand has been completely overshadowed by the chain reaction of "oil prices → inflation → hawkish Fed → strong dollar," with profit-taking at high levels leading to a rare divergence between gold and oil prices.

A Hawkish Outlook is Here: The Fed's Policy Shift is the Final Straw

The March Fed meeting maintained interest rates at 3.50%-3.75%, and the dot plot showed only one rate cut in 2026 (previously expected to be two), while inflation expectations were revised upward to 2.7%. The Chairman and several officials clearly stated that while the risk of oil-driven inflation is rising and there are signs of a cooling labor market, short-term headlines are insufficient to change the tightening path. The derivatives market even priced in two ECB rate hikes and one round of tightening by the Bank of England, resulting in British and German bonds outperforming US bonds, but overall risk appetite retreated. A rebounding dollar and rising bond yields directly weakened gold's attractiveness as a non-interest-bearing asset. With a hawkish outlook, the "currency devaluation trade" logic for gold has temporarily failed.

This gold price correction was mainly driven by two short-term pressures:

Liquidity constraints in the Gulf region and physical selling pressure: The Iranian blockade has led to a significant decline in oil revenues for Gulf countries. To alleviate cash flow pressure, some sovereign wealth funds may sell their gold reserves, increasing physical supply in the market. This is a one-off liquidity event; once the blockade eases or reserve adjustments end, the selling pressure is expected to subside quickly and turn into restocking demand.

Rising US Treasury yields: The yield on the 10-year US Treasury bond has broken through 4.3%, currently hovering in the 4.35%-4.39% range, approaching the next resistance level of 4.8%-5.0%. High yields increase the opportunity cost of holding gold, suppressing demand for non-interest-bearing assets.

However, the fundamentals are not entirely bearish:

Energy price-driven inflation expectations: The ongoing conflict in the Middle East is pushing up oil prices, and the market has already priced in the energy inflation shock, which actually provides long-term support for gold (its inflation hedging properties).

Persistent US fiscal pressure: Federal debt has reached $38.5 trillion, with a debt-to-GDP ratio of 122.5%, and the deficit for this fiscal year is expected to exceed $2 trillion. Tariff rebates, military spending, and rising debt servicing costs are creating a vicious cycle, and the market expects the Federal Reserve may be forced to intervene in long-term yields (fiscal-driven). At that time, a decline in real yields and a weakening dollar will significantly benefit gold.

Conclusion:

The peak of the gold bull market has been confirmed, and the short-term downward pressure is unlikely to change.

Technical, capital, institutional, and macroeconomic signals are all converging, coupled with the realization of a hawkish outlook, fully validating the judgment that the gold market has peaked. Any current rebound in gold prices that fails to return to the psychological level of $5,000 will be considered a "dead cat bounce." Unless the US economy shows clear signs of recession, the Federal Reserve returns to large-scale easing, or geopolitical conflicts completely ease and push down oil prices, gold is likely to fluctuate at high levels before continuing its downward trend.

In the long term, the structural logic of central bank gold purchases and de-dollarization has not disappeared, but in the short term, hawkish pressure and capital outflows have taken precedence. Investors should view the current pullback as a risk warning rather than a good opportunity to allocate funds—the peak has passed, and risk control should be the priority. The market always moves within expectations, and this unusual "war-related gold price drop" is the best illustration of the hawkish outlook.

The Five-Day Ceasefire Mystery: US and Iran Give Conflicting Accounts; What's Next for Oil and Gold Prices?

Last week, Trump stated that the US and Iran had engaged in very good and productive dialogue on a complete resolution of hostilities in the Middle East. He had instructed the US Army to postpone all military strikes against Iranian power plants and energy infrastructure for five days, contingent on the success of current talks and discussions. The suspension of the attack plans was attributed to progress in negotiations to reopen the Strait of Hormuz, a statement made after he issued a 48-hour ultimatum to Iran the previous Saturday.

However, Iran's Fars News Agency, citing sources, reported that there was no direct communication or intermediary contact between Iran and the US, and that Trump backed down after learning of Iran's plans to strike all power plants in West Asia.

Tehran also indicated that Trump's move was intended to prevent further spikes in energy prices and buy time for his military plans.

Iran's "senior leadership" stated that there have been no negotiations between Iran and the United States. Iran claims that Trump's "withdrawal" of the attack was due to a "decisive, powerful, and credible retaliatory deterrent" by the Iranian armed forces. Iran emphasized that its position on the Strait of Hormuz remains unchanged and will not change.

Iran's Differentiated Navigation: Green Light for Non-US and Israeli Ships, Market Panic Temporarily Subsides

Iran is gradually establishing a dedicated passage mechanism for non-US and non-Israeli ships through diplomatic consultations, becoming a key breakthrough in alleviating current energy supply concerns.

Iranian officials have explicitly stated that the Strait of Hormuz is only closed to ships associated with "hostile forces of Iran," allowing safe passage for merchant ships from other countries. They have already communicated with major energy-importing countries such as South Korea and India.

On March 23, two Indian-flagged liquefied petroleum gas (LPG) carriers successfully passed through the Strait of Hormuz, marking the first sign of the mechanism's implementation. The Iranian Embassy in India also refuted claims of a $2 million passage fee, further stabilizing market expectations.

In South Korea, following a phone call between Foreign Minister Cho Hyun and Iranian Foreign Minister Araqchi, Iran agreed to guarantee the safety of South Korean vessels stranded in the Strait of Hormuz. Currently, the passage of over 20 South Korean ships and more than 100 crew members is being gradually resolved.

This differentiated strategy avoids Iran's international isolation due to a complete blockade of the Strait, while preserving a crucial channel for global energy transportation. This directly alleviates extreme market concerns about a complete supply disruption, becoming a significant supporting factor for last week's oil price plunge after Trump postponed his attack.

Alternative routes fully activated: Saudi Arabia's East-West pipeline becomes key, but capacity bottlenecks remain. Against the backdrop of obstruction in the Strait of Hormuz, alternative oil transport routes in Middle Eastern countries have been fully activated, becoming a "second lifeline" to alleviate supply pressure. Among them, Saudi Arabia's East-West pipeline has played the most crucial role.

Saudi Arabia's East-West Pipeline: A "Security Trump Card" in the Global Energy Market

Saudi Arabia's 1,200-kilometer-long East-West oil pipeline, built over 45 years, runs from eastern oil fields across the Arabian Peninsula to the port of Yanbu on the Red Sea. It currently carries 7 million barrels per day, with approximately 5 million barrels exported, becoming a core transport capacity bypassing the Strait of Hormuz. Yanbu Port's five-day rolling export volume reached 3.66 million barrels per day, roughly half of Saudi Arabia's total exports before the conflict, effectively filling some of the supply gap.

Other Alternative Routes: Limited Capacity, Insufficient to Fill the Overall Gap

UAE Fujairah Pipeline: With a daily capacity of 1.5 million barrels, it bypasses the Strait of Hormuz, but recent attacks have compromised its stability.

Iraq-Turkey Pipeline: An agreement was reached between Iraq and the Kurdish region to export via the Turkish Mediterranean pipeline, but its daily capacity is far below its normal export volume of 3 million barrels per day from the Persian Gulf, a drop in the ocean.

Duqm Port, Oman: Planning is underway to construct a regional alternative hub and oil storage facilities. In the long term, a trans-peninsula pipeline could be built to connect to Saudi crude oil, but effective transport capacity cannot be formed in the short term.

Overall, the existing alternative channels theoretically have a total transport capacity of less than 8 million barrels per day, while the daily transport volume through the Strait of Hormuz exceeds 20 million barrels per day, leaving a daily supply gap of over 10 million barrels, making it difficult to fundamentally solve the supply shortage problem.

The actual impact of the dual measures on oil prices: Short-term cooling, long-term concerns remain.

Short-term: Geopolitical premium recedes, oil prices fall sharply.

The implementation of the differentiated navigation mechanism for Iran and Trump's postponement of military strikes are dual benefits that directly and quickly cleared the geopolitical risk premium. On Monday, Brent and WTI crude oil prices plummeted by more than 14% and 13% respectively, significantly easing market panic.

Meanwhile, the efficient operation of Saudi Arabia's East-West pipeline and the IEA's release of 400 million barrels of strategic reserves have jointly formed a "supply buffer," preventing an uncontrolled surge in oil prices.

Long-Term Outlook: Three Major Concerns Limit Oil Price Decline

**1. **Unbreakable Shipping Capacity Bottleneck:** Alternative shipping routes have a total capacity of only 40% of that of the Strait of Hormuz, and face multiple constraints including port loading efficiency, pipeline maintenance, and security threats, limiting the actual increase in supply.

**2. **Uncertainty Regarding Navigation Mechanisms:** Iran unilaterally controls the definition of "non-hostile vessels" and security coordination standards, and the Bab el-Mandeb Strait remains under threat from the Houthis. If they cooperate with Iran to block the waterway, oil market volatility will intensify again.

**Goldman Sachs Warns of Extreme Risks:** If the flow in the Strait of Hormuz remains at 5% of normal levels for 10 consecutive weeks, Brent crude oil prices could break through the historical high of $147/barrel in 2008, and the long-term logic of tight supply remains unchanged.

**Conclusion:**

Easing, Not Reversing, Oil Prices Remain in a High-Level Game

Iran's differentiated navigation and alternative shipping routes can only alleviate upward pressure on oil prices in the short term and cannot fundamentally reverse the tight supply situation.

The current oil price trend still hinges on two key variables: first, whether the navigation mechanism negotiated between Iran and other countries can be fully implemented and when overall navigation in the Strait of Hormuz will resume; and second, whether Saudi Arabia and other countries can continuously increase the capacity of alternative shipping routes while ensuring port and pipeline security.

In the short term, with the five-day diplomatic window open, oil prices are likely to remain volatile at high levels. However, if navigation in the Strait remains obstructed for an extended period, even with alternative shipping routes operating at full capacity, oil prices still face the risk of further price increases, and the fragility of the global energy market will continue to be exposed.

US Treasury yields support the dollar: Short-term caution is advised against dollar volatility?

Last week, although signs of easing tensions in the Middle East weakened safe-haven demand, the delayed Fed rate cut expectations and rising US Treasury yields supported the dollar. In the short term, the market is repeatedly navigating between geopolitical and policy factors, and the dollar may remain volatile at high levels.

Market surveys indicate that the US is pushing for negotiations with Iran through diplomatic channels, including proposing several solutions and promoting a phased ceasefire. This development has alleviated market concerns about escalating conflict to some extent, theoretically weakening the safe-haven demand for the dollar. However, in reality, Iran denies any substantial breakthrough, and the two sides continue communication through third-party channels, leaving the geopolitical situation highly uncertain.

The US Dollar Has Not Weakened Significantly

Against this backdrop, the US dollar has not weakened significantly, primarily because market focus has gradually shifted to the path of monetary policy. Recent statements from Federal Reserve officials indicate that current inflationary pressures remain above target levels, necessitating caution in policy adjustments. Chicago Fed President Goolsby pointed out that energy price shocks could pose a risk to both inflation and employment objectives, directly impacting the pace of interest rate cuts.

Meanwhile, Fed Governor Barr stated that interest rates may need to remain at higher levels for a longer period before inflation falls back to target levels. This statement reinforced market expectations of "high interest rates remaining for a longer time," thus supporting the dollar's performance.

From a market pricing perspective, investor expectations for Fed rate cuts have cooled significantly. Increased uncertainty regarding the rate cut path has become a core factor in the dollar's continued strength. Simultaneously, high US Treasury yields further enhance the attractiveness of dollar assets, putting downward pressure on non-US currencies.

The US dollar's movement exhibits a typical "dual-logic" characteristic.

It's important to note that the current US dollar movement displays a typical "dual-logic" characteristic. On the one hand, easing geopolitical tensions have weakened safe-haven demand; on the other hand, interest rates and yields continue to provide support. This mixed state of bullish and bearish factors makes it difficult for the dollar to form a unidirectional trend, instead exhibiting more high-level fluctuations.

From a market sentiment perspective, investors are gradually shifting from geopolitical drivers to fundamental drivers. As the situation gradually enters the negotiation stage, the market will pay more attention to inflation data, the Fed's policy path, and economic growth prospects. The dollar's pricing logic is transitioning from "safe-haven driven" to "interest rate driven."

Conclusion:

The current strength of the US dollar index stems more from interest rate expectations and yield support than simply safe-haven demand. Against the backdrop of gradually easing geopolitical tensions, market focus is returning to fundamentals. In the short term, the dollar will maintain high-level fluctuations, but its medium-term trend will depend on the inflation path and the pace of Fed policy. Investors need to pay close attention to changes in interest rate cut expectations and breakouts at key technical levels.

Overview of Important Overseas Economic Events and Matters This Week:

Monday (March 30): Eurozone March Economic Sentiment Index; Eurozone March Consumer Confidence Index (Final); Bank of Japan releases summary of opinions from the March Monetary Policy Committee meeting; G7 finance ministers, energy ministers, and central bank governors meet to discuss the release of strategic petroleum reserves.

Tuesday (March 31): Japan March Tokyo CPI (YoY) (%); Japan February Unemployment Rate (%); Australia ANZ Consumer Confidence Index for the week ending March 29; UK Q4 Production-based GDP (Final) (%); Eurozone March Harmonized CPI (YoY) - Unadjusted (Preliminary) (%); US March Conference Board Consumer Confidence Index; Release of minutes from the March Monetary Policy Committee meeting.

Wednesday (April 1): Australia March AIG Manufacturing Performance Index; Japan Q1 Bank of Japan Tankan Large Manufacturing Index; Eurozone March SPGI Manufacturing PMI (Final); UK March SPGI Manufacturing PMI (Final); Eurozone February Unemployment Rate (%). US March ADP Employment Change (thousands); US February Retail Sales MoM (%); US February Retail Sales YoY (%); US March ISM Manufacturing PMI

Thursday (April 2nd): Australia January Goods and Services Trade Balance (AUD billion); Australia January Imports/Exports MoM (%); Eurozone January Retail Sales MoM (%); US January Import Price Index MoM (%); US Initial Jobless Claims for the Week Ending February 28th (thousands); Federal Reserve Beige Book

Friday (April 3rd): Eurozone Q4 Final GDP (Seasonally Adjusted) (%); US February Non-Farm Payrolls (Seasonally Adjusted) (thousands); US February Average Hourly Earnings YoY (%); US February Unemployment Rate (%); US January Retail Sales MoM (%); US January Retail Sales YoY (%)

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