Daily Market Update
April 03, 2026EUR/USD ranged in the mid 1.15’s overnight. Major central banks pointed to uncertainty linked to the war in the Middle East as they largely kept interest rates steady in March, with concerns over higher inflation and weaker growth clouding the global economic outlook.
Policymakers across both developed and emerging markets struck a cautious tone, with most opting to hold rates or move only gradually as volatile oil prices and geopolitical risks complicated the path for monetary easing.
Trump said during a primetime televised speech from the White House on Thursday that Iran had been decimated and that the hard part of the war was done.
However, he added that the US would hit Iran “extremely hard” for the next two to three weeks.
The US President also called for countries that receive oil through the Strait of Hormuz to show “courage” and seize the key waterway, while saying Washington will not allow its Middle East allies to be harmed.
Persistent tensions in the Middle East continue to support a safe-haven currency such as the Greenback and act as a headwind for the major pair.
The Bank of England (BoE) Governor Andrew Bailey cautioned that financial markets are “getting ahead of themselves” by pricing in multiple interest rate hikes for later this year.
Traders are fully pricing a full percentage point of BoE monetary tightening in 2026 for the first time, as the Iran conflict continues to fuel inflationary pressures, according to Bloomberg.
The Japanese Yen (JPY) remains under pressure against the US Dollar (USD) as uncertainty builds around the Bank of Japan’s (BoJ) policy outlook.
While the Japanese central bank has hinted at a potential rate hike this month, markets remain uncertain about whether it will offer clear forward guidance ahead of its April 28 policy meeting.
According to Reuters, a senior BoJ official indicated on Friday that the central bank will continue raising interest rates if its economic projections remain on track, reinforcing a tightening bias even as recent surveys highlight growing strain on firms from rising fuel costs linked to Middle East tensions.
Meanwhile, BoJ Executive Director Koji Nakamura told parliament that although higher oil prices pose risks to economic growth, they could also lift underlying inflation by boosting long-term inflation expectations.
Source FX Street
