Daily Market Update
March 30, 2026EUR/USD ranged from the high 1.14’s to low 1.15’s overnight. EUR/USD struggles to gain traction and trades near 1.1500 in the European morning on Monday after posting small losses in the previous week.
Markets cling to a cautious stance to start the new week as news surrounding the Middle East conflict show no signs of a de-escalation aytime soon.
Over the weekend, Iran-backed militant group in Yemen, Houthis, entered the month-old war in the Middle East by launching missiles at Israel.
Meanwhile, the Israeli military continued carrying out extensive strikes across Tehran and Israel’s Prime Minister Benjamin Netanyahu announced that they will be expanding operations in southern Lebanon to stop Hezbollah from launching rockets.
Although United States (US) President Donald Trump told the Financial Times that discussions with Tehran were going “extremely well,” he also added that they could “take the oil in Iran.”
Crude Oil prices edge higher in the early European session and the Euro Stoxx 50 Index trades marginally lower on the day.
In the second half of the day, preliminary March Consumer Price Index (CPI) data from Germany will be watched closely by market participants.
In case there is a significant increase in the annual CPI inflation rate, which stood at 1.9% in February, investors could see that as a sign that could pave the way for a policy tightening by the European Central Bank (ECB) and help EUR/USD limit its losses.
During the American trading hours, Federal Reserve (Fed) Chair Jerome Powell will participate in a moderated discussion at the Harvard University Principles of Economics Class in Cambridge, Massachusetts.
According to the CME FedWatch Tool, markets are currently pricing in about a 75% chance that the Fed’s policy rate will remain unchanged at 3.5%-3.75% by end-2026, while seeing an 18% probability of a 25 basis-points hike.
In case Powell notes that they could consider rate hikes in case rising Oil prices cause persistenly high inflation, the USD could preserve its strength and make it difficult for EUR/USD to recover.
Conversely, the pair could turn north if Powell dismisses the idea of tightening the policy, citing worsening labor market conditions.
Reports suggest that diplomatic efforts are underway to introduce a one-month ceasefire mechanism to allow the US and Iran to negotiate on a plan to end the war.
This follows US President Donald Trump’s decision to delay planned strikes on Iran’s energy infrastructure by five days, fueling hopes for a de-escalation of tensions in the Middle East.
The conflict, however, has shown no signs of easing, with Israel continuing its strikes on the Islamic Republic, and the Trump administration has directed thousands of soldiers from the US Army’s elite 82nd Airborne Division to the Middle East.
Moreover, Iran fired a new missile barrage at Israel, while Gulf countries also reported repeated drone and missile interceptions, as fighting intensifies in Lebanon and Iraq.
This keeps geopolitical risks in play and acts as a tailwind for Crude Oil prices, fueling inflation fears and hawkish US Federal Reserve (Fed) expectations.
In fact, traders have nearly priced out the possibility of any further rate cuts by the Fed and are rapidly increasing bets for a hike by the end of this year. The outlook, in turn, assists the USD to attract some buyers and caps the upside for the GBP/USD pair.
Meanwhile, the UK Office for National Statistics (ONS) reported that the headline Consumer Price Index (CPI) rose 3.0% over the year in February, matching the previous month’s reading and consensus estimates.
However, the core CPI, which excludes volatile food and energy items, came in above market expectations and climbed 3.2% YoY from 3.1% in January. Moreover, the Bank of England’s (BoE) hawkish outlook, signaling the potential rate hike as early as April amid inflation fears, offers some support to the British Pound (GBP) and helps limit losses for the GBP/USD pair.
Source FX Street
