Dear investors, welcome to today’s Daily Insights.
In yesterday’s (March 31, 2026) forex and financial markets, the latest geopolitical developments became the core force driving market sentiment. Optimistic news of a potential ceasefire in the Middle East significantly boosted global investors’ risk-on sentiment.
Middle East Tensions Ease, Risk-On Sentiment Returns
According to the Wall Street Journal, the US may end its military operations against Iran without demanding the reopening of the Strait of Hormuz. Meanwhile, Iran confirmed that both sides have exchanged messages through intermediaries. Although formal negotiations have not yet begun, these signals were enough to raise market expectations for a de-escalation. Consequently, global stock markets saw a strong rebound, with the US S&P 500 index recording its largest single-day gain since last May. Simultaneously, concerns over supply disruptions eased, leading to a sharp decline of nearly 4% in WTI crude oil prices.
US Dollar (USD) Weakens Across the Board
Against the backdrop of cooling safe-haven demand, the US Dollar (USD) emerged as the weakest major currency yesterday. The US Dollar Index (DXY), which measures the greenback against a basket of currencies, briefly climbed to a high of 100.60 in early Asian trading. However, as the ceasefire news gained traction, the dollar quickly came under pressure and continued to retreat, ultimately closing down approximately 0.54%. Nevertheless, looking at the entire month of March, the dollar still recorded a monthly gain of over 2%, driven by safe-haven flows stemming from the Middle East conflict.
Major Currency Pairs Performance
As the dollar weakened, non-US currencies generally found breathing room:
- EUR/USD: Ended a five-day losing streak, with the exchange rate rebounding above 1.1450. The latest data showed that the Eurozone’s headline inflation rate (CPI) rose to 2.5% in March, primarily driven by energy prices, but core inflation was lower than expected, complicating the European Central Bank’s policy outlook.
- GBP/USD: Also saw a rebound, stabilizing above the 1.3200 level. UK fourth-quarter GDP growth met expectations, providing some support for the pound.
- USD/JPY: Despite the persistent US-Japan interest rate differential, the pair fell below the 159.00 mark, influenced by the ceasefire optimism.
Gold Shows Unique Resilience
It is worth noting that despite the return of risk-on sentiment, gold (XAU/USD), typically a safe-haven asset, was not sold off. Instead, driven by the weaker dollar, gold prices surged over 3.7%, breaking through the $4,670 mark and setting a new all-time high once again. This indicates that gold is currently benefiting more from dollar weakness than purely from geopolitical safe-haven demand.
Today’s Focus
Looking ahead, investors should continue to monitor further developments in the Middle East situation, as well as upcoming key US economic data, which will provide more guidance for the market’s next moves.