Weekly Summary: a turbulent week despite Iran Ceasefire

The past week in global financial markets was packed with major economic and monetary developments, alongside high‑impact geopolitical events related to the conflict in the Middle East. Sharp volatility dominated trading across global assets, driven primarily by the ongoing war between the United States and Israel on one side and Iran on the other, despite the implementation of a temporary two‑week ceasefire.

The ceasefire itself was one of the few bright spots of the week, even as the region witnessed repeated violations of the agreement—particularly by Israel, which continued its strikes on Lebanon. On the economic front, U.S. consumer inflation data came in below market expectations, marking another positive development. Meanwhile, the Federal Reserve’s March meeting results introduced a new twist, highlighting that some members now see a renewed possibility of interest‑rate hikes returning to the table.

The U.S. Dollar Faces Weekly Losses

At the start of the week, the U.S. dollar posted modest declines against most major currencies as global risk appetite improved on hopes of a ceasefire in Iran. This optimism reduced demand for dollar liquidity, even as President Donald Trump threatened to escalate the conflict if the Strait of Hormuz was not reopened.

The dollar later regained some strength after Trump’s remarks, with the U.S. Dollar Index edging higher following his warning of potential military escalation should negotiations fail. However, the currency remained under pressure from expectations of future rate cuts, with markets pricing in a possible 25‑basis‑point reduction later this year.

Economic data also influenced the dollar’s performance. U.S. services‑sector activity weakened, with the ISM Services PMI falling to 54.0 versus expectations of 54.9, while the Prices Paid Index climbed to its highest level in three and a half years at 70.7—signaling rising inflationary pressures. In contrast, the latest jobs report supported market sentiment, showing strong hiring with 178,000 new jobs added and unemployment falling to 4.3%.

By the end of the week, the dollar settled into a state of relative balance, caught between geopolitical tensions and mixed economic data. Investors remained focused on developments in the U.S.–Iran negotiations and their potential impact on global liquidity trends. The week was marked by sharp swings, reflecting a currency trapped between political pressure from the Iran conflict and temporary support from strong labor data. The dollar ultimately ended Friday’s session with losses of around 0.5% after a turbulent, volatile week that concluded on a downward note.

Looking ahead, the dollar is widely expected to regain ground in the coming week as geopolitical concerns intensify during the second week of the ceasefire between the United States, Israel, and Iran, following the failure of peace talks held in Islamabad at the end of last week. The United States also announced measures likely to significantly weaken risk appetite in global markets—developments that typically favor the dollar.

Federal Reserve Meeting Results

The results of the Federal Open Market Committee’s March 2026 meeting indicated that the ongoing conflict in the Middle East may continue to push energy prices sharply higher, posing a growing concern for policymakers. The results noted that rising energy inflation could soon feed into production costs and eventually pass through to consumer prices, adding further inflationary pressure.

The meeting also revealed that some committee members want to keep the option of raising interest rates on the table, placing it alongside the possibility of rate cuts rather than focusing on a single direction. This comes amid widespread concern that a prolonged conflict in the Middle East could further weaken labor‑market conditions, potentially justifying additional rate cuts if economic conditions deteriorate.

The results also pointed out that inflation may continue rising for longer than previously expected, complicating the Fed’s policy decisions in the months ahead.

Weekly Gains for U.S. Equities

U.S. equities experienced a highly volatile week as geopolitical developments between Washington and Tehran intersected with mixed economic data, creating an environment of heightened uncertainty for investors.

At the start of the week, markets were supported by reports of negotiations for a 45‑day ceasefire between the United States and Iran, which boosted optimism and risk appetite. The U.S. decision to extend Iran’s deadline to reopen the Strait of Hormuz also helped ease concerns, despite Tehran’s skepticism about reaching a truce under current conditions. Economically, the services sector showed weakening activity alongside rising price pressures, while the strong jobs report provided a counterbalance by reinforcing confidence in the labor market.

Midweek trading saw limited recovery amid continued volatility, driven by hopes of extending Iran’s deadline as Pakistan intensified diplomatic efforts. However, rising oil prices and reports of potential U.S. military preparations inside Iran brought geopolitical risks back to the forefront. Economic data remained mixed, with stronger capital‑goods orders offset by weaker consumer credit, while Federal Reserve officials attempted to reassure markets about the trajectory of core inflation.

A strong rally followed the announcement of a two‑week ceasefire between the United States and Iran, along with Tehran’s pledge to reopen the Strait of Hormuz. This development triggered a sharp drop in oil prices and a decline in bond yields, restoring investor confidence and encouraging a shift toward riskier assets. Still, doubts persisted about the durability of any long‑term agreement, particularly given ongoing disputes over Iran’s nuclear program and U.S. sanctions.

Toward the end of the week, pressure returned to the markets as skepticism grew over the ceasefire’s stability, with both sides accusing each other of violations and Israeli strikes on Lebanon escalating regional tensions. Weak U.S. economic data added to the strain, with rising jobless claims, falling personal income, and downward revisions to GDP growth. Consumer‑confidence data also weighed on sentiment, alongside renewed pressure on the technology sector.

Overall, U.S. equity movements reflected a balance between cautious optimism and recurring anxiety. Geopolitical developments played a central role in shaping market direction, while economic data reinforced a broader sense of uncertainty surrounding the economic outlook.

Oil Suffers Heavy Weekly Losses

Oil prices have become the primary gauge investors rely on to assess the direction of the war, with crude trading within a critical range of $90 to $120 per barrel — a band widely seen as determining whether the conflict is heading toward de‑escalation or further escalation.

Volatility intensified as U.S. and Israeli strikes continued and Iran rejected a ceasefire, alongside reports of fires at oil facilities in Kuwait and attacks on gas infrastructure in the UAE since the outbreak of the Middle East conflict.

The International Energy Agency warned that restoring normal oil flows through the Strait of Hormuz will take considerable time due to extensive damage, increasing the market’s sensitivity to any political or military development.

Amid these tensions, West Texas Intermediate surged above $114 before quickly retreating last week, while Brent crude traded between $102 and $114 per barrel, with expectations that any escalation could push prices above $120.

Conversely, the unexpected announcement of a two‑week ceasefire between the United States and Iran triggered a sharp sell‑off, sending Brent down to around $94 and WTI to roughly $96 — the largest single‑day drop in six years.

U.S. inventory data added further pressure after crude stockpiles rose more than expected.

At the same time, OPEC production fell to its lowest level in decades at 22.1 million barrels per day due to disrupted exports through the Strait of Hormuz, with Iraq, Saudi Arabia, and the UAE recording the largest declines.

Overall, oil continued to trade within a wide band of volatility, driven by developments in the war, the status of the Strait of Hormuz, and inventory data, as markets watch closely for any signal that could determine whether prices move toward $90 or retest levels above $120.

Despite all the supportive factors earlier in the week, crude ultimately suffered steep weekly losses of about 14%, weighed down by the ceasefire and the resumption of peace talks between the United States and Iran.

Weekly Gains for Gold

Gold retreated ahead of the peace talks between the United States and Iran in Islamabad, despite a weaker U.S. dollar, as hopes rose that negotiations could lead to an end to the war. Pakistan hosted the talks between the American and Iranian delegations, but doubts persisted after the announcement that the discussions failed to produce an agreement, especially amid continued regional escalation in the Middle East.

By the end of last week, however, the precious metal managed to reverse its losses and close with weekly gains, supported by the weaker dollar and the collapse of the peace talks. Still, its advance remained limited—around 1.5%—due to rising oil prices, growing inflation expectations, and concerns about a global economic slowdown. Outflows from gold‑backed ETFs also capped the upside.

Gold is expected to benefit from deteriorating risk sentiment at the start of the new trading week, following the U.S. announcement of a blockade on Iranian ports.

The New Week

The new week began with negative developments on the Middle East front, as the United States announced military measures against Iran despite the ongoing two‑week ceasefire that began last week. U.S. Central Command stated that its forces would begin enforcing a full maritime blockade on all traffic entering or leaving Iranian ports starting at 10 a.m. ET on April 13, in line with the president’s directive.

CENTCOM clarified that the blockade would be applied “neutrally” to vessels from all countries entering or departing Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and the Gulf of Oman. The statement emphasized that U.S. forces would not obstruct freedom of navigation for ships transiting the Strait of Hormuz to and from non‑Iranian ports.

Commercial mariners were urged to monitor official notices and maintain communication with U.S. naval forces through designated radio channels when operating in the Gulf of Oman and the approaches to the Strait of Hormuz.

This blockade is widely expected to trigger significant negativity across global markets. Under these anticipated developments, oil prices may rise further, while the U.S. dollar could resume its upward trajectory—unless new progress emerges on the peace front between the parties involved in the conflict.

Economic data will also be present this week, though its impact may be limited. U.S. consumer inflation data is due for release and will complement the picture painted by last Friday’s consumer‑price figures.