Markets Today: Dollar and Oil Dominate as Traders Brace for US data barrage, FTSE 100 breaks key support zone

• Geopolitical tensions drove a second consecutive week of losses for global markets.
• The US dollar surged to a three-month high amid increased safe-haven demand.
• Elevated oil prices intensified inflation fears, limiting the Fed’s capacity for rate cuts.
• FTSE 100 breaks support, is a test of 10000 incoming?

Most Read: Chart alert: Dow Jones (DJIA) on the brink of major bearish breakdown below 200-day moving average at 46,330

Asian markets faced a downturn this Friday, marking the second consecutive week of losses as geopolitical tensions continue to rattle markets. The primary catalyst is the escalating conflict between the US, Israel, and Iran; with hopes for a diplomatic resolution fading, oil prices have remained elevated, intensifying global inflation fears and dampening market sentiment.

The impact was felt sharply across the region:

Broad Indices: The MSCI Asia-Pacific index dropped 1%, totaling a 2.2% loss for the week.

Regional Heavyweights: Japan’s Nikkei fell 1.4%, while South Korean equities, heavy with tech influence slid nearly 2%.

Emerging Markets: The broader MSCI emerging market stock index sank 1.4%, extending a decline of nearly 8% since the war's onset in late February. Similarly, the EM currency gauge dipped 0.6%.

South Korea and Taiwan have emerged as some of the most vulnerable markets in the region. Investors are aggressively scaling back exposure to artificial intelligence and other tech-cyclical stocks following a massive early-year rally that left many valuations overextended.

The volatility in South Korea has been particularly intense, triggering lower circuit breakers twice in the last two weeks. Authorities have also been forced to activate "sidecar" measures, temporary trading halts designed to stabilize sudden, drastic movements in index futures and program trading

European markets retreated on Friday, with both the STOXX 50 and the STOXX 600 dropping approximately 1%. This decline erased earlier momentum, leaving the benchmarks largely flat for the week.

The downturn was most pronounced in consumer cyclicals, consumer defensives, and the financial sector. Notable laggards included Siemens (-2.9%), L’Oréal (-2.4%), and Banco Santander (-2.3%), while luxury giants like LVMH and Hermès also saw significant pullbacks.

Conversely, the geopolitical climate provided a tailwind for defense and energy stocks. Companies such as Rheinmetall (+1.2%), Repsol (+1.8%), and BP (+1.7%) all recorded gains as energy security and military spending remain top of mind for traders.

A standout performer amidst the broader sell-off was Zalando, which surged 3.6% to lead the STOXX 600. The online retailer’s jump extended a rally from the previous session, fueled by a report of upbeat quarterly results that bucked the general market gloom.

How did FX markets react?

The US dollar surged to a more than three-month high on Friday, marking its highest level since late November and securing a second consecutive weekly gain. The greenback's strength is being driven by its dual status as a premier safe-haven asset during the ongoing conflict in Iran and the United States' position as a net energy exporter, which shields it from some of the global oil price volatility.

The dollar index rose 0.16% to 99.83, positioning it for a 1% overall increase for the week.

This dollar dominance pressured major global currencies significantly:

• Europe: The euro slipped to $1.1501, its lowest point since November 21, while sterling dipped to $1.333.
• Asia-Pacific: The Japanese yen weakened to 159.69 per dollar—its softest level since July 2024, while the Australian dollar and New Zealand kiwi both trended lower, with the kiwi dropping 0.44%.

Bucking the general downward trend in risk assets, cryptocurrencies showed resilience on Friday. Bitcoin gained 1.90% to reach $71,527.50, and Ether followed suit with a 2.23% increase to $2,109.03, suggesting some investors may be looking toward digital assets as alternative hedges or speculative plays amid the traditional market turmoil.

Currency Power Balance

Commodities mixed

Gold prices are currently navigating a volatile landscape, heading for a second consecutive weekly decline despite a slight uptick on Friday.

Spot gold rose 0.3% to $5,095.55/oz, while US gold futures for April delivery settled slightly lower at $5,100.20. While a dip in US 10-year Treasury yields has provided some support for the non-yielding asset, bullion has nonetheless lost more than 1% this week and over 3% since the conflict began on February 28.

The primary headwind for gold remains the surge in energy prices; investors fear that persistent high oil costs will fuel inflation, complicating the Federal Reserve's ability to implement near-term interest rate cuts.

This bearish sentiment extended across the metals complex, with silver, platinum, and palladium all sliding by 1% on Friday.

In the energy sector, oil prices are poised for significant weekly gains despite diplomatic efforts to stabilize the market. To ease supply anxieties, US Treasury Secretary Scott Bessent announced a 30-day license allowing for the purchase of Russian oil products currently stranded at sea.

However, analysts suggest this move has done little to address broader supply constraints caused by the US-Israeli war with Iran.

Consequently, Brent futures climbed 1% to $101.48 a barrel heading for a nearly 10% weekly surge, while US West Texas Intermediate (WTI) crude rose to $96.67, marking a weekly increase of more than 6%.

Read More:

US Dollar Index (DXY): Technical picture as inflation and geopolitical uncertainty loom

Retreating but Not Defeated: AUD/USD bulls find hope in technical support and hawkish RBA

GBP/USD at the Crossroads: Will cable break the 1.3437 resistance?

As the trading day continues, markets remain cautious. The rest of the European session will be quiet with Euro Area industrial production the only data release ahead.

Beyond the geopolitical instability in the Middle East, upcoming US economic data is expected to further reinforce the recent hawkish shift in central bank policy expectations.

Markets are closely watching the Federal Reserve's preferred inflation gauge, the core PCE index, which is projected to climb to 3.1% year-on-year for January. This represents a concerning departure from the Fed's 2% target, especially considering the index had bottomed out at 2.6% last summer.

This persistent inflationary trend severely restricts the Fed's capacity to cut interest rates this year, a topic likely to dominate the discourse at next Wednesday’s FOMC meeting.

In addition to inflation data, today’s release of US job openings for January is expected to provide further insight into labor market tightness. My thinking is that even a surprisingly soft reading is unlikely to dampen the current momentum of the US dollar or alter expectations for a restrictive Fed policy for very long.

The Dollar Index (DXY) is currently hitting new monthly highs, with technical targets now set on last summer's peak in the 100.25/35 range. Given the high level of uncertainty surrounding the duration of the current global crisis and the inherent "weekend risk," traders appear reluctant to bet against the dollar rally or hold short positions heading into the break.

From a technical perspective, the FTSE 100 index continued its decline this morning breaking back below a key support area.

Having printed fresh lows this morning at 10193, the index is on shaky ground with more losses potentially in store.

For now though, this will depend on overall risk sentiment.

The period-14 RSI on a four-hour chart rejected off the 50 neutral level which hints that bearish momentum remains very much intact.

Immediate support rests at 10193 before the 10100 handle comes into focus.

Resistance to the upside at 10269 needs to be cleared if bulls are to make a run for 10350 and the 200-day MA at 10464.

FTSE 100 Index Four-Hour Chart, March 13, 2026

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