Markets Today: Oil rises, DXY retreats ahead of a busy week that will test the FED and global central banks

• Oil prices surged past $107 on stalled US-Iran peace talks, fueling inflation concerns and reinforcing a "higher-for-longer" interest rate outlook ahead of a busy week for global central banks.
• Equity markets remained resilient, with a rally in chip stocks driven by "tech-euphoria".
• A quiet day ahead with US-Iran developments remaining key.

Most Read: Markets Weekly Outlook - Can earnings outweigh geopolitical headwinds & Central Bank decisions?

Oil prices charged higher on Monday as a stalemate in US-Iran peace talks reintroduced a "fear premium" into the energy markets. The prospect of further disruptions to Middle East exports saw Benchmark Brent crude futures spike more than 2% in Asia trade, touching a three-week high of $107.97 a barrel.

This renewed surge in energy costs is stoking fresh inflation worries, effectively forcing market participants to price out any hopes for interest rate cuts in developed markets this year. With the Fed already leaning into a "higher-for-longer" stance, the uptick in crude adds another layer of complexity for central banks ahead of a week packed with policy decisions.

AI Optimism Offsets Macro Headwinds

While commodities felt the heat, the equity space remained resilient, buoyed by relentless AI spending. Chip stocks led a rally across Asia, with markets in Taiwan (.TWII), Tokyo (.N225), and Seoul (.KS11) following Wall Street’s lead to hit record highs. Despite some early wobbles in S&P 500 futures (ESc1), the underlying sentiment remains supported by "tech-euphoria" as investors brace for a heavy week of big-tech earnings reports.

Geopolitical Flux: The Strait of Hormuz in Focus

On the geopolitical front, the landscape remains volatile. President Donald Trump’s decision to cancel a high-level envoy trip to Islamabad initially rattled nerves.

However, a slight "risk-on" reprieve followed an Axios report suggesting Iran may be open to a "strait-first" deal, prioritizing the opening of the critical maritime artery while postponing broader nuclear negotiations.

The foreign exchange markets started the week in a consolidative mood, with the US Dollar Index hovering around the 98.41 mark, down a marginal 0.1%.

While the Greenback remains the dominant force, the diverging impact of rising energy costs is beginning to carve out clear winners and losers across the G10 space.

EUR/USD managed a slight 0.1% gain to trade at $1.1734, though the currency remains vulnerable. While the single currency saw a relief rally from $1.15 to nearly $1.18 following the ceasefire announcement in early April, that momentum is being tested.

Unlike the US, which maintains a level of energy independence, the Euro area’s heavy reliance on oil imports makes it far more susceptible to the inflationary "tax" of surging crude prices.

USD/JPY saw a fractional gain of 0.07%, bringing the pair to 159.26. However, the market remains on high alert as the currency sits uncomfortably close to the 160.00 handle.

This level is widely regarded as a "line in the sand" for Japanese authorities, and any further weakness in the Yen could see Tokyo step in with direct market intervention to stem the slide.

Currency Power Balance

European equities struggled for direction on Monday, with the pan-European STOXX 600 sitting flat at 610.86 points. Investors appear to be hunkering down for a high-stakes week dominated by central bank rhetoric and a deteriorating geopolitical backdrop in the Middle East.

Despite the somber macro mood, specific pockets of the market found support through upbeat earnings and M&A activity:

• Nordex (NDXG.DE): The German wind turbine manufacturer surged 8.3% after reporting a significant beat on both core earnings and sales, outperforming analyst expectations.
• Forvia (FRVI.PA): The French auto parts supplier climbed 3.5% following the announcement of a €1.82 billion ($2.13 billion) deal to sell its car interiors division to Apollo Funds.

While corporate resilience is providing a floor for European shares, the overarching theme remains one of caution. Until there is clarity on the US-Iran front or a dovish signal from central banks, expect the STOXX 600 to remain pinned within its current range.

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It is a quiet day on the data front today which is welcomed given the busy week ahead.

From tomorrow onward, the US economic calendar is heating up with several heavy-hitting releases that could dictate the Dollar’s trajectory for the remainder of the quarter.

GDP Rebound in Focus The spotlight shines brightest on the first look at 1Q26 GDP. After a dismal 0.5% reading in the final quarter of 2025 heavily weighed down by the federal government shutdown, markets are looking for a significant "bounce-back."

Current expectations are penciled in for a 2.2% quarter-on-quarter annualized expansion, signaling a return to healthy growth as the economy shakes off the impact of last year’s legislative gridlock.

In addition to growth figures and the FOMC, we have key data points arriving to test the Fed’s "higher-for-longer" resolve:

• Consumer Confidence (Tuesday): A crucial gauge of household sentiment amid ongoing geopolitical volatility.
• Core PCE (Thursday): The Fed’s preferred inflation metric. With energy prices creeping back up, any upside surprise here will likely solidify hawkish expectations.

The US Dollar Index (DXY) has faced some renewed selling pressure on the back of the latest headlines out of Iran.

However, I’d caution against chasing the Index lower just yet. With crude oil prices remaining uncomfortably high and major central banks still in "wait-and-see" mode, the fundamental floor for the Greenback remains intact.

On what is shaping up to be a relatively quiet Monday, expect the DXY to remain anchored around the 98.50 area as traders wait for the mid-week data deluge to provide a clearer catalyst.

Key Levels to Watch:

97.70, 96.90, 96.37

99.50, 100.00, 100.61

USD Index Daily Chart, April 27, 2026

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