Markets Weekly Outlook - Middle East uncertainty to dominate ahead of jobs report, Nasdaq 100 at 6-month lows

• Middle East uncertainty dominated the week, sending the Nasdaq into official correction territory (down >10%)
• The US Dollar is eyeing its strongest monthly gain since July 2025
• The week ahead is anchored by crucial US data, including the Non-Farm Payrolls/Jobs Report and Retail Sales, as well as Eurozone inflation figures.

Read More: US: Inflation is rising, the Fed is waiting, and forecasts are getting weaker

Another week dominated by the happenings in the Middle East. The uncertainty around whether or not a deal would materialize between the US, Israel and Iran kept markets on edge and hanging on the words of President Trump.

Markets hovered between brief bouts of risk-on sentiment but the risk off environment dominated the majority of the time. As I write this, the US is waiting for troops to land in the Middle East with about 3,000 troops from the Army’s 82nd Airborne Division expected to land Friday.

This was followed by a Wall Street Journal report later in the day that the Pentagon is ​looking at sending ‌up to 10,000 additional ​ground troops ​to the Middle East ⁠to ​give President Donald ​Trump more military options. This comes as President Trump ​weighs peace talks with ‌Tehran, ​citing ⁠Department of Defense ​officials with ​knowledge ⁠of the planning.

Heading into the weekend, the S&P 500 and the Nasdaq retreated to six-month lows on Friday, as a sell-off in technology stocks weighed heavily on the broader market. While the Dow Jones Industrial Average remained relatively flat for the period, both the S&P 500 and the Nasdaq are now pacing toward their fifth consecutive week of losses.

This downturn highlights a period of extreme uncertainty, evidenced by the CBOE Volatility Index (VIX) climbing 1.57 points to 29.01, a clear sign that investor anxiety is reaching a fever pitch.

The Nasdaq’s recent performance officially confirms a move into correction territory, ending Thursday more than 10% below its record close. It follows in the footsteps of the Russell 2000, which was the first major index to signal a correction last week.

Meanwhile, the commodities complex has faced its own share of volatility. After hitting a four-month low of $4,097.99 on Monday, spot gold staged a recovery to trade above $5,300/oz for much of the week. Despite this bounce, the precious metal remains under significant pressure as markets continue to price in a more hawkish outlook for interest rates.

Silver and PGMs (platinum group metals) saw a reprieve on Friday, with spot silver gaining 4.4% to reach $71.01 per ounce, while platinum and palladium rose by 3% and 3.7%, respectively.

In the energy sector, oil prices edged higher on Friday, though Brent crude is still eyeing its first weekly decline since early February.

This comes amid shifting geopolitical headlines, President Trump indicated that talks with Iran were progressing, though he offered little in the way of specifics. The underlying supply crunch remains severe, however, as the conflict has sidelined roughly 11 million barrels per day. The International Energy Agency has characterized the current situation as a supply crisis more severe than the combined impact of the dual oil shocks of the 1970s.

The US Dollar is eyeing its strongest monthly gain since July 2025, fueled by safe-haven demand and rising expectations for a domestic rate hike. The Dollar Index (DXY) rose to 99.973 on Friday, up 2.4% for March.

This strength has pushed the Yen toward the critical 160.00 level, a threshold widely seen as a trigger for potential BoJ intervention. Despite rising Japanese bond yields and hawkish signals from policymakers, the Yen remains pressured by Japan’s high sensitivity to energy import costs.

Elsewhere, the Euro held steady at $1.1529, while Sterling marked its fourth straight decline to $1.3311.

Risk-sensitive currencies also struggled; the Australian Dollar touched a two-month low of $0.6887, having shed 3% since the start of the conflict. This leaves the Aussie as the second-worst major performer this month, trailing only the Indian Rupee, which has dropped nearly 4%.

Markets are currently focused on whether central banks will hike interest rates in April following energy price spikes caused by conflict in the Middle East. While markets are pricing in a high probability of hikes, I think this may be premature.

Here is the summary of key events for next week in the US, Eurozone (EU), and UK:

United States

Retail Sales (Wednesday): Expected to be lifted by strong auto sales, but there is concern that rising energy costs are becoming "demand-destructive," leaving consumers with less money for discretionary spending.

Non-Farm Payrolls / Jobs Report (Friday): This is the marquee event. While a rebound to around +60,000 jobs is expected (following a weak February impacted by strikes and weather), the underlying trend is described as "low-hire, low-fire," with most sectors outside of government and healthcare actually losing workers over the past year.

ISM Manufacturing Index: Likely to show strength as customers rush orders to get ahead of potential price hikes in manufactured goods.

Eurozone (EU)

Economic Sentiment (Monday): Sentiment is expected to drop significantly. Consumer confidence has already "taken a nosedive" due to the dual fears of geopolitical turmoil and higher prices.

Inflation Data (Tuesday): Preliminary March readings are expected to show a sharp increase in headline inflation driven by surging petrol and diesel prices at the pump.

Manufacturing vs. Services: Analysts will be looking at the European Commission's data to see how energy-intensive industries are holding up compared to the services sector, which has recently seen a drop in activity.

United Kingdom (UK)

BoE Decision Maker Panel (DMP) Survey: This survey of CFOs will be closely watched for wage expectations. While wage growth has been falling, "hawks" at the Bank of England are concerned that expectations remain higher than desired.

Inflation Expectations: There is specific concern regarding consumer perceptions of inflation, which have spiked alongside petrol prices. This is noted as one of the few data points that might "panic" the Bank of England into a rate hike.

Rate Hike Speculation: Despite market pricing of three hikes this year, ING notes reports that BoE Governor Bailey was "infuriated" by the hawkish repricing, suggesting the bank is further from hiking than investors believe.

China

PMI Data (Tuesday/Wednesday): The focus is on whether manufacturing returns to expansionary territory.

Official NBS PMI (Tuesday): Expected to rise to 50.0 (up from 49.0 in February). This would be a significant milestone as the index has been in contraction for 10 of the last 11 months.

Caixin (RatingDog) Manufacturing PMI (Wednesday): Expected to continue its trend of outperforming the official NBS indicator.

Japan

Tokyo CPI (Friday): Markets will closely watch inflation data for the capital. Both headline and core inflation are expected to remain stable in March, as rising gasoline prices are likely offset by government utility subsidies and steady food costs.

Economic Activity Data: February figures for Industrial Production and Retail Sales are expected to decline, partially reversing the strong gains seen in January.

The US Dollar Index (DXY) is currently testing a critical juncture as it battles a confluence of technical resistance levels.

After a sharp recovery from the January lows, price action has carved out an ascending channel, but the bullish momentum is now stalling near the 100.617 handle.

While the index remains above its key SMAs (20, 50, and 200), a failure to break and hold above the psychological 100.00 level could trigger a retracement toward the 98.72 support zone.

The RSI is currently hovering around 61, indicating that while bulls maintain control, the window for a sustained breakout is narrowing.

Traders should watch for a decisive daily close above the channel for continuation, or a breakdown below 99.57 to confirm a short-term reversal.

US Dollar Index (DXY) Chart, March 27, 2026

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