Date: 13th March 2026.
Dollar Index Climbs to Five-Month High as Oil Volatility Dominates Markets.
Oil prices are becoming the centre of attention when analysing other assets such as the US Dollar and Gold. The US Dollar saw strong gains on Thursday and also continues to increase in value this morning. Gold, on the other hand, has fallen to a three-day low due to Dollar pressure.
Analysts do not expect volatility to fall on Friday as Trump advises that the war may potentially escalate today. In addition to this, the US is due to release its latest Core PCE Price Index and quarterly Gross Domestic Product.
What has Triggered the Volatility from the Past 24 Hours?
Investors are closely monitoring oil prices which continue to increase in value and trades at almost $100 per barrel. The IEA decided to release a record number of barrels from its reserves. However, prices remain elevated despite the US allowing more Russian oil purchases. Yesterday evening, the US issued a second authorisation allowing buyers to receive Russian oil cargoes already at sea, aiming to ease price pressure as the Middle East war continues.
Another factor impacting the price action is the upcoming Federal Reserve meeting which is only five days away. Investors have almost completely removed any possibility of a rate cut this month or in April. A small percentage of analysts even believe the Federal Reserve will increase interest rates by 0.25%.
EURUSD - US Dollar Rises As the ECB Indicates No Rate Hikes!
Due to market expectations regarding the Fed’s monetary policy, the US Dollar is now trading close to a five-month high. The US Dollar is the day’s best performing currency and is still trading 0.50% below resistance levels. The Euro, on the other hand, is one of this week’s worst performing currencies.
In addition to this the Dollar found support from oil prices, inflation and the Fed’s hawkish monetary policy. The European Central Bank is also supporting the US Dollar with its latest comments. Previously, economists were expecting the ECB to increase interest rates on two occasions this year due to higher inflation. However, members of the ECB have told journalists that this is far from reality.
Officials have said they are not rushing to change interest rates, even with market volatility and rising oil prices. The head of the French Central Bank advises that inflation remains low enough that even with a moderate increase there may not be a need to respond in the short term. Due to the ECB’s dovishness, the Euro declines, but traders will continue to monitor their forward guidance.
The new Iranian leader made his first public statement, offering no signs of de-escalation or willingness to negotiate. He made it clear Iran intends to keep the Strait of Hormuz closed and open additional fronts if the war continues. As a result, the chances of the conflict ending soon remain slim, supporting the US Dollar rather than Gold.
Even though the price of Gold is declining, the price of the US Dollar is increasing at a faster pace. Due to this, the correlation is forming an indication of divergence which points towards the bullish trend of the Dollar losing momentum in the short term.
HFM - EURUSD 30-Minutes
Even though the US Dollar Index is at a five-month high as mentioned above, against the Euro the Dollar is at an eight-month high. The price is clearly below the VWAP and most moving averages providing a clear bearish indication for the currency pair. Momentum-based indicators are indicating the trend will continue downwards.
When monitoring the past week’s price action, the price tends to form a retracement after the price deviates away from the 100-bar SMA by 0.55%. Currently, the price is at a deviation of 0.51% and at 18 on the RSI. Both are indicating the price may be oversold. For this reason, even though momentum indications are pointing towards a further decline, traders may also expect a retracement or slight correction in the short term.
Key Takeaways:
Oil prices near $100 per barrel are driving volatility across currencies and commodities.
The US Dollar strengthened, reaching a five-month high, while Gold fell to a three-day low.
Markets expect continued volatility with US Core PCE and GDP data due today.
Fed rate cut expectations have disappeared, with some analysts even expecting a 0.25% hike.
ECB dovish signals and Iran tensions are supporting the US Dollar and pressuring the Euro.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Michalis Efthymiou
HFMarkets
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