Markets endured a volatile session on Tuesday as escalating conflict between the US and Iran drove oil prices sharply higher and equity markets lower, though President Trump’s late-day assurances about securing energy shipping lanes helped pare some of the day’s losses. The US dollar emerged as one of the session’s top performers, likely benefiting from safe-haven flows, while gold suffered a historic liquidation despite the geopolitical turmoil.
Check out the forex news and economic updates you may have missed in the latest trading session!
Forex News Headlines & Data:
- New Zealand Building Permits for January 2026: 1.9% m/m (2.0% m/m forecast; -4.6% m/m previous)
- Japan Unemployment Rate for January 2026: 2.7% (2.6% forecast; 2.6% previous)
- Japan Monetary Base for February 28, 2026: -10.6% y/y (-9.8% y/y forecast; -9.5% y/y previous)
- Japan Capital Spending for December 31, 2025: 6.5% y/y (2.3% y/y forecast; 2.9% y/y previous)
- U.K. BRC Shop Price Inflation for February 2026: 1.1% (1.7% forecast; 1.5% previous)
- Australia Building Permits Prel for January 2026: -7.2% m/m (12.0% m/m forecast; -14.9% m/m previous); -15.7% y/y (2.8% y/y forecast; 0.4% y/y previous)
- Euro area Inflation Rate Flash for February 2026: 0.7% m/m (0.4% m/m forecast; -0.6% m/m previous); 1.9% y/y (1.7% y/y forecast; 1.7% y/y previous)
- Euro area Core Inflation Rate Flash for February 2026: 2.4% y/y (2.2% y/y forecast; 2.2% y/y previous)
- U.S. RCM/TIPP Economic Optimism Index for March 2026: 47.5 (49.3 forecast; 48.8 previous)
- New Zealand Global Dairy Trade Price Index for March 3, 2026: 5.7% (3.8% forecast; 3.6% previous)
- New York Fed President John Williams stated that monetary policy is well-positioned to stabilize the labor market and return inflation to 2%, with further rate cuts possible if inflation follows expected downward trends.
Promotion: Use TradeZella’s AI Powered trade journal to deep-dive into your execution and see exactly how you performed during today’s trading session. Click here to get the TradeZella Edge and use code PIPS20 to save 20% on your subscription!
Disclosure: We may earn a commission from our partners if you sign up through our links, at no extra cost to you.
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay – Chart Faster With TradingView
Tuesday’s session was dominated by the fourth day of the US-Iran war, with geopolitical tensions driving pronounced risk-off sentiment across financial markets. Oil prices surged on reports of Iranian strikes and the temporary closure of the Strait of Hormuz, while equities sold off sharply before recovering modestly after President Trump announced the US would provide political risk insurance for maritime trade and begin escorting tankers through the strait.
WTI crude oil rallied 4.34% to close at $73.80 per barrel, marking the session’s strongest performance among major assets. The surge correlated directly with reports that Iran targeted the US consulate in Dubai and that the Strait of Hormuz was temporarily closed, disrupting a critical global energy chokepoint. Oil reached intraday highs approaching 9% before paring gains following President Trump’s announcement around midday that the US Navy would escort tankers “as soon as possible” and provide political risk insurance for vessels. The late-day pullback suggested traders took some comfort in the commitment to maintain energy flows, though prices remained elevated reflecting ongoing supply disruption concerns.
US equities declined, with the S&P 500 falling 0.92% to close around 6,810.6. The index experienced significant intraday volatility, dropping as much as 2.5% during the session before recovering into the close. The early selloff appeared to correlate with the escalating Middle East conflict and surging oil prices, which raised concerns about inflation reigniting and potential economic damage from sustained energy price increases. Small caps bore the brunt of the selling pressure, with the Russell 2000 sliding 1.79% as investors rotated toward perceived safe havens. The modest recovery into the close coincided with Trump’s shipping lane security announcements, though strategists noted the choppy trading and wide intraday ranges reflected difficulty pricing in risks from the ongoing conflict.
Gold suffered a notable decline, plunging 4.19% to settle around $5,098.9 per ounce. The precious metal experienced what traders described as a massive liquidation, with prices breaking below the $5,100 level and touching an intraday low near $4,996.36 before rebounding modestly. The counterintuitive move lower despite heightened geopolitical tensions appeared to reflect forced selling or margin calls, possibly as traders unwound leveraged positions amid broader market volatility. Silver crashed even harder, falling 8.17% to $81.98, reinforcing the technical nature of the precious metals selloff rather than a fundamental shift in safe-haven demand.
Treasury yields rose 0.62% with the 10-year note settling around 4.06%. Yields traded in a two-way pattern, initially experiencing safe-haven demand before ultimately settling mostly slightly higher on the day. The modest yield increase likely correlated with inflation concerns tied to the oil price surge, which appeared to offset traditional safe-haven flows into government bonds. Market anxiety about persistent inflation potentially delaying Federal Reserve rate cuts was reflected in pricing, with traders now seeing just a 50% chance of a second Fed rate cut by year-end.
Bitcoin declined 1.97% to trade near $68,055.7, following the broader risk-off trend as investors reduced exposure to speculative assets. The cryptocurrency traded lower throughout most of the session with no apparent crypto-specific catalysts, suggesting the weakness simply reflected the challenging risk environment.
Promoted: Day traders & Scalpers have better odds of making great decisions if they see & hear market catalysts right away. Get the real-time feed that pros use to catch the news.
Join FinancialJuice for Free to learn more!
Disclosure: We may earn a commission from our partners if you sign up through our links, at no extra cost to you.
FX Market Behavior: U.S. Dollar vs. Majors
Overlay of USD vs. Majors – Chart Faster With TradingView
The US dollar dominated Tuesday’s currency markets, closing as a top performing major currency as geopolitical tensions supported the greenback across most currency pairs.
During the Asian session, the dollar traded with limited volatility against the major currencies, posting an arguably net bullish lean heading into the London session. With no major regional economic releases to drive price action, the dollar’s early strength possibly reflected cautious positioning as traders monitored developments in the US-Iran conflict overnight.
The London session brought Tuesday’s most significant economic catalyst from the currency space. The dollar continued trending net higher against major currencies following the release of eurozone inflation data at around 5:00 AM ET (10:00 AM GMT). The euro area flash CPI surprised to the upside at 1.9% year-over-year versus 1.7% expected, with core inflation rising to 2.4% against forecasts of 2.2%. The hotter inflation readings sparked a shift in European Central Bank rate expectations, with markets now pricing a 50% chance of an ECB rate hike by year-end and a 20% chance of an adjustment as early as June. However, the euro’s initial reaction was muted and choppy, possibly as traders weighed the hawkish inflation data against ECB policymaker François Villeroy’s comment that “it would be a mistake to predict rate moves in a hurry” given uncertainty about the length and impact of the Middle East conflict. The dollar capped its gains and pulled back slightly ahead of the US open, though it maintained an overall positive trajectory through the London session.
The US session opened with the dollar rebounding slightly before pulling back lower heading into the London close. Despite the lack of major US economic releases, several Federal Reserve officials provided commentary on monetary policy and the potential implications of the Middle East conflict.
Fed Governor Neel Kashkari acknowledged that while it was too early to fully assess the impact of the Iran conflict on inflation, it “could have an impact on monetary policy” if energy price spikes become persistent.
Fed Governor John Williams took a more measured tone, noting that long-term inflation expectations have remained remarkably stable and that further rate cuts would be warranted if inflation continues to ebb.
However, Fed Governor Thomas Schmid struck a more hawkish stance, stating he currently opposes further interest rate cuts and signaling a preference for restrictive rates until the inflationary impact of the Middle East conflict becomes clearer. The dollar stabilized through the remainder of the session, with its resilience during US trading hours possibly reflecting both safe-haven demand amid the deteriorating geopolitical situation and relative growth concerns in other regions.
At Tuesday’s close, the dollar posted broad-based gains against major currencies, with the notable exception of the Canadian dollar. The loonie’s resilience likely reflected the 4.34% surge in WTI crude oil, with Canada as a major energy exporter benefiting from the spike in oil prices driven by Middle East supply disruption concerns. The Canadian dollar’s ability to hold its ground against the broadly stronger dollar suggested that the positive terms of trade impact from higher oil prices outweighed safe-haven flows into the greenback.
The dollar’s emergence as the top performer against most major currencies appeared to reflect its role as the primary safe-haven currency during periods of acute geopolitical stress, with the combination of Middle East conflict escalation, inflation concerns from surging energy prices, and relative economic resilience providing multiple sources of support for the greenback.
Promoted: While new firms come and go with the volatility, The5ers has spent the last 10 years perfecting a funding model that works for the trader. It’s why over 1.6 million traders worldwide trust them to provide the capital and scaling needed to turn market analysis into meaningful professional growth.
Learn more about The5ers Disclosure: We may earn a commission from our partners if you sign up through our links, at no extra cost to you.
Upcoming Potential Catalysts on the Economic Calendar
- Australia S&P Global Services PMI Final for February 2026 at 10:00 pm GMT
- Australia AIG Manufacturing Index for February 2026 at 10:00 pm GMT
- Australia GDP Growth Rate for December 31, 2025 at 12:30 am GMT
- Japan S&P Global Services PMI Final for February 2026 at 12:30 am GMT
- Japan Consumer Confidence for February 2026 at 5:00 am GMT
- Swiss Inflation Rate for February 2026 at 7:30 am GMT
- Germany HCOB Services PMI Final for February 2026 at 8:55 am GMT
- Euro area HCOB Services PMI Final for February 2026 at 9:00 am GMT
- U.K. S&P Global Services PMI Final for February 2026 at 9:30 am GMT
- Euro area PPI for January 2026 at 10:00 am GMT
- Euro area Unemployment Rate for January 2026 at 10:00 am GMT
- U.S. MBA Mortgage Applications for February 27, 2026 at 12:00 pm GMT
- U.S. MBA 30-Year Mortgage Rate for February 27, 2026 at 12:00 pm GMT
- U.S. ADP National Employment Report for February 2026 at 1:15 pm GMT
- Canada Labor Productivity for December 31, 2025 at 1:30 pm GMT
- Canada S&P Global Services PMI for February 2026 at 2:30 pm GMT
- U.S. S&P Global Services PMI Final for February 2026 at 2:45 pm GMT
- ISM Services PMI for February 2026 at 3:00 pm GMT
- U.S. EIA Crude Oil Stocks Change for February 27, 2026 at 3:30 pm GMT
Wednesday’s calendar features the Australian GDP reading at 12:30 AM GMT, which could influence Reserve Bank of Australia rate expectations following Tuesday’s weaker-than-expected building permits data. The US session brings the critical ADP National Employment Report at 1:15 PM GMT and ISM Services PMI at 3:00 PM GMT, both of which could provide important signals about the US economic trajectory as markets assess whether the Federal Reserve will deliver additional rate cuts this year.
Markets remain highly sensitive to any developments in the US-Iran conflict, with traders watching for further supply disruptions or de-escalation signals that could drive additional volatility in energy markets and broader risk assets.
Stay frosty out there, forex friends!
Promoted: How Do Professionals Trade Geopolitical Shocks?
You’ve seen the retail reaction to the military strikes in the Middle East—now see the institutional one. Brent Donnelly’s “The Art of Currency Trading” (4.7 stars & 517 reviews on Amazon) bridges the gap between the news headlines you read and the execution on your screen. It’s a practical, “no-fluff” guide to how professional FX desks navigate the exact type of geopolitical volatility described in today’s report.
Learn more about “The Art of Currency Trading” at Amazon
Disclosure: We may earn a commission from our partners if you sign up through our links, at no extra cost to you.
