War, Oil and Fed: Markets This Week - 3.16

The U.S. Dollar Index has eased slightly to the 100.31 area as reports emerge of a possible U.S. led coalition to escort ships through the Strait of Hormuz, reducing immediate safe haven demand. Current Dollar Index strength is driven by 'fear,' temporarily decoupling the dollar from standard interest rate differentials.

• EURUSD Bearish / Cautious - Trading near 1.1439, testing year-to-date lows. Europe's energy dependence is weighing heavily on Eurozone growth. Resistance at 1.1550. ECB meeting this week.
• GBPUSD Neutral / Slight Bearish - Trading near 1.337 - 1.324 range. BoE's cautious rate path provides relative sterling support vs EUR. Downside bias while energy shock persists.
• USDJPY Bearish JPY (Cautious) - testing major resistance near 159.39. Yen reclaiming safe-haven status; BoJ speculation and geopolitical hedging pressure the pair lower. Support: 157.70.

Global equities have shown surprising resilience, though not without volatility.

• S&P 500 is roughly flat (~6,880) since war began. Wells Fargo: median +0.4% return two weeks after geopolitical events since WWII. Carson Group: Buy-the-dip after initial drawdown.
• Nasdaq down ~0.5–2% since Feb 28. AI-driven gains facing valuation fatigue. Mega cap tech (NVIDIA, Microsoft) are buy the dip targets for institutional investors.
• Dow Jones is down ~1% since conflict began. Rotation into defense and value stocks underway. Energy companies (Exxon, Chevron) rallying sharply on oil price surge.
• Nikkei 225 dropped 3.06% on March 3, among the worst-hit globally. Yen safe-haven strength is weighing on export heavy Japanese stocks. BoJ policy uncertainty adds to volatility.

Since the U.S. and Israel launched joint air strikes on Iran on February 28 , Brent crude has surged from roughly $73 to briefly touching $120 - 65% spike in under two weeks, before settling near $103 at Friday's close. 
WTI passed $100 and is trading around $102. The IEA reports that global oil supply has plunged by an estimated 8 mb/d in March, driven by the near-complete shutdown of tanker traffic through the Strait of Hormuz, which normally carries about 20% of global crude supply.

Bitcoin, after dropping 8.5% on February 28,  then has rallied approximately 7–11% from its opening-day lows, outperforming the S&P 500, Nasdaq, and gold over the same period. 

Despite the price resilience, sentiment remains deeply bearish: the crypto fear and greed index is in 'extreme fear,' funding rates for BTC perpetual futures have been negative since early March (the longest streak since April 2025), and VIX has jumped to 25. 

Key Risk: Bitcoin has historically dropped after 7 of 8 FOMC meetings in 2025, creating a 'sell the news' pattern. Traders are watching the March 18 FOMC dot plot 

• dovish shift could push BTC above $75,000;
• dovish shift could push BTC above $75,000;