The US Dollar ended a four-day rise on Monday after markets reacted to a US strike on Kharg Island, an Iranian oil outpost in the Persian Gulf. US officials said oil infrastructure could be targeted if Iran keeps disrupting shipping in the Strait of Hormuz, and President Trump asked allies to help secure the route. The US Dollar Index was near 99.80, down from the 100 level reached last week. EUR/USD traded near 1.1500, snapping a four-day decline ahead of ECB and Fed meetings that are widely expected to leave rates unchanged.

Major Pairs In Focus

GBP/USD was near 1.3330, recovering most of last week’s fall ahead of the Bank of England decision on Wednesday, which is also expected to keep rates steady. USD/JPY traded near 159.00 before Fed and BoJ decisions on Wednesday and Thursday. WTI crude traded around $93.80 a barrel after last week’s spike. Gold was at $5,011, broadly steady on the day but lower as risk aversion eased. The calendar lists data and events from Tuesday, March 10 to Friday, March 13 across the UK, China, Germany, the Eurozone, the US, Australia, New Zealand, Spain and Canada. It also notes that API inventory data is released on Tuesdays and EIA data the next day, with results within 1% of each other 75% of the time, and that OPEC has 12 member states and meets twice a year. Looking back a year ago, we saw WTI oil spike to around $94 per barrel following the US strike on Iran’s Kharg Island. Tensions in the Strait of Hormuz have since calmed, and with OPEC+ maintaining its production quotas, prices have stabilized. Last week’s Energy Information Administration (EIA) report showed a crude inventory build of 2.1 million barrels, and WTI is currently trading near $82 per barrel. A year ago, the Dollar Index was pulling back from the 100 mark as the market absorbed geopolitical news. Today, the focus has shifted entirely to central bank policy differences and persistent inflation. The DXY is now trading in a tighter range around 103.5 as the Federal Reserve has signaled a pause in rate hikes, awaiting clearer economic data.

Shifting Central Bank Drivers

In March 2025, EUR/USD was rebounding to the 1.1500 level ahead of central bank meetings that were expected to hold rates. We now see the pair trading much lower, near 1.0850, as the Eurozone’s economic growth continues to lag behind that of the US. The latest German industrial production figures showed a slight contraction, reinforcing this divergence. We can recall GBP/USD recovering to 1.3330 this time last year as traders anticipated the Bank of England’s decision. The pound is now trading closer to 1.2700, weighed down by a UK economy that has narrowly avoided recession. Last month’s UK GDP data showed flat growth of 0.1%, highlighting the challenge for the BoE. The USD/JPY was trading at a very high 159.00 in March 2025, reflecting a massive policy gap between the Fed and the Bank of Japan. Since then, the BoJ has taken initial steps to move away from its ultra-loose monetary policy, causing the pair to retreat. The current level around 149.00 shows a market that is pricing in a less dramatic interest rate differential. Gold was at a remarkable $5,011 an ounce this time last year as risk aversion dissipated from even higher levels. That speculative peak has passed, and with geopolitical fears easing, gold has settled into a more sustainable range. It is now trading near $2,350, supported by continued central bank purchases and its role as a hedge against inflation. Create your live VT Markets account and start trading now.

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