Forex Today: Middle East crisis deepens, Gold plunges to fresh 2026-low
Here is what you need to know on Monday, March 23:
Safe-haven flows dominate the action in financial markets as tensions in the Middle East continue to escalate. In the absence of high-tier macroeconomic data releases, investors will pay close attention to geopolitical headlines on Monday.
Over the weekend, United States (US) President Donald Trump said that they will “obliterate” Iran’s power plants, starting with the biggest one, if they refuse to open the Strait of Hormuz within 48 hours. In response, Iran warned that it will retaliate and target all US-linked energy infrastructure in the Middle East if the US attacks its power plants. In a statement published on Sunday, Iran’s Revolutionary Guards said that the Strait of Hormuz will be completely closed if the US executes threats against its energy facilities, adding that companies with US shares will be completely destroyed.
Meanwhile, citing two sources familiar with the matter, the Jerusalem Post reported early Monday that the US is preparing to launch a ground military operation to seize the Iranian island of Kharg.
After losing about 10% in the previous week, Gold remains under heavy selling pressure to start the week and trades at its lowest level since December below $4,200, down nearly 7% on the day.
Crude Oil prices push higher in the European session on Monday. At the time of press, the barrel of West Texas Intermediate (WTI) was up more than 2% on the day near $100.
The US Dollar (USD) benefits from safe-haven flows and gathers strength against its major rivals early Monday. The USD Index was last seen rising 0.3% on the day at 99.80. In the meantime, US stock index futures stay under heavy pressure, losing between 0.6% and 1% on the day.
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
USD EUR GBP JPY CAD AUD NZD CHF USD 0.34% 0.39% 0.16% 0.05% 1.01% 0.74% 0.22% EUR -0.34% 0.04% -0.17% -0.30% 0.79% 0.39% -0.12% GBP -0.39% -0.04% -0.23% -0.35% 0.74% 0.34% -0.18% JPY -0.16% 0.17% 0.23% -0.09% 0.85% 0.52% 0.07% CAD -0.05% 0.30% 0.35% 0.09% 0.94% 0.56% 0.14% AUD -1.01% -0.79% -0.74% -0.85% -0.94% -0.39% -0.80% NZD -0.74% -0.39% -0.34% -0.52% -0.56% 0.39% -0.48% CHF -0.22% 0.12% 0.18% -0.07% -0.14% 0.80% 0.48%The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
EUR/USD loses traction and trades in the red below 1.1550 in the European session on Monday after having gained more than 1% in the previous week.
GBP/USD continues to push lower after opening with a small bearish gap and trades below 1.3300 on Monday.
Atsushi Mimura, Japan’s Vice Finance Minister for International Affairs and top foreign exchange official, said on Monday that the government considers to take measures on all fronts in foreign exchange (FX) volatility. After rising nearly 1% on Friday, USD/JPY holds its ground and clings to small gains near 159.50.
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
What are the key assets to track to understand risk sentiment dynamics?Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
Which currencies strengthen when sentiment is "risk-on"?The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
Which currencies strengthen when sentiment is "risk-off"?The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
