When war begins, particularly a destabilizing conflict like the one we are witnessing in the Middle East, FX volatility tends to spike. This time was no different. After a rough patch for the US dollar, major military operations in Iran (and Iran’s retaliations against all its neighbors) have fueled demand back towards it. The petrodollar trade returned and shifted the early 2026 currency market picture.
2026 has marked the beginning of a new age for global geopolitics and markets have certainly shared their excitement towards it.
Currency markets are seeing newfound extreme volatility throughout this year beginning and this trend has accelerated with the ongoing US-Iran-Israel war. The Middle Eastern conflict is now entering its second week and has had its fair share of effects.
Global energy commodity prices have spiked to new extremes, with this week’s Globex open taking WTI oil prices to highs not seen since early 2022 – just below $120 per barrel.
US (WTI) Oil daily chart, March 9, 2026. Source: TradingView. Past performance is not indicative of future results.
This has had a wide effect on risk-assets, which have held an inverse correlation to rises in commodity prices. Indeed, when supply shocks occur in oil and energy commodities, inflation expectations tend to shoot higher as global production and transportation prices also rise.
This doesn’t fare well for the pricing of rate cuts in the US, which has helped the US dollar to outperform European currencies throughout the beginning of the conflict. This effect is accelerated with the location of the American continent, which produces its own petroleum – their strategic advantage reigns in the fact that the US, Canada and other American nations don’t face supply issues as harsh.
The Old Continent on the other hand, is getting squeezed by the ongoing conflict in Ukraine and ongoing chaos in the Crescent.
Victims of their locations, the CHF, GBP and Euro have all reached 5-month lows against the US dollar.
About the latter, EUR/USD reached 5-year highs not even two months ago and has lost 5,000 pips since. Now evolving in a downward channel, this week’s gap down reached its lower bound, also coinciding with the 1.15 level.
The 50 and 200-day moving averages hanging at the key 1.1650 resistance.
EUR/USD daily chart, March 9, 2026. Source: TradingView. Past performance is not indicative of future results.
Resistance levels
● 1.1580 to 1.16 Key Pivot (testing)
● 1.1640 to 1.1680 Resistance (200-Day moving average)
● 1.1750 mini-resistance (50-Day moving average)
Support levels
●1.1470 to 1.15 Pivotal Support (1.15060 Weekly lows)
●1.1350 to 1.14 Main Support
●1.1220 to 1.1280 May 2025 Pre-Breakout Support
● End-January lows 1.34820
This article and its contents are intended for educational purposes only and should not be considered trading advice. Forex trading is high-risk. Losses may exceed deposits.
