• AUD (-0.8%) resilience dissipates as legacy longs feel the squeeze

• Pair briefly took out 0.70 to hit session low of 0.6945

• Since recovered amid the stabilisation in risk assets

• Though the heavy tone should persist as geo tensions remain heightened

• Resistance at 0.7100-20 should cap topside in the short-run
AUDUSD daily chart


Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

Deutsche Bank discusses Gold's response to historical crises,

"There is a high degree of variability in gold's performance after historical crises, even if its average response is positive. 

Our key observations are that:  (1) Gold's response to crisis events tends to build over 1-2 weeks (2) This response can be observed in spot as well as the premium to model fair value (3) Gold's response is fairly unreliable, however, shown by the large dispersion in the individual responses, and this applies even when looking at the residual to fair value. (4) Silver does tend to participate but not to a much larger degree than gold," DB notes.

"At this stage of the US-Israel-Iran conflict, the important observation is that not all of the crisis-related response (either in spot or relative to fair value) occurs on the first one or two days," DB adds.

March 3 (Reuters) - Euro selling has gathered real momentum, taking out the 200-day MA and posting a fresh 2026 low at $1.1530. De-risking has broadened out and the terms of trade shock has been the key driver for EUR. As such, the 2022 Russia-Ukraine playbook is a good guide to understanding how far we may go. It is worth remembering that the common currency dropped 15% in the seven months following the start of that conflict.

With U.S/Israel-Iran tail risks now harder to fade and a prolonged conflict scenario increasingly on the table, this may be more than just a positioning squeeze, which would open the door towards a more structural EUR decline that could even potentially see the common currency fall as far as 1.10.

That said, the situation remains a fluid one, thus it is unlikely that EUR falls in a straight line. Near-term, EUR is oversold, which sets the way for a reprieve. The first hurdle on any bounce is the 200-day MA at 1.1669

Looking ahead, commodity prices are the cleanest indicator for EUR where any sustained bid in commodities will present a headwind for the euro.
EURUSD performance ToT shock


EURUSD daily chart


Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

Credit Agricole CIB Research discusses the implications for the war in Iran on oil prices and Eurozone HICP inflation.

"Our Macro team detailed three scenarios and their implications on oil prices...In the best case, inflation would merely blip after a temporary spike in energy prices and a quick de-escalation," CACIB notes.

"However, in the worst case scenario, which would involve a long-lasting blockade of the Strait of Hormuz (5% probability), oil and gas prices could double compared to their pre-shock level. As a result, we could see another massive inflation shock and Eurozone HICP around 4% by the end of the year," CACIB adds.

• EUR/GBP drops to 0.8700 (two-week low) ahead of the NY option cut

• A big 0.8700 option expiry rolls off at 10am ET (1500 GMT)

• Big expiries can exert magnetism over FX rates, re: option-related flow

• 0.8696 (GBP/EUR 1.15) is a support point just below 0.8700

• Reeves promises to guide UK economy through Middle East conflict

EURGBP


(Robert Howard is a Reuters market analyst. The views expressed are his own)

MUFG Research discusses the implications of the US-Israel Iran conflict on thei USD forecasts.

"The US-Israel attacks on Iran over the weekend have resulted in predictable moves in the financial markets at the start of March. Our initial take is that this is a conflict that is more likely to last weeks rather than months. We believe President Trump will have limited appetite for prolonging the conflict given the mid-term elections in November," MUFG notes.

"Nonetheless, we have raised our US dollar forecasts versus currencies of countries that have a high energy import-dependence. Hence, the US dollar on a DXY basis is forecast to be about 1.5% stronger than our previous forecast by year-end. Nearer-term, risks of a larger move stronger for the dollar are greater, hence we have revised more notably...," MUFG. adds.

Bank of America Global Research prefers NZD short as a cheap, tactical hedge to the escalation in the Middle East.

"We see a broad dollar rally following military escalation in the Middle East, and NZD is our preferred short. While other high-beta FX pairs (e.g. AUD) are likely vulnerable in a broad dollar rally, NZD Is our preferred short because of the country's high (and rising) reliance on oil imports and large current-account imbalances.

Unlike other energy importers (e.g. Japan), NZD trades at an especially high beta to risk. After the closure of its last and only oil refinery (Marsden Point Refinery) in 2022, New Zealand has relied exclusively on imports for the supply of refined fuels and diesel represents about half the country's oil consumption (by fuel type)," BofA notes.

"We see short NZD as a cheap, tactical hedge but note the tailwinds for this trade are likely to fade unless risk sentiment continues to remain bearish," BofA adds. 

• Cable falls to 1.3263 on safe-haven USD demand as Iran war enters fourth day

• 1.3263 is the lowest level since Dec 3 (1.3212 was the low that day)

• Gilt yields spike for second day as Iran conflict sparks inflation fears

• UK yet to decide on sending warship to defend Cyprus base

• 1.3315 (Monday low) and 1.3360 are now GBP/USD resistance levels

• UK finance minister Reeves to deliver budget update at 1230 GMT

GBPUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• U.S.-listed shares of silver miners fall premarket, tracking prices of the white metal [GOL/]

• Spot silver down 6.5% at $83.63/ounce as stronger U.S. dollar curbs demand for safe havens amid rising Middle East tensions

• The dollar rose to a more than one-month high, supported by firm demand and cautious market sentiment

• Shares of miners Hecla and Coeur down between 7.3% and 6.2%, respectively

• Canadian miners Endeavour Silver and Silvercorp Metals dip ~6% and 6.6%, respectively

• Abrdn Physical Silver Shares ETF and iShares Silver Trust ETF both down ~7%

(Reporting by Dharna Bafna in Bengaluru)

• U.S.-listed shares of gold miners fall premarket, tracking a decline in gold prices [GOL/]

• Spot gold down 0.8% at $5,283.87/ounce, as a stronger dollar outweighs safe-haven demand from the escalating U.S.-Israeli air war against Iran

• Top miners Newmont and Barrick Mining down 3.3% and 3.1%, respectively

• South African miners Gold Fields falls 7.4%, Sibanye Stillwater down 10.2%, Harmony Gold declines 3.8%, and AngloGold Ashanti down 7.3%

• Canadian miners Agnico Eagle Mines falls 3.1% and Kinross Gold dips 3.2%

(Reporting by Sumit Saha in Bengaluru)

• Yen and euro hit by Middle East conflict, energy import concerns

• Fin Min Katayama: Japan watching markets with 'extremely strong' sense of urgency

• Katayama: will take appropriate action when monitoring situations

• USD/JPY rose on Monday from 155.50 to 157.75, to close above the thin cloud

• The thin daily cloud currently spans the 155.72-78 region

• Spot has seen a 157.16-59 range, on Tuesday, according to EBS data

• USD/JPY's downside is likely limited due to the expanded Middle East conflict

• USD/JPY and EUR/JPY tend to move in tandem, log correlations are high above +0.5

• Signs are EUR/JPY will climb in March, as usual

Correlation Chart


Daily Chart


Correlation Chart


Correlation Chart


Daily Chart


Daily Chart


Correlation Chart


(Martin Miller is a Reuters market analyst. The views expressed are his own)

• Ahead of Iran conflict traders were heavily betting that the euro would rise

• Since the U.S. attack EUR/USD has slowly sunk from 1.1796 to 1.6555 EBS

• The pair has dripped below both 100-DMA at 1.1695 and 200-DMA at 1.1664

• EUR/USD has not closed below the 200-DMA since March 2025

• The 200-DMA defined key lows in Jan 2026 and March 2025

• There has been a reluctance to sell that a closing break will dictate

• Duration of Iran war key for FX markets clearly inclined to gamble

•
EURUSD


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• Cable falls to 1.3354 as safe-haven dollar strengthens on Middle East war

• 1.3354 is the lowest level since Jan 19 (1.3321 was the low that day)

• Friday's range was 1.3440-1.3509 (with the low plumbed on Iran conflict risk)

• 1.3400 (ex-support point) is now a resistance level, pre-1.3435 (Feb low)

• CFTC data: net GBP short rose to 57,072 contracts in the week to Feb 24

• Third consecutive week in which the net GBP short position increased

GBPUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• FX options expire at 10-am New York/15.00 GMT on Tuesday March 3

• EUR/USD: 1.1575 (1.9BLN), 1.1665-70 (300M), 1.1700-05 (1.1BLN), 1.1720-30 (1.3BLN)

• EUR/GBP: 0.8665 (464M), 0.8700 (1.4BLN)

• GBP/USD: 1.3400 (215M), 1.3460-75 (527M)

• AUD/USD: 0.7000-10 (794M), 0.7015-25 (754M), 0.7125 (343M)

• NZD/USD: 0.5945 (298M). USD/CAD: 1.3720-25 (382M)

• USD/JPY: 156.50 (768M), 157.00 (1.2BLN), 157.25 (268M), 157.40-50 (1.1BLN), 158.00 (502M)

• FX options wrap - Mid-East conflict leaves FX risk premium muted (Richard Pace is a Reuters market analyst. The views expressed are his own)

• GBP/USD steady in cautious Asia as traders parse news of Middle East war

• Conflict widens to Lebanon, Iraq; two drones hit U.S. embassy in Riyadh

• You'll soon find out response to Riyadh embassy attack-Trump

• Early rally to 1.35255 fades as risk aversion intensifies; S&P E-Mini -0.5%

• Decline to 1.3393 ensues before stabilising

• British Finance Minister Rachel Reeves delivers an annual budget update Tue

• New economic forecasts will be announced; focus will be on inflation outlook

• 55-week MA at 1.3348; no weekly close below since Feb 2025

• Support 1.3305-15, resistance 1.3440-50
GBP:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• EUR complex doing little in Asia, most pairs range-bound, mixed biases

• EUR/USD heavy after fall to 1.1672 yesterday, Asia 1.1684-1.1706 EBS

• In area of 1.1699 100-DMA, 200-DMA below at 1.1669

• Massive E1.2 bln option expiries today between 1.1695-1.1705, to anchor?

• Below 1.1575 E1.9 bln, above 1.1720-30 E1.3 bln, 1.1770-80 E587 mln

• Total E2.7 bln or so between 1.1800-50 above too

• EUR/JPY tad more buoyant, 183.85-184.31 EBS after 182.55-184.66 yesterday

• Back in 182.83-184.33 daily Ichi cloud, still above 183.54-66 hourly cloud

• 100-HMA now above current spot at 184.14, 200-HMA below cloud at 183.35

• EUR/GBP off hard from 0.8790, 0.8787 highs Friday-Monday, Asia 0.8719-26

• Back within confines of 0.8697-0.8755 daily Ichimoku cloud

• 100-DMA in cloud above at 0.8731, 200-DMA below cloud at 0.8677

• Large E464 mln option expiries today at 0.8665, massive E1.4 bln at 0.8700

• EUR/CHF buoyant? 0.9107-17 EBS after 0.9028-0.9130 yesterday

• SNB verbal intervention yesterday, 0.9000 SNB line in sand?

• Related comments , , also
EUR/USD:


EUR/JPY:


EUR/CHF:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• GBP/USD +0.1% in cautious Asia as traders parse Middle East conflict news

• Geopolitical concerns limit upside; Iran conflict widens to Lebanon, Iraq

• U.S. embassy in Riyadh hit by two drones resulting in a limited fire

• Trump: You'll soon find out response to Riyadh embassy attack

• British Finance Minister Rachel Reeves delivers an annual budget update Tue

• New economic forecasts will be announced; focus will be on inflation outlook

• 55-week MA at 1.3348; no weekly close below since Feb 2025

• Support 1.3305-15, resistance 1.3440-50; Monday range 1.3315-1.3498

• Asia range 1.3400-1.34255
GBP:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• AUD/USD +0.1% Tue after RBA flags potential OCR increase at Mar meeting

• RBA's Bullock says unemployment may need to increase to contain inflation

• AU Q4 current account 21.1 bln deficit (Reuters poll consensus -16.5 bln)

• UST yields & broad USD index firmer on oil related inflation fears

• Trump says Iran military action to continue for 4-5 weeks as conflict widens

• AU Q4 real GDP due Wed, Reuters poll consensus +0.6% q/q, +2.2% y/y

• Range Asia 0.7094-0.7108, support 0.7025-30 0.6900, resistance 0.7158
AUD Hourly Bollinger Study

(James Connell is a Reuters market analyst. The views expressed are his own.)

• USD/JPY higher still overnight to 157.75 EBS in overseas trading

• Asia so far 157.19-42 and holding relatively bid

• Some profit-taking by long specs but unlikely to fall far

• Market focused on Japan energy dependence on Middle East, trapped tankers

• Daily Ichimoku cloud now far below between 155.72-77

• Spot holding for now between 157.43 hourly Ichimoku tenkan, 156.87 kijun

• Large option expiries above/below, $1.1 bln 157.40-50, 157.00 $1.2 bln

• More either side of these strikes, feeling 157.00-50 in Asia as a result?

• JGB-US Treasury rate differentials back in narrowing mode, 2s @216 bps

• Middle East conflict, repercussions to continue to sway JPY trading

• Related comments , , , also

• US markets , , ,

• On Middle East , , US data
USD/JPY:


USD/JPY nearby option expiries this week:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

Danske Research discusses EUR/USD outlook.

"With the short-end of the oil curve up ~5 USD/bbl, with the implicit US terms of trade improvement and given how the rise in cross asset vols is not directly related to the state of the US economy it is unsurprising to see the USD be one of the primary beneficiaries. EUR/USD is down the 1.18 support level and we expect the cross to find the tune from energy prices in the coming sessions," Danske notes.

"To the extent that the whole energy curve shifts higher for longer it does pose a risk to our case for a higher EUR/USD also in the next 1-3M, but we see the risks as limited. Also, we highlight how the Fed is unlikely to trigger speculations of near-term policy shifts following the rise in energy prices," Danske adds.

• NZD/USD hits 0.5917 low overnight on stop loss selling below 0.5930

• UST yields & DXY firmer as oil related inflation fears escalate

• USD index breaks above 97.94 55-DMA after an extended struggle to do so

• Trump says Iran military action to continue for 4-5 weeks as conflict widens

• NZ's heavy reliance on imported energy leaves economy vulnerable

• AUD/NZD rallies to fresh 1.1931 thirteen-year high, NZD remains pressured

• Range NZ 0.59315-55, support 0.5930 0.5730 0.5580, resistance 0.6120
NZD Hourly Bollinger Study & DXY Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• AUD/USD settles -0.4% late Mon after early risk off losses were nullified

• UST yields & broad USD index firmer on oil related inflation fears

• DXY breaks clear of 97.94 55-DMA after multiple previous failed attempts

• Middle East conflict widens; Trump says conflict may extend beyond 4-5 weeks

• RBA Governor Michele Bullock speaking at Sydney business summit Tue morning

• AU Q4 current account due Tue, Reuters poll consensus 16.5 bln deficit

• Overnight range 0.7045-0.71055, support 0.7025-30 0.6900, resistance 0.7158
AUD Daily 200-DMA & DXY Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

SocGen Research sees a scope for USD/JPY spike to extend towards 160.

"The yen is back in the wars, USD/JPY threatening a return to 160 after PM Takaichi expressed doubts about the wisdom of the BoJ raising rates and nominated two perceived doves to the BoJ policy board," SocGen notes. 

"To make matters slightly worse, the long end of the JGB market is selling of again, which will not ease concerns about debt sustainability. USD/JPY is in danger of spiking higher," SocGen adds.

ANZ Research discusses AUD/USD and AUD/NZD near-term outlook.

"The recent risk-off sentiment in markets, on geopolitical tensions, has not caused the AUD to retreat below 0.70. We think this is due to the strong domestic backdrop. In the short term, we see AUD/USD remaining within the 0.70– 0.715 range. Near-term resistance lies at 0.7147 (12 February high) and a break above 0.7158 would clear a path for fresh highs," ANZ notes. 

"On the crosses, AUD/NZD is extending its strong run, supported by solid Australian data and higher yields. We think the rally in the cross is overdone and is ripe for a reversal towards 1.17, but this will take some time, possibly into April when Q1 inflation data for both economies is out," ANZ adds.