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The Middle East conflict is showing no signs of abating, and is still influencing major asset prices this Monday, March 16th:
Brent oil (Bybit: UKOUSD) is back above $106, +2.6%
Bitcoin (BTCUSDT) briefly flirted with $74,500 - its highest levels since early-Feb
Further occupying the market's attention this week, amid the still-raging war, are the 18 major central banks that are set to hold their respective key policy meetings this week, including these big 4:
Wednesday, March 18 @ 6:00PM UTC: Federal Reserve a.k.a. The Fed
Thursday, March 19 around 3:00AM UTC: Bank of Japan (BoJ)
Thursday, March 19 around 12:00PM UTC: Bank of England (BoE)
Thursday, March 19 around 1:15PM UTC: European Central Bank (ECB)
To be clear, NONE of these 4 major central banks listed above are expected to adjust their respective rates this week - anything else would be a massive shocker!
Instead, markets are ready to react to any sign whether these major central banks are bracing for an inflation shock and how they might each respond with interest rates.
With the above in mind, here are 3 major FX pairs to watch this week:
Bloomberg's FX forecast model: 76% chance USDJPY+ trades between 156.5 - 161.9 this week.
NOTE: USDJPY recently hit its highest levels since July 2024.
POTENTIAL UPSIDE: USDJPY+ may rise to match its June 2024 peak around 161.90 if (1) market fears keep escalating surrounding the Middle East conflict, (2) BoJ hesitates to say it'll raise interest rates in this economic environment (3) Fed keeps backing away from rate cuts amid risks of an inflation shock
POTENTIAL DOWNSIDE: USDJPY+ may fall to 156.5 if (1) market fears subside surrounding the Middle East conflict, (2) BoJ cites willingness to raise Japan rates to tamper inflation shock (3) Fed believes Middle East conflict is temporary, Fed still ready to cut US rates later in 2026
Bloomberg's FX forecast model: 75.5% chance GBPUSD+ trades between 1.305 - 1.343 this week.
POTENTIAL UPSIDE: GBPUSD+ may rise to 1.343 if (1) market fears subside surrounding the Middle East conflict, (2) BoE cites readiness to raise interest rates and (3) Fed believes Middle East conflict is temporary, Fed still ready to cut US rates later in 2026
POTENTIAL DOWNSIDE: GBPUSD+ may fall to 1.305 if (1) market fears keep escalating surrounding the Middle East conflict, (2) BoE says it'll be tough to raise interest rates in this economic environment (3) Fed keeps backing away from rate cuts
Bloomberg's FX forecast model: 76% chance EURUSD+ trades between 1.126 - 1.159 this week.
POTENTIAL UPSIDE: EURUSD+ may rise to 1.1590 if (1) market fears subside surrounding the Middle East conflict, (2) ECB cites readiness to raise interest rates and (3) Fed doesn't see Middle East conflict preventing it from cutting US rates later in 2026
POTENTIAL DOWNSIDE: EURUSD+ may fall to 1.1260 if (1) market fears keep escalating surrounding the Middle East conflict, (2) ECB says it'll be tough to raise rates (3) Fed keeps backing away from rate cuts