Oil prices have been driving market sentiment once again. As energy markets react to geopolitical developments, the US dollar has softened while risk currencies begin to recover. But volatility remains elevated and uncertainty around global energy supply continues to influence FX markets.
Key Highlight
- The US dollar has softened as risk appetite improves across markets.
- Commodity and risk-sensitive currencies are gaining ground, with GBP among the stronger performers.
- Oil price volatility and geopolitical developments remain the primary drivers of currency market sentiment.
Market Recap
Currency markets experienced choppy trading conditions, with sharp intraday movements but no sustained directional trend. Earlier strength in the US dollar faded later in the session as markets reassessed geopolitical risks and energy supply concerns.
Oil prices initially surged overnight but later pulled back following comments from G7 officials indicating they stand ready to stabilise global energy supply if required. Additional remarks from Donald Trump and US Energy Secretary Chris Wright suggested the recent spike in oil prices largely reflects a temporary “fear premium”, with any potential disruption through the Strait of Hormuz expected to be relatively short-lived.
As energy prices eased into the European close, earlier demand for safe-haven assets moderated. The USD gave back gains and the euro recovered from earlier selling pressure.
Market Update
Market sentiment has started the day on a slightly more positive footing after Donald Trump indicated that the conflict with Iran could conclude “very soon”. This shift in tone helped push oil prices lower overnight while Asian equity markets rebounded, reducing immediate demand for defensive currencies.
In foreign exchange markets, the US dollar is trading modestly weaker against most major currencies. Higher-beta currencies such as AUD, NZD and NOK are leading gains, with GBP also performing relatively well, while the Japanese yen is lagging.
Despite the improved mood, overall moves remain contained. US 10-year Treasury yields are holding near 4.1%, and ongoing uncertainty around the Strait of Hormuz continues to keep investors cautious.
With limited economic data scheduled today, markets are likely to remain driven primarily by geopolitical developments and fluctuations in oil prices, both of which continue to play a central role in shaping USD direction and broader market risk sentiment.
10th March 2026
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