Estimated reading time: 0 minutes
Markets have been dominated this week by escalating geopolitical tension in the Middle East and a distinctly hawkish tone from the Federal Reserve. A sharp deterioration in U.S.-Iran relations has triggered a massive flight to safety, while sticky inflation data has forced traders to rethink how quickly interest rates might fall.
This potent combination of geopolitics and monetary policy has kept volatility elevated across every major asset class. Here is a breakdown of what we are seeing across the markets.
Equities: Holding Near Highs Despite the Noise
The S&P 500 endured a volatile week, including a midweek pullback, yet is on track to close roughly unchanged. Despite the alarming headlines, the index is still trading just 1.5% off its all-time highs, which tells you there is incredible underlying resilience in the market.
FOMC minutes from the January meeting raised eyebrows after suggesting the Fed could even consider rate hikes if inflation remains stubborn. That is not what equity bulls wanted to hear, but still, dip buyers stepped in. The tech sector saw some natural profit-taking, particularly in AI infrastructure and chipmakers where valuations have become stretched. The NAS100 is also set to finish the week broadly flat, suggesting this was more rotation than panic.
Forex: The Dollar Is King
The US dollar is on track for its strongest week in four months, benefiting from both safe-haven demand and a repricing of rate expectations. USD strength accelerated as traders scaled back rate cut bets following firm jobless claims and solid business outlook data. The market is beginning to accept that rates may stay higher for longer.
- EURUSD: The Euro remains under severe pressure. We have seen a clean structure break below 1.1780, which could open the path toward the next support zone around 1.1580. From a technical perspective, that break completely changes the tone.
- USDJPY: Continues to trade around 153.15, with the yen remaining highly sensitive. Traders are balancing fragile Japanese growth against the possibility of further policy normalisation; volatility here should not be underestimated.
Bitcoin: Deleveraging in Motion
Bitcoin has had a difficult February, and this week continued that theme. Price is currently hovering between 66,000 and 68,000 after failing to sustain momentum above the 73,000 mark earlier in the week.
We have seen a rapid unwind of leverage, with futures open interest dropping sharply. That kind of deleveraging is often healthy longer-term, but in the short term, it keeps pressure on the price. Unless Bitcoin can reclaim and hold above 70,000, the near-term bias remains neutral to bearish as forced selling and reduced risk appetite continue to weigh.
Commodities: The Fear Trade and War Premiums
Gold: Gold has been the standout performer of the week, driven almost entirely by geopolitical demand. Spot gold is actively testing the psychological 5000 level. Escalating tensions in the Gulf of Oman and increased military rhetoric have triggered aggressive safe-haven buying, keeping the trend firmly bullish. However, elevated US interest rates are acting as a counterbalance; higher rates increase the opportunity cost of holding gold, which is why we are seeing the price coil near highs rather than explode through them.
Oil: Oil has been at the very centre of the geopolitical storm. Crude benchmarks have surged to six-month highs as traders price in a significant war premium. Brent moved above 72.00, up more than 6% on the week, while WTI climbed past 66.50, supported further by a surprise 9 million barrel draw in US inventories. The major concern remains the Strait of Hormuz—any disruption to the 20% of global oil that flows through there would be viewed as a red line and could send prices sharply higher. Meanwhile, OPEC+ has maintained its production freeze through March, though there are signals output may increase in April.
The PropIQ Trading Edge
In chaotic environments like this, it is easy to get whipped around by news swings. Remember the golden rule: Trade what you see, not what you think. Respect the trends, use your stop losses, and manage your daily drawdowns carefully. The market always leaves footprints for those patient enough to follow them.
Good trading for the week ahead.
Disclaimer
This market commentary is provided for educational and informational purposes only. It reflects the opinions of the author at the time of writing and should not be taken as financial or investment advice.
Funded Trading Plus operates evaluation and simulated funded challenges, not live trading accounts. All references to trading, strategies, or market opportunities relate to simulated trading environments. Past market performance or individual trader results are not indicative of future outcomes.
About Andrew Lockwood
Andrew Lockwood is a seasoned professional trader with over 40 years of experience in financial markets. Starting his career on the floor of the London International Financial Futures Exchange (LIFFE) in the 1980s, Andrew has traded through multiple market cycles and volatility regimes. Today, he specialises in prop trading strategies, focusing on technical setups, risk management, and trader psychology. As the founder of PropIQ and a leading mentor, Andrew is dedicated to training the next generation of prop traders with proven, real-world trading methods.