Markets Stabilize as Oil Tests $100; Dollar Strengthens, Gold Finds Support

The S&P 500 Index and the Nasdaq 100 Index have recorded gains of 0.87% and 0.97% respectively in early trading on Monday, currently priced at $6,680 and $24,555. This uptick comes amid rising oil prices, which have exerted significant pressure on equity markets.

Oil Prices and Market Reactions

Over the weekend, the United States conducted a strike on Kharg Island, a critical oil export terminal in Iran. Although there was no damage to oil infrastructure, the attack has heightened concerns among oil traders. Historically, markets have only experienced negative returns when oil prices exceed $100 for ten consecutive days. Despite recent increases, West Texas Intermediate (WTI) has not managed to close above this threshold.

Data indicates that maintaining oil prices above $100 for 11 to 20 days has historically led to a 3-month return of approximately -0.5%. If prices remain above $100 for 30 days, the 3-month return drops to -6.4%, with a negative 12.3% over a 12-month period. JPMorgan has warned of a potential 10% correction in the S&P 500 should oil prices stabilize at $100 per barrel.

In terms of economic data, the Industrial Production figures and earnings reports from Dollar Tree are anticipated to attract attention today. Additionally, the Fear & Greed Index has entered the extreme fear zone for the first time this year. Sectors expected to perform positively this week include fertilizers, defense, utilities, and energy.

Technical Analysis of Indices

From a technical perspective, both indices have rebounded from the 200-day Simple Moving Average (SMA) at $6,625 and $24,370. However, on a weekly basis, both indices closed below critical support levels of $6,730 and $24,710, which have acted as significant support since mid-December. This situation suggests a potential “dead cat bounce” at these levels, indicating a retest of the breakdown. A bearish outlook is anticipated as the indices attempt to retest the $6,730 and $24,710 levels, which also align with the 8-day Exponential Moving Average (EMA).

Gold Market Dynamics

Gold has begun the week on a positive note after two weeks of declines, currently trading above $5,000 in early Asian markets. This movement comes as investors navigate heightened geopolitical tensions alongside a stronger U.S. dollar. The metal briefly dipped to around $4,970 before recovering, as markets evaluate the implications of the ongoing U.S.-Israel conflict with Iran on global energy supplies.

The geopolitical situation has contributed to rising oil prices, which in turn raises inflation concerns and diminishes expectations for near-term Federal Reserve rate cuts. According to the CME FedWatch tool, the market currently assigns a negligible chance of a rate cut at the upcoming Fed meeting. Higher borrowing costs typically exert downward pressure on non-yielding assets like gold.

Despite strong inflows into the U.S. dollar acting as a headwind for gold, persistent safe-haven demand and ongoing central bank purchases continue to support the metal. Gold remains up approximately 16% year-to-date, reflecting its underlying strength.

Technically, gold is finding support at its 50-day SMA level of $4,940, with resistance identified at Friday’s high of $5,128. While short-term movements may be sensitive to dollar and rate expectations, unresolved geopolitical risks could limit downside potential and encourage renewed buying interest on dips. Silver is under pressure, trading around $80.40, with resistance seen at the 20-day SMA of $84 and support around $77.

Dollar Performance and Market Sentiment

The U.S. dollar concluded a volatile week at its highest level this year, closing at $100.49. It has recorded a second consecutive weekly gain, rising nearly 2.8% since the onset of the Middle East crisis. This trend underscores a robust demand for the dollar as a safe haven amid ongoing geopolitical tensions and escalating energy prices. Currently, it is trading around $100.30.

Fundamentally, the dollar remains bullish. The DXY index will likely track movements in crude prices, which closed around $100 a barrel on Friday. Any developments that escalate the crisis are expected to support crude prices and drive haven flows to the dollar index. Further support for the dollar is anticipated unless the Federal Reserve surprises the market by maintaining rate cuts or if the European Central Bank (ECB) and Bank of Japan (BoJ) adopt aggressive tightening measures.

The Federal Reserve is scheduled to announce its interest rate decision during its March 17-18 meeting, with markets pricing in a near-certain rate hold. Traders are adjusting their expectations for Fed rate cuts this year in light of rising inflation concerns. Institutional investor flows have reportedly reached their strongest levels in nearly two years, with speculative trades reducing their bets against the dollar by nearly 67%.

The ECB and the Bank of England are expected to keep interest rates unchanged in their upcoming meetings. Any guidance regarding inflation risks and future rate cuts could trigger significant volatility across foreign exchange markets. Swaps pricing indicates that the ECB may tighten monetary policy more quickly than previously anticipated due to rising energy costs and inflation fears.

Technically, the DXY index has near-term support at $100, followed by the 20-day EMA at $99.82. Resistance is likely near last Friday’s high of $100.49, with additional resistance in the $100.60-$100.70 range. The EUR/USD pair has support from Friday’s close of 1.141, while resistance may be around 1.151, reflecting the dollar’s strength.

Oil Market Volatility

Oil prices have shown significant volatility amid ongoing tensions in the Middle East, with oil futures rising approximately 40% over the past two weeks. Although some gains have been pared, prices remain elevated following the U.S. strike on military targets in Iran. The closure of the Strait of Hormuz has impacted crude flows, leading to increased premiums for physical barrels and fuel prices, prompting some producers to reduce output.

In response to supply disruptions, the International Energy Agency (IEA) plans to release an unprecedented stockpile to Asia, while Europe and America will receive supplies beginning at the end of March, with details on volume and pace yet to be clarified. Saudi Arabia is offering long-term oil buyers the option to receive April shipments through the Red Sea port of Yanbu, amid ongoing disruptions in the Strait of Hormuz.

Brent crude, which rallied 11% last week to reach a high of $119.50, is currently up 0.9% at $104.78, with psychological support at $100. WTI crude is trading near $99, with initial support around $92–$93, corresponding to a previous breakout zone. The next support range is between $88 and $90, where buyers have previously entered during pullbacks. The $100 level remains a critical psychological resistance point, with a sustained move above this threshold potentially attracting additional buying momentum.

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Published on 2026-03-16 19:47:00 • By Editorial Desk