The markets were again all about the oil prices, as the Middle East conflict continued to spill into everything else. Brent gained about 8.9% over the week to settle around $112, while WTI slipped modestly to about $98. However, both remain dramatically higher than a month ago, up roughly 55% and 47% respectively—enough to keep inflation anxiety elevated even when spot prices pause.

The Fed's decision to keep rates unchanged at 3.50%-3.75% left no surprises. It was broadly expected, and the heightened uncertainty due to the conflict only fortified the "hawkish wait" approach. That caution looked increasingly justified as inflation data surprised to the upside again, with February PPI printing at +0.7% m/m versus +0.3% expected, and core PPI at +0.5% versus +0.3% consensus.

Despite risk-off conditions and rising U.S. yields that would normally lift USD, the greenback lagged as policy divergence took center stage: markets increasingly believe the ECB and, to a lesser extent, the BoE may be forced into a more aggressive stance to counter an energy shock that hits Europe asymmetrically. That re-pricing supported EUR and kept USD offered, leaving the Dollar Index to retreat but still above key support around 98.5—an uneasy stalemate between a waning rate advantage on the margin and episodic haven demand.

Pairs in Focus

1.EUR-AUD

This pair has shown some signs of bottoming, although it would be premature to declare a victory for the bulls.

EUR-AUD Daily Chart, Source: TradingView

The level in focus remains 1.65800, and a break and retest of this level is worth watching for a meaningful short-term reversion to the upside.

2. AUD-SGD

After a strong bullish start to the year, AUD SGD ran into resistance at the previous year's highs.

AUD-SGD Daily Chart, Source: TradingView

The technical setup is for it to either do one of these two things: break above 0.91 and overcome this strong resistance. Or, decline to 0.89 and test the previous support.

The Week Ahead

The coming week will test whether that USD underperformance is a temporary dislocation or the start of a more persistent "Europe out-hawks the Fed" phase.

Oil's volatility remains a dominant macro input, and the most important factors for FX are the conflict-driven energy premium and the uncertainty around LNG disruptions. That question is the main unknown for Europe, which risks intensifying inflation.

At the same time, U.S. rates have technically broken higher, and if 10-year yields continue to grind toward the next resistance zone near 4.6%, USD could regain traction—especially against lower-yielders—if the market starts interpreting "hawkish wait" as "higher for longer.

Two Fed speeches are on the calendar, including Vice Chair Barr and SF Fed's Daly. Their input might provide on policymakers' appetite for inflation persistence and conflict factors. Meanwhile, flash PMI on Tuesday, new home sales, and weekly jobless claims will offer a reading on higher energy impact.

Equity positioning looks fragile with the Dow hovering above the psychologically massive 45k support zone; a decisive break could trigger a deeper deleveraging episode that would likely restore classic liquidity demand for USD and JPY.

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