The past week clearly demonstrated that when the economic calendar is light on news, markets are ruled by geopolitics and psychology. Despite the lack of high-profile regulatory meetings, markets remained in active motion. Washington's ultimatums and the Fed's hawkish sentiment continue to dictate the rules of the game.
The US Dollar Index (DXY) rose by 0.9%, marking its best performance in four months.
The Minutes effect: The released FOMC minutes served as a cold shower for the market. It revealed that the Federal Reserve is seriously discussing not only a pause but a potential rate hike if inflation remains stubborn. This triggered a massive short squeeze as speculators betting against the dollar were forced to cover their positions en masse.
The key advantage: The dollar has once again reclaimed its safe-haven status. With news of aircraft carrier movements in the Persian Gulf, investors prefer to stay in cash and the US currency.
The GBP/USD pair declined to 1.3498, losing approximately 1%.
Downward pressure: A dramatic slowdown in UK inflation early in the week signaled to the market that the Bank of England could be the first among major regulators to cut rates in March. Aside from that, domestic political factors are weighing in, with calls for Prime Minister Keir Starmer’s resignation and the arrest of Prince Andrew.
Support factors: Unexpectedly strong retail sales data (+1.8%) prevented the pound from collapsing below the psychological support level of 1.3437.
Advice: The pound is currently extremely sensitive to any rumors or shifts in expert rhetoric. Any hint of political instability in London could send the pair toward 1.3360.
The black gold market is ignoring rising inventory data, focusing solely on the Middle East.
Oil: Brent is holding above $71-72. The ultimatum to Iran has created a war premium that traders are in no rush to lock in before the weekend.
Gold: The metal is behaving nervously. After a surge toward $5,000, it has quieted down as a strong dollar and rising US Treasury yields hinder a further rally.
Yen (JPY): The currency fell by more than 1%, consolidating above 154.90. Even reports that the US Treasury secretly reviewed yen rates in January do not support the Japanese currency against a hawkish dollar.
Australian Dollar (AUD): Holding the line at 0.7074 thanks to record-low unemployment in Australia (4.1%). The RBA remains one of the few central banks maintaining a truly hawkish stance.
This week proved that even without Non-Farm Payrolls or central bank meetings, the market can have powerful moves based solely on expectations and fears. For a trader, this is a time for maximum caution. Make sure to avoid unnecessary risk and carefully plan every trade.
Do not let market noise jeopardize your deposit. If volatility is daunting or your capital does not allow you to weather such sharp swings, it is time to move to a professional level.
We have a special agent ready to answer all your questions about the prop challenge and help you choose the prop trading tariff plan that’s right for you. This is the best way to capitalize on market opportunities with hefty capital without putting your own savings at risk.
76