The foreign exchange market for the week that ended on March 29th was sensitive to a series of headlines concerning the Middle East conflict. Amid ongoing military exchanges between the U.S. and Iran, the dollar strengthened against other currencies. The USDJPY reached the 160 yen range on Friday, while the EURUSD and GBPUSD sagged throughout the week.

March 23 (Mon)

The escalation of the Middle East conflict prompted traders to buy the dollar as a safe-haven currency, lifting the USDJPY to a daily high of 159.65 yen. However, after President Donald Trump announced that the U.S. would postpone its military strike on Iran by five days, the pair plummeted to the 158 yen range.

Conversely, the EURUSD surged from below the 1.15 level to the 1.163 range. Meanwhile, the GBPUSD initially struggled to rise above the lower 1.33 range and fell to the 1.325 range. However, after Trump's announcement, the pair surged to the 1.347 range.

March 24 (Tue)

The dollar was bought back as Iran denied negotiations with the U.S. The USDJPY rebounded to 159.19 yen. However, news reports that the U.S. had sent a proposal to resolve the conflict contributed to dollar selling, pushing the pair down to the 158.3 yen range during trading hours.

The EURUSD fell to 1.155, but later rebounded to 1.162. The GBPUSD also rebounded to the 1.34 range after falling to the 1.335 range.

March 25 (Wed)

The stalemate in U.S.-Iran negotiations amplified the risk-off atmosphere and contributed to the strong dollar.

Although some headlines temporarily pushed the USDJPY down, the pair moved steadily throughout the day and reached as high as 159.49 yen. The EURUSD initially rose to 1.1630 but later fell back to the 1.155 range. The GBPUSD struggled to advance, concluding the daily trading session in the mid-1.33 range.

March 26 (Thu)

Although the foreign currency market lacked a clear direction, the USDJPY extended its uptick to touch 159.84 yen. The EURUSD continued to fall to the 1.152 range, and the GBPUSD dropped below the 1.33 level during trading hours.

March 27 (Fri)

The Japanese government warned against the weak yen. Nevertheless, media reports about the attack on an Iranian heavy-water reactor accelerated dollar buying. The USDJPY rose to a high of 160.41 yen. The EURUSD rebounded to the 1.154 range but later fell just above the 1.150 level. The GBPUSD extended its downtrend to the 1.325 range to conclude the weekly trading session.

March 30 (Mon)

• 14:30 U.S.: Press conference by Federal Reserve Board (FRB) Chair Jerome H. Powell

March 31 (Tue)

• 06:00 U.K.: October-December Quarterly Gross Domestic Product (revised GDP)
• 09:00 Europe: March Harmonised Index of Consumer Prices (preliminary HICP)
• 09:00 Europe: March Harmonised Index of Consumer Prices (preliminary HICP core index)
• 23:50 Japan: Bank of Japan (BOJ) January-March Short-Term Economic Survey of Enterprises (Tankan)

April 1 (Thu)

• 12:15 U.S.: March ADP National Employment Report
• 12:30 U.S.: February Retail Sales
• 12:30 U.S.: February Retail Sales (excluding automotives)
• 14:00 U.S.: March ISM Manufacturing PMI

April 3 (Fri)

• 12:30 U.S.: March change in nonfarm payrolls
• 12:30 U.S.: March unemployment rate
• 12:30 U.S.: March average hourly earnings
• 14:00 U.S.: March ISM Non-Manufacturing PMI (composite)

The following currency pair charts are analyzed using an overlay of the ±1σ and ±2σ standard deviation Bollinger Bands, with a 20-period moving average.

The ongoing conflict between the U.S./Israel and Iran has been pushing up the dollar. The USDJPY reached the 160 yen range for the first time since 2024. Although the market is cautious about potential market intervention, some market participants believe that even direct intervention involving actual trading will not have a significant impact sufficient to reverse the trend. As long as no progress is made toward resolving the conflict, the dollar will continue to strengthen against the yen.

Next is an analysis of the USDJPY daily chart.

The pair has been extending its uptick while overcoming some dips and broke above the milestone of the 160 yen level to conclude last Friday's trading session. Although profit-taking by traders may temporarily push the pair below the 160 yen level, it will continue to make higher highs and lows and climb higher.

We continue with an analysis of the USDJPY weekly chart.

The pair broke above the 160 yen level to conclude last week's trading session. However, as the pair reached the upper limit of the band, it may temporarily decline. Meanwhile, the long lower wicks on the latest three candlesticks indicate an increase in buying pressure. In any case, it is safe to say that the uptrend will likely continue.

Although speculation emerged that the European Central Bank (ECB) would make an early rate hike, the dominant outlook is now that the prolonged conflict in the Middle East and subsequent high oil prices will weigh on the Eurozone economy. As long as the dollar remains favored as a safe-haven currency, it will strengthen against the euro throughout the week.

Next is an analysis of the EURUSD daily chart.

After reaching a low of 1.1416, the pair continued to rally. However, the rally halted earlier last week, and the pair then continued to fall. It is important to watch whether the pair falls below the 1.1416 level. For now, it would be best to take advantage of a temporary rally to sell the euro, as the downtrend is expected to continue.

We continue with an analysis of the EURUSD weekly chart.

On the weekly chart, the pair withstood the downtrend just above -2σ and formed a higher high and a higher low than the previous week. However, mounting selling pressure capped the pair's rally, and it concluded last week's trading session with a negative candlestick. It is currently important to watch whether the pair can remain above the 1.14 level.

The U.K. economy is being weighed down by high oil prices resulting from the Middle East conflict. Thus, the dollar is strengthening against the pound. If the situation heads toward calmness, demand for the dollar will decrease, and in turn, the pound will strengthen. However, for the time being, the dollar will continue to strengthen.

Next is an analysis of the GBPUSD daily chart.

Last week, the pair failed to break above the 1.3483 level and instead concluded the trading session on Friday by falling below -1σ. More traders will likely take advantage of a temporary rally to sell the pound. If the pair falls below the latest low, the downtrend will likely accelerate toward 1.30.

We continue with an analysis of the GBPUSD weekly chart.

On the weekly chart, the pair repeatedly faced selling pressure every time it broke above the middle line and concluded last week's trading session below the previous week's close. For now, it is important to watch whether the pair can stay above the 1.32 level. Meanwhile, if the pair breaks above the 1.3483 level, it will likely return to inside the fixed range.

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