Australia CPI cools to 3.7% but RBA stays hawkish as Iran war energy risks loom. Gold recovers above $4,600, oil near $88. UK CPI, PMIs, and jobless claims this week. Key levels inside.
Australian CPI Falls to 3.7% but RBA Hawkish – Iran War Fuels Oil & Gold Volatility
📌 Key Takeaways – March 25, 2026
- Australian CPI fell to 3.7% YoY (vs. 3.8% expected), but the RBA remains hawkish as energy-driven inflation from the Iran war is expected to push prices higher in coming months.
- Middle East tensions continue to drive volatility across asset classes; conflicting signals on US-Iran talks keep markets on edge.
- Oil prices remain elevated near $88/barrel, with geopolitical risk premium persisting despite brief dips on ceasefire hopes.
- Gold is recovering above $4,600 as the US Dollar retreats on risk-on flows, but a technical “Bear Cross” looms.
- UK CPI is expected to remain sticky at 3.0% YoY, reinforcing market bets on a Bank of England rate hike in April.
- This week’s key events: Flash PMIs (released yesterday), Australia & UK CPI (Wednesday), US jobless claims (Thursday), UK retail sales (Friday).
By Zahari Rangelov – Published: March 25, 2026 | Updated:
Australian inflation cooled slightly, but the RBA remains hawkish as Iran‑war energy shocks loom. Markets are weighing de‑escalation hopes against persistent geopolitical risks driving sharp reversals in gold, oil, and the US Dollar. With Flash PMIs already behind us, focus shifts to UK CPI, US jobless claims, and retail sales later this week. We break down the latest price action across FX, commodities, and indices, highlighting key levels for traders. Here’s what you need to know for the sessions ahead.
Market Snapshot – March 25, 2026
| Asset | Current Price | Support | Resistance |
|---|---|---|---|
| DXY (US Dollar Index) | 99.070 | 98.80 / 98.50 | 99.50 / 100.00 |
| EUR/USD | 1.15990 | 1.1550 / 1.1500 | 1.1630 / 1.1680 |
| GBP/USD | 1.33834 | 1.3330 / 1.3300 | 1.3425 / 1.3495 |
| AUD/USD | 0.69759 | 0.6950 / 0.6900 | 0.7020 / 0.7060 |
| USD/JPY | 158.878 | 158.00 / 157.50 | 159.50 / 160.00 |
| USD/CAD | 1.37732 | 1.3700 / 1.3650 | 1.3820 / 1.3880 |
| USD/CHF | 0.78962 | 0.7850 / 0.7820 | 0.7950 / 0.8000 |
| NZD/USD | 0.58150 | 0.5780 / 0.5750 | 0.5850 / 0.5880 |
| Gold (XAU/USD) | $4,573 | $4,490 / $4,400 | $4,619 / $4,700 |
| WTI Crude Oil | $87.875 | $85.00 / $82.50 | $90.00 / $93.50 |
| S&P 500 | 6,609 | 6,550 / 6,500 | 6,650 / 6,700 |
| NASDAQ 100 | 24,208 | 24,000 / 23,800 | 24,500 / 24,800 |
| US30 (Dow Jones) | 46,122 | 45,800 / 45,500 | 46,500 / 47,000 |
| Bitcoin (BTC/USD) | 70,765 | 68,500 / 67,000 | 72,000 / 74,000 |
Geopolitical Backdrop: Iran War Uncertainty Weighs on Markets
The ongoing conflict involving Iran continues to be the primary driver of volatility across forex, commodities, and equities. Reports that the United States may be seeking a month‑long ceasefire and has sent a 15‑point plan to Iran briefly boosted risk sentiment, sending the US Dollar lower and fueling a relief rally in stocks and gold.
However, diplomatic sources indicate that formal negotiations have not yet been scheduled, and Iran’s Fars News Agency denies any direct or indirect communication with Washington. Meanwhile, the Pentagon is reportedly deploying thousands of additional troops from the 82nd Airborne Division to the Middle East, underscoring that the risk of escalation remains high.
Market impact: The conflicting signals have created a volatile environment where safe‑haven assets like the US Dollar and Gold experience sharp reversals, while oil prices remain elevated with a substantial geopolitical risk premium.
Oil Outlook: Geopolitical Risk Premium to Persist
WTI Crude Oil is trading near $87.88, down slightly on ceasefire hopes but still well above pre‑conflict levels. The market is caught between two forces:
- Downside pressure: Any credible sign of de‑escalation in the Middle East could trigger a sharp sell‑off, as traders unwind geopolitical risk premiums.
- Upside risks: If tensions flare again—whether through military action or disruption to shipping lanes in the Strait of Hormuz—oil could quickly retest the $90+ level.
For traders, elevated volatility is likely to continue.
Key levels: $85.00 (near‑term support) and $90.00 (psychological resistance). A sustained break above $90 would signal that the market is pricing in a prolonged conflict with potential supply disruptions.
Australian CPI Falls to 3.7%: Why the RBA Remains Hawkish
The Data
Australia’s February Consumer Price Index (CPI) came in at 3.7% year‑on‑year, slightly below the 3.8% consensus and down from the previous reading. The monthly CPI was flat at 0.0%, while the RBA’s preferred Trimmed Mean CPI rose 0.2% month‑on‑month and 3.3% annually.
Why the RBA Isn’t Backing Down
Despite the mild downside surprise, the Reserve Bank of Australia (RBA) is expected to maintain its hawkish bias—and possibly hike rates further—for three key reasons:
- Energy prices are about to surge: The February data does not yet reflect the sharp rise in oil and energy costs triggered by the Iran war. Analysts at Westpac project inflation could climb to around 4.6% YoY in the June quarter due to the energy shock.
- Second‑round effects: Higher energy costs risk feeding into wages and broader inflation expectations, which the RBA is keen to prevent.
- Global central bank stance: With the Fed, ECB, and BoE all signaling caution amid energy‑driven inflation pressures, the RBA is unlikely to pivot dovishly.
What this means for AUD/USD: The Australian Dollar initially dipped on the soft CPI print but found support near 0.6960. The pair is currently trading at 0.6976.
If markets continue to price in RBA tightening, the Aussie could recover toward 0.7060. However, global risk sentiment—particularly developments in the Middle East—remains the dominant driver.
Major Currency Pair Analysis
EUR/USD: Risk-On Flows Lift Euro
EUR/USD is trading at 1.1599, gaining ground as risk appetite returns on US‑Iran ceasefire hopes. The pair has found support above 1.1600, but upside remains capped ahead of key US data later this week.
Technical levels: Resistance at 1.1630 (recent high) and 1.1680. Support at 1.1550.
USD/JPY: Yen Weakens Despite Hawkish BoJ
USD/JPY is grinding higher toward 159.00 after dipping earlier in the week. The Bank of Japan’s minutes signaled a hawkish tilt, with policymakers noting upside inflation risks from rising oil prices. However, concerns that higher energy costs could weaken Japan’s economy are weighing on the Yen, offsetting the hawkish signal.
Intervention watch: Traders remain cautious as USD/JPY approaches levels that triggered official intervention in 2024. The 159.50–160.00 zone is a potential flashpoint.
GBP/USD: All Eyes on UK CPI
GBP/USD is holding above 1.3380 ahead of Wednesday’s UK inflation report. Markets expect headline CPI to remain at 3.0% YoY, with core inflation running at 3.1%. Sticky inflation would reinforce expectations that the Bank of England will hike rates again at its April 30 meeting, supporting the Pound.
Technical levels: Resistance at 1.3425 (200‑day SMA). A break above could open the door to 1.3495.
USD/CAD: Oil and Risk Sentiment in Focus
USD/CAD is trading at 1.3773, with the Canadian Dollar finding support from elevated oil prices. The pair’s direction will depend on whether geopolitical tensions escalate (bullish USD/CAD) or de‑escalate (bearish USD/CAD).
Gold Analysis: Recovery or Dead Cat Bounce?
Gold (XAU/USD) is trading at $4,573, recovering from recent lows near $4,490. The move higher is driven by:
- US Dollar weakness as risk appetite returns on ceasefire hopes.
- Lower Treasury yields following the risk‑on shift.
However, the technical picture remains fragile. The 21‑day Simple Moving Average (SMA) is on the verge of crossing below the 50‑day SMA, a pattern known as a “Bear Cross.” If confirmed on a daily closing basis, this would signal that further downside is likely.
Key levels to watch: Resistance at $4,619 (100‑day SMA). Support at $4,490 (recent low) and $4,400 (critical psychological level).
For gold traders, the coming days will be a battle between:
- Bullish factors: Middle East uncertainty, central bank buying, and a weaker USD.
- Bearish factors: Hawkish central banks (higher rates are negative for gold) and the technical Bear Cross.
Equity Markets: Rally on Ceasefire Hopes
US index futures are trading higher, with the S&P 500 at 6,609, the NAS100 at 24,208, and the US30 at 46,122. The risk‑on mood follows reports of potential US‑Iran talks, which eased fears of a broader conflict that could disrupt global growth.
However, the rally may be fragile. Any setback in diplomatic efforts could quickly reverse gains, especially given that valuations remain elevated and central banks are still hawkish on inflation.
Corrected: What to Watch This Week (March 23–27)
| Event | Date | Impact | What to Expect |
|---|---|---|---|
| Flash PMIs (France, Germany, Eurozone, UK, US) | March 24 | High | Early read on March business activity; readings above 50 signal expansion. Strong numbers support hawkish central bank bets. |
| Australia CPI (February) | March 25 | High | Came in at 3.7% YoY (slightly below 3.8% expected). RBA remains hawkish on energy risks. |
| UK CPI (February) | March 25 | High | Expected at 3.0% YoY. A hotter print would cement BoE rate hike expectations; a cool print could weigh on GBP. |
| US Initial Jobless Claims | March 26 | Medium | Forecast 225K. A sharp rise would raise recession fears; a drop reinforces labour market strength. |
| UK Retail Sales (February) | March 27 | High | Forecast 0.4% m/m. Strong sales support BoE hawkishness; weak data could pressure GBP. |
Strategic Analysis: Why This Market Requires a Different Approach
For traders, the current environment defined by geopolitics, central bank divergence, and elevated volatility rewards those who focus on strategic positioning rather than short‑term noise.
| Theme | Strategic Implication |
|---|---|
| Geopolitical risk | Hedge with a mix of safe havens (USD, Gold) and energy‑exposed currencies (CAD, NOK). Avoid binary directional bets. |
| RBA hawkishness | AUD may be undervalued relative to rate expectations; consider long AUD positions with tight risk management. |
| Oil volatility | Use options strategies (e.g., straddles) to capture volatility without predicting direction. |
| Gold’s technical setup | Wait for confirmation above $4,619 before adding longs; a break below $4,490 could accelerate selling. |
Conclusion
Markets are caught between two powerful forces: the hope of Middle East de‑escalation and the reality of persistent inflation driven by energy costs. Australia’s slightly softer CPI print has done little to change the RBA’s hawkish outlook, as the bigger inflation wave is yet to arrive. This week’s data especially UK inflation and global PMIs are testing whether the risk‑on rally can sustain. For traders, the key to navigating this environment is to avoid chasing headlines and instead focus on strategic levels, risk management, and the structural themes energy, central bank policy, and geopolitical risk that will define the months ahead.
About the Author
This analysis was prepared by Zahari Rangelov, specializing in broker analysis, regulatory research, and market strategy. With over a decade of experience in financial markets, his focus has been on providing traders with actionable insights backed by data.
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