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Middle East Political Tensions Influence Markets: Focus U.S.CPI, FOMC Minutes and U.K. GDP

Monday October 9th, 2023 started relatively quiet on the forex market as US markets were closed for the Columbus day holiday. However, the escalating tensions in the Middle East continued to influence trading in European and Asian sessions. The ongoing Palestine-Israel conflict has been a major factor affecting market sentiment and is expected to continue to do so.

EUR/USD Pair Starts Week with Subdued Bearish Undertone Amid Ongoing Middle East Tensions

EUR/USD pair started the week with a subdued bearish undertone settling near the 1.0600 mark before falling back to below 1.0550 in the early European trading session amid the ongoing political tensions in the Middle East region.

It’s important to note that political tensions in any region can have a significant impact on currency pairs like the EUR/USD. When investors perceive increased risk, they tend to move their money into safe-haven assets like gold.

EURUSD Daily Chart

EURUSD Daily Chart

Chart From TradingView

As you can see from the EURUSD Daily Chart, the Euro (EUR) has been showing noticeable signs of weakening against the US Dollar (USD). This has caused the EUR/USD currency pair to decline and reach the 1.0530 level.

This drop comes after the Euro had experienced three consecutive sessions of gains earlier on. This shift in momentum highlights the increasing strength and dominance of the US Dollar in the current market.

On the other hand, the USD is gaining back the ground it previously lost and is now returning to the 106.30 region, as indicated by the USD Index (DXY). This is in response to the overall cautious attitude in global markets at the start of the week.

Dollar Index Chart (DXY)

Dollar Index Chart (DXY)

The underlying bullish trend in the greenback is still going strong, thanks to robust US yields and the Federal Reserve’s tight-for-longer stance. However, the US Bonds Market will be closed on Monday for Columbus Day Holiday.

USDJPY Predictions: USD/JPY Set to Maintain Consolidative Stance for Weeks Ahead

USD/JPY predicted to maintain consolidative stance in coming weeks. As of the morning session the USD/JPY currency pair was seen hovering around the 149.00 level.

USD/JPY Daily Chart

USD/JPY Daily Chart

Middle East tensions impact demand for safe-haven assets and fuel uncertainty. Bank of Japan intervention limits upside, while positive NFP report raises expectations of interest-rate hike. Volatility ahead as CPI data released on Thursday, with steady growth anticipated.

GBP/USD Currency Pair Below 1.2200

Escalating tensions in the Middle East, coupled with bullish expectations for the Federal Reserve, have pushed the GBP/USD currency pair below 1.2200.

GBP/USD Daily Chart

GBP/USD Daily Chart

GBP/USD remained relatively stable last week, with a minor recovery in the second half. However, a surge in safety concerns at the beginning of this week led to a bearish gap and a drop below 1.2200.

Recent reports highlight that the death toll has exceeded 1,100 due to escalating conflicts between Israel and Hamas. As a result, investors sought safety in the US Dollar, causing the USD Index to rise above 106.50. After a slight decline last week, the USD is now up 0.4% for the day.

AUD/USD Expected to Trade in a Consolidative Pattern

In the coming days, AUD/USD is likely to continue trading within a range. The Australian Dollar has temporarily halted its upward momentum due to a resurgence in the US Dollar. However, strong commodity prices driven by geopolitical tension in the Middle East are providing some support to the Aussie pair.

AUDUSD Daily Chart

AUDUSD Daily Chart

Surging US Dollar Pushes USD/CAD Price Above 1.3650 Level

The USD/CAD currency pair broke its two-day losing streak and traded higher around the 1.3670 level.

USDCAD Daily Chart

USDCAD Daily Chart

According to analysis, if the USD/CAD is able to break the psychological level of 1.3700, there is potential for further gains with an opportunity to reach the 1.3750 level and previous week’s high at 1.3785. However, there is downward pressure on USD/CAD due to rising oil prices caused by the Palestine-Israel conflict.

Middle East Conflicts Drive WTI Crude Oil Price Surge, Experts Predict Possible $100 per Barrel Milestone

During the Asian session, the WTI crude oil price surged with a significant $2 gap, and continued to rise by $2.5. This increase is attributed to mounting global supply concerns sparked by recent conflicts in the Middle East. Experts believe that the Palestine-Israel conflict has played a significant role in driving up crude oil prices, with speculation that prices may even surpass the $100 per barrel mark.

In response to an attack by Hamas on Israel, both Brent and WTI prices experienced a notable 2% jump, as reported by CNBC. However, it’s essential to recognize that crude oil prices are influenced by a variety of factors, including geopolitical tensions, supply and demand dynamics, economic growth, and weather patterns.


CFDs on WTI Crude Oil

Gold spot price increases to $1,850 amid geopolitical tensions caused by Palestine-Israel conflict

The live gold spot price climbed to the $1,850 area, with a bid of $1,850.40 and an ask of $1,851.40 per ouncet. This increase in the price of gold may be due to escalating geopolitical tensions caused by the Palestine-Israel conflict.

XAUUSD Daily Chart

xauusd chart

Gold is often seen as a safe-haven asset during times of uncertainty and market volatility, which may explain why investors are reacting to this news by buying more gold.

This Week In Focus

Later this week, several key economic events are expected which could impact the direction of the fx market. On Wednesday October 11th, the US will release data regarding Core PPI m/m, PPI m/m, and FOMC meeting minutes.

On Thursday October 12th, the UK will release GDP m/, while the US will release data regarding Core CPI m/m, CPI m/, and unemployment claims.

On Friday October 13th, China will release data regarding CPI y/y and PPI y/y. Additionally, BOE Governor Bailey and EUR President Largade will speak while the US will release Prelim UOM Consumer Sentiment and Inflation Expectations data.

It remains to be seen how these economic events will affect the forex market. Investors will be closely monitoring the situation in the Middle East as well as upcoming economic data releases in order to make informed trading decisions.


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  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.

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