Tensions in the Middle East are escalating as Donald Trump extends the deadline for negotiations with Iran, which has opted out of compliance, raising fears of further instability in the energy sector. This uncertainty is affecting market sentiment, particularly as investors brace for critical macroeconomic data releases, including U.S. labor market figures and Eurozone inflation stats. The situation is pressuring key assets, notably EURUSD, oil prices, and the S&P 500.

The oil market is experiencing unprecedented volatility, with March prices potentially surging over 50% due to the blockade of the Strait of Hormuz. Analysts warn that if negotiations fail, oil prices could reach record levels exceeding $150 per barrel. Meanwhile, U.S. equities remain resilient despite geopolitical risks, but the looming earnings season could reveal how companies are managing rising energy costs and inflationary pressures.

Market participants should closely monitor upcoming economic data, as resurgent inflation could prompt further interest rate hikes, echoing the downturn seen in 2022.

Source: xtb.com