War Fears Fuel Inflation; Markets Pivot to U.S. ADP & PMI

ATFX Market Outlook - 4th March 2026

War Fears Fuel Inflation; Markets Pivot to U.S. ADP & PMI

(By ATFX Analyst Team)

Summary

·       Geopolitical Tensions: The expansion of conflict following U.S.-Israeli strikes on Iran has intensified market expectations of persistent global inflation.

·       Market Reversal: Donald Trump’s announcement regarding the provision of insurance and escorts for tankers transiting the Strait of Hormuz caused the U.S. Dollar and Treasury yields to retreat sharply from their highs, leading to a rebound in U.S. equities.

·       Key Focus Today: Investors are monitoring the Eurozone January PPI and final Services/Composite PMI readings. The U.S. February ISM Non-Manufacturing PMI is expected to remain steady at 53.5 (previously 53.8); a stable reading would be viewed as a positive signal. U.S. ADP Employment is projected to increase by 50,000 (previously 22,000). Early Thursday morning, the Federal Reserve will release the Beige Book, which will be scrutinized for insights into economic, inflation, and employment trends that may signal the future path of Fed policy.

Global Market Overview

As the conflict with Iran enters its fourth day, rising oil prices continue to fuel inflation concerns. U.S. stock markets closed sharply lower on Tuesday, with the Dow falling 0.8%, the S&P 500 dropping 0.9%, and the Nasdaq sliding 1%. Driven by inflation fears, U.S. Treasury yields climbed steadily, pushing the U.S. Dollar to multi-month highs before it retraced some gains. The EUR/USD ended the session down 0.6% at 1.1616.

Gold prices plummeted, pressured by a stronger dollar and darkening prospects for interest rate cuts. Concerns that the Middle East conflict could become prolonged have heightened inflation anxieties; spot gold plunged 4.5% to $5,086.47 per ounce. Meanwhile, the escalation of hostilities involving the U.S., Israel, and Iran has disrupted Middle Eastern energy transport. U.S. crude oil settled up 4.7% at $74.56 per barrel, marking its highest level since June last year.

Key Events Today:

16:55 EU GERMANY Services & Composite PMI Final FEB **

17:00 EU Services & Composite PMI Final FEB **

17:30 GB Services & Composite PMI Final FEB **

18:00 EU Unemployment Rate JAN **

18:00 EU PPI JAN **

21:15 US ADP Employment Change FEB *** 

22:45 US Services & Composite PMI Final FEB **

23:00 US ISM Services PMI FEB **

23:30 EIA Crude Oil Stock Change **

Tomorrow:

03:00 Fed Beige Book *** 

18:00 EU Retail Sales JAN **

21:30 US Initial Jobless Claims *** 

EURUSD

Resistance: 1.1653/1.1711Support: 1.1578/1.1520

The Euro tumbled 0.6% to 1.1616, its lowest since November, as soaring energy costs hit oil-dependent Europe harder than the U.S. Surging inflation risks have forced markets to scale back on the ECB, easing hopes and further weighing on the currency’s sentiment.

Analyst View: The pair is trending lower within a descending channel, characterized by sharp bearish momentum. Price action has breached previous consolidation zones, and the current price action suggests a potential continuation toward the 1.1578/1.1520 support level.

Bias: Bearish below 1.1600.

GBPUSD

Resistance: 1.3420/1.3481Support: 1.3218/1.3139

Sterling dropped 0.3% to 1.3361, reaching its lowest level since December as Middle East tensions reignited global inflation risks. Investors are reassessing the timing of BoE rate cuts, with rising energy prices complicating the central bank’s path to monetary easing.

Analyst View: The pair is trading in a clear descending channel, with recent price action testing the lower boundary of the 1.3218 support zone. While a temporary bounce may occur from these oversold levels, the overall structure remains bearish as long as the price stays capped below the 1.3420 resistance area.

Bias: Bearish below 1.3350.

USDJPY

Resistance: 158.29/158.93Support: 156.87/156.24

USD/JPY rose 0.2% to 157.61, hitting multi-month highs as the Dollar's safe-haven appeal strengthened. The Yen remains weak despite Japanese officials expressing "extreme urgency" regarding market volatility and hinting at possible foreign exchange interventions to stabilize the currency.

Analyst View: The pair is trending higher within an ascending channel, recently clearing the 156.87 level. Bullish momentum remains dominant, suggesting a potential retest of the 158.29 resistance zone unless intervention threats materialize to disrupt the current upward trajectory.

Bias: Moderately Bullish.

US Crude Oil Futures (APR)

Resistance: 77.44/78.74Support: 73.13/71.80

WTI surged over 5% to $74.56 after Israel and the U.S. struck targets inside Iran, triggering retaliatory attacks in the Persian Gulf. The closure of the Hormuz Strait and Iraq’s massive 1.5 million bpd production cut have intensified global supply fears.

Analyst View: Prices are trading in a strong uptrend following a strong bullish breakout. While immediate resistance sits near $77.44, the sustained momentum suggests a move toward $80.00 is possible if geopolitical tensions remain elevated.

Bias: Bullish above $73.

Spot Gold (XAU/USD)

Resistance: 5284/5353Support: 4994/4927

Spot Silver

Resistance: 88.05/92.21Support: 78.17/74.85

Gold plunged over 4% to $5,123 as the USD surged and Fed rate cut expectations were pushed back to September. Despite geopolitical escalations, investors prioritized liquidity, shifting toward cash as treasury yields rose and energy-driven inflation fears surfaced.

Analyst View: The sharp decline reflects a "dash for cash" as higher yields and a dominant dollar diminish the appeal of non-yielding gold. While current momentum is bearish, the ongoing closure of the Hormuz Strait could provide a geopolitical floor if inflationary pressures intensify.

Bias: Bullish for Gold above $5,000.

Dow Jones Futures

Resistance: 49226/49472Support: 47937/47624

Dow fell 0.83% to 48,501.27 as intensifying Middle East conflict and rising energy costs fueled inflation fears. Sentiment was further dampened by a surge in redemption requests for Blackstone’s flagship credit fund, BCRED, amid broader market instability.

Analyst View: The index remains stable but has recently experienced a sharp pullback, breaking below the previous consolidation zone. A failure to maintain the current support levels could lead to a deeper correction toward the channel's lower boundary near 47,624.

Bias: Bearish below 48,700.

NASDAQ 100

Resistance: 25048/25227Support: 24471/24289

NAS100 dropped 1.02% to 22,516.69, leading a broad-market sell-off as surging oil prices threatened growth sectors. High energy costs and geopolitical uncertainty continued to weigh on tech heavyweights like Nvidia, despite ongoing optimism surrounding Chinese AI assets.

Analyst View: The index is currently consolidating within a narrowing range following a significant pullback from recent highs. While it is holding above the 24,289 support zone, the immediate outlook remains cautious as the price struggles to overcome the 25,048 resistance area.

Bias: Bearish below 24900 (Key MA resistance).

Bitcoin (BTC/USD)

Resistance: 69691/70937

Support: 65736/64507

Bitcoin was muted on Tuesday, trading down 2.1% to $67,993.7 as investors pivoted away from speculative assets. Despite some strength on Monday, the cryptocurrency remains stuck in a range between $60,000 and $70,000, pressured by escalating U.S.-Iran tensions.

Analyst View: Bitcoin remains in a consolidation phase below the $70,000 psychological barrier. While mining firm Core Scientific announced plans to liquidate holdings to fund AI expansion, the immediate technical focus is on whether BTC can hold the $64,507 support amid high-risk geopolitical volatility.

Bias: Neutral to Bearish below $70,000.

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