Markets spent most of the week balancing fragile ceasefire optimism against a fresh escalation risk after US-Iran talks failed and President Trump announced a blockade tied to Iranian-linked shipping through the Strait of Hormuz. That geopolitical swing mattered because it pushed oil sharply higher again, revived inflation concerns, and strengthened the view that central banks may have to keep policy tighter for longer.
The US dollar firmed as crude rebounded and risk sentiment deteriorated at the start of the new week.
Analysts note that EUR/USD falling to 1.1658 from Friday’s 1.1723 close, while USD/JPY rose as high as 159.85 from 159.27, showing how higher oil and yields fed directly into dollar demand.
AUD/USD also dipped to 0.6986 before recovering towards 0.7040, suggesting commodity-linked currencies were volatile rather than uniformly weak.
Oil was the clearest macro signal. Brent surged nearly 8% and crude moved back above USD 100 after the Hormuz blockade announcement, while European natural gas futures traded 13% higher into the European session.
Supply worries also spread into refined products, with tighter diesel and jet fuel markets and warnings that some European airports could face shortages within three weeks if flows were not restored.
By contrast, metals weakened as the stronger dollar and higher bond yields pressured gold, silver and copper, with gold left range-bound between roughly $4,650 and $4,850.
Equities still finished the week strongly before the new escalation headlines hit. The S&P 500 rose 3.56%, the Nasdaq gained 4.68%, the Dow advanced 3.04%, and MSCI EAFE added 4.52% as investors leaned into the ceasefire narrative and the prospect of the Strait reopening.
Midweek price action was especially powerful, with all three major US averages gaining more than 2.5% on Wednesday alone after the White House said attacks would be suspended for two weeks while a ceasefire proposal was considered.
By 13 April, however, the tone had turned more selective, with the S&P 500 slipping 0.1% and the Dow down 0.6% while the Nasdaq still managed a 0.4% rise, showing traders were rotating rather than simply exiting risk
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