Forex Today: Middle East crisis, upcoming US data to keep markets busy
Here is what you need to know on Tuesday, March 31:
There is a positive shift in risk mood early Tuesday as investors try to make sense of the latest headlines on the crisis in the Middle East. Later in the European session, Eurostat will release the preliminary Harmonized Index of Consumer Price (HICP) data for March. In the second half of the day, the US economic calendar will feature the Conference Board's Consumer Confidence Index data for March and the US Bureau of Labor Statistics will publish the JOLTS Job Openings for February.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.27% | 0.43% | -0.29% | 0.37% | 0.24% | 0.65% | 0.36% | |
| EUR | -0.27% | 0.16% | -0.62% | 0.09% | -0.04% | 0.38% | 0.09% | |
| GBP | -0.43% | -0.16% | -0.72% | -0.09% | -0.19% | 0.22% | -0.10% | |
| JPY | 0.29% | 0.62% | 0.72% | 0.68% | 0.56% | 0.95% | 0.57% | |
| CAD | -0.37% | -0.09% | 0.09% | -0.68% | -0.16% | 0.28% | -0.04% | |
| AUD | -0.24% | 0.04% | 0.19% | -0.56% | 0.16% | 0.42% | 0.06% | |
| NZD | -0.65% | -0.38% | -0.22% | -0.95% | -0.28% | -0.42% | -0.33% | |
| CHF | -0.36% | -0.09% | 0.10% | -0.57% | 0.04% | -0.06% | 0.33% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
United States (US) President Donald Trump said on Monday that they were in serious discussions with a "new and more reasonable regime" to end the military operations in Iran. Trump, however, renewed his threat of targeting energy infrastructure if they fail to reach a deal and Iran refuses to open the Strait of Hormuz. In response, Iran's foreign ministry Spokesperson Esmaeil Baghaei said that no direct talks with the US took place and messages were sent through intermediaries, adding that the US' proposals conveyed to Iran was mostly "unrealistic, unreasonable and excessive."
Meanwhile, citing Trump administration officials, the Wall Street Journal reported that Trump was considering ending the military campaign against Iran even if the Strait of Hormuz remains largely closed and plan a more complex operation to reopen it at a later date.
Wall Street's main indexes closed in negative territory on Monday and the barrel of West Texas Intermediate (WTI) rose 3% on the day. The US Dollar (USD) benefited from safe-haven flows and the USD Index advanced to its highest level since May 2025 above 100.60 in the early trading hours of the Asian session on Tuesday, before retreating to the 100.50 region. In the European morning, US stock index futures rise between 0.6% and 0.8%, while the barrel of WTI fluctuates below $100, losing about 2% on the day.
The data from Germany showed on Tuesday that Retail Sales declined 0.6% on a monthly basis in February. This print followed the 1.1% decrease recorded in January and came in worse than the market expectation for an increase of 0.2%. EUR/USD closed in negative territory for the fifth consecutive trading day on Monday. Early Tuesday, the pair holds steady above 1.1450 but struggles to gather recovery momentum.
The UK's Office for National Statistics confirmed that the Gross Domestic Product (GDP) expanded at an annual rate of 1% in the fourth quarter, matching the market expectation. GBP/USD stays in a consolidation phase near 1.3200 after losing about 0.6% on Monday.
Gold rises more than 1% on the day and trades above $4,500 following Monday's indecisive action.
Despite the broad USD strength, USD/JPY closed in the red on Monday as the Japanese Yen gathered strength following verbal intervention. The pair stays relatively quiet early Tuesday and moves sideways above 159.50. The data from Japan showed that the Tokyo Consumer Price Index (CPI) rose 1.4% on a yearly basis in March, compared to the 1.5% increase recorded in February.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
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