Geopolitical tensions in the Middle East are escalating sharply, setting the tone for the trading day—and the clock is now ticking toward President Trump’s 8 PM deadline to reopen the Strait of Hormuz or face the threat of widespread destruction of Iran’s electrical and bridge infrastructure.
Ahead of that deadline, reports indicated that Israel, with U.S. involvement, carried out a broad wave of airstrikes across Iran targeting critical economic and transport hubs. Iranian media confirmed multiple strikes on Kharg Island—home to a significant portion of the country’s oil export capacity—raising immediate concerns about potential disruptions to global supply. However, U.S. officials have since pushed back, saying the strikes were aimed at air defense systems as a show of force, not directly at oil facilities. At the same time, a key railway bridge in Kashan was destroyed, killing two and severing a vital logistics link between central Iran and southern ports.
The timing is critical. These strikes come just hours before the deadline, while Iran continues to resist. Tehran has rejected any temporary ceasefire, demanding a halt to attacks, guarantees against future strikes, compensation for damages, and even fees for ships passing through the Strait of Hormuz. That posture, combined with the targeting of infrastructure, suggests the conflict may be shifting into a more aggressive, economically focused phase.
Markets are reacting accordingly. Oil prices are surging—with the front contract trading near $115.22 and June near $100—reflecting growing fears of supply disruption. U.S. equities are under pressure, erasing yesterday’s gains, with the Dow down -182 points, the S&P down -34 points, and the Nasdaq down -116 points. In the forex market, trading is more mixed: the EURUSD and GBPUSD are modestly higher by 0.16% and 0.11% respectively, while the USDJPY is pushing higher with the yen weakening by 0.7% against the dollar.
The stakes are high. Any sustained disruption to Kharg Island or shipping through the Strait of Hormuz has direct implications for oil, inflation, and global risk sentiment. Traders will be watching closely—not just the headlines, but the price action. In the video above, I break down the EURUSD, USDJPY, and GBPUSD from a technical perspective, outlining the key risk-defining levels that will determine which side—buyers or sellers—gains the upper hand.
Be aware. Be prepared. Let the price action guide the bias.
US durable goods be released at 8:30 AM, with the estimate of -1.0% versus 0.0% last month. The non-Defense capital goods ex air is expected to rise by 0.4% versus 0.1%.
Fed members Williams, Goolsbee and Jefferson are expected to speak. Williams spoke last week. Goolsbee spoke yesterday while Jefferson has not spoke recently (but after the last FOMC meeting:
John Williams (NY Fed President) — most recently April 2, 2026
Speaking in a interview last week, Williams said risks to inflation and employment from higher energy prices are "in balance" and that he favors holding rates steady, saying monetary policy "is actually well positioned to keep those risks in balance." A few days earlier, on March 30 — just over a month into the conflict — he warned that the Middle East conflict "could result in a large supply shock with pronounced effects," boosting price pressures while also dampening economic activity, and noted "this has begun to play out already" through disruptions in energy and related goods. He also flagged that tariff-driven inflation remains elevated but "those effects should begin to dissipate later this year," suggesting the energy shock is now the dominant near-term concern. His overall posture is calm but watchful — policy is well positioned, but risks are real and rising.
Austan Goolsbee (Chicago Fed President) — most recently April 6, 2026
Goolsbee has undergone a notable shift in tone since the war broke out. Before February 28, he had been on the optimistic side, believing rates could come down multiple times in 2026. But in a CNN interview on April 3 — about five weeks into the war — he described the oil price surge as "fairly severe" and warned that a sustained increase risks feeding into consumer sentiment, food prices, and manufacturing costs, potentially derailing disinflation at an "unfortunate" moment. Yesterday, in a joint podcast interview, he rated the inflation outlook as "at least orange — orange with a chance of meatballs," while giving the labor market a "yellow" rating, citing a low-hiring, low-firing dynamic he attributes largely to uncertainty. He's also worried about repeating the 2021 "team transitory" mistake, and has said that if inflation fails to improve, rate cut decisions could be pushed off to 2027 at the earliest.
Philip Jefferson (Fed Vice Chair) — most recently late March 2026
Jefferson, speaking shortly after the March 18 FOMC meeting — roughly three weeks into the war — said he confronts "an outlook where there is downside risk to the labor market and upside risk to inflation," and noted that "progress on disinflation has stalled" above the Fed's 2% target. He acknowledged that it had been his expectation that disinflation would resume once higher tariffs stopped pushing up consumer prices, but that "ongoing trade policy uncertainty and geopolitical tensions pose upside risk" to his inflation forecast — with overall inflation expected to move higher in the short term due to rising energy costs. Despite those concerns, he echoed Powell in saying monetary policy is "well positioned" to respond, and noted one silver lining: the dollar's appreciation since the war began "actually helps us on the inflation front." Jefferson's tone is measured and data-dependent — he's not calling for action yet, but the risks on both sides of the mandate are clearly weighing on him.
