Daily Market Outlook, March 12, 2026 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

The surge in oil prices following a tanker attack in Iraqi waters negatively impacted U.S. equity futures and Asian stocks, prolonging the week's volatility. The incident highlighted the fragility of Middle Eastern energy infrastructure and stoked fears of escalating tensions in the region. Futures for the S&P 500 and Nasdaq 100 dropped roughly 1%, while Asian markets saw a steeper decline of about 2%. Brent crude climbed back above $100 per barrel after Iraq was forced to suspend operations at its oil ports in response to the assault. Meanwhile, Oman evacuated all vessels from a key export terminal as a precautionary measure, and Bahrain accused Iran of targeting its fuel tanks. Energy markets remained front and center for investors, with concerns over supply disruptions fueling inflationary worries. The relentless rise in oil prices suggested that fears of prolonged conflict were overshadowing the temporary relief provided by the largest-ever emergency release of crude reserves by wealthy nations. 

Elsewhere, the U.S. Dollar index edged up 0.2%, while cryptocurrencies continued their slide. The Japanese Yen, which has been hovering near its weakest levels against the Dollar this year, briefly dipped to 159.24 per Dollar on Thursday. This brought it dangerously close to the 159.45 mark that prompted the Federal Reserve to conduct a "rate check" earlier this year in January. Looking ahead, over one-third of economists surveyed predict that the Bank of Japan (BoJ) will raise its benchmark interest rate in April, although no changes are expected at next week’s policy meeting. Meanwhile, U.S. Treasury yields have climbed, with the 10-year rate now hovering around 4.24%, roughly 10 basis points higher than the previous day. Investors are increasingly factoring in the possibility of prolonged energy market disruptions and persistently high prices. Policymakers are also grappling with the implications. European Commission President Ursula von der Leyen addressed the European Parliament, discussing potential measures such as subsidies or even capping gas prices. However, such moves could pose challenges for the European Central Bank (ECB), which has maintained a hawkish stance. ECB President Christine Lagarde emphasized that the central bank would not allow Europe to experience inflation levels similar to those seen in 2022-2023. While capping energy prices might seem like a straightforward way to curb inflation, fiscal subsidies aimed at limiting the immediate impact of energy price shocks could inadvertently trigger broader inflationary pressures, complicating the ECB's efforts.The interplay between fiscal and monetary policy is poised to become a critical factor for markets if the crisis persists. However, not all risks point upward. The latest UK RICS housing market survey, which collected data through March 9, revealed a sharp drop in price expectations for home sales over the next three months, falling from -6% to -18%. This decline likely reflects growing uncertainty stemming from the ongoing geopolitical turmoil in the Middle East.

The US CPI report aligned with expectations, showing headline inflation at 2.43% y/y (up from 2.35%) and core CPI declining to 2.46% y/y (from 2.50%), marking a new cycle low. Improvements in services, particularly shelter, continued, while tariff impacts remain minimal. Apparel saw a slight uptick, but transport costs rose due to a mild fuel price base effect, which could amplify next month with higher gasoline prices. Used car prices appeared understated, diverging from the Manheim index over recent months. Despite weak auto sales, this seems more like a data anomaly than a trend. The broader disinflation narrative persists, supported by a weak labor market. Risks include potential impacts from Iran and looser fiscal policy, notably influenced by the Supreme Court tariff ruling. Policy implications remain unclear, with more insight expected by late May.

Overnight Headlines

• Brent Surges Back Above $100 As Disruption Hits Key Omani Port

• Sea Drones Target Oil Tankers In The ME As Conflict Risks Widen

• IEA Releases Record Oil Reserves To Counter Iran War Energy Shock

• Trump To Invoke Emergency Law For Offshore Oil Producer Sable

• Iran Says Truce Depends On US, Israel Pledging Not To Strike

• Morgan Stanley Sees Risks That Oil Shock Will Delay Next Fed Cut

• Trump Touts Oil Supply Moves, Vows To Finish The Job in Iran

• US Launches New Trade Probes Into A String Of Countries And The EU

• EU Warns Iran Conflict Could Push The Bloc’s Inflation Above 3%

• UK Home Sales Seen Taking Short-Term Hit as War Damps Sentiment

• BOJ Watchers Set Sights On April Rate Hike After Hold Next Week

• Australia Inflation Expectations Rise to Highest Since 2023

• Evacuates Vessels From Oil Terminal In Precautionary Move

• Trump-Touted Texas Refinery Sees Fuel Sales Starting in 2029

• Private Credit Exits Force Cliffwater, Morgan Stanley to Cap

• Citadel GFI, Taula Sink In Brutal Trading Week For Hedge Funds

• Pimco Commodity Fund Slumps 17% In March As Iran War Upends Oil

• JPMorgan Says Hedge Funds Hit by Worst Drawdown Since April

• SoftBank's PayPay Prices IPO Below Range At $16 A Share

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

• EUR/USD: 1.1600 (€933m), 1.1650 (€1.3bn)

• EUR/JPY: 159.50 ($559m), 160.00 ($885m), 160.75 ($727m)

• EUR/GBP: 0.8800 (€650m)

• AUD/USD: 0.6975 (A$1.1bn), 0.7000 (A$576m), 0.7175 (A$619m), 0.7300 (A$656m)

• USD/JPY: 157.00 ($664m)

• USD/CNH: 1.3700 ($533m)

CFTC Positions as of March 6, 2026: 

• Equity fund speculators trim S&P 500 CME net short position by 66,786 contracts to 399,180 Equity fund managers cut S&P 500 CME net long position by 8,773 contracts to 996,776 

• Speculators increase CBOT US 5-year Treasury futures net short position by 25,863 contracts to 2,090,794 Speculators trim CBOT US 10-year Treasury futures net short position by 119,513 contracts to 654,507 Speculators trim CBOT US 2-year Treasury futures net short position by 9,495 contracts to 1,338,541 Speculators trim CBOT US UltraBond Treasury futures net short position by 24,793 contracts to 255,694 Speculators raise CBOT US Treasury bonds futures net long position by 15,191 contracts to 20,265 

• Bitcoin net long position is 1,011 contracts Swiss franc posts net short position of -41,283 contracts British pound net short position is -72,686 contracts Euro net long position is 136,498 contracts Japanese yen net short position is -16,575 contracts

Technical & Trade Views

SP500

• Daily VWAP Bearish

• Weekly VWAP Bearish

• Above 6800 Target 6920

• Below 6700 Target 6500

EURUSD 

• Daily VWAP Bearish

• Weekly VWAP Bearish

• Above 1.1675 Target 1.1730

• Below 1.15 Target 1.1410

GBPUSD 

• Daily VWAP Bullish

• Weekly VWAP Bearish

• Above 1.3450 Target 1.3550

• Below 1.3400 Target 1.3150

USDJPY 

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 157.50 Target 159.40

• Below 155 Target 152

XAUUSD

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 5150 Target 5325

• Below 5200 Target 4900

BTCUSD 

• Daily VWAP Bullish

• Weekly VWAP Bearish

• Above 78k Target 81.5k

• Below 75k Target 53k