Markets Turn Hawkish in the CB Week (03.20.2026)

Global markets shifted toward a more hawkish outlook as central banks maintained rates while signaling caution over persistent inflation risks. 

The euro climbed to $1.15 after the ECB held rates steady and emphasized a data-driven approach amid rising energy costs linked to Middle East tensions. The Japanese yen recovered as the Bank of Japan maintained a tightening bias, while sterling gained strength following a firm stance from the Bank of England. Despite these currency moves, precious metals remained under pressure overall, with gold and silver attempting to stabilize after recent losses as higher yields and delayed rate-cut expectations continued to weigh on sentiment.

Euro Climbs to $1.15 as ECB Holds Rates

The Euro strengthened to $1.15 after the European Central Bank maintained its deposit rate at 2% for a sixth consecutive meeting. Adopting a meeting-by-meeting approach, officials noted that the Iran conflict has heightened economic uncertainty, threatening higher inflation and slower growth via rising energy costs. Despite the pause and a reaffirmed 2% inflation target, markets are pricing in two further hikes this year. This cautious stance aligns with recent holds by the Fed, BoE, and BoJ as global central banks navigate shared geopolitical risks.

For EUR/USD, the initial resistance is seen at 1.1610, while the closest support is positioned at 1.1530.

Yen Rebounds to 158 Amid Policy Shifts

The Japanese Yen recovered to 158 per dollar on Friday, rebounding from weekly lows near 160. Support came from the Bank of Japan’s tightening bias as oil-driven inflation persists. While the BOJ held rates at 0.75%, board member Hajime Takata dissented for a second time, pushing for a hike to 1%. Governor Kazuo Ueda signaled that further hikes remain possible if the Iran-related slowdown is brief. Additionally, the Yen benefited from easing oil prices after President Trump ruled out ground troops and Israel signaled restraint toward Iranian energy infrastructure.

Technically, resistance stands near 158.50, while support is firm at 157.20.

Gold Rebounds to $4,700

Gold recovered above $4,700 on Friday following a steep two-session selloff, though it remains on track for a heavy weekly loss. Rising energy costs from the Middle East conflict have fueled inflation, shifting investor preference toward the US Dollar and bonds. This "energy shock" prompted a hawkish recalibration of global policy; the Federal Reserve ruled out near-term cuts, while the ECB and BoE signaled a tightening bias. Markets have delayed Fed rate cut expectations until 2027, while bracing for two hikes each from the ECB and BoE this year.

Gold sees support near $4580, while resistance is around $4780.

Sterling Climbs Past $1.33

The British Pound rose above $1.33 after the Bank of England unanimously held interest rates at 3.75%. Defying expectations of internal dissent, policymakers adopted a hawkish tone, warning that Middle East tensions and surging energy costs, with Brent crude at $117 and Qatar LNG disruptions, threaten to reignite inflation. Despite lackluster labor data showing wage growth misses and 5.2% unemployment, the focus on commodity-driven price risks has led investors to fully price in two BoE rate hikes for 2026.

From a technical view, support stands near 1.3350, with resistance around 1.3480.

Silver Recovers to $74 Amid Hawkish Pivot

Silver climbed back above $74 on Friday but remains on track for its third straight weekly loss. Rising energy prices from the Middle East conflict have fueled inflation, driving investors toward the US Dollar and Treasuries over safe-haven metals. This energy shock triggered a hawkish recalibration across global central banks; the Federal Reserve ruled out near-term easing, while the ECB, BoJ, and BoE signaled a tightening bias. Markets have pushed Fed rate cut expectations to 2027 and are now pricing in two hikes each for the ECB and BoE this year.

From a technical view, resistance stands near $75.00 while support is located around $70.10.