On Monday, Dow Jones futures rose 0.20% to above 45,500 during European hours, while S&P 500 and Nasdaq 100 futures increased by 0.30% and 0.25% to near 6,430 and 23,390, respectively, ahead of the US regular market open [1]. Despite these gains, US equity futures face pressure from heightened risk aversion linked to escalating tensions in the Middle East, particularly doubts over resolving the Iran conflict. US President Donald Trump stated that the US could 'take the oil in Iran,' including seizing Kharg Island, but also noted that indirect talks with Tehran are 'doing extremely well' and a deal could be achieved 'fairly quickly' [1]. However, Trump's comments describing Iranian leaders as 'very reasonable' have been largely ignored by investors, who remain wary of the Iran-backed Houthis widening the conflict and threatening the closure of the Bab el Mandab Strait, a critical oil chokepoint [2].
The Wall Street Journal reported last week that the US Pentagon may deploy 10,000 additional troops to Iran, prompting a warning from Ebrahim Zolfaqari on Iranian state TV that 'US troops will be good food for sharks of the Persian Gulf' [1]. Over the weekend, Iran-backed Houthi forces in Yemen launched their first strikes on Israel, escalating regional tensions and threatening Red Sea shipping routes and Saudi energy infrastructure, which increases risks to global supply [1][2].
Market sentiment has turned risk-off, with most Asian markets trading in the red and European bourses expected to open negatively [2]. The Euro (EUR) is consolidating last week's losses near 1.1500, with the EUR/USD pair trading at 1.1517 and on track to close March 2.5% lower, marking its worst monthly performance since July last year [2]. Technical analysis shows a mildly bearish bias, with the MACD histogram negative and RSI at 43, indicating sellers retain control [2]. The March 23 low at 1.1484 is currently holding bears, while resistance is seen at 1.1555 and 1.1575 [2].
Traders are closely watching upcoming events, including a speech from Federal Reserve Chair Jerome Powell late Monday evening and key US economic releases such as Nonfarm Payrolls (NFP) and the ISM Purchasing Managers’ Index (PMI) [1][2]. In the Eurozone, confidence indexes and the German Harmonized Index of Consumer Prices (HICP) may attract attention during the European session [2]. On the earnings front, Terns Pharmaceuticals, Inc., AlliedGold Corporation, and USA Rare Earth, Inc. are in focus later in the day [1].
CONCLUSION
Escalating Middle East tensions and threats to oil supply have triggered risk-off sentiment, pressuring global equities and the Euro while supporting the US Dollar. Despite modest gains in US futures, investors remain cautious, awaiting key speeches and economic data for further direction. The market impact is high, with volatility likely to persist as geopolitical risks and macroeconomic releases unfold.