The biggest March forex moves have been shaped by the ongoing conflict in the Middle East, affecting not only currencies but also commodities. Central bank decisions have also been influenced by the situation, adding to market uncertainty. Since the end of February, volatility has risen sharply, producing a wide range of winners and losers and creating a completely new forex landscape for traders to navigate.
Of course, the asset that has gotten the most attention is also the most volatile: Brent jumped from $70 per barrel on the last day of February to almost $120 at one point, before falling back to the upper $90s. Now it’s trending back towards $110, as there are mixed signals between Washington and Tehran about whether negotiations to end the war are underway. But fluctuations in crude prices have been a contributing factor to a host of other assets moving, and could continue to influence them going forward.
King Dollar Returns to His Throne
Among the biggest March forex trends, The dollar index is up 2.2% over the last 30 days, the strongest gain in over a year. This has been largely due to a return to its status as a safe haven. If 2025 was the year of “Sell America”, since March, it has been the reverse. The US is not only less exposed to the situation in the Middle East, but its economy could also benefit from increased exports. Not surprisingly, the Canadian dollar is doing even better, as a large crude producer.
While most other currencies have lost against the dollar, a couple stand out for how they might perform in the future. That includes the Euro, with authorities in Europe having tried to sell it as a replacement for the dollar in recent months. But the EU’s strong reliance on energy imports means it will have to spend much more Euros to keep the lights on, pushing up inflation and reducing the currency’s value. If the ECB is forced to raise rates to head off a rise in consumer prices, the fledgling Eurozone economy could falter, further weighing on the shared currency.
Precious Metals in Decline
The strong dollar would naturally put pressure on precious metals. But that only explains part of the dramatic drop in gold (-15%) and silver (-24%) over the last month. One of the main reasons is that Asia is the latest buyer of the two most prominent precious metals, and it’s also the region most vulnerable to a supply shock if the Strait of Hormuz remains closed or highly restricted.
As Asian indices fell during the month, traders sold gold to shore up their portfolios, further depressing the yellow metal. China also buys substantial amounts of silver for solar panel production, but, ironically, higher oil prices could slow production of these key components of the energy transition. However, it’s not all down from here. 95% of central banks expect to keep buying this year, with most economists predicting gold will recover once the war is over.
AUD vs NZD
The two island nations are also vulnerable to crude supply shocks, but they have different outlooks. Among the biggest March forex movers, New Zealand has to import all of its petroleum products and has very short supplies. This has left the dollar the worst performing of the major currencies, as traders worry higher energy prices will snuff out its weak recovery.
Meanwhile, the AUD is under pressure but not as much, as Australia is one of the world’s largest LNG producers, which is in high demand. However, regulation prevents the country from taking full advantage of its exports, and it still has to import refined crude. Still, the RBA’s move to a hiking track has prevented the AUD from falling as quickly as the NZD.