In This Issue 

• Iran de-escalation — USD and Oil gap lower on Monday’s open

• BTC false break of 74,500 — key pivot still in play

• EUR/USD trading below the 200-day moving average

• USD/JPY — watching the unwind

• Week Ahead: Risk events and key levels
  

Iran

Sharp reversal Monday morning.

Trump commented on positive developments with Iran — bombing of energy infrastructure is off the table, or at least pushed back. Crude dropped 17%, stocks rallied over 3%, EUR/USD up 1.3%.

The move made sense. Markets have been trading the war — USD and oil as the primary expressions of that positioning. When the headline hit, the unwind was fast.

If you ever doubt the USD/oil correlation driving this — just look at USD/JPY. You rarely see stocks up 3-4% and USD/JPY lower. That's the tell.

What's interesting is Iran came out almost immediately saying there was no conversation with the US and that their original criteria for reopening the Strait of Hormuz hasn't changed.

Markets gave back some of the move. Not all of it.

My read: the initial knee-jerk cleaned out some of the weaker correlated positioning — but the overhang is still there. Net long crude, net long USD. That trade isn't fully unwound.

Worth noting — neighboring countries that Iran has been trying to draw into the conflict have had enough. If unprovoked attacks continue, they've signaled they'll take action. That's a new variable.

Markets are clearly putting more weight on Trump's comments than Iran's denial. But with positioning still skewed, any escalation from here gets amplified. The weaker hands are out — the move on bad news will be bigger now.

Key Levels This Week

BTC

• 74,500 — key pivot / Fibonacci level

• 57,797 — 61.8% Fib (Nov 2022 low → ATH)

• 48,698 — 61.8% Fib of the entire BTC move

EUR/USD

Resistance

• 1.1678 — 200-day moving average (key — watching on a closing basis)

• 1.1674 — 38.2% Fib (Jan high → March low)

Pullback Support

• 1.1553 — 38.2% Fib

• 1.1525 — 50%

• 1.1498 — 61.8% Fib

USD/JPY

• 160.00 — topside / unspoken BOJ intervention level

• 157.51 — pivot on the downside

17% gives you an idea about how stretched the long positioning is. The move was triggered by headlines — but the magnitude was positioning.

Key levels to watch on a closing basis — with volatility at these levels intraday breaks carry less weight:

• 92.00 — Resistance at bottom of the 7-day consolidation channel

• 87.28 — 50% Fib (Dec low → March 9 high) — a close below here is significant

• 79.66 — 61.8% Fib

Week Ahead

Markets will remain headline driven.

The Iran story isn't resolved — Trump's comments moved markets but Iran's denial of any conversation means the situation can flip quickly. The weaker positioning has been cleaned out. Any escalation from here gets amplified.

A few things I'm watching:

Crude — 92.00 is the first near term level. A close below 87.28 opens the door for a deeper move. Watching on a closing basis given the volatility.

EUR/USD — the 200-day MA at 1.1678 is the key level on the upside. First test should see some resistance.

USD/JPY — 160.00 remains the unspoken BOJ level. If the Iran de-escalation holds and USD stays offered, JPY strength does the BOJ's work for them. 157.51 is the pivot to watch on the downside.

BTC — 74,500 still the key. False break last week, momentum overbought, still below. The setup hasn't changed.

As long as the Iran conflict remains the dominant macro driver everything else trades through that lens.

Market Notes

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Next Tuesday: Weekly market update. — Mark

Meridian Compass is brought to you by Mark Schaefer, a portfolio manager with over 30 years experience developing and trading systematic strategies in global futures and FX at major banks and hedge funds.

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