Investors flocked again to tech shares, lifting the Nasdaq and keeping the ‌tech-heavy index ⁠in positive ⁠territory since the U.S.-Israeli strike on Iran that ignited the conflict in the Middle East. The S&P 500 remained close to its all-time closing high, in January. A New York Times report said Iranian intelligence operatives indirectly reached out to the CIA a day after the attacks, but U.S. officials remain skeptical that either the Trump administration or Iran is prepared for a near-term de-escalation. Trump’s announcements of a U.S. naval escort for oil tankers through the Strait of Hormuz and political risk insurance also brought some relief.

The White House announcement reduced fears ⁠of major disruptions ‌in the oil market which could lift energy prices and pressure inflation, said Jim Awad, senior managing director at Clearstead Advisors LLC in New York. The relief gave investors confidence to ⁠scoop up tech-related stocks that sold off heavily in February and were cheap compared with weeks ago, he said.

“That combination is giving the market some optimism, which will be tested over coming weeks,” Awad said. “It is time to be realistic and not get carried away, either too bullishly or too bearishly.”

According to preliminary data, the S&P 500 gained 52.83 points, or 0.78%, to end at 6,869.46 points, while the Nasdaq Composite gained 290.79 points, or 1.29%, to 22,807.48. The Dow Jones Industrial Average rose 228.86 points, or 0.49%, to 48,738.98.

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The prospect of the war spurring additional ‌inflation is one of the main reasons for market volatility on the horizon, said Richard Bernstein, chief executive officer of Richard Bernstein Advisors.
“If people think the war will be short-lived or ‘not an issue’ for the U.S. economy, then the ⁠stock market will likely rally,” he said. “The opposite seems true too. Long-lived and impacting the U.S. economy could mean more volatility.” The energy sector led declines on the S&P 500 as stocks that had climbed in recent days on rising oil-price fears reversed course.

Several Middle Eastern countries have temporarily halted oil and gas production and the U.S. was looking to expand its campaign inside Iran. Oil prices settled unchanged on Wednesday at the end of a volatile trading session. Brent crude settled at $81.40 per barrel, flat to Tuesday’s close and at its highest level since January 2025.

The forex market remained highly volatile Wednesday as escalating conflict between the United States, Israel, and Iran continued to dominate sentiment, boosting the U.S. dollar as a safe-haven currency while pressuring risk-sensitive pairs amid surging oil prices and uncertainty over global supply chains.

The U.S. Dollar Index (DXY), which measures the greenback against a basket of major currencies, traded around 98.74 to 99.00 in early Asian and European sessions on March 4, 2026, up modestly from recent levels but off session highs near 99.33. The index extended gains from earlier in the week, reflecting flight-to-safety flows triggered by reports of Iranian retaliatory actions and temporary disruptions in the Strait of Hormuz.

Major currency pairs showed pronounced moves tied to the geopolitical backdrop. EUR/USD hovered near 1.1613 to 1.1620, down about 0.03% in recent trading, as the euro faced pressure from higher energy costs that could complicate the European Central Bank’s policy path. GBP/USD traded around 1.3364, edging up slightly by 0.05%, though the pound remained vulnerable to broader risk aversion. USD/JPY climbed toward 157.14 to 157.48, up modestly, with the yen weakening as safe-haven demand shifted toward the dollar amid rising oil prices that benefit commodity exporters but hurt Japan’s import-heavy economy.

Oil’s sharp rally amplified forex dynamics. Brent crude and WTI futures surged in recent sessions, with prices approaching or exceeding $73-75 per barrel at peaks, driven by fears of prolonged supply interruptions through the Strait of Hormuz — a chokepoint for roughly 20% of global oil flows. Analysts warned that sustained disruptions could push prices toward $80-100 per barrel, reviving inflation concerns and reducing expectations for aggressive central bank easing.

The dollar’s resilience stemmed from multiple factors. Geopolitical risk aversion traditionally favors the greenback, while higher oil prices stoke U.S. inflation expectations, lowering bets on Federal Reserve rate cuts. Money markets priced in about 37 basis points of Fed easing for 2026, down from prior levels. President Donald Trump’s assurances that the U.S. Navy would escort tankers and provide political risk insurance for maritime trade helped cap some losses late Tuesday, contributing to a partial rebound in equities and tempering dollar gains.

In Asia, the Japanese yen faced additional pressure. USD/JPY tested levels near 157-158, with analysts noting intervention risks if the pair approaches 160. The Bank of Japan has maintained a hawkish tilt with recent rate adjustments, but escalating energy costs could weigh on growth. EUR/JPY and GBP/JPY showed similar patterns, with crosses reflecting dollar dominance.

The British pound held relatively firm despite domestic uncertainties, including trade frictions and political developments. GBP/USD’s modest uptick reflected some resilience, though analysts from Barclays and HSBC highlighted near-term dollar tailwinds from risk aversion.

Broader market themes included tariff turbulence following a U.S. Supreme Court ruling limiting broad tariff authority, forcing narrower sector-based approaches. This added complexity to global trade outlooks, supporting the dollar while pressuring emerging market currencies. China’s renminbi and other Asian units faced headwinds amid export concerns.

Upcoming economic data could influence direction. The U.S. ADP employment report and ISM services data were due mid-week, with non-farm payrolls on Friday expected to be a high-volatility event. Traders also monitored any de-escalation signals from indirect U.S.-Iran contacts or nuclear talks.

Analysts offered cautious views. MUFG Research’s March 2026 outlook projected the DXY near 99.63 by end-Q1, with USD/JPY at 154.00 and EUR/USD around 1.1500 in coming quarters, assuming some stabilization. Convera highlighted elevated volatility from tariffs, central bank pressures, and oil on edge, driving sharper moves in majors.

The Australian dollar and New Zealand dollar showed mixed performance, with AUD/USD near 0.7042 and NZD/USD around 0.5911, reflecting commodity ties to oil but offset by risk sentiment.

As the Middle East situation evolves, forex participants remain on alert. A rapid de-escalation could unwind safe-haven premiums and pressure the dollar, while prolonged tensions might sustain strength in the greenback and volatility across pairs. For now, geopolitical headlines overshadow traditional fundamentals, keeping traders positioned defensively in an uncertain environment.