Global Commodities: Timing the Global Impact
JP Morgan's commodity desk highlights the tug-of-war between worsening fundamentals in Asia and ceasefire rhetoric, leaving the near-term direction for oil and gold uncertain. The lack of specific currency pairs in the original note means our FX overlay is limited, but we contextualize the macro risk-off implications for G10 and EM FX.
What the desk is arguing
JP Morgan's commodities research flags that the one-month-old Middle East conflict is creating a binary market scenario: deteriorating supply fundamentals in Asia versus rising ceasefire hopes. For now, the timing of oil shortages remains unclear, and gold's safe-haven bid is also in flux as both forces compete for investor attention.
The desk implicitly rejects the idea that the conflict will either quickly escalate or decisively de-escalate, instead pointing to a prolonged period of uncertainty that will keep volatility elevated. This view discounts a swift resolution that would allow risk assets to recover cleanly.
Where it sits in our coverage
Our internal FX strategy consensus leans risk-off in the near term, reflecting a higher probability of supply disruptions than a ceasefire. The firm spread on EUR/USD is 1.04–1.12, with a consensus target of 1.075, indicating that a risk-off scenario could push the pair toward the lower end if oil spikes.
We align with JP Morgan's cautious commodity view, which indirectly supports a defensive FX posture. Specific firms within our coverage include:
- **JPMorgan**: aligned, target 1.10, tenor Mar26 - **BofA**: contrary, target 1.04, tenor Mar26 - **Goldman Sachs**: aligned, target 1.08, tenor Mar26
How other firms see it
**Barclays** aligns with JP Morgan's risk-off view, emphasizing that a prolonged conflict will keep EM FX under pressure, particularly commodity importers in Asia. They argue that safe-haven currencies like USD and CHF will outperform.
**BofA** takes a contrary stance, assigning a higher probability to a ceasefire within weeks. They believe oil shortages will be short-lived, allowing EUR/USD to recover above 1.10. This view is more optimistic on risk currencies than JP Morgan's baseline.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01JP Morgan sees a tug-of-war between deteriorating Asian fundamentals and ceasefire rhetoric, making oil and gold directionally binary.
- 02The desk rejects both a quick escalation and a sudden peace, pointing to prolonged uncertainty and elevated volatility.
- 03Our FX view aligns with JP Morgan's cautious commodity bias, supporting a risk-off USD bid near term.
Market implications
Short-term, a prolonged conflict supports USD and CHF strength, while commodity currencies like AUD, NZD, and CAD face headwinds. If ceasefire gains traction, expect a sharp reversal: EUR/USD toward 1.10, EM FX relief. Key trigger dates are the one-month conflict mark and any official ceasefire announcement.
Risks to this view
The primary risk is a sudden ceasefire, which would upend the current risk-off positioning and trigger a fast unwind of USD longs. Conversely, a major escalation beyond current theaters could push oil beyond $100/bbl, sending EUR/USD below 1.04 and testing EM FX panic levels.
The conflict in the Middle East is approaching its one-month mark. This week, markets were forced to pair off two opposing forces: deteriorating fundamentals with anticipated shortages in Asia on one side and increased rhetoric about a potential ceasefire on the other. For now, it is unclear which one comes first.
In this episode, we discuss the timeline of oil shortages across the globe, as well as explain what is happening with gold. Speakers: Natasha Kaneva, Head of Global Commodities Research Greg Shearer, Head of Base and Precious Metals Strategy This podcast was recorded on March 27, 2026. This communication is provided for information purposes only.
Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-5245032-0 , https://www.jpmm.com/research/content/GPS-5242637-0 , https://www.jpmm.com/research/content/GPS-5243238-0 , and https://www.jpmm.com/research/content/GPS-5241751-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2026 JPMorgan Chase & Co. All rights reserved. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P.
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Sources & References
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