It seems few market participants fully understand — let alone trust — the US president anymore. His back-and-forth behavior only reinforces the likelihood of a ground operation. Now the question is what form it will take.

So, Trump's latest statements — two days ago, claiming the Middle East war would end in two to three weeks, then reversing course and threatening Iran with severe reprisals — all point to an increased risk of a ground invasion of the Islamic Republic.

In this environment, markets already in a state of high volatility are simply being yanked from side to side. One day, they are full of optimism. The next, that optimism vanishes like morning fog. Oil prices are again rising more than 7%, gold is plunging about 3.25% intraday, the dollar is back above the 100 level on the ICE index, and crypto instruments are trading in the red.

Now, after diametrically opposed statements from Trump, everything reverts to the status quo: Americans promise victory, and Iranians respond in kind.

Against the backdrop of the Middle East conflict, market participants are largely ignoring incoming US economic data that point to a fragile domestic picture — one that needs low interest rates and affordable energy (gasoline, diesel, etc.) to stimulate growth.

What to expect in the near term?

I believe the Middle East war and Trump's behavior — likely intentionally chosen to mislead as he sees fit until a final decision on a ground operation is made — will continue to push markets from extreme to extreme, driving high volatility and, overall, a sideways trading range.

Daily forecast:

#CL

The US crude benchmark is already trading above the resistance level of $106.70. Trump's behavior is creating event risk and uncertainty, which is pushing oil prices higher and could drive WTI up to $120.00 per barrel. A level to consider for long positions is $107.69.

#USDX

The dollar is strengthening on the prospect of a US ground operation in Iran, and the ICE Dollar Index could rise toward 100.60. A level to consider for long positions is 100.18.