Geopolitical Risks And Market Reaction
US President Donald Trump said Iran’s power plants and bridges could be targeted if the Strait of Hormuz is not reopened on Tuesday. Iran set new conditions for reopening the route, raising fears of disruption to trade and supply. Technically, the near-term trend remained bullish after last week’s rebound from the rising 100-period EMA on the 4-hour chart. The move also followed a break above the $100.00 level. MACD turned higher, with the line back in positive territory and the histogram improving. The RSI sat near 61, above its midline and below overbought levels. Support was seen near $102.00, then around $99.50. The 100-period EMA on the 4-hour chart was below $94.00, suggesting the low-$90s would be viewed as a correction if the slope stays up.Key Support And Resistance Levels
Resistance stood near $105.70, with $108.00 next if that level breaks. The technical section was produced with help from an AI tool. The current price action in WTI is a familiar story, reminiscent of patterns we saw in past years where fundamental tightness clashes with macroeconomic headwinds. WTI is currently pulling back from its March highs, finding temporary support around the $92.00 level. The US Dollar Index holding firm above 105 is creating significant headwinds for all dollar-denominated commodities. On the bullish side, supply constraints should prevent any significant collapse in prices and limit downside risk. We note that OPEC+ compliance with the production cuts agreed to in late 2025 remains exceptionally high at over 98%, keeping a tight rein on the physical market. Last week’s EIA report confirmed this tightness, showing a surprise crude inventory draw of 2.5 million barrels when a small build was expected. Conversely, persistent strength in the US dollar is capping the upside potential for oil. With the latest year-over-year CPI data coming in at 3.1%, hotter than consensus, the market is pricing out any chance of a Federal Reserve rate cut in the second quarter. This expectation of higher-for-longer interest rates continues to attract capital to the dollar. From a technical perspective, the near-term bias remains constructive as long as the price holds above the 50-day moving average, which is currently sitting near $89.50. Any pullback into the $90.00-$91.00 range is likely to be viewed by traders as a buying opportunity to join the prevailing uptrend. The daily Relative Strength Index (RSI) has cooled off from overbought levels, suggesting there is now room for another move to the upside. For derivative traders, this setup suggests selling cash-secured puts with a strike price below key support, such as $88, to collect premium while defining a favorable entry point. Alternatively, using call spreads targeting a move toward the year-to-date highs near $98 would allow for participation in a rally while limiting capital at risk. This strategy protects against the sharp, dollar-driven reversals we have seen intermittently over the past few months. Create your live VT Markets account and start trading now.
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