Strait Of Hormuz Risk
Tehran also said it would not reopen the Strait of Hormuz in return for a temporary ceasefire. The strait handles about 20% of global oil supply. Markets are waiting for the US ISM Services PMI for March at 14:00 GMT, expected at 55.0 versus 56.1 previously. The week also includes the March FOMC minutes on Wednesday and US CPI data for March on Friday. EUR/USD traded near 1.1560 and sat just below the 20-day EMA near 1.1570. A symmetrical triangle near the bottom points to a sideways phase, while the 14-day RSI moved into the 40.00–60.00 range from below 40.00. Resistance levels are seen at 1.1570, 1.1600, then 1.1660 if 1.1600 is cleared. Support is near 1.1500, then the late-1.14 area, with 1.1450 and 1.1411 as further downside levels.Options Positioning Ideas
We are seeing the market’s mood improve today, pushing EUR/USD towards 1.1560 as geopolitical tensions seem to ease with the US-Iran ceasefire proposal. This has caused the US Dollar Index to dip below the psychologically important 100.00 mark, as traders move away from safe-haven assets. This shift provides a short-term opportunity, but Iran’s hesitation on the deal introduces significant uncertainty. We should be watching oil prices very closely, as Iran is refusing to immediately reopen the Strait of Hormuz. We saw in the early 2020s how even minor disruptions in this channel, which handles nearly a fifth of global petroleum liquids, can cause oil prices to spike and send traders rushing back to the safety of the US dollar. A sudden reversal in sentiment is a real risk if these talks stall. Given the symmetrical triangle pattern forming, one strategy is to position for a potential breakout to the upside in EUR/USD. Buying call options with a strike price just above the 1.1600 resistance level could be a cost-effective way to play a bullish reversal. This allows us to capitalize on upward momentum if the pair decisively breaks its recent downtrend. However, we must also hedge against the possibility of this being a false dawn. Purchasing put options with a strike price below the 1.1500 support level would protect our positions if the ceasefire talks collapse or if upcoming US data is stronger than expected. This creates a balanced position ahead of a volatile week. The US ISM Services PMI data due later today will offer the first clue on the economy’s health. While the forecast of 55.0 is a slight dip, any reading above 50 still signals a robustly expanding services sector, which could temper the dollar’s recent weakness. The real focus, however, will be the FOMC minutes on Wednesday and the US CPI inflation data on Friday. We remember how surprisingly persistent inflation data throughout 2024 kept the Federal Reserve on a hawkish path, causing the dollar to strengthen significantly against the euro. This week’s CPI report will be critical in showing whether that inflationary pressure has truly subsided. A higher-than-expected number could quickly erase all of the euro’s recent gains. Create your live VT Markets account and start trading now.
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