The US Dollar traded firmer in Thursday’s American session, as concerns about oil supply disruption weighed on market sentiment. EUR/USD traded near 1.1520, above the 2026 low at 1.1507. Attention stayed on the Strait of Hormuz, amid continued attacks and reports of threats to shipping. Reports said tankers from neighbouring countries were attacked and that Iran laid mines in the passage, while Mojtaba Khamenei said the Strait should remain closed.

Oil Supply Risks And Dollar Strength

Donald Trump said the US, as the largest oil producer, benefits when prices rise. The comments came amid market concerns about Brent moving above $100 per barrel and WTI trading above $90. On Friday, markets are set to watch the US Personal Consumption Expenditures (PCE) Price Index. January data is due after December core PCE inflation was 3%. On the 1-hour chart, EUR/USD was at 1.1523 and remained below the 20-, 100- and 200-period SMAs, which were all sloping lower. Resistance was noted near 1.1540, 1.1585 and 1.1606, while support sat at 1.1507 and then 1.1470. A correction dated March 12 at 18:47 stated December core PCE was 3%, not 2.9%.

Options Positioning And Hedging Ideas

Given the ongoing closure of the Strait of Hormuz, we are seeing a classic flight to safety into the US dollar. The persistent risk of supply disruption is likely to keep oil prices elevated, which in turn supports the dollar. Derivative traders should anticipate this trend continuing in the coming weeks. We see opportunities in the crude oil market, with WTI now trading firmly above $90 per barrel. Buying call options on oil futures is a direct way to speculate on further price increases if the conflict escalates. Recent reports from the Energy Information Administration (EIA) confirm this tightness, showing an unexpected draw in US crude inventories of 2.8 million barrels last week. For currency traders, the weakness in EUR/USD presents a clear opening near its 2026 lows. We should consider buying put options on the EUR/USD pair, targeting a break below the 1.1507 support level. This provides a defined-risk strategy to capitalize on continued dollar strength against the euro. Tomorrow’s release of the US PCE Price Index for January will be a major catalyst. Looking back at December 2025, core PCE was already at 3%, and if this upcoming figure comes in higher, it will increase pressure on the Federal Reserve to maintain a hawkish stance. A hot inflation print would almost certainly send the dollar higher and EUR/USD lower. This combination of geopolitical tension and persistent inflation is negative for general market sentiment, making equity index protection attractive. We are looking at buying put options on the S&P 500 to hedge against a broader market downturn. Calls on the VIX, which is currently trading around 22, could also be used to profit from a potential spike in volatility. The current market environment feels very similar to what we experienced in 2022 when energy shocks led to a strong dollar and widespread market uncertainty. That historical precedent suggests that as long as the Strait of Hormuz remains a flashpoint, these defensive and pro-dollar positions are the most logical ones to hold. Create your live VT Markets account and start trading now.

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