Iran confirmed it received a US ceasefire proposal via Pakistan and said it is reviewing it, according to Reuters citing a senior Iranian official. Iran said it will not accept any proposal under pressure or deadlines.
The official said Tehran has received Pakistan’s proposal and it is under review. Iran said it will not reopen the Strait of Hormuz in exchange for a “temporary ceasefire”, and said it believes the US is not ready for a permanent ceasefire.
After the acknowledgement, the US Dollar weakened. The US Dollar Index (DXY) was down 0.2% to near 100.00 at the time of reporting.
WTI oil also fell following the statement. WTI was down 1.6% to near $102.00.
In markets, “risk-on” and “risk-off” describe how much risk market participants are willing to take. Risk-on is linked to buying riskier assets, while risk-off is linked to moving towards safer assets.
Risk-on periods are often associated with rising equities, gains in most commodities except gold, stronger commodity-linked currencies, and higher cryptocurrencies. Risk-off periods are often associated with stronger bonds, higher gold, and demand for the US Dollar, Japanese Yen, and Swiss Franc.
The Australian Dollar, Canadian Dollar, and New Zealand Dollar often strengthen in risk-on conditions. The US Dollar, Japanese Yen, and Swiss Franc often strengthen in risk-off conditions.
We recall that in 2025, Iran’s confirmation that it was reviewing a ceasefire proposal marked a significant turning point in market sentiment. This news initiated a classic “risk-on” shift as traders began pricing out the worst-case conflict scenarios. The immediate reaction we saw was a weaker US Dollar and a sharp drop in oil prices.
The fall in WTI crude from over $102 a barrel back then demonstrated how much geopolitical risk premium was built into the price. With WTI now trading in a more stable range near $85 a barrel, according to recent Energy Information Administration (EIA) reports, that premium is gone. In the coming weeks, this suggests that selling out-of-the-money call options on crude is a viable strategy, capitalizing on continued market stability.
This de-escalation continues to suppress market volatility, which directly impacts options pricing. The CBOE Volatility Index (VIX), which we saw spike above 25 during the height of tensions in 2025, has since fallen and is currently holding near a 12-month low of 14.5. Traders should consider strategies that benefit from this low-volatility environment, as it makes buying protection relatively cheap and selling premium attractive.
The US Dollar Index (DXY) has struggled since it broke below the key 100.00 level following the 2025 ceasefire news. As capital continues to seek higher returns in a less fearful world, the dollar’s status as a primary safe-haven is diminished. We see this trend continuing, supporting bearish derivative positions on the dollar against a basket of other major currencies.
Consequently, commodity-linked currencies are benefiting from the improved global outlook. The Australian and Canadian dollars have shown steady gains against the USD over the past six months, a trend we expect to persist amid stable commodity demand. This environment favors strategies like buying call options on these currencies to profit from their anticipated continued strength.
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