RBA Deputy Governor Andrew Hauser said the board does not have “high confidence” that the current cash rate will return inflation to the 2–3% target. He made the comments at a fireside chat in New York.

Hauser said inflation is “too high” and that policymakers are assessing the income shock from rising oil prices linked to the Middle East conflict. He said rates will need to be set at a level that brings inflation back to target, and could rise if required.

Oil Price Shock Raises Inflation Risk

RBA staff estimated last month that if oil stays near $100 a barrel, higher petrol prices would lift headline inflation to about 5% year on year in Q2. That would be above the 2–3% target band.

TD Securities now forecasts a 25 basis point rise at the next meeting. It also warns the cash rate may need to move above 4.35% after May if oil-driven inflation continues.

The article was produced using an AI tool and checked by an editor.

We are seeing a clear hawkish shift from the RBA, as Deputy Governor Hauser’s comments show they don’t have high confidence in their current policy. This means we must seriously re-evaluate the possibility of a rate hike at the upcoming May 2025 meeting. The door is now wide open for further tightening.

Market Positioning For Higher RBA Rates

These concerns are not unfounded, as we saw annual inflation remain sticky at 3.6% in the first quarter of 2025, well above the RBA’s target. With Brent crude prices consistently holding above $90 a barrel due to ongoing Middle East tensions, the risk of inflation staying high is very real. This data gives credibility to the RBA’s warning about inflation potentially hitting 5%.

For those trading interest rate derivatives, this signals a need to position for a higher cash rate. We’ve seen the market react, with interbank cash rate futures for mid-2025 shifting to price in a higher probability of a 4.60% cash rate. Protecting against or betting on a hike in the coming months is now the primary play.

This policy pivot should provide strong support for the Australian dollar. A central bank that is more likely to hike rates than its peers tends to attract capital, boosting its currency. We should consider positioning for AUD strength against currencies with more dovish central banks.

The increased uncertainty surrounding the RBA’s next move will likely push up market volatility. We can expect implied volatility in AUD/USD options and options on three-year bond futures to rise. This presents opportunities for traders who focus on volatility rather than just market direction.

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Final March CPI figures for the Eurozone are due, which may clarify how the Hormuz-related energy shock is feeding into inflation across the currency bloc. The focus is on how energy prices are passing through into broader Euro-area inflation measures.

In Hungary, following Viktor Orbán’s electoral defeat, the new prime minister, Magyar, has indicated he may end Hungary’s block on the EU’s €90B loan for Ukraine. He has also reiterated support for NATO, while not committing to the same level of support for Ukraine.

Eurozone Inflation Energy Pass Through

At EU level, European Commission President Ursula von der Leyen is advocating a shift from national vetoes on foreign policy to qualified majority voting. The proposal is politically contentious, including within member states that are generally supportive of deeper EU integration.

We are closely watching for the final March Eurozone CPI figures, as they will be the first full dataset to reflect the energy shock from the Strait of Hormuz conflict. With Brent crude having spiked to over $115 a barrel in late March, initial estimates suggest headline inflation could jump well above the 3.1% we saw in February 2026, creating significant volatility. Traders should consider positioning for a surprise in the data, as a higher-than-expected print could force the ECB’s hand.

The recent political shift in Hungary removes a major headwind for Euro-denominated assets. The potential release of the €90 billion Ukraine loan facility signals renewed political cohesion within the EU, reducing the tail risk that weighed on the single currency. Looking at the Euro’s performance, we saw it struggle to break key resistance levels throughout late 2025 when Hungary’s veto was a constant threat.

Longer-term, the push for qualified majority voting on foreign policy is a structurally positive development that derivative traders should monitor. This move is aimed at preventing the kind of single-country gridlock that created market uncertainty over aid packages and sanctions in the past. While progress will be slow, any steps forward reduce the political risk premium embedded in long-dated Euro options.

Implications For Euro Rates And FX

Looking back at 2025, much of the market narrative was dominated by EU political friction and its dampening effect on investor confidence. Now in April 2026, we see a different landscape where resolving political impasses may provide a supportive floor for the Euro. However, this is happening just as a fresh energy-driven inflation shock, reminiscent of the 2022 crisis, creates new uncertainty for monetary policy.

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NZD/USD rose 0.5% to near 0.5900 in Tuesday’s European session, with the New Zealand Dollar outperforming peers in a risk-on market. S&P 500 futures climbed to near 6,900 during European trade.

Market focus is on the chance of a second round of US-Iran talks before the expiry of a two-week ceasefire on April 21. This has reduced demand for the US Dollar as a safe-haven asset.

Dollar Weakness And Data Watch

The US Dollar Index (DXY) was down 0.3% at about 98.00, its lowest level in more than six weeks. Traders are also waiting for the US Producer Price Index (PPI) for March, due at 12:30 GMT.

Forecasts point to headline PPI rising to 4.6% year-on-year, up from 3.4% in February. NZD/USD held above the 20-period EMA at 0.5817 and moved above the 50% Fibonacci retracement at 0.5888.

The 14-day RSI was 58.3 and rising, but still below overbought levels. Resistance sits at 0.5936 and 0.6005, while support is at 0.5888, then 0.5839–0.5817, with deeper levels at 0.5779 and 0.5683.

We are seeing a clear bullish signal for the Kiwi against the US dollar, driven by positive market sentiment and specific weakness in the greenback. A strategy to consider in the coming days is buying NZD/USD call options with a strike price near 0.6000. This allows us to capitalize on the upward momentum while clearly defining our maximum risk.

The New Zealand dollar’s strength is supported by solid fundamental data that has recently emerged. Fonterra’s global dairy auction prices, a key indicator for New Zealand’s largest export, showed a surprise 2.8% increase in the latest report from early April 2026. This adds a layer of confidence to the Kiwi’s rally beyond just the favorable market mood.

Key Risks And Trade Management

On the other side of the trade, the US dollar’s weakness is a major factor as traders unwind safe-haven bets. We remember the US Dollar Index was stubbornly holding above the 103.00 level for much of 2025, so its current dip to 98.00 marks a significant shift in sentiment. This trend is likely to continue as long as geopolitical tensions surrounding the US-Iran talks continue to ease.

However, we must watch the upcoming US Producer Price Index data very closely. The market expects a high number, and after the persistent inflation we saw through 2025, any figure that comes in even hotter could spark fears of a more aggressive Federal Reserve. This would cause a rapid reversal and strengthen the US dollar, so it may be prudent to place protective stop-loss orders or use options spreads to hedge this risk.

Using the technical levels provided, a break above the 0.5936 resistance would be a strong confirmation of the trend. This could be a trigger to add to bullish positions, with an ultimate target near the 0.6005 level. On the downside, if the pair falls back below 0.5888 after the inflation report, it would be a signal to reduce our exposure.

The geopolitical catalyst for this trade, the US-Iran ceasefire talks, has a deadline of April 21. This gives us a specific timeframe to manage, as market sentiment could shift dramatically around that date. Any derivatives positions we take on should ideally have an expiration that accounts for this potential spike in volatility next week.

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Global risk sentiment has improved as US–Iran diplomacy keeps a ceasefire in place. Brent crude has fallen to just under $100 a barrel, stocks and bonds have risen, and the US Dollar has weakened against major currencies.

The US Dollar Index (DXY) is expected to be driven mainly by rate differentials again. It is forecast to remain within its established 96.00–100.00 range over the next few months.

Risk Sentiment And Energy Markets

The energy shock may continue, but its worst phase is described as likely past. March 30 is identified as a possible low point for risk sentiment.

A weaker long-term US Dollar view is linked to fading confidence in US trade and security policy. It is also linked to worsening US fiscal credibility and the politicisation of the Federal Reserve.

The article states it was produced using an AI tool and reviewed by an editor.

With financial markets shifting into a risk-on mode, we see an opportunity in the volatility space. The CBOE Volatility Index (VIX) has recently fallen below 15, a significant drop from its highs above 25 seen earlier in the year. This suggests that selling options to collect premium, such as through put credit spreads on major indices, could be a viable strategy in the coming weeks.

Dollar Range And Options Positioning

The US Dollar Index (DXY) is expected to stay within its 96.00 to 100.00 range, and is currently trading near 97.80. This stability makes strategies like iron condors on currency-tracking ETFs attractive, as they profit from low volatility and a confined price channel. The narrowing of interest rate differentials, particularly with the European Central Bank, supports this view of a capped upside for the dollar.

For longer-term positions, we maintain our bearish view on the dollar due to deep structural issues. Looking back at the trends we observed throughout 2025, concerns over US fiscal credibility have only grown. With the Congressional Budget Office projecting the US debt-to-GDP ratio will climb past 110% this year, buying longer-dated put options on the DXY could serve as a valuable position.

The recent drop in Brent crude prices to below $100 a barrel, retreating from its March highs, indicates the worst of the energy shock is likely behind us. Traders could consider buying put options on oil futures to position for a further slide toward the mid-$90s. This aligns with the improved geopolitical sentiment surrounding ongoing US and Iranian diplomacy.

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Gold (XAU/USD) rose for a second day on Tuesday and moved towards $4,800 after rebounding from one-week lows at $4,664 on Monday. Reports of possible new US–Iran negotiations supported risk aversion and lifted demand for precious metals versus the US Dollar.

Reuters reported that US and Iran delegations may be ready to resume talks in Pakistan this week. US President Donald Trump said on Monday that Iran had called to “work for a deal”, and US Vice President JD Vance said on Tuesday that Tehran should “take the next step” in negotiations.

Gold Price Levels And Momentum

XAU/USD remains range-bound, with resistance around $4,850 and support near $4,620, the 38.6% Fibonacci retracement of the March sell-off. On the 4-hour chart, the RSI is above 50 but below 60, while the MACD is near the zero line.

A break above $4,850 (the April 8 high) could open $4,932, the 61.8% Fibonacci level, and resistance just above $5,000. A drop below $4,620 could lead to the March 26 low area near $4,350.

The technical analysis used an AI tool. The story was corrected on 14 April at 11:15 GMT after a misspelling about US–Iran negotiations.

We remember looking at the market back in April 2025, when gold was moving sideways. The price was trapped between support near $4,620 and a firm ceiling around $4,850. At that time, the main driver was speculation about peace talks, which created a hesitant market.

Inflation Driven Shift In The Trend

Today, the situation is different, with persistent inflation being the primary catalyst pushing gold towards the $5,200 level. The latest March 2026 Consumer Price Index data showed inflation at 3.8%, which was higher than the market expected. This reinforces gold’s appeal as a hedge against rising prices, providing a more solid foundation than the political rumors of last year.

For traders, this suggests a strategy of buying call options to capitalize on the upward momentum while keeping risk defined. Implied volatility is currently elevated at an 18% six-month high, indicating the market expects a significant price move. This makes bull call spreads an attractive option to help offset the increased cost of premiums.

We should also watch for any pullbacks, with the new critical support level now established near $5,050. A decisive break below this mark could lead to a sharp decline, reminding us of the quick sell-off we saw in late 2025. Buying protective put options with a strike price around $5,000 would be a sensible hedge for existing long positions.

The bullish long-term trend is further strengthened by consistent demand from large institutions. The World Gold Council recently reported that central banks were again net buyers in the first quarter of 2026, adding 250 tonnes to their reserves. This underlying demand creates a level of support that was not as apparent during the sideways market of 2025.

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Germany’s 5-year note auction yield rose to 2.74%, up from 2.72% at the previous auction.

The change marks an increase of 0.02 percentage points compared with the prior result.

German Five Year Yield Signals

The slight increase in the German 5-year yield to 2.74% confirms the trend we’ve been watching over the past few weeks. This suggests the market is continuing to price in a more hawkish European Central Bank for longer. After the persistent inflation we saw through much of 2025, this small move is a significant signal for what’s to come.

We should consider adding to short positions on interest rate futures, particularly those tracking German debt like the Euro-Bobl. With Eurostat’s latest flash estimate showing core inflation unexpectedly ticking back up to 2.9%, the path of least resistance for yields is likely higher. Paying fixed on interest rate swaps also looks attractive to position for the ECB potentially holding rates higher than anticipated through the summer.

This environment is also ideal for looking at options to trade the expected increase in price swings. Buying put options on bond futures offers a direct way to profit from falling bond prices as yields continue their climb. We saw how profitable this strategy was during the rapid rate hikes of 2022 and 2023, and the current market structure is showing similar patterns.

Euro Support From Yield Differentials

The rising yield differential should continue to provide support for the Euro against other major currencies. We can express this view through call options on the EUR/USD pair, as the spread between German and U.S. 5-year government debt has now widened by over 15 basis points since the start of the year. This trade is further supported by recent U.S. labor market data from late March which showed a surprising softening, potentially giving the Federal Reserve room to ease policy sooner than the ECB.

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Gold steadied after an early dip, with price action supported by ongoing geopolitical uncertainty and structural demand. Near-term moves are expected to track ceasefire news and broader risk sentiment.

Gold fell to 4645 before retracing during New York hours and was last seen around 4720. Daily-chart momentum remains bullish, while the RSI has moderated, suggesting two-way risks.

Key Support And Resistance Levels

Key support is at 4670, aligned with the 21- and 100-day moving averages and the 38.2% Fibonacci level. Resistance sits at 4850, the 50% Fibonacci retracement of the 2026 high-to-low move, and at 4915 near the 50-day moving average.

Despite weaker sentiment after no deal over the weekend, central bank buying continues, though it varies month to month. This demand is linked to diversification, alongside gold’s use as a hedge against geopolitical risk and policy uncertainty.

The outlined approach favours buying on pullbacks rather than chasing rising prices. Attention remains on ceasefire developments, with direction also influenced by wider market risk conditions.

Gold has found its footing around the 4720 level, but we should resist the urge to chase this strength. The better strategy is to buy on pullbacks, as structural support from geopolitical risks and central bank buying remains strong. This cautious approach is prudent given the two-way risk from ceasefire headlines.

Options And Futures Positioning

Central bank diversification is a key driver, with the World Gold Council reporting a net purchase of 45 tonnes globally in the first quarter of 2026. The People’s Bank of China was a notable buyer, adding another 10 tonnes in March, continuing a multi-month trend of accumulation. This underlying demand provides a solid floor for prices.

For options traders, this means we could consider selling cash-secured puts or establishing bull put spreads with strike prices near the 4670 support level. This approach allows us to collect premium while waiting for a potential dip, defining our risk if the price moves against us. It aligns perfectly with a strategy of buying weakness rather than strength.

If using futures, we should avoid entering long positions now and instead place limit orders closer to that 4670 support zone. Resistance at 4850 and 4915 should be viewed as potential profit-taking targets, not breakout entry points. This disciplined tactic helps avoid getting caught in a reversal from overbought conditions.

The fragile nature of the current ceasefire negotiations means that headline risk could trigger the very pullback we are looking for. We only have to look back to the market reaction during the supply chain disruptions of late 2025 to see how quickly capital flows into gold as a hedge. Being positioned to buy a dip could prove to be the most effective strategy.

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Gold steadied after an early dip, with price action supported by ongoing geopolitical uncertainty and structural demand. Near-term moves are expected to track ceasefire news and broader risk sentiment.

Gold fell to 4645 before retracing during New York hours and was last seen around 4720. Daily-chart momentum remains bullish, while the RSI has moderated, suggesting two-way risks.

Key Support And Resistance Levels

Key support is at 4670, aligned with the 21- and 100-day moving averages and the 38.2% Fibonacci level. Resistance sits at 4850, the 50% Fibonacci retracement of the 2026 high-to-low move, and at 4915 near the 50-day moving average.

Despite weaker sentiment after no deal over the weekend, central bank buying continues, though it varies month to month. This demand is linked to diversification, alongside gold’s use as a hedge against geopolitical risk and policy uncertainty.

The outlined approach favours buying on pullbacks rather than chasing rising prices. Attention remains on ceasefire developments, with direction also influenced by wider market risk conditions.

Gold has found its footing around the 4720 level, but we should resist the urge to chase this strength. The better strategy is to buy on pullbacks, as structural support from geopolitical risks and central bank buying remains strong. This cautious approach is prudent given the two-way risk from ceasefire headlines.

Options And Futures Positioning

Central bank diversification is a key driver, with the World Gold Council reporting a net purchase of 45 tonnes globally in the first quarter of 2026. The People’s Bank of China was a notable buyer, adding another 10 tonnes in March, continuing a multi-month trend of accumulation. This underlying demand provides a solid floor for prices.

For options traders, this means we could consider selling cash-secured puts or establishing bull put spreads with strike prices near the 4670 support level. This approach allows us to collect premium while waiting for a potential dip, defining our risk if the price moves against us. It aligns perfectly with a strategy of buying weakness rather than strength.

If using futures, we should avoid entering long positions now and instead place limit orders closer to that 4670 support zone. Resistance at 4850 and 4915 should be viewed as potential profit-taking targets, not breakout entry points. This disciplined tactic helps avoid getting caught in a reversal from overbought conditions.

The fragile nature of the current ceasefire negotiations means that headline risk could trigger the very pullback we are looking for. We only have to look back to the market reaction during the supply chain disruptions of late 2025 to see how quickly capital flows into gold as a hedge. Being positioned to buy a dip could prove to be the most effective strategy.

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The NFIB Business Optimism Index for the United States was 95.8 in March. This was below the expected level of 98.6.

The drop in small business optimism is a clear warning sign for the economy. Since these businesses are a major source of hiring, their caution suggests potential weakness in future jobs reports and consumer spending. We should adjust our strategies to prepare for increased market volatility and a potential slowdown.

Volatility Signals Rising

This reading creates uncertainty, which is visible in the CBOE Volatility Index, or VIX, now hovering around 17. This is up from the lows we saw earlier in the year. Derivative traders should consider buying VIX call options or using straddles on the S&P 500 to profit from the expected increase in price swings.

We anticipate that cyclical sectors, like consumer discretionary and industrials, will face headwinds. Buying put options on ETFs tracking these sectors could be a prudent move. Conversely, we are looking at selling cash-secured puts on defensive sectors like healthcare and utilities, which tend to hold up better during economic slowdowns.

The Federal Reserve is now in a difficult position, as recent CPI data showed inflation is still persistent at 3.5%. This weak NFIB number complicates any plans for further rate hikes and may force them to hold steady. We are watching derivatives tied to federal funds futures, which are now pricing in a greater chance of a rate cut by the fourth quarter.

This situation differs from the sharp, inflation-driven downturn we navigated back in 2022. Unlike then, we currently see conflicting data, as the last jobs report added a surprisingly strong 280,000 new positions. This suggests a period of economic confusion rather than a clear collapse, making strategies that benefit from a range-bound market, like iron condors, particularly appealing.

Positioning For Mixed Data

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Brent oil fell below $100 as hopes rose for a US–Iran deal. Spot Brent dropped to $97.76 after closing at $99.36, up +4.37% on the prior session.

Brent was down a further -1.61% overnight, taking it back under $98. This reduced concerns about a stagflationary shock.

Market Reaction And Risk Sentiment

The S&P 500 rose +1.02% and closed above its pre-strike level on 27 February. Oil futures prices remained below spot levels.

The 6-month Brent future traded at $83.55. The 12-month Brent future traded at $78.57.

The pricing gap between spot and later-dated contracts indicates expectations of lower oil prices over time. The article states it was produced with an AI tool and checked by an editor.

With Brent crude recently pushing past $92 a barrel due to renewed tensions in the Strait of Hormuz, the market is showing signs of nervousness. However, the futures market tells a different story, with the 6-month contract trading near $85 and the 12-month future closer to $80. This steep downward slope, known as backwardation, indicates that traders see the current price spike as short-lived.

Derivative Trading Implications

We are looking at a market structure very similar to what we saw in early 2025, when hopes for a US-Iran deal pushed the Brent spot price well above its futures contracts. Back then, the market correctly anticipated that geopolitical fears would ease, allowing prices to normalize over the following months. That historical precedent gives us confidence in the current futures curve as a reliable indicator.

For derivative traders, this suggests that selling front-month call options could be an attractive strategy to collect premium from the elevated volatility. This position benefits if the geopolitical risk subsides and prices either stabilize or fall back towards the levels predicted by the futures curve. The recent EIA Short-Term Energy Outlook, which projects a slight softening in global demand for the third quarter, further supports this view that the current price strength will not last.

Another approach is to look at calendar spreads, which involve selling the near-term futures contract while simultaneously buying a longer-dated one. This trade profits directly from the expected flattening of the curve as the near-term price falls more sharply than the deferred price. It is a way to bet on normalization without taking an outright bearish view on oil over the long term.

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