S&P 500 futures fell as the Iran conflict escalated and energy prices rose, weighing on global risk sentiment. Deutsche Bank strategists also referenced a risk-off move after US-Iran talks ended without a deal, alongside plans for a US blockade of the Strait of Hormuz for vessels entering or leaving Iranian ports.

Brent crude was up +7.39% to $102.24/bbl, raising concerns about a stagflationary shock. S&P 500 futures were down -0.73%, while DAX futures were down -1.47%, with Europe framed as more exposed to an energy shock.

Key Market Focus For The Week Ahead

The Iran conflict is set to remain the main focus in the week ahead, alongside the start of the Q1 earnings season. Releases this week include several US financial firms.

Deutsche Bank’s US equity team said bottom-up analyst consensus expects mid-teens S&P 500 earnings growth of 16%, supported by macro conditions. They also projected stronger growth led by megacap technology and financials during the reporting season.

The article notes it was produced using an Artificial Intelligence tool and reviewed by an editor.

We are currently seeing a similar tug-of-war between geopolitical headlines and underlying economic fundamentals. This environment mirrors the risk-off sentiment from 2025, when the US-Iran conflict caused a sharp spike in oil prices and a dip in equity futures. The key for traders now is to gauge whether strong corporate earnings can once again overcome these external pressures.

Options Positioning And Risk Management

Given the persistent geopolitical uncertainty, implied volatility is on the rise, with the VIX climbing to over 17 in recent sessions. This presents an opportunity to purchase protection against sudden market drops, much like the one feared during the Strait of Hormuz blockade. Traders should consider buying puts on broad market indices like the SPX or SPY to hedge their portfolios against an unexpected escalation.

The energy sector remains a primary focus, with Brent crude currently holding firm near $90 per barrel. While not at the $102 panic level seen in 2025, this elevated price keeps inflation concerns active and could pressure other sectors. Call options on energy ETFs could be a direct way to profit if tensions worsen and oil prices climb further.

However, the earnings picture today is different from the optimism of 2025, when mid-teens growth was expected. Current Q1 2026 consensus forecasts point to more modest S&P 500 earnings growth, closer to 4-5%. This lower bar could make it easier for companies to deliver positive surprises, potentially rewarding traders who sell cash-secured puts on fundamentally sound companies ahead of their reports.

Just as in 2025, the earnings season is kicking off with major financials, which will set the tone for the coming weeks. Their results, particularly guidance on loan growth and credit losses, will be critical indicators of economic health. A defined-risk strategy like an iron condor on a financial sector ETF could be used to capitalize on post-earnings volatility compression.

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The euro fell 0.32% in early Asian trading, despite weekend election news from Hungary. Peter Magyar’s pro-EU Tisza party defeated Viktor Orban’s Fidesz.

Tisza secured a two-thirds majority in Hungary’s 199-seat parliament. The result was compared by some in Brussels and EU capitals to the 1956 Hungarian Uprising.

The outcome may reduce one internal barrier to EU policy action. However, Magyar was not described as a Eurocrat.

Further tensions between the EU and Budapest may still occur. Czechia and Slovakia were also described as having Orban-like positions.

We are seeing the Euro drop by 0.32% in early trading, which is notable because it ignores the positive news of a pro-EU party winning in Hungary. This suggests that the market is focused on bigger problems facing the European economy. The victory for Peter Magyar’s party is not enough to outweigh the underlying negative sentiment.

Traders should not interpret this political shift as a reason to be bullish on the Euro. Recent data shows the wider Eurozone economy is struggling, with German industrial output unexpectedly falling by 0.8% in the latest figures for February 2026. This fundamental weakness is a much stronger driver for the currency than a single election result.

The Hungarian election outcome may remove an internal EU headache, but it doesn’t solve everything. We know Magyar is not a complete follower of Brussels, and populist-leaning governments in Czechia and Slovakia still pose challenges to unified EU policy. These lingering political risks create uncertainty, which typically weighs on a currency.

Broader global pressures are also capping any potential gains for the Euro. We are seeing renewed trade friction with China over electric vehicle subsidies and Brent crude oil prices have climbed back above $95 a barrel, reviving memories of the energy cost pressures we saw in 2025. These external factors are far more significant for the Euro’s valuation right now.

Given this backdrop, we should consider strategies that protect against further Euro weakness. Buying puts on the EUR/USD pair or selling out-of-the-money call options could be prudent ways to position for a sideways or downward trend in the coming weeks. Volatility may be low, but the risk of a sudden drop linked to poor economic data remains elevated.

EUR/GBP traded in a tight 25-pip range on Monday, staying between 0.8695 and 0.8725 and hovering around 0.8700. Market sentiment weakened after US–Iran peace talks failed, although a two-week ceasefire remained in place and volatility stayed relatively low.

Higher oil prices and a US vow linked to blocking the Strait of Hormuz limited the Euro’s upside. On Tuesday, speeches by Bank of England Governor Andrew Bailey and European Central Bank President Christine Lagarde may move the pair.

Technical Momentum Signals

The pair kept a mild bullish tilt, but momentum was fading. The 4-hour RSI was near 50, while the MACD sat just above zero, pointing to no clear direction.

Resistance was seen at 0.8722, with further levels at the April high area near 0.8740 and the year-to-date high at 0.8789. Support sat around 0.8705, then 0.8687, with lower support near 0.8635.

The report noted that an AI tool assisted the technical analysis. A correction on April 13 at 11:40 GMT pointed to Tuesday’s speeches as more relevant than those on Wednesday.

Looking back to this time in 2025, we saw the EUR/GBP pair trapped in a state of hesitation around the 0.8700 level. The market was nervous due to geopolitical tensions and was waiting for cues from central bankers. That period of calm was a warning sign for the volatility that followed.

Lessons From 2025 Price Action

Those doji candles in April 2025 correctly signaled a turning point, as the pair broke sharply lower in the subsequent weeks. The Bank of England maintained a more aggressive stance on inflation through the summer of 2025 than the ECB, pushing the pair down to test 0.8550 by August. We can see from historical data that a divergence in central bank policy, with UK inflation proving stickier at 3.1% in late 2025 versus the Eurozone’s 2.5%, often precedes major trends.

Today, we see a similar tight consolidation, but now it is happening around the 0.8620 mark. With Eurozone Q1 2026 growth figures coming in at a disappointing 0.1% and the UK economy showing surprising resilience, the fundamental pressure on the Euro persists. This historical parallel from last year suggests we should be wary of the current quiet market.

Given the memory of last year’s breakdown, traders should consider buying put options with a strike price below current support at 0.8600. This provides a clear hedge against a repeat of 2025’s sharp decline. The cost of this insurance is limited to the premium paid for the options.

Implied volatility for EUR/GBP options is currently low, hovering around 6.2%, which is below the five-year average. This makes strategies like a bear put spread attractive, as it lowers the upfront cost while still profiting from a moderate drop in the exchange rate. This allows for a defined-risk way to position for a potential slide towards the 0.8500 level.

However, we must remember how the market was caught off guard by ECB commentary in the second half of 2025. Any strategy should therefore be flexible. Using options allows traders to position for a directional move without being immediately stopped out by short-term noise, which proved to be a valuable approach last year.

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The Australian Dollar traded mixed against major peers on Monday. It was down 0.2% near 0.7050 versus the US Dollar during the European session, after trimming earlier losses.

Risk appetite stayed weak after the first round of US–Iran negotiations failed, which helped oil prices rebound. S&P 500 futures were over 0.6% lower near 6,760.

Geopolitical Tensions And Risk Sentiment

Talks in Pakistan on a permanent ceasefire did not reach agreement. Iran denied it would abandon plans to build nuclear facilities.

The renewed conflict supported demand for the US Dollar as a safer currency. The US Dollar Index was up 0.25% near 99.00.

Traders are awaiting Australia’s March labour market report on Thursday. Jobs growth is forecast at 20K versus 48.9K in February, with unemployment seen steady at 4.3%.

In the US, March Producer Price Index data is due on Tuesday. Headline PPI is expected to rise 1.2% month on month, up from 0.7% previously.

Trading And Hedging Approaches

We are seeing a classic risk-off move driven by the failed US-Iran negotiations, which is causing a flight to safety. The resulting spike in oil prices is pushing investors into the safe-haven US Dollar, directly pressuring the Australian Dollar. This is reinforced by the drop in S&P 500 futures, signaling broader market anxiety.

With Australian jobs data due Thursday, we should prepare for potential AUD/USD volatility. Looking back, we saw how a weaker-than-expected jobs report in the third quarter of 2025 caused the Aussie to drop over half a cent in minutes. A similar miss on the expected 20K job gain this week could easily push the AUD/USD pair towards new lows.

The US Producer Price Index data is another key event for the US Dollar’s direction. A high reading, especially if it beats the strong 1.2% monthly forecast, would signal persistent inflation. This would likely strengthen the US Dollar as it reinforces the case for the Federal Reserve to maintain its current interest rate policy.

Implied volatility is likely to rise, much like the spike we saw in the VIX index from 17 to over 21 during the geopolitical flare-ups of 2025. Traders holding long Australian Dollar positions should consider buying puts on the AUD/USD as a hedge against a further downturn. These options can provide downside protection through the upcoming data releases.

Given the uncertainty, purchasing a short-dated straddle on the AUD/USD could be a viable strategy to play the jobs data release. This approach profits from a large price swing in either direction, whether the data strongly beats or misses expectations. A market that is currently priced for a 40-pip move on the event may be underestimating the potential for a larger swing.

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USD/JPY opened the week with a bullish gap but had little follow‑through and stayed below 160.00 into the European session. Supportive market conditions have kept an upward bias for a third straight day.

The yen has been weaker amid economic concerns linked to rising tensions in the Middle East. Worries include possible disruption around the Strait of Hormuz, after US President Donald Trump said the US Navy would start blockading the waterway following failed US‑Iran peace talks.

Middle East Risk And Yen Weakness

US‑Iran talks ended without a breakthrough after nearly 21 hours of discussions. Ongoing Israeli strikes in Lebanon have added to risk, lifting crude oil prices and increasing inflation concerns.

Higher energy prices have pushed up Japanese government bond yields and added pressure on the yen, which is sensitive to imported energy costs. The US dollar has also been supported by demand linked to its reserve currency role.

Expectations of a more hawkish Federal Reserve, due to inflation worries tied to energy prices, have supported the dollar. However, talk of possible Japanese action to limit yen weakness has restrained further USD/JPY gains.

Looking back to this time in 2025, we saw USD/JPY pressing against the 160.00 level, driven by Mideast tensions and a hawkish Federal Reserve. The primary factor holding the pair back was the significant threat of intervention from Japanese authorities. This created a tense standoff between strong fundamental pressures pushing the pair higher and the risk of a sharp, policy-driven reversal.

We now know that threat was very real, as authorities stepped in later in 2025 to defend the yen, spending over 9 trillion yen in the process. That action caused a temporary but sharp drop, reminding us that while fundamentals point one way, official policy can create severe short-term volatility. The memory of that intervention is critical as we approach similar levels today.

Rate Differential And Intervention Risk

The core dynamic remains the wide interest rate gap between the US and Japan, which is even more pronounced now in April 2026. The Federal Reserve’s policy rate sits at 5.25%, while the Bank of Japan has only recently moved its rate to a mere 0.1%. This differential of over 500 basis points makes carrying long USD/JPY positions fundamentally attractive for yield.

As of today, April 13, 2026, the pair is again challenging the 159.50 level, largely because recent US inflation data came in hotter than expected at 3.4%, pushing back any hope for near-term Fed rate cuts. This mirrors the inflationary fears we saw in 2025, but this time it is driven by stubborn domestic price pressures rather than a specific energy shock. The market is now re-testing the resolve of Japan’s Ministry of Finance.

Given this backdrop, we should consider buying USD/JPY call options with strikes around 161.00 and 162.00. This strategy allows us to profit if the fundamental upward pressure continues and breaks through the old highs. The key benefit is that our maximum loss is limited to the premium paid, providing a safety net if Japanese authorities intervene again and cause a sudden drop.

For a more conservative approach, we are looking at bull call spreads. By buying a call option at a lower strike price, like 160.00, and simultaneously selling a call at a higher strike, such as 162.50, we can finance the position. This reduces the upfront cost and allows us to profit from a measured move higher, while defining our risk in this tense environment.

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Hungary’s election produced a parliamentary supermajority for Peter Magyar’s opposition Tisza party, with roughly 69% of the mandate versus 28% for Viktor Orbán’s Fidesz. The result is described as reducing transition risks and creating room for structural reforms.

Commerzbank said EUR/HUF has already traded near 365 following the vote. It also said it expects to revise its end-June forecast down from 380, which implies a stronger forint than previously projected.

The bank added that broader war-related volatility could limit how much the currency benefits in the near term. In its pre-election view, it said EUR/HUF could reach 365 after the vote if the Iran war situation allowed.

The article notes it was created with the help of an Artificial Intelligence tool and reviewed by an editor.

Looking back at the election in 2025, the Tisza party’s supermajority victory was seen as a pivotal moment for Hungary, promising significant structural reforms. This overwhelming mandate was interpreted as a more positive outcome than a simple majority, creating a credible opportunity to reset the country’s political and economic trajectory. The initial market reaction was a sharp strengthening of the forint.

We recall the EUR/HUF exchange rate briefly touched the 365 level, which was our target assuming a calm global environment. However, persistent geopolitical risks and an aggressive rate-cutting cycle from the Hungarian National Bank have since tempered that optimism. The pair is currently trading closer to 392, suggesting the initial political premium has faded.

Fundamentally, the case for a stronger forint remains, as we anticipate progress on unlocking EU funds will provide a significant tailwind. Inflation in Hungary has fallen dramatically to 3.6% year-over-year, which supports economic stability even as the central bank continues to lower its policy rate from last year’s highs. This disinflationary trend strengthens the forint’s real value.

For the coming weeks, derivative traders should consider positioning for a renewed downward move in EUR/HUF. Buying EUR/HUF put options with strikes around 385 or 380 could offer a favorable risk-reward profile to capitalize on forint strength. Short-dated forward contracts also present a direct way to express this bearish view on the currency pair.

However, traders must hedge against ongoing volatility stemming from regional conflicts and the pace of domestic monetary easing. A slower-than-expected release of EU funds or a sudden shift in global risk sentiment could trigger short-term forint weakness. Therefore, maintaining disciplined stop-loss levels on any short EUR/HUF positions is crucial.

Global markets turned risk-averse after weekend talks between Iran and the US made no progress. The only item on the US calendar is March Existing Home Sales.

President Donald Trump said talks were “very friendly” and that Iran agreed to “just above every point” the US needed, but Iran did not commit to giving up nuclear ambitions. Trump said a two-week ceasefire is holding, while the US military will enforce a blockade on all naval traffic in and out of Iranian ports in the Strait of Hormuz from 10:00 EST Monday.

Markets React To Renewed Geopolitical Risk

The Wall Street Journal reported Trump and advisers are weighing renewed military strikes alongside the blockade. Oil opened with a bullish gap, with WTI near $96, up about 6% on the day.

US stock index futures fell 0.6% to 0.7%, while the USD Index rose over 0.3% to near 99.00. US CPI inflation rose to 3.3% year-on-year in March from 2.4% in February; monthly CPI was 0.9% after 0.3%.

Gold fell to a six-day low below $4,650, then recovered above $4,700. EUR/USD neared 1.1700, down about 0.3%, and GBP/USD was just above 1.3400, down 0.35%.

USD/JPY traded above 159.50 after two days of gains. BoJ Governor Kazuo Ueda said the recovery is modest and inflation is moving towards target.

Key Cross Asset Levels

Looking back at the events of exactly one year ago, we saw how quickly markets reacted to the failed US-Iran talks. The immediate 6% spike in WTI crude oil to $96 a barrel was a clear warning of how sensitive energy prices are to conflict in the Strait of Hormuz. We should be positioned for similar volatility now, especially with crude oil inventories showing a recent drawdown of 2.1 million barrels last week, tightening the supply picture even before any new disruptions.

The risk-off sentiment that hit stock futures in April 2025 is a textbook reaction we must prepare for again. Volatility, as measured by the VIX, is currently holding near a relatively calm 15, which could represent a cheap entry for buying call options as a hedge. Any escalation in geopolitical tensions would likely see this index surge, as it did this time last year when it jumped over 25% in two days.

Last year’s events also reinforced the US Dollar’s role as the ultimate safe haven, with the DXY climbing past 99.00. With US inflation data from March showing a stubborn 3.4% annual rate, the dollar continues to have fundamental support for a strong policy stance. This suggests that holding long dollar positions against other major currencies remains a sound strategy in the face of global uncertainty.

We should also remember the pressure on the Japanese Yen, which weakened past 159.50 against the dollar despite the risk-off mood. While the strong dollar was the main driver then, a severe crisis could still trigger a rush into the Yen as a traditional haven, unwinding carry trades violently. Traders should therefore be cautious and consider options to protect against a sudden reversal in USD/JPY.

Gold’s behavior last year was tricky, showing a sharp dip before rebounding above $4,700. This initial shakeout likely cleared the way for a more sustained move higher, driven by both the conflict and the high inflation figures. Given that gold is currently trading above $2,550 an ounce, any similar dips on news should be viewed as opportunities to build long positions.

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EUR/USD fell back from last week’s peak near 1.1740 on Monday, but stayed in the upper 1.1600s. It traded at 1.1685 and found support earlier at 1.1670.

Oil prices rose after peace talks between the US and Iran failed and the US said it would block the Strait of Hormuz, which lifted demand for the US Dollar. The Euro’s decline has remained limited so far.

Oil Shock And Currency Reaction

Brent crude traded just above 100 USD per barrel, while EUR/USD slipped below 1.17. Implied EUR/USD volatility was described as staying comparatively low while markets expect de-escalation.

With a light economic calendar, headlines from Iran are expected to keep moving markets. On Tuesday, attention turns to ECB President Christine Lagarde ahead of the April 30 policy decision.

EUR/USD held above the 1.1630 area and its wider trend was described as positive. The RSI was around the mid-50s and the MACD stayed close to the zero line.

Resistance was placed at 1.1725–1.1735, then 1.1825, and near 1.1930. Support levels were 1.1670, 1.1630–1.1640, and a rising trend support near 1.1590.

Then And Now

We remember this time in 2025 when tensions in the Strait of Hormuz pushed oil over $100 a barrel. The Euro held surprisingly firm against the dollar, trading near 1.17 despite the flight to safety. That period showed us that geopolitical risk does not always crush the Euro if markets are hoping for a quick resolution.

Today, on April 13, 2026, the situation is quite different. With Brent crude trading more calmly around $87 per barrel and a fragile truce holding in the Middle East, the geopolitical premium has mostly vanished. The EUR/USD pair is now trading much lower, near 1.0850, driven more by central bank policy divergence than by conflict.

Implied volatility was a key indicator then, and it remains so now. While volatility was considered low in April 2025, the underlying risk was high; today, the CBOE EuroCurrency Volatility Index sits near a multi-year low of 6.2, reflecting genuine market quiet. This makes buying options, such as straddles or strangles, relatively cheap to position for any unexpected disruption.

Last year, we were watching ECB President Lagarde for hints on managing an inflation shock from oil. Now, the focus is squarely on the divergence between the ECB and the Federal Reserve, with the ECB signaling a more aggressive rate-cutting cycle. This fundamental pressure is what is keeping a lid on any Euro rallies, unlike the resilient price action we saw in 2025.

Considering the low volatility and the bearish fundamental outlook, selling out-of-the-money call spreads on EUR/USD could be an effective strategy. This allows us to collect premium while betting that the pair will not break significantly higher, a direct contrast to the bullish trend we saw in early 2025. The 1.1000 level, which acted as support in late 2025, now looks like a formidable resistance ceiling for the coming weeks.

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DBS Group Research said stagflation risks are expected to shape discussions at the IMF and World Bank Spring Meetings in Washington, D.C., after a US move involving the Strait of Hormuz. It said the IMF World Economic Outlook (WEO), due on 14 April, is likely to cut global growth forecasts.

The report described President Donald Trump ordering the US Navy to blockade the Strait of Hormuz by stopping vessels in international waters that paid Iran a toll for safe passage. It also referred to Trump’s 17 March address in which NATO and Asian security partners were called “free riders” who did not “share the burden”.

Stagflation Risks And Global Policy Focus

It said the action followed a US Supreme Court ruling that removed Trump’s ability to use the International Emergency Economic Powers Act (IEEPA) for broad-based tariffs. The report said the administration is instead using energy security measures aimed at trade deficit partners in Europe and Asia.

It said Asia may be the most exposed region because of heavy reliance on Hormuz-linked industrial inputs. IMF Managing Director Kristalina Georgieva said prices may take time to return to levels seen before Operation Epic Fury began on 27 February.

Looking back at the turmoil of early 2025, we saw how the Strait of Hormuz blockade triggered the exact stagflationary shock many feared. The disruption, which began with Operation Epic Fury, caused a massive energy price spike that rippled through the global economy. This is a crucial backdrop for our current market positioning.

The CBOE Volatility Index (VIX) surged above 40 in April 2025, reflecting deep market uncertainty as the IMF downgraded its global growth forecast. As predicted, Asian economies were hit hard, with Japan and South Korea entering technical recessions in the second half of last year. US inflation, measured by CPI, subsequently peaked at 5.9% in the third quarter of 2025.

Positioning For Volatility And Range Bound Markets

Central banks were caught in a bind, forced to raise interest rates throughout the second half of 2025 to combat the supply-side inflation. This decision, while necessary to tame prices, further squeezed economic activity, particularly in manufacturing. We are still living with the consequences of those policy choices today.

Today, with inflation still stubbornly above the Fed’s target and growth anemic, the path for monetary policy remains highly uncertain. This environment makes options on short-term interest rate futures particularly compelling. They offer a way to trade the ongoing debate between further hikes to crush inflation or potential cuts to stave off recession.

We are also seeing elevated volatility in energy markets, even a year after the initial crisis. Brent crude prices, which briefly touched $140 per barrel last year, have settled but remain jumpy around $92 on any new geopolitical headline. Using long-dated call and put spreads on crude oil futures can help manage exposure to these persistent price swings.

This stagflationary echo also suggests equity indices may remain range-bound for some time. We are therefore positioning using strategies like iron condors on the SPX. This approach allows us to profit from a lack of strong directional movement and continued high implied volatility.

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Turkey recorded a current account balance of $7.501bn in February. This was above expectations of -$7.5bn.

The February current account data is a game-changer, showing a massive $15 billion swing from the expected deficit to a strong surplus. This is the clearest sign yet that the orthodox economic policies we have seen implemented over the last couple of years are finally delivering structural improvements. For the coming weeks, we must position for a fundamentally stronger Turkish Lira (TRY).

This positive flow drastically reduces pressure on the currency, a stark contrast to the persistent deficits we saw through 2025. With the central bank’s net reserves recently turning positive for the first time in years, reaching over $15 billion, the firepower exists to support this strength. We should be looking at derivatives that benefit from USD/TRY moving lower, potentially targeting a break below the 40.00 level through call spreads or by selling out-of-the-money puts.

A stable currency will likely trigger a new wave of foreign investment into Turkish equities. The BIST 100 index, which saw gains of over 90% in 2024, could see another significant leg up as currency risk subsides for offshore funds. We should consider buying BIST 100 index futures or call options to capture this potential upside momentum.

This surplus also gives the central bank significant flexibility, shifting the market narrative from rate hikes to the timing of eventual rate cuts. This implies that the extreme risk premium embedded in Turkish assets should decrease, making it attractive to sell volatility on the lira. Selling short-dated USD/TRY strangles could be an effective way to capitalize on a period of newfound, and surprising, stability.