Silver (XAG/USD) ended a five-day rise, dropping over 2.5% to about $73.80 per troy ounce in Asian trading on Monday. Demand eased as rising energy costs increased inflation concerns and raised the chance of delayed rate cuts or tighter policy by the Federal Reserve and other central banks.

West Texas Intermediate (WTI) started the week with a bullish gap, up about 7.5% near $97.10 per barrel. Oil prices rose amid renewed tension between the United States and Iran linked to the Strait of Hormuz.

Oil Shock And Inflation Fears

US President Donald Trump said the US would begin blockading ships entering or leaving the Strait of Hormuz after peace talks in Islamabad failed. US Central Command stated the blockade of maritime traffic to and from Iranian ports would start at 10 AM ET (14:00 GMT) on Monday.

US inflation data also supported expectations of higher interest rates for longer. The Bureau of Labor Statistics reported annual CPI at 3.3% in March, up from 2.4% in February, with monthly CPI at 0.9% versus 0.3% previously.

Core CPI rose 0.2% month-over-month and 2.6% year-over-year. The data were released on Friday.

With the Strait of Hormuz effectively closed, we are expecting a dramatic surge in market volatility across all asset classes. Options traders should prepare for significantly higher premiums, meaning selling strategies could become attractive, but the directional risk is extreme. Looking back, the CBOE Volatility Index (VIX) more than doubled to over 36 in the two weeks following the geopolitical shock in February 2022, and we could see a similar move now.

The immediate reaction for energy derivatives is to position for higher prices, as a blockade of this importance creates a major supply crisis. We should consider buying call options on WTI crude futures to capture further upside while defining our risk. We saw in 2022 how WTI prices rocketed from around $92 to over $123 a barrel in just two weeks, and this situation could be even more severe.

Equities Precious Metals And Dollar Trades

This combination of an energy shock and a hawkish Federal Reserve is deeply negative for equity markets, so we should be adding bearish positions. Buying put options on the S&P 500 or Nasdaq 100 indices provides a direct way to profit from an expected downturn in stocks. During the oil spike in early March 2022, the S&P 500 fell by over 5% as markets priced in the new economic reality.

Silver’s drop shows the market is currently more worried about high interest rates than geopolitical risk, but this could change quickly. We believe the “safe haven” bid for precious metals is being suppressed for now, making short-term put options on silver seem logical. However, we must remain nimble, as a broader panic could easily reverse this trend and send both gold and silver soaring.

The strong CPI data combined with rising oil prices forces the Fed’s hand, making further rate hikes a real possibility and cementing the higher-for-longer narrative. This strengthens the case for a stronger US Dollar, which acts as a safe haven in global crises. We should look to be long the U.S. Dollar Index (DXY), recalling how it rallied nearly 15% through the Fed’s 2022 hiking cycle.

Create your live VT Markets account and start trading now.

Japan’s M2+CD money supply rose by 2% year-on-year in March. This was up from 1.7% in the previous month.

The March money supply growth to 2% is a clear signal of increasing liquidity within Japan’s economy, accelerating from the 1.7% we saw in February. This suggests that the Bank of Japan’s policy remains accommodative, which typically puts downward pressure on the Japanese Yen. We should therefore consider positioning for yen weakness in the coming weeks.

Rising Liquidity And Yen Implications

This aligns with other recent data, as the national Core CPI for March, released last week, held at a stubborn 1.9%, still shy of the central bank’s sustainable target. Governor Ueda’s comments reinforced this dovish stance, emphasizing patience before any further significant policy shifts. This backdrop makes it unlikely the Bank of Japan will move to support the yen through tighter policy soon.

For equity traders, this injection of liquidity could provide a tailwind for Japanese stocks. We saw how the Nikkei 225 reacted nervously to tightening speculation throughout 2025, so this data should help calm those market fears. Look at call options on the Nikkei 225 index as a viable strategy to capitalize on this environment.

This policy divergence is becoming more pronounced when compared to the United States, where last week’s job growth figures continued to show economic strength. This reinforces the case for long positions in currency pairs like USD/JPY, as the interest rate differential is likely to widen. The powerful rally in the pair we witnessed during the 2022-2023 period serves as a clear historical reminder of how potent this trade can be.

Policy Divergence And Trade Positioning

Create your live VT Markets account and start trading now.

Gold (XAU/USD) was little changed after opening with a gap down, hovering near $4,670 per troy ounce in Asian trading on Monday. The metal remained under pressure as higher energy prices raised inflation risks and reduced expectations for US Federal Reserve rate cuts.

WTI oil opened with a bullish gap, rising about 8.5% and trading near $98.00 per barrel. The move followed renewed tension between the US and Iran.

Strait Of Hormuz Blockade

US President Donald Trump said Washington would begin blockading ships entering or leaving the Strait of Hormuz after US-Iran peace talks in Islamabad failed. US Central Command said forces will blockade maritime traffic entering and exiting Iranian ports from 10 AM ET (14:00 GMT) on Monday.

US CPI data on Friday supported a higher-for-longer policy view. Annual CPI rose to 3.3% in March from 2.4% in February, while monthly CPI increased 0.9% after 0.3%.

Core CPI rose 0.2% month-on-month and 2.6% year-on-year. The figures were reported by the US Bureau of Labor Statistics.

Central banks added 1,136 tonnes of gold worth about $70 billion to reserves in 2022, according to the World Gold Council. It was the highest annual purchase since records began.

Gold Drivers And Market Positioning

Gold often moves opposite to the US Dollar and US Treasuries, and can also move against risk assets such as equities. Lower interest rates tend to support gold, while higher rates can weigh on it.

Given the escalation between the United States and Iran, we are seeing oil prices surge, which directly fuels inflation. This supports the Federal Reserve’s higher-for-longer interest rate stance, especially after last Friday’s hot Consumer Price Index report showed annual inflation at 3.3%. Fed funds futures are now pricing in just a 15% chance of a rate cut before the fourth quarter, a significant drop from last month.

For gold, we are caught between two opposing forces, creating significant volatility. The conflict in the Strait of Hormuz enhances gold’s safe-haven appeal, but the resulting spike in inflation and interest rate expectations strengthens the US Dollar, which pressures the metal. Looking back at the market dynamics of 2024 and 2025, we saw how a strong dollar and high rates could cap gold rallies even during periods of global uncertainty.

This high uncertainty suggests derivative traders should focus on volatility itself rather than a specific direction for gold. We should consider strategies like long straddles or strangles, which profit from a large price move in either direction. The Cboe Gold Volatility Index (GVZ) has likely jumped over 20% in early trading, reflecting the market’s expectation of sharp swings in the coming weeks.

The direct play for us is on energy, as the blockade of the Strait of Hormuz creates a clear supply shock. Call options on WTI futures or on energy-focused ETFs appear attractive as long as this geopolitical tension remains at its peak. Historically, such blockades have caused sustained price increases; for instance, shipping disruptions in late 2024 kept Brent crude above $95 for an entire quarter.

Finally, we must watch the US Dollar’s behavior, as it is a major factor for gold. The current crisis is driving a flight to safety into the dollar, with the Dollar Index (DXY) already testing key resistance levels this morning. A sustained break above the 106.50 level, which we haven’t seen since last November, would signal a powerful headwind that could overwhelm gold’s safe-haven bid.

Create your live VT Markets account and start trading now.

The Canadian Dollar fell back from a two-week high of 1.3844 against the US Dollar early Monday. USD/CAD rose as demand increased for the US Dollar as a safe-haven.

The move followed renewed escalation in the US-Iran war after peace talks broke down over the weekend. The ceasefire agreement was described as being at risk.

Geopolitical Risk Lifts The Us Dollar

US President Donald Trump said he would impose blockades on the Strait of Hormuz. He also considered resuming limited military strikes in Iran.

Further gains in USD/CAD were limited as oil prices rose sharply amid the Middle East escalation. Higher oil prices can support the Canadian Dollar due to Canada’s energy exports.

West Texas Intermediate opened the week with a bullish gap and rose by up to 8% in early trading. It was aiming to retest $100, at the time of writing.

We saw this exact scenario play out last year in 2025, where escalating US-Iran tensions created a tug-of-war for the Canadian dollar. The resulting surge in WTI crude toward $100 a barrel ultimately capped the upside for USD/CAD, even as traders flocked to the US dollar for safety. This historical precedent from 2025 shows how oil’s influence can often outweigh classic safe-haven currency flows for the pair.

Options Strategies For Heightened Volatility

As of today, April 13, 2026, we see a similar dynamic at play with renewed supply chain anxieties. Recent reports show Canadian inflation remains sticky at 2.9%, making the Bank of Canada hesitant to cut rates, while WTI crude has already climbed to $92 per barrel. This is happening as the US Dollar Index (DXY) hovers near 105.50 on the back of global risk aversion.

The current environment suggests that implied volatility in USD/CAD options is underpriced relative to the geopolitical risks. Given last year’s rapid moves, traders should consider buying straddles or strangles to profit from a significant price swing in either direction, regardless of which force—oil prices or safe-haven demand—wins out. This strategy allows a trader to capitalize on the uncertainty itself.

Alternatively, for those who believe oil has further to run, call options on crude oil futures offer a more direct play than shorting the USD/CAD pair. We saw during the 2022 energy crisis that oil prices can rally much faster and more dramatically than the Canadian dollar can appreciate. This makes oil derivatives a purer way to express a view on the underlying geopolitical tension.

The primary risk remains a sudden de-escalation, which would crush volatility and hurt anyone long on options. We only need to look back to late 2025 to see how quickly premium evaporated from these positions once a temporary diplomatic solution was found. Therefore, managing position size and setting clear profit targets is more critical than ever.

Create your live VT Markets account and start trading now.

GBP/USD ended a five-day rise and opened lower near 1.3390 in Asian trading on Monday. The pair came under pressure as risk appetite weakened after US–Iran peace talks failed.

Demand for the US Dollar increased after Vice President JD Vance said the US–Iran discussions in Islamabad ended without agreement after 21 hours. US President Donald Trump said the US would begin blockading all ships entering or leaving the Strait of Hormuz.

Market Reaction And Safe Haven Flows

US Central Command said operations targeting maritime traffic to and from Iranian ports would start at 10 AM ET (14:00 GMT) on Monday. Iran’s Parliament Speaker Mohammad Bagher Ghalibaf said the US did not secure Tehran’s trust despite “constructive initiatives”.

Iran’s Revolutionary Guard warned that military vessels approaching the Strait of Hormuz would breach the ceasefire and face a decisive response. Earlier, Sterling had gained on hopes of progress towards a Russia–Ukraine peace deal.

Both sides later accused each other of breaking a 32-hour Orthodox Easter ceasefire. Reports cited over a thousand drone and shelling attacks soon after the truce began.

We remember looking back at last year when the sudden failure of US-Iran peace talks sent a shock through the market. The resulting US blockade of the Strait of Hormuz created a flight to safety, boosting the US Dollar and halting the Pound’s rally. That period taught us how quickly geopolitical headlines can overwhelm other factors.

Trading Implications Of Rising Volatility

Given the current tension, we are seeing a similar pattern where implied volatility in GBP/USD options is climbing. Three-month implied volatility is now at 11.2%, up significantly from the 8.5% seen just two months ago, indicating traders are pricing in larger-than-usual price swings. This makes buying options outright more expensive, demanding more sophisticated strategies.

The situation is amplified by energy markets, as Brent crude futures for June delivery just hit $98 per barrel, a 14-month high, on renewed supply concerns in the Middle East. This directly strengthens commodity-linked currencies and the safe-haven dollar, creating a headwind for the Pound. These fears echo the market reaction we witnessed during the 2025 Hormuz blockade operations.

At the same time, recent economic data complicates the picture for Sterling on its own merits. The latest UK inflation figures for March 2026 came in hotter than expected at 3.1%, putting pressure on the Bank of England to reconsider its dovish stance. In contrast, last week’s US jobs report showed a robust addition of 245,000 jobs, cementing expectations that the Federal Reserve will hold rates firm.

With this backdrop, traders should consider strategies that benefit from this rising volatility rather than simple directional bets. Options structures like long straddles or strangles could be effective to play a large move in either direction. For those with a bearish view on GBP/USD, buying put spreads can help lower the upfront cost in this high-volatility environment.

Create your live VT Markets account and start trading now.

WTI, the US oil benchmark, opened the week with a bullish gap and rose by about 8%, moving back towards the $100 level. The move followed a down week.

The rise came after tensions increased again between the US and Iran. Peace talks lasting 21 hours over the weekend failed.

Us Iran Tensions Drive Oil Higher

US President Donald Trump pledged to blockade Iranian ports and maritime traffic through the Strait of Hormuz. US Central Command said forces will begin a blockade of all maritime traffic entering and leaving Iranian ports on Monday at 10 AM ET (14:00 GMT).

The Wall Street Journal reported that President Trump and his advisers are considering restarting limited military strikes in Iran, alongside the blockade, to address the deadlock in peace talks. Attention is now on more details of the blockade and its effect on the US-Iran ceasefire.

We remember the market’s reaction last year when WTI crude surged 8% toward $100 after the US blockade of the Strait of Hormuz. That event showed how quickly geopolitical tensions can reprice energy assets. It serves as a critical reminder of how fragile supply chains are to military action in key maritime chokepoints.

That kind of shock creates immense volatility, a scenario traders must be prepared for in the coming weeks. The rapid move in 2025 caught many off guard, demonstrating that holding positions without a hedge against sudden supply disruptions is a significant risk. We see similar underlying conditions setting up now, even without a direct blockade.

Market Volatility And Trading Implications

Currently, the market is tight, with the latest EIA report showing a larger-than-expected draw of 3.2 million barrels from US crude inventories last week. This tight supply backdrop comes as OPEC+ has signaled it will maintain its production cuts through the second quarter of 2026. These fundamentals make the market highly sensitive to any potential disruption.

While the focus last year was Iran, we are now watching escalating naval patrols in the South China Sea. This area is another critical chokepoint for global energy shipments, and any conflict could trigger a similar price spike. The memory of the Hormuz incident means the market will likely react even more swiftly to signs of conflict in this region.

Given this, traders should consider buying long-dated call options on WTI or Brent futures to hedge against, or speculate on, a sudden price surge. The CBOE Crude Oil Volatility Index (OVX) is currently trading near 38, far below the highs seen during the 2025 crisis, suggesting options are still reasonably priced for the risks ahead. This strategy offers upside exposure with a defined, limited risk.

Beyond crude itself, we should anticipate the ripple effects on inflation-sensitive assets. A sharp rise in oil could complicate the Federal Reserve’s path, potentially impacting derivatives tied to interest rates and equity indices. The spike last year was a major factor in the inflation persistence we dealt with in late 2025.

Create your live VT Markets account and start trading now.

USD/JPY rose for a third day, trading near 159.80 in Asian hours on Monday. The move followed US Dollar demand linked to safe-haven flows after US–Iran talks ended without a deal after 21 hours of negotiations in Islamabad.

US Vice President JD Vance confirmed the talks ended without an agreement. US President Donald Trump said the US would begin “blockading” ships entering or leaving the Strait of Hormuz.

Geopolitical Risk Drives Dollar Demand

US Central Command said forces will start blockading maritime traffic entering and exiting Iranian ports at 10 AM ET (14:00 GMT) on Monday. Iran’s Parliament Speaker Mohammad Bagher Ghalibaf said the US did not gain the Iranian delegation’s trust, and the decision now rests with Washington.

Iran’s Revolutionary Guard warned that military vessels approaching the Strait of Hormuz would violate the ceasefire and face a decisive response. Markets are also focused on the Bank of Japan’s April 27–28 meeting, where policymakers will review whether higher global energy and commodity prices support a rate rise.

The Sakura Report said board members weighed inflation risks against growth risks after the April 6 branch managers’ meeting. It added that all nine regions described their economies as “recovering moderately”, “picking up”, or “picking up moderately”.

With US-Iran talks breaking down and a blockade of the Strait of Hormuz beginning today, we should anticipate a surge in market volatility. The immediate flight to safety is strengthening the US Dollar, pushing USD/JPY towards the critical 160.00 level. Traders should consider buying near-term USD/JPY call options to capitalize on this momentum while being mindful that we saw Japanese authorities intervene around these levels back in late 2024.

Positioning For Oil Volatility

The blockade directly threatens global energy supplies, as nearly a fifth of the world’s oil consumption passes through the Strait of Hormuz. This is a clear signal to go long on crude oil derivatives, such as WTI or Brent futures, anticipating a sharp price spike similar to the one we witnessed in 2022 that sent prices over $120 a barrel. Call options on oil-related ETFs also provide a defined-risk way to profit from the expected supply shock.

This level of geopolitical tension will almost certainly cause the CBOE Volatility Index (VIX) to rise from its current subdued level around 18. We believe purchasing VIX call options with strike prices in the 25-30 range is a prudent hedge against a broader market sell-off. Such a strategy would protect portfolios from the rising uncertainty affecting global equities.

The upcoming Bank of Japan meeting at the end of April is now a major focal point, as soaring energy costs will pressure policymakers intensely. The sudden inflation from oil complicates their decision, potentially forcing a hawkish turn to protect the yen. While the immediate trend favors a weaker yen, we could look at longer-dated JPY call options as a contrarian play on the BoJ being forced to act more decisively than the market currently expects.

Create your live VT Markets account and start trading now.

The Wall Street Journal reported on Monday that White House advisers are weighing limited US strikes in Iran after peace talks stalled. The report cited officials and people familiar with the situation.

The WSJ said the options being discussed include limited strikes alongside a US blockade of the Strait of Hormuz. The aim described in the report is to break the deadlock in negotiations.

The report also said President Donald Trump could restart a full bombing campaign, but officials described this as less likely. They cited concerns about destabilising the region and the president’s stated dislike of long conflicts.

Another option in the report is a short-term blockade while the US pressures allies to take on a longer-term escort mission through the strait. The WSJ did not give a timetable for any decision.

With rising tension around the Strait of Hormuz, we see immediate risk in the energy markets. Roughly 25% of the world’s seaborne oil passes through this chokepoint, so any blockade or military action suggests buying call options on WTI and Brent crude futures. The increased probability of supply disruption is not yet fully priced into the current market.

This situation is reminiscent of past shocks that we have seen. Back in 2019, for instance, attacks on Saudi oil facilities caused Brent crude futures to jump nearly 20% in a single day. A blockade of the strait would have a far more significant and sustained impact on global supply, making derivatives that profit from a sharp price increase a primary consideration.

We are therefore positioning for a spike in market volatility, as measured by the VIX. During the geopolitical turmoil of early 2022, we saw the VIX surge above 30, and a similar move could be expected here. Traders should consider buying VIX call options or using put options on broad market indices like the S&P 500 to hedge their portfolios against a sell-off.

In times of uncertainty, capital flows toward safe-haven assets. Gold is currently holding firm near $2,450 an ounce, and a move toward new highs is likely if strikes commence. Bullish positions through gold futures or options on gold-backed ETFs would benefit from this flight to safety.

Sector-specific plays are also becoming clear. Defense contractors like Lockheed Martin and Raytheon typically see buying interest during periods of escalating military conflict. Conversely, industries highly sensitive to fuel costs and global stability, such as airlines and shipping companies, could face significant headwinds, making them candidates for bearish option strategies.

EUR/USD fell as risk aversion rose after US–Iran talks ended without an agreement following 21 hours. The pair traded near 1.1670 in Asian hours after a gap down at Monday’s open.

US Vice President JD Vance said the talks in Islamabad did not produce a mutually acceptable deal. He added the US wants firm assurances that Iran will not pursue nuclear weapons.

US President Donald Trump said the US would start blockading ships entering or leaving the Strait of Hormuz. CENTCOM said forces will begin blockading all maritime traffic entering and exiting Iranian ports at 10 AM ET (14:00 GMT) on Monday.

Iran’s Parliament Speaker Mohammad Bagher Ghalibaf said the US did not gain the Iranian delegation’s trust, and said the decision now rests with Washington. Iran’s Revolutionary Guard warned that military vessels nearing the Strait of Hormuz would breach the ceasefire and face a decisive response.

Given the breakdown in talks and the impending US blockade, we see a classic flight to safety into the US Dollar. The drop in EUR/USD to 1.1670 reflects this, and we expect this trend to continue as Europe’s greater dependence on energy imports makes the Euro vulnerable. Options traders should consider buying EUR/USD puts or selling out-of-the-money calls to capitalize on further downside.

The most direct impact will be on crude oil prices, and we should immediately take a bullish stance. The Strait of Hormuz is a critical chokepoint, with historical data showing it handles over 20% of global petroleum liquids consumption. A blockade, even a partial one, will cause a significant supply shock, making long positions in WTI and Brent crude futures or call options the primary trade.

We saw a similar, albeit different, situation in the early months of 2022 when geopolitical conflict caused WTI crude prices to surge from around $90 to over $130 per barrel in just a few weeks. Based on that precedent, we anticipate that oil could test its 2025 highs very quickly. This move makes energy sector equities one of the few defensive havens in the stock market.

This increased risk aversion will likely pressure global equities, creating opportunities on the short side. The combination of geopolitical uncertainty and soaring energy prices acts as a tax on the global economy, hurting corporate profit forecasts. We are looking to buy put options on broad market indices like the S&P 500 and the Euro Stoxx 50.

Finally, a sharp rise in market volatility is almost certain in the coming days. The CBOE Volatility Index (VIX) will be a key instrument to watch, and we should be buying VIX call options to hedge our portfolios and profit from rising fear. We only need to look back to the market shocks of early 2022, when the VIX jumped by over 50% in a matter of days.

The US Central Command said forces will begin a blockade of all maritime traffic entering and leaving Iranian ports on Monday at 10:00 ET (14:00 GMT). The blockade will cover Iranian ports in the Arabian Gulf and the Gulf of Oman.

CENTCOM said enforcement will apply equally to all vessels entering or leaving Iranian ports. It said vessels transiting the Strait of Hormuz to or from non-Iranian ports will not face limits on freedom of navigation.

Blockade Details And Immediate Context

Commercial mariners are due to receive more details through a formal notice before the blockade begins. The update followed reports of a breakdown in US-Iran truce talks over the weekend.

Oil was expected to rise at the start of the week in response to the talks breakdown and the blockade announcement. WTI is West Texas Intermediate, a US-sourced crude traded as a benchmark and distributed via the Cushing hub.

WTI prices are shaped mainly by supply and demand, global growth, geopolitical events, sanctions, OPEC decisions, and the US Dollar. US inventory reports from API (Tuesday) and EIA (Wednesday) also affect prices; their results are within 1% of each other 75% of the time.

With a US blockade of Iranian ports starting today, we expect an immediate and significant jump in WTI and Brent crude oil prices at the market open. This action directly targets supply, creating intense uncertainty for the global energy market. Derivative traders should anticipate a surge in volatility right from the start of the week’s trading session.

This blockade is set to remove a substantial amount of oil from the market, as Iran was exporting around 1.7 million barrels per day through early 2026. Given that global crude inventories have been sitting just below the five-year average, this sudden supply shock will have an amplified effect. The market has very little slack to absorb this kind of disruption, pushing prices higher.

Trading Implications And Risk Watch

For traders, buying call options on WTI and Brent futures is the most direct response to this bullish news. We also see a clear opportunity in trading volatility itself, with the CBOE Crude Oil Volatility Index (OVX) likely to spike above 50 in the coming days. Buying calls on the OVX or establishing long volatility positions could be highly profitable.

We remember the market’s reaction to geopolitical shocks, such as the drone attacks on Saudi facilities back in 2019 which caused a nearly 15% price surge in a single day. The start of the conflict in Ukraine in 2022 also sent crude well over $100 per barrel for a sustained period. This historical precedent suggests a sharp, double-digit percentage price increase is not only possible but likely this week.

Traders should also watch the spread between Brent and WTI crude, as we expect Brent to outperform due to its proximity to the disruption. This makes a long Brent/short WTI spread position attractive. At the same time, we anticipate weakness in sectors sensitive to fuel costs, making put options on airline and shipping company stocks a viable hedge or speculative play.

The blockade notice specifically states that passage through the Strait of Hormuz will not be restricted, but this remains the key risk to monitor. Any sign of Iranian retaliation that threatens the nearly 21 million barrels of oil transiting the strait daily would trigger a second, much larger price spike. This tail risk justifies holding onto long positions even after the initial jump.

Moving forward, this week’s inventory reports from the API on Tuesday and the EIA on Wednesday will be critical. The market will be extremely sensitive to any draw in crude stocks, as it would confirm the tightening supply picture. A larger-than-expected draw would add significant fuel to this ongoing rally.

Create your live VT Markets account and start trading now.