Iran’s Fars News Agency reported on Wednesday that oil tankers travelling through the Strait of Hormuz have been stopped after Israel breached the ceasefire, according to Reuters.

Iran’s Tasnim News Agency, citing an unnamed source, said Iran will withdraw from the ceasefire agreement if attacks on Lebanon continue. It reported that ending the war on all fronts, including Lebanon, was part of a two-week ceasefire agreement with the US.

Market Snapshot

The US Dollar (USD) Index recovered slightly from a four-week low near 98.50. At the time of press, the index was down 0.72% on the day at 98.80.

Given the developing situation in the Strait of Hormuz, we should anticipate a sharp increase in oil price volatility. Call options on Brent and WTI crude futures for the coming weeks are now a primary focus, as any extended closure could trigger a supply shock. With roughly 20% of global oil consumption passing through the strait daily, the potential for a rapid price spike is significant, similar to the tensions we saw in the region back in 2019.

This geopolitical flare-up is a clear signal to hedge against broader market downturns. We should consider buying put options on major indices like the S&P 500, as heightened energy costs and conflict risk will almost certainly dampen investor sentiment. Historically, sudden oil shocks, such as the one in 1973, have preceded major equity bear markets.

We expect a flight to safety, making call options on gold and U.S. Treasury bond futures attractive positions. Gold often rallies during periods of Middle Eastern conflict, and we saw yields on government debt fall sharply during the onset of instability in early 2022 as capital sought safe havens. This pattern suggests that traders should prepare for falling yields and rising bond prices.

Volatility And Currency Positioning

The most direct way to trade this uncertainty is through volatility itself. We believe buying call options on the VIX index is a prudent move, as its value will likely surge if the conflict escalates and tanker traffic remains halted. Looking back at the lessons from the 2008 and 2020 crises, the VIX spiked over 80, showing how profitable positioning for volatility can be in uncertain times.

Finally, while the US Dollar initially weakened on the ceasefire news, this reversal of events should provide it with safe-haven support. However, the situation remains fluid, so using options strategies like straddles on major currency pairs like EUR/USD could be an effective way to profit from large price swings in either direction. The initial market reaction shows confusion, and trading the resulting volatility might be safer than picking a direction right now.

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Eurozone demand has been weaker than in 2022, which has helped to keep inflation contained even though supply constraints remain above historical averages. Since mid-2024, survey data show demand constraints have been the main factor, while supply-side constraints have continued to ease.

This shift has helped inflation return to the European Central Bank’s 2% target, though it has not moved below it because supply constraints are still higher than the historical average. The situation contrasts with the United States, where demand and inflation have stayed more sustained.

Inflation Drivers And Recent Data

Harmonised inflation rose by 0.6 percentage points to 2.5% year-on-year in March, attributed at this stage to higher fuel prices. Energy shocks, the conflict in Iran, and rising input price indices in business climate surveys are cited as factors that could later push core inflation higher.

Looking back at our analysis from 2025, the dynamic of weak demand containing inflation remains the central theme for the Eurozone. That core trend of demand constraints being more powerful than supply issues, which we identified starting in mid-2024, has largely persisted. This underlying weakness is keeping the European Central Bank from being overly aggressive on interest rate policy.

However, the supply-side risks we flagged last year are now materialising and should be the focus of our trading strategy. The latest flash estimate for March 2026 showed Eurozone inflation ticking up to 2.6%, primarily driven by the energy component as Brent crude now trades over $95 a barrel amid ongoing shipping disruptions. This is precisely the kind of scenario we were concerned about when we saw input prices rising in business surveys throughout 2025.

This puts the ECB in a difficult position, caught between sluggish growth and rising energy-driven inflation. Recent data confirms this divergence, with the March 2026 manufacturing PMI for the Eurozone still in contractionary territory at 47.1, signalling that the weak demand has not disappeared. The ECB is therefore unlikely to signal aggressive rate hikes, creating significant uncertainty about its next move.

Trading Strategy Implications

Given this uncertainty, traders should consider buying volatility on interest rate futures. A long straddle on December 2026 EURIBOR futures would profit from a significant rate move in either direction, whether the ECB is forced to hike to fight inflation or pivots to cutting rates as the weak economy falters. This strategy positions for a breakout from the current state of indecision.

Another approach is to trade the inflation curve itself using inflation swaps. We can bet on the front end of the curve rising while the back end remains anchored by poor long-term growth prospects. This involves setting up a “steepener” trade, paying a fixed rate on a 2-year inflation swap while receiving a fixed rate on a 10-year swap, profiting as near-term inflation fears outpace long-term expectations.

The geopolitical risks mentioned last year, specifically concerning energy supply, are now the primary driver of upside risk. With tensions in the Middle East keeping oil prices elevated, purchasing out-of-the-money call options on Brent or WTI crude futures offers a direct and capital-efficient way to speculate on a further supply shock. These positions provide exposure to a sudden spike in inflation and would act as a hedge against hawkish central bank surprises.

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The Reserve Bank of India (RBI) kept its policy rate unchanged at 5.25% and maintained a neutral stance. It cited uncertainty linked to the West Asia conflict and potential effects on inflation and growth.

The RBI described domestic economic fundamentals as solid. It warned that higher energy prices, supply disruptions and increased global financial volatility could raise risks.

Inflation Outlook And Policy Stance

Inflation is currently contained but faces upside risks. The RBI is using a flexible wait-and-watch approach and may respond as conditions change.

The conflict may slow growth through higher input costs, weaker external demand and tighter financial conditions. Domestic consumption and investment are continuing to provide support.

The article notes that the unwinding of stagflation expectations may affect trading in the coming weeks. It also states the piece was created using an Artificial Intelligence tool and reviewed by an editor.

With the Reserve Bank of India holding its policy rate at 5.25%, the immediate need to hedge against aggressive rate hikes has diminished. We see this as a signal to unwind positions that were betting on stagflation, particularly those shorting Indian government bond futures. The central bank’s neutral stance suggests interest rates may remain stable in the near term, making strategies that profit from a range-bound market more attractive.

Managing Risk In A Volatile Energy Backdrop

The primary risk cited is the West Asia conflict, which has kept energy prices volatile. We saw Brent crude spike to nearly $110 a barrel in February 2026 before settling back to the current $98 level, showing how quickly sentiment can shift. Given this backdrop, traders should consider using options to define risk, as selling volatility could be dangerous if the conflict escalates unexpectedly.

For currency traders, the RBI’s confidence in domestic fundamentals provides a floor for the Indian Rupee, even with global uncertainty. After the USD/INR pair tested 85.50 earlier this year, it has since stabilized around 84.20, supported by the RBI’s steady hand. This suggests that buying expensive upside protection through long-dated USD calls may no longer be the most efficient trade.

Looking back from 2025, we can recall the aggressive global rate-hiking cycle of 2022 that was driven by runaway inflation. The RBI’s current “wait-and-watch” approach is markedly different, indicating a higher tolerance for inflation as long as domestic growth holds up. India’s latest CPI reading of 5.6% for March 2026, while above target, has eased from its recent peak, supporting the bank’s patient stance.

This environment points toward a more nuanced approach for equity derivatives on indices like the Nifty 50. While the external risks cap the upside, the stable domestic policy prevents a sharp downside, creating a range-bound scenario. We believe selling out-of-the-money option premium could be profitable, but it must be paired with strict risk management to account for headline risks from the ongoing conflict.

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GBP rose about 1.1% against the US dollar, making it one of the strongest G10 performers on the day. The move was driven by market sentiment and lifted the pair towards the top of its late-February range.

There were no major UK data releases and no Bank of England speaking events scheduled before next Tuesday. As a result, trading focused mainly on price action and technical levels.

Technical Breakout Signals

GBP/USD moved above the 200-day moving average at 1.3416. The relative strength index (RSI) also moved further into bullish territory.

The next technical level cited was the 50-day moving average at 1.3448. Price targets mentioned included the 1.35 level, with a near-term trading range expected between 1.34 and 1.35.

The article noted it was produced using an artificial intelligence tool and reviewed by an editor.

The Pound is a strong performer, gaining on sentiment and pushing to the top of its recent range. We are seeing a significant break above the 200-day moving average at 1.3416. This technical signal suggests that further upside is likely in the near term.

Derivatives Positioning Approach

This rally is occurring against a backdrop of a softening US dollar, especially after the latest Non-Farm Payrolls report showed a disappointing addition of only 155,000 jobs. In the UK, inflation came in last week at 3.1%, which keeps pressure on the Bank of England even as growth shows signs of slowing. The lack of major scheduled data or central bank speeches this week leaves the market to be driven by this sentiment.

For derivative traders, this suggests an opportunity to position for a continued move towards 1.35 in the coming weeks. Buying short-dated call options with a strike price near 1.3450 could be an effective way to play this momentum. This strategy allows for participation in the upside while capping the maximum loss at the premium paid for the option.

However, we must also consider the risk of a reversal, as these sentiment-driven rallies can be fragile. Looking back from the perspective of 2025, we recall the rally in early 2022 ultimately faded when fundamental concerns took over. A protective strategy could involve using bull call spreads to define risk, or purchasing puts below the 1.3350 support level.

The next major target we are watching is the 50-day moving average, which sits at 1.3448. A clean break above this level would signal further strength and bring the psychologically important 1.35 level into focus. We anticipate the currency will trade within a 1.34 to 1.35 range over the next few weeks.

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US EIA data for 3 April showed a crude oil stocks change above the expected 0.7M.

The actual change was 3.081M for the week ending 3 April.

Bearish Inventory Surprise

This unexpected build of 3.081 million barrels signals that supply is currently outweighing demand. Given expectations were for a much smaller increase, we should view this as a bearish indicator for crude prices in the short term. This immediately puts downside pressure on West Texas Intermediate (WTI) futures, likely pushing them toward the $82 support level.

The timing of this build is particularly noteworthy. We are entering the period where refineries typically ramp up production for the summer driving season, which should be drawing down crude stocks. The latest data shows refinery utilization is still hovering around 89.1%, suggesting that either demand for refined products is soft or refiners are cautious about overproducing.

This weak demand picture is consistent with recent macroeconomic data, as non-farm payrolls last week came in at 195,000, missing the forecast of 215,000. It seems the higher interest rate environment is finally beginning to cool economic activity and, consequently, fuel consumption. This contrasts with the tight supply situation we saw through much of 2025, when geopolitical risks kept a floor under prices.

For the coming weeks, we should consider establishing or adding to short positions through futures contracts. Buying put options on WTI, particularly with strike prices below $80, offers a defined-risk way to capitalize on potential further price drops. The market’s oversupply situation seems more pronounced than initially believed.

We will be watching next week’s inventory report very closely for any sign of a reversal. Additionally, any statements from OPEC+ regarding their production quotas will be critical. Until we see a significant draw in inventories or a major supply disruption, the path of least resistance for oil prices appears to be lower.

Key Watch Items Ahead

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A two-week ceasefire between the US, Israel and Iran has been linked to renewed weakness in the US Dollar. The move has coincided with improved risk sentiment and a fall in Brent Oil.

MUFG said the ceasefire reduces, in the short term, the risk of a major risk-off move that would normally support the Dollar. It added that the outcome is negative for the Dollar and may lead to further near-term losses if talks continue.

Ceasefire Impact On Dollar And Oil

The note stated that the Dollar had underperformed during the conflict compared with what would be expected given higher energy prices. It also said markets are likely to stay sensitive to incoming news on negotiation progress.

It outlined possible reversal moves in G10 currencies following the ceasefire news. It suggested SEK and NZD could do well, while NOK and GBP could lag, as NOK and GBP were the two top performers since the conflict began.

The article states it was produced using an artificial intelligence tool and reviewed by an editor. It is attributed to the FXStreet Insights Team.

We are seeing renewed market jitters that mirror the tensions we experienced before the ceasefire of 2025. With Brent crude recently touching $95 a barrel and the Dollar Index (DXY) firming above 106.5, the market is pricing in a significant risk premium. This environment makes the US dollar a temporary safe haven, much like it was during the early stages of that past conflict.

Options Positioning For A Potential Dollar Reversal

Looking back at the events of 2025, we remember how the two-week ceasefire agreement caused a sharp reversal. Oil prices fell back below $80 and risk sentiment improved dramatically, leading to a rapid decline in the dollar. The lesson is that any credible news of de-escalation can unwind these safe-haven trades very quickly.

For derivative traders, this means positioning for a potential sharp drop in the dollar if negotiations progress. Buying short-dated put options on the dollar index or related ETFs provides a low-cost way to profit from a sudden dovish turn in sentiment. The high uncertainty makes options a better tool than outright short positions for managing risk.

This situation also reinforces the divergence in monetary policy we’ve been watching. A fall in energy prices would cool inflation more significantly in Europe, where recent CPI still hovers around 3.1%, than in the US. This could give the European Central Bank more breathing room and strengthen the euro against the dollar.

We should also anticipate reversal trades in G10 currency pairs, just as we saw in 2025. The Norwegian krone (NOK) has been strong due to high oil prices, while the Swedish krona (SEK) and New Zealand dollar (NZD) have suffered from the risk-off mood. Derivative strategies that bet on SEK or NZD strength against the NOK could perform well in the coming weeks if tensions ease.

This playbook is not new; we saw a similar dynamic during the onset of the conflict in Ukraine back in 2022. The DXY rallied from around 96 to over 103 in a matter of months as the crisis unfolded, showing how geopolitical risk directly translates into dollar strength. Any unwinding of that risk should logically have the opposite effect.

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TD Securities strategists say higher energy-linked inflation and delayed Federal Reserve rate cuts are keeping the opportunity cost of holding gold high in the near term. They add that a lack of Middle East capital in the gold market is a downside catalyst.

They state that, even with a ceasefire, it may take time to reverse higher inflation expectations. They link this to higher energy, fertiliser, and chemical prices, which they say could make early Fed cuts difficult.

Later 2026 Gold Outlook

They expect conditions to ease later as energy and interest rates normalise and the US Dollar weakens. On that basis, they forecast gold returning above $5,000 in the latter part of 2026.

The opportunity cost of holding gold remains high, as elevated interest rates offer better yields elsewhere. With the latest March CPI report showing inflation at a stubborn 3.8%, we see the Federal Reserve’s hands as tied for the immediate future. This makes non-yielding assets like gold less attractive in the coming weeks.

A strong U.S. dollar, with the DXY index hovering near 106, is creating significant resistance for gold prices. Compounding this, WTI crude has held firm above $90 a barrel, keeping inflation expectations high and delaying any potential monetary policy pivot. This environment supports strategies that are neutral to bearish on gold through the second quarter.

For the near term, derivative traders could consider selling out-of-the-money calls with expirations in May and June 2026. This strategy collects premium by taking advantage of the expected range-bound price action caused by high carry costs. It allows for profiting from time decay as long as gold does not break out significantly to the upside.

Options Positioning For Late 2026

We are simultaneously looking at the latter half of 2026 for a major shift as energy costs and rates are expected to normalize. To position for the potential move toward $5,000, acquiring long-dated call options, such as those expiring in December 2026 or March 2027, is a viable strategy. These instruments provide exposure to the significant upside while capping the initial risk.

A more complex approach involves using a calendar spread to capitalize on this timeline. By selling a near-term call option, a trader can fund the purchase of a longer-dated call option at a similar strike price. This position benefits from the expected sideways movement in the coming weeks while maintaining exposure to the anticipated rally late in the year.

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The US Dollar Index (DXY), which measures the US Dollar against six major currencies, fell to one-month lows on Wednesday. It traded near 98.60, down nearly 1% after the United States and Iran agreed to a two-week ceasefire deal.

Lower demand for safe-haven assets and a sharp drop in Oil prices weighed on the Dollar. US Treasury yields also retreated as Oil-related inflation fears eased and expectations for Federal Reserve rate cuts returned.

Technical Breakdown And Key Levels

On the chart, DXY broke below an upward-sloping channel in place since late January. The fall followed repeated failures above 100.00–100.50, a resistance band that has limited gains since May 2025.

Price is now testing support where the 50-day, 100-day, and 200-day Simple Moving Averages meet around 98.50–98.60. A hold could steady the index, while a break below may extend the downtrend.

Resistance sits first at 99.00, then at 100.00–100.50. Momentum indicators have weakened, with the RSI (14) near the low-40s and the MACD below zero.

We are seeing a rapid unwinding of long dollar positions following the recent US-Iran ceasefire deal. This abrupt shift from a risk-off environment is causing a reassessment of volatility in the currency markets. Derivative traders should note that the VIX index, a measure of stock market volatility, has dropped over 15% this week to 14.5, reflecting this broader sense of relief.

The US Dollar Index is testing a crucial support zone around 98.50, a level reinforced by several major moving averages. Given the negative momentum, we should consider positioning for a potential breakdown below this floor in the coming weeks. Purchasing put options with strike prices around 98.00 or 97.50 could be a defined-risk way to capitalize on further dollar weakness.

Options Strategies And Macro Drivers

The price of WTI crude oil has fallen below $85 per barrel for the first time since February, significantly easing inflation fears. This is being reflected in the futures market, where traders are now pricing in a 60% probability of a Fed rate cut by the third quarter, up from just 25% last week. This revival of dovish expectations fundamentally undermines the dollar’s recent strength.

We must remember the repeated failures to hold above the 100.00-100.50 resistance zone, a key ceiling we observed throughout mid-2025. This historical context suggests that the recent rally was a bull trap within a larger downtrend. Selling out-of-the-money call spreads above the 99.50 level could be an effective strategy to collect premium, betting that this ceiling will remain firm.

Despite the current calm, the two-week ceasefire is fragile and any renewed tension could cause a sharp reversal back toward safety. Implied volatility on dollar options has compressed significantly, making strategies like long strangles or straddles cheaper than they were a week ago. This could be a way to position for a large move in either direction if the market calm proves temporary.

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Markets have moved mainly on Iran-related news, with oil and bond yields reacting to ceasefire developments. Recent trading was volatile as approaching geopolitical deadlines first raised inflation and oil supply fears, then eased as hopes of de-escalation pushed oil prices and short-dated yields lower.

Momentum increased after President Donald Trump agreed to a two-week Iran ceasefire, conditional on the Strait reopening. Brent fell below USD100/bbl, S&P 500 futures rose, and the US dollar weakened.

De Escalation Outlook

If de-escalation is seen as credible, the US dollar is expected to return to a shallow depreciation trend as lower energy risks support non-US economies, global risk assets, and cyclical currencies. Since the Iran conflict began, foreign exchange moves have been linked to terms-of-trade shifts and wider risk sentiment.

In a de-escalation scenario, lower oil prices and risk-on conditions are expected to favour AUD, NZD and SEK over oil-linked CAD and NOK, and over safe havens CHF and JPY. Emerging market carry trades such as BRL, MXN and ZAR may return if a truce holds.

The article was made using an artificial intelligence tool and reviewed by an editor.

We are seeing markets trade almost entirely on headlines related to Iran, with oil prices and bond yields reacting to every development. We saw Brent crude spike above $110 late last year during the peak of tensions, but it has since fallen back below $98 a barrel this month. This volatility continues to be the primary driver of short-term positioning.

Market Reaction And Positioning

Looking back at the end of 2025, the major shift in momentum came when a two-week ceasefire was announced, conditional on the reopening of the Strait of Hormuz. This single event caused a significant repricing of risk across assets. The immediate market reaction saw S&P 500 futures rally and the US Dollar weaken against most major currencies.

If this de-escalation holds, the US Dollar should resume a gradual downward trend. Lower energy prices reduce inflation fears and provide a boost to energy-importing economies in Europe and Asia. The CBOE Volatility Index (VIX), a key measure of market fear, has already fallen from its highs above 25 to a more stable reading around 17, supporting this view.

This environment favors currencies like the Australian dollar, New Zealand dollar, and Swedish krona. We have already seen the AUD/USD pair recover from lows near 0.6200 to over 0.6650, and further upside is likely. Derivative traders should consider call options or bull call spreads to gain exposure to these cyclical currencies.

Conversely, oil-linked currencies like the Canadian dollar and Norwegian krone may lag as crude prices stabilize at lower levels. The traditional safe havens, the Swiss franc and Japanese yen, will also likely underperform if risk appetite continues to improve. We have watched the USD/JPY cross climb back toward 152 from its crisis lows near 145 as traders move out of safety.

With volatility easing, emerging market carry trades are becoming attractive again. Currencies like the Brazilian real, Mexican peso, and South African rand offer high yields that look appealing in a calmer global environment. Selling options to collect premium on these pairs could be a viable strategy if the truce remains in place.

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Oklo is described as a next-generation nuclear power company working on advanced fission reactors and small modular designs. Its share price rose from the low twenties to nearly $190 during 2025, then fell and has trended lower since the summer highs.

The stock is trading around $45.79, down over 6% from the prior session. It is near support at $44.80, a level that has been tested many times over weeks.

A daily close below $44.80 is presented as a breakdown trigger. If that occurs, the next target mentioned is a price gap at $39.72.

One approach described is to wait for follow-through on a second session after a close below $44.80. Another approach is to act on the first confirmed close, while noting that an intraday move below support that recovers by the close is not treated as a breakdown.

A bullish scenario is defined as a confirmed close back above $55. From current levels, that would require a move of more than $9.

We are seeing a critical test of the $44.80 support level on OKLO, which has been under pressure for weeks. For derivative traders, this presents a clear inflection point for bearish strategies. The repeated tests suggest buyer exhaustion, making a breakdown increasingly probable in the coming sessions.

This technical weakness is amplified by recent industry data. A March 2026 report from the U.S. Energy Information Administration indicated that utility-scale adoption of small modular reactors is lagging behind the optimistic projections from last year. Combined with a recent uptick in the CBOE Volatility Index (VIX) to over 19, the broader market environment does not favor high-growth stories like this one right now.

A confirmed daily close below $44.80 should be seen as the trigger to consider buying put options. Specifically, the May 2026 monthly expiration puts with a strike price around $42.50 or $40.00 could offer a direct way to play the expected move down to the gap fill at $39.72. Waiting for that confirmation is key to avoid getting caught in a false breakdown.

More conservative traders might prefer a put debit spread to lower the upfront cost and define risk. For instance, one could buy the May $45 put and sell the May $40 put after the breakdown is confirmed. This strategy profits from the downward move but caps the maximum gain if the price falls significantly below $40.

On the other hand, a strong defense of the $44.80 level could be an opportunity to sell out-of-the-money put credit spreads below that support. However, we have to remember the massive overhead supply from everyone who bought during the speculative run-up to nearly $190 back in 2025. Any rally will likely face selling pressure, making the path to the bullish signal of $55 a difficult one.